Malaysia’s state-owned oil and gas company, Petroliam Nasional Berhad or PETRONAS posted a 25% decline in revenues to MYR 248 billion (USD 59 billion) last year compared to 2014.
PETRONAS anticipates its financial performance for 2016 to continue to be affected by the prolonged volatility in oil prices and is intensifying efforts to cushion the impact to remain competitive and sustainable. Forecasting that oil prices will remain low in 2016, PETRONAS President and Group CEO Datuk Wan Zulkiflee Wan Ariffin announced that the company will make additional cuts in capital expenditures and operating expenditures of MYR 50 billion (USD 12 billion) over the next four years, starting with MYR 15 to 20 billion (USD 3.6 to 4.8 billion) in 2016. The company has also completed a review of its business operating model to facilitate higher efficiency levels and robustness in the organisation, resulting in a new organisation structure which would take effect on April 1, he said.
With the price of Brent crude averaging USD 52 per barrel last year, PETRONAS achieved notable operational milestones in both its upstream and downstream businesses, he said. In the downstream sector, profit margins rose more than 50% to MYR 8.9 billion (USD 2.1 billion). The positive results from its downstream business was attributed to the realisation of post-acquisition synergies at PETRONAS’ Melaka Refinery, PETRONAS Gas Berhad’s transformation initiative, cross-business plant performance improvement initiatives, as well as cost savings initiatives across PETRONAS’ global lubricants business.
The Pengerang Integrated Complex project is progressing as planned with the refinery and steam cracker construction on-track.
PETRONAS Chemicals Group Berhad acquired three of PETRONAS’ petrochemical companies undertaking RAPID’s petrochemical projects.
PETRONAS Lubricants International broke ground on its first lubricants blending plant in India.
Datuk Wan Zulkiflee anticipated that the next two years would continue to be challenging for PETRONAS. He also added that the company’s cash flow from operations is unlikely to be able to cover the remaining capital expenditure and its MYR 16 billion (USD 3.8 billion) dividend commitments to the Malaysian government.