Petroliam Nasional Bhd (Petronas) is paying a record RM67.6 billion to the government this year, up from RM52.3 billion previously, its president and chief executive Tan Sri Mohd Hassan Merican said.
Of the total, the federal government gets RM62.8 billion, which includes RM30 billion in dividends, RM6 billion special dividend, RM4.7 billion royalty and RM26 billion in petroleum and corporate taxes. Royalty payments to the state governments of Terengganu, Sabah and Sarawak amount to RM4.8 billion.
“The higher profits have enabled Petronas to provide higher payment to the government. Therefore we have decided to declare a special dividend of RM6 billion to the government this year,” Mohd Hassan said, adding that the special dividend would be paid in phases during the year.
The RM67.6 billion payment represents 63.1% of the RM107.1 billion profit before tax, royalty and export duty at the holding company level. Mohd Hassan said since its incorporation in 1974, Petronas’ payments to the government amounted to RM403.3 billion.
At the group level, the state oil company recorded its best performance in the financial year ended March 31, 2008 (FY08), with a 31.5% jump in net profit to RM61 billion from RM46.4 billion. Group revenue rose 21.2% to RM223.1 billion from RM184.1 billion due to higher crude oil prices and increased revenue contribution from its international operations.
For the first time, overseas operations were the biggest contributor to the group’s revenue, surging 33.1% to RM90 billion, surpassing contributions from the domestic exploration and production (E&P) operations, which rose 7.4% to RM46.3 billion from RM43.1 billion, Mohd Hassan said at its FY08 financial results briefing here yesterday.
Petronas’ export revenue rose 18.3% to RM86.8 billion and accounted for 14% of Malaysia’s total exports.
The national oil company’s earnings were boosted significantly by rising crude oil prices. “Even if there were a correction in crude oil prices, it would not be a sharp one. Assuming that oil trades around US$110 a barrel, Petronas would still stand to gain as a number of their PSC contracts are based on a benchmark of US$40 per barrel of oil and it is not possible that oil would come down to such levels,” an analyst told The Edge Financial Daily.
Crude oil prices on the New York Mercantile Exchange touched US$145.20 at 2.30pm yesterday in electronic trading. Concerns about oil production disruptions in Iran, Nigeria and Brazil, coupled with a weaker US dollar saw oil prices surge to a high of US$147.27 a barrel last Friday.
The rise in crude oil prices had driven up the price of Malaysian Crude Oil (MCO), said Mohd Hassan. The weighted average price of MCO rose to US$86.81 per barrel, up 26.7%. The country’s Tapis oil rose 26.9% to US$87.57 per barrel.
Petronas’ total oil reserves fell 0.5% to 26.37 billion barrels and its reserves replacement ratio (RRR) slipped to 0.9 times during the year to Jan 1, 2008, from 1.8 times previously. Its domestic reserves declined slightly to 20.13 billion barrels from 20.18 billion last year. It replaced its reserves at 0.9 times, from 1.4 times a year earlier.
“The ratio reflects the maturity of our acreages. It also shows that it is more difficult to replace production of resources,” Mohd Hassan said.
Petronas’ entitlement to the country’s oil and gas production rose 3.4% to 744,000 barrels a day of oil equivalent in the year to March 31, 2008 from 719,800 barrels previously. Its domestic share accounted for 44.5% of a daily output of 1.67 million barrels a day.
However, rising costs pushed up Petronas’ capital expenditure (capex) by 33.3% to RM37.6 billion, with some RM20.7 billion or 55.1% of the total directed towards E&P.
Mohd Hassan said that the country’s E&P sector remained vibrant despite increasing challenges and costlier operating environment, and it continued to attract production-sharing contractors (PSC).
“Our PSC terms and conditions are tough and we have not changed the rules of the game… because of the stable geopolitical environment, we continue to generate economic activity in Malaysia,” he said.
On its refining activities, Mohd Hassan said output for the group’s refineries rose to 150.9 million barrels a day from 148.8 million barrels previously. Its three domestic refineries — Petronas Penapisan (Melaka) Sdn Bhd , Petronas Penapisan (Terengganu) Sdn Bhd and Malaysian Refining Company Sdn Bhd — were built with a capacity of 323,300 barrels a day. Utilisation rates at the refineries rose to 91.6% from 91.4% on measures taken to improve efficiencies.
Source : The Edge
