Petronas: No Longer the Fattened Calf

Malaysia's State oil firm Petronas reported today (8 December 2009)profits in the first half of fiscal year 2010 declined by half as the global recession hit demand and crude oil prices tumbled from year-ago levels.

Petronas’ crude oil output in the country has continued to fall, down to 450,400 barrels per day (bpd) in the April-September period this year, from 485,400 bpd by the earlier fiscal year ending March 2009, it said.

“The decrease in revenue for HY 2009 was mainly due to the overall decrease in product prices and lower sales volume,” said .

“Revenues were partly mitigated by the weakening of the ringgit against the US dollar.”

Analysts say though crude prices have risen to US$74 (RM251) barrel from a low of less than US$33 in December, they are still way below a high of more than US$147 touched in July last year.

Unlisted Petronas’ profit for April-September 2009 stood at RM20.3 billion versus RM38.6 billion in the same period a year ago. Revenues dropped 37.5 per cent to RM98.2 billion from RM157.2 billion ringgit.

Petronas is also battling with slowing production at home, especially on the continental shelf of Malaysia as ageing fields took their toll after years of steady output. Production is higher in the offshore Borneo island.

The firm has looked overseas for future growth but with lower crude oil prices, capital expenditure internationally in first half of the fiscal 2010 dived 55.5 per cent to RM5.5 billion compared to the same period a year ago.

Petronas’s overall global energy output has also slowed in Africa and the Middle East due to the worldwide economic fallout.

By second-half September, the company’s total oil and gas production was 1.726 million bpd compared to 1.796 million bpd for the fiscal year ending March 31, 2008.

“The decrease in gas production in Africa was driven by decrease in gas demand from domestic buyers in Egypt as well as decline in baseline production rate and higher water cuts in Chad,” the firm said.

Petronas said overall output declines were offset slightly by rising production in Oceania as well as higher gas output in Southeast Asia driven by Indonesia and Myanmar.

“Oceania production was driven by improvements in field gas processing facility and water handling capabilities in Australia, allowing more wells to be connected and allowing increased production,” the firm said.

So, this means less money in Federal coffers as well as contribution to the oil producing states. Until we own up to the fact that we can no longer rely that much on Petronas, would we be more level headed to spend within our means. Stop the unnecessary iconic projects. We can ill-afford them!