KUALA LUMPUR, Nov 29 – Malaysia’s Petroliam Nasional Bhd posted a 22 per cent fall in third-quarter net profit as a halt in production in Sudan and pressure on its margins dented its performance.
Petronas said its profit for the quarter ended Sept. 30 fell 22 per cent to RM12.4 billion from RM15.9 billion a year ago.
“The environment remains challenging, but we are quite happy with what we have achieved,” CEO Shamsul Azhar Abbas told reporters.
Unlisted Petronas accounts for nearly half of Malaysia’s government budget revenues and needs to secure more overseas reserves to offset declining output and maintain profits.
The oil firm has been pushing for a new dividend policy that would set the annual payout to the government at 30 per cent of profits instead of the flat RM28 billion it will pay this year.
A lower payout to the government would preserve money to reinvest in global oil and gas exploration in order to compensate for declining domestic supplies.
A Reuters analysis of Petronas and government financial data has shown Petronas would have paid close to RM17 billion in the March 2011 fiscal year if the 30 per cent dividend formula was in place.
The government has yet to agree to the 30 per cent cap on dividends.
Shamsul said Petronas had paid out some 61 per cent of its profits in dividends for the financial year 2011, compared with the 38 per cent average paid by its global peers and criticized calls for higher oil royalties from various oil-producing state governments.
“We should focus on enlarging the pie, not scramble for a bigger piece of a shrinking pie,” he said, labelling the calls for higher royalty payments “counter-productive.”
Geopolitical concerns in Sudan have led to a halt in oil production there and hit profits at Petronas.
“On the international side, it is not looking good. The damage is mainly from Sudan where we are still struggling to start production,” Shamsul said.
Within Malaysia, the picture has been brighter, with seven new oil discoveries during the quarter and improved domestic oil production, he added.
That said, he noted that the company has to spend more to maintain its level of production as many of its oil fields are mature.
Petronas data shows third-quarter hydrocarbon production in Malaysia stood at 1.5 million barrels of oil equivalent per day compared to 1.52 million barrels a year ago.
To stem declining production at home, Petronas has embarked on a series of projects with partners like Exxon Mobil Corp and Shell to tap more oil from marginal fields, part of the government’s initiative to attract US$444 billion (RM1.35 trillion) in investment by 2020. – Reuters