By Khairul Khalid
Wan Zulkiflee Wan Ariffin
Petronas will still pay RM26 billion in dividends to the federal government despite its weakening cash flow, says chief executive officer (CEO) Wan Zulkiflee Wan Ariffin at a press conference today.
“We are still committed to paying the RM26 billion,” said Wan Zulkiflee during today’s presentation of Petronas financial results for the second quarter of 2015 (2Q15).
Wan Zulkiflee said that Petronas does not expect its cash flow from operations this year to meet its capital expenditure and dividend commitments, so the company will have to draw on its cash reserves and persevere on austerity measures to cover any shortfall.
The CEO explained that prudent cash management in the past had provided sufficient financial reserves for the company, but it will not have the luxury now that oil prices have plunged.
Petronas posted RM11.1 billion in profit after tax for 2Q15, down 47% year-on-year (y-o-y), as revenue for the quarter fell 28% y-o-y to RM61.3 billion.
While the weaker performance is largely due to lower liquefied natural gas (LNG) volumes and prices, Petronas said the dragdown was offset by higher Brent crude prices, stronger refining margins, better operational efficiencies, and a stronger US dollar.
Wan Zulkiflee said that despite the bleak outlook, the company managed several operational and project milestones in 2Q15, such as achieving first hydrocarbons from three greenfields (two in Malaysia and one in Indonesia), the first steel-cutting ceremony for its second floating LNG facility, the PFLNG2 in South Korea, as well as kicking off construction for the Pengerang Integrated Complex for its Refinery and Petrochemical Integrated Development Project in Johor.
The CEO also called for Malaysian oil and gas (O&G) companies to consolidate and engage in more collaborations to survive in a drastically changed landscape in the industry due to plummeting oil prices.
“I strongly urge companies in the Malaysian O&G companies to join forces for the greater good in this pervasive low oil price environment. There are ample opportunities in the market for consolidation, leading ultimately to increased cost efficiency and competitiveness across the industry,” said Wan Zulkiflee.
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