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Petronas Q2 profit falls 30pc.

Malaysia's Petronas Nasional posted a 30 per cent drop in second-quarter net profit on softer crude oil prices and a production standstill in southern Sudan and warned the government -- its major shareholder -- that it will struggle to meet dividend payments.

Profit for the quarter ended June 30 2012 dropped to 15.2 billion ringgit ($4.88 billion) from 21.7 billion ringgit a year ago with the coming months expected to be challenging as the global economic crisis festers, said CEO Shamsul Azhar Abbas.

"It will be a struggle for Petronas to match its strong performance in 2011. This is for management of expectations, not a profit warning," Shamsul told reporters at the results briefing. "I'm indirectly telling the government not to expect too much," he added.

Petronas, which accounts for about half of the government's budget revenues, has been pushing for a new dividend policy that would set the annual payout to the government at 30 per cent of profits instead of the flat 28 billion ringgit it will pay this year.

A lower payout would preserve money to reinvest in global oil and gas exploration in order to compensate for declining domestic supplies.

A Reuters analysis of Petronas and government financial data has shown Petronas would have paid only close to 17 billion ringgit in the March 2011 fiscal year if the 30 per cent dividend formula was in place. The government has yet to agree to the 30 per cent cap on dividends.

"The understanding is there. There's nothing in black and white," Shamsul said.

He said Petronas bases its financial projections on crude oil prices averaging $87 a barrel and a drop to $80 would make it hard to meet its 300 billion ringgit capital expenditure plan through 2015 as well as meet its dividend obligations.

Geopolitical concerns in Sudan have led to a halt in oil production there and hit profits at Petronas. "We expect zero production from Sudan this year," Shamsul said, adding that the halt will hit Petronas' bottomline by $1 billion.

Petronas data shows second-quarter hydrocarbon production in Malaysia stood at 1.46 million barrels of oil equivalent per day.

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Publication:Oil & Gas News
Article Type:Financial report
Geographic Code:6SUDA
Date:Sep 17, 2012
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