Petronas Dagangan allocates RM700 million to expand lube, LPG business overseas

Petronas Dagangan Bhd has set aside RM700 million (US$230 million) for capital expenditure (capex) this year and wants to expand its lubricant and liquefied petroleum gas businesses in Thailand, Vietnam and the Philippines.
Petronas Dagangan is the domestic marketing arm of national oil company Petroliam Nasional Bhd (Petronas).
Petronas Dagangan Chairman and Executive Vice-President of Downstream Business Datuk Wan Zulkiflee Wan Ariffin said the businesses in the three countries are its first venture overseas.
They have started contributing since last December, accounting for less than 1% of the group’s revenue. The company plans to grow this to 8% in the next five years.
“We made acquisitions in six downstream companies in the Asean region, which were completed last December. This is a fundamental strategy to grow the company to the next level,” Wan Zulkiflee said.
Petronas Dagangan’s revenue increased to RM29.5 billion (US$9.7 billion) last year, following a 1.4% increase in sales volume.
Pre-tax profit, however, decreased by RM49.3 million (US$16.2 million) to RM1.1 billion (US$362.4 million) due to lower gross profit as a result of crude oil price volatility.
“Our focus is to integrate our domestic and regional operations to sustain growth agenda, and over the next few years, efforts will be directed to nurture the acquired companies prior to realising the full benefits of this acquisition,” Wan Zulkiflee said.
He said Petronas Dagangan normally allocates RM500 million (US$164.7 million) in capital spending but has raised it to RM700 million this year to better execute its strategies for retail, commercial, liquefied petroleum gas and lubricants, including its regional businesses.
For its retail business, the company plans to open up to 60 new Petronas stations nationwide this year.