(Updated)

Petronas reports 154% jump in 1Q profit to RM23 bil, but cautious on outlook

Petronas reports 154% jump in 1Q profit to RM23 bil, but cautious on outlook
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KUALA LUMPUR (May 31): Petroliam Nasional Bhd (Petronas) reported a 154.15% jump in profit after tax (PAT) for the first quarter ended March 31, 2022 (1QFY22) to RM23.44 billion from RM9.22 billion in the corresponding quarter the year before, as operating profit more than doubled following upward trend in prices offset by higher product costs and taxation.

Quarterly revenue rose 49.87% to RM78.75 billion, from RM52.55 billion, which it said was predominantly due to price impact for major products, in line with higher benchmark prices, according to a statement from Petronas.

It is Petronas’ strongest bottom line performance in at least a decade, on the back of higher crude oil prices as 1QFY22's average dated Brent rose to US$102.23/bbl. The last time the Brent average breached the US$100/bbl average was in FY13, when the full-year PAT came in at RM65.59 billion, with the highest quarterly PAT recorded that year being RM20.37 billion in 1QFY13.

Petronas president and group chief executive officer (CEO) Datuk Tengku Muhammad Taufik said the latest results demonstrated Petronas' disciplined delivery of its core and growth strategy.

“Despite a degree of recovery and growth expected with the reopening of economies, Petronas will continue exercising prudent financial management and a firm focus on reinvesting, given our cautious outlook amid volatile geopolitical conditions and accelerated energy transition. Petronas will continue to nurture a robust oil and gas services and equipment (OGSE) ecosystem to strengthen our resilience in responding to these challenges and effectively contribute to Malaysia’s economic growth,” Muhammad Taufik said in a statement

In the quarter, Petronas' capital expenditure stood at RM7.4 billion, where domestic capex increased by close to 30%, it said. Upstream remains a major contributor to overall capex spending, it added.

The quarter saw six upstream projects receiving first hydrocarbon, and another six achieving final investment decision (FID), Petronas said. Also awarded were four production sharing contracts (PSCs), which drew capital commitments of about RM600 million to exploration activities in Malaysia.

Significant upstream, gas and downstream improvements

Operation-wise, three businesses — comprising gas, upstream and downstream — contributed to the significant improvements in PAT and revenue in the quarter.

In the upstream business, daily production average rose by 70,000 barrels of oil equivalent (boe) to 2.46 million boe, mainly due to higher production from Malaysian operations contributed by higher gas demand.

“This was partially offset by lower production from international (operations) following the disposal of Azerbaijan assets,” Petronas said.

“In line with Petronas’ aspiration to achieve Net Zero Carbon Emissions by 2050, upstream recorded a 29% reduction in greenhouse gas (GHG) emissions in 1QFY22 compared to the same period last year, following the execution of multiple emissions reduction projects,” it added.

Meanwhile, in the gas business, Malaysia's average sales volume rose by 187 million standard cubic feet per day (mmscfd) to 2,632 mmscfd, mainly due to higher offtake from the power sector in Peninsular Malaysia, in line with higher demand for gas, although gross liquefied natural gas (LNG) sales volume slipped on fewer trading opportunities.

Petronas delivered 102 LNG cargoes from the Petronas LNG Complex (PLC) in Bintulu in the quarter, and two carbon-neutral LNG cargoes to China.  

The downstream business saw petroleum product sales volume fall 1.1 million barrels to 58.3 million barrels, impacted by domestic refinery turnaround, while crude oil sales volume fell by 2.5 million barrels to 30.4 million barrels on low marketing volume. “Petrochemical products sales volume was comparable at 1.9 million metric tonnes,” Petronas said.

In the renewable energy space, Petronas' capacity in operations and under developments exceeded 1 gigawatt (GW). It has also signed a term sheet with Sumitomo for 100 kilo-tonnes per annum (KTPA) of low-carbon ammonia for offtake in 2025.

“Amplus delivered 114 EV vehicles under the Vehicle as a Service (VaaS) model. A total of 174 charging points have also been installed in Delhi, Bangalore, Hyderabad and Pune in India,” it added, referring to Amplus Energy Solutions Pte Ltd, the Singapore-based renewable energy unit it bought in 2019.

On prospects, Petronas sees oil and gas prices remaining high and vulnerable with increased volatility due to geopolitical and macro-economic uncertainties.

“Petronas will continue to strengthen our operational excellence to maximise value creation, whilst intensifying our growth and sustainability agenda in Malaysia and internationally,” it said.

Tan Choe Choe