PETALING JAYA: While Petroliam Nasional Bhd (Petronas) looks set to see healthier earnings in its current financial year ending March 31, 2011, an anticipated slower global growth next year will weigh in on its performance.
An area of concern highlighted by the national oil company during its first quarter results media briefing on Monday was the possibility of a double-dip recession and its repercussion on oil prices.
The global financial crisis experienced in 2008 and into 2009 saw downward pressure on the world economy, which consequently pulled down energy demand and prices.
Global oil demand fell as weaker activity in developed countries and slower growth in key emerging markets such as China and India battered demand.
According to Petronas’ 2010 annual report, world oil demand retreated to 84.4 million barrels per day (bpd) for the second consecutive year, despite positive contributions from pockets of demand growth in key emerging economies. World production capacity exceeded oil demand at 89.4 million bpd.
Motorists at a Petronas station in Kuala Lumpur. An area of concern highlighted by the national oil company during its first quarter results media briefing on Monday was the possibility of a double-dip recession and its repercussio n on oil prices.— ReutersWhile the jury is still out on whether there will be a double-dip recession, the global economy is poised for slower growth next year as emerging markets come off their sharp growth seen in the first half of this year.
Despite the fact that world oil demand is expected to hover around 86.5 million bpd this year and increase marginally to 87.8 million bpd next year, a cooling off in global economic growth may see emerging economies scaling back on their oil demand.
For its first quarter ended June 30, Petronas posted a 60% jump in net profit to RM12.3 bil while revenue rose 26.3% to RM58.6bil, driven by higher oil prices and better sales demand.
Its results confirmed that the refining turnaround was felt globally as profits from oil majors like ExxonMobil Corp and Royal Dutch Shell Plc also grew.
With the global economic environment still looking fragile, Petronas does not expect its second half results for the year ending March 31, 2011 to be as good as the first half. Its second quarter results for the three month period ended Sept 30 will be released in two months.
Its oil and gas production for the first quarter dropped 0.5% to 1.079 billion barrels of oil equivalent per day from 1.084 billion barrels in the previous corresponding period.
Change in strategy
Another consideration to Petronas’ revenue stream is the outcome from the change in strategy this year to cutback on exploration works overseas and beef up domestic exploration instead.
The domestic oil exploration would see Petronas drill deeper for oil and gas in the shallow waters of Malaysia and to increase the amount of oil it pumps out from existing wells in the country.
The group’s new direction is also to acquire proven oil and gas reserves instead of drilling for them.
StarBiz previously reported Petronas president and chief executive officer Datuk Shamsul Azhar Abbas as saying that most of its international activities abroad, with the exception of developing reserves in areas such as Iraq, Sudan and Myanmar, were focused on exploration.
Results from such exploration work have not matched expectations and the push is now more centralised on Malaysia.
The change in strategy is a departure from former president and CEO Tan Sri Mohd Hassan Marican’s emphasis that global operations were an integral part of Petronas’ business, which accounts for over 40% of the group’s revenue.
According to its 2010 annual report, international operations was the largest contributor to the Petronas’ topline at RM98.1bil, or 45.3% of the total revenue.
“We are in the midst of a portfolio rebalancing mainly because we are heavy on our foreign portion and neglected the domestic portion,” Shamsul told reporters on Monday, adding that the greater emphasis on domestic deepwater and unconventional plays was to arrest domestic production declines.
Petronas said that it is currently working on a masterplan on key growth areas, in line with the oil and gas sector being earmarked as a national key economic area.
ECM Libra Investment Research said in a report last month that the sector contributed US$1.1bil to the country’s gross national income (GNI) and is projected to contribute US$2.6bil to GNI by 2020.
The anticipated growth is to be driven by projects such as deepwater developments off Sabah and the offshore liquefied natural gas (LNG) regasification plant.
Petronas expects Malaysia’s first regasification plant to be ready to process some 3.5 million tonnes of imported LNG by July 2012. - The Star
Despite the fact that world oil demand is expected to hover around 86.5 million bpd this year and increase marginally to 87.8 million bpd next year, a cooling off in global economic growth may see emerging economies scaling back on their oil demand.
For its first quarter ended June 30, Petronas posted a 60% jump in net profit to RM12.3 bil while revenue rose 26.3% to RM58.6bil, driven by higher oil prices and better sales demand.
Its results confirmed that the refining turnaround was felt globally as profits from oil majors like ExxonMobil Corp and Royal Dutch Shell Plc also grew.
With the global economic environment still looking fragile, Petronas does not expect its second half results for the year ending March 31, 2011 to be as good as the first half. Its second quarter results for the three month period ended Sept 30 will be released in two months.
Its oil and gas production for the first quarter dropped 0.5% to 1.079 billion barrels of oil equivalent per day from 1.084 billion barrels in the previous corresponding period.
Change in strategy
Another consideration to Petronas’ revenue stream is the outcome from the change in strategy this year to cutback on exploration works overseas and beef up domestic exploration instead.
The domestic oil exploration would see Petronas drill deeper for oil and gas in the shallow waters of Malaysia and to increase the amount of oil it pumps out from existing wells in the country.
The group’s new direction is also to acquire proven oil and gas reserves instead of drilling for them.
StarBiz previously reported Petronas president and chief executive officer Datuk Shamsul Azhar Abbas as saying that most of its international activities abroad, with the exception of developing reserves in areas such as Iraq, Sudan and Myanmar, were focused on exploration.
Results from such exploration work have not matched expectations and the push is now more centralised on Malaysia.
The change in strategy is a departure from former president and CEO Tan Sri Mohd Hassan Marican’s emphasis that global operations were an integral part of Petronas’ business, which accounts for over 40% of the group’s revenue.
According to its 2010 annual report, international operations was the largest contributor to the Petronas’ topline at RM98.1bil, or 45.3% of the total revenue.
“We are in the midst of a portfolio rebalancing mainly because we are heavy on our foreign portion and neglected the domestic portion,” Shamsul told reporters on Monday, adding that the greater emphasis on domestic deepwater and unconventional plays was to arrest domestic production declines.
Petronas said that it is currently working on a masterplan on key growth areas, in line with the oil and gas sector being earmarked as a national key economic area.
ECM Libra Investment Research said in a report last month that the sector contributed US$1.1bil to the country’s gross national income (GNI) and is projected to contribute US$2.6bil to GNI by 2020.
The anticipated growth is to be driven by projects such as deepwater developments off Sabah and the offshore liquefied natural gas (LNG) regasification plant.
Petronas expects Malaysia’s first regasification plant to be ready to process some 3.5 million tonnes of imported LNG by July 2012. - The Star