Transport Fuels

Petronas Dagangan to keep capex at MYR 500 million, introduce Euro 4M fuels in September

Petronas Dagangan Bhd (PetDag), a unit of Petroliam Nasional Bhd (Petronas), has planned a capital expenditure (capex) of MYR 500 million (USD 138 million) this year, the same as last year, to spur sales in its retail and commercial segments, according to Mohd Ibrahimnuddin Mohd Yunus, managing director and chief executive officer (CEO).

“The capex that we have allocated will be used to enhance our retail segment through increasing our stations as well as unlocking strategic values in the commercial division by focusing on aviation, diesel and fuel oil segments,” he said.

Mohd Ibrahimnuddin said PetDag sees opportunities to increase its profit margin in the aviation fuel segment, mainly due to the implementation of the ASEAN Open Skies policy and the opening of Kuala Lumpur International Airport Terminal 2 (KLIA2), which saw an increase in jet fuel demand and passenger traffic.

“Overall, the aviation segment contributes about half the total commercial sales or some 10% to our overall margin. The commercial division contributed 51.4% to our revenue last year. We see the expected growth of 3% in passenger traffic to 85.3 million this year to spur demand in this division,” he said.

Currently, PetDag has 13 aviation terminals nationwide.

On retail products, Mohd Ibrahimnuddin expects sales to increase with the opening of some 20 gas stations this year. Currently, the company has 1,057 stations nationwide.

PetDag’s sales of retail products — petrol and diesel fuel – dropped 1.9% to 7.1 billion litres in 2014 from 7.2 billion litres in 2013, due to floods which disrupted its operations in the East Coast during the fourth quarter of 2014, heightened enforcement activities, and delay in the opening of new petrol stations.

Mohd Ibrahimnuddin says PetDag’s overseas sales of liquefied petroleum gas and lubricants should benefit from deregulation, particularly in Thailand, Vietnam and the Philippines.

“Currently, overseas business contributes less than 3% to the overall revenue. In the long run, we expect the contribution to increase to 10%,” he said.

The company also plans to introduce RON 97 petrol that complies with the Euro 4M specification by 1 September, with prices to be determined by the government.

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