Petronas Profits Reflect Cost-Cutting

Malaysian state gas giant Petronas reported a 2017 post-tax profit up 91% in 2017 at ringgit 45.5bn ($11.6bn), compared with ringgit 23.8bn in 2016. The increase was achieved on the back of higher revenue, lower net impairment on assets and well costs and continuous efforts to optimise costs in 2017, it said March 2.

It means that Petronas's 2017 net profit was more than three times that of BP ($3.4bn), greater than Chevron's ($9.2bn), and not so far behind Shell's ($13bn).

The Malaysian producer's cumulative 2017 earnings before interest, tax, depreciation and amortisation (Ebitda) rose to ringgit 92bn ($23.4bn) compared with ringgit 70.7bn in 2016, in line with higher profits. Cash flows from operating activities improved to ringgit 75.7bn, up 41% year on year.  Petronas produced 2.32mn barrels of oil equivalent/day, down 2% from 2016 as it complied with the request from Opec for a cartel-wide cut in output, which other producers notably Russia also supported.

Petronas delivered 443 of what it calls "LNG Big Cargoes Equivalent" or 27mn metric tons, over the course of the year, more than ever before, and in September it despatched its 10,000th cargo from Bintulu, Sarawak.

Continuous efforts in portfolio high-grading have given significantly better financial returns from international operations. It said: "One of the significant decisions was not to proceed with final investment decision on Pacific North West LNG project and the Prince Rupert Gas Transmission (PRGT) project in Canada. However, Petronas will continue to evaluate options to monetise gas in Canada."

CEO Tan Sri Wan Zulkiflee Wan Ariffin said the "continued drive for higher productivity and operational excellence has placed Petronas in a stronger position to execute its long-term growth strategy. Subject to sustainability of price recovery, the group expects to deliver a satisfactory performance in the next financial year."

Costs though, he warned, are increasing thanks to "a perceived recovery. If this trend is left unchecked, the industry as a whole runs the risk of negating the value we have gained from intensive cost-efficiency efforts over the last three years. It is imperative therefore, that we do not drop the austerity mind-set and continue to ensure we keep costs under control, increase efficiencies, and drive up value.”