Losses in Sudan and Egypt took a serious bite out of Malaysian national oil company Petronas’ profits for the year 2012 and the problems could also impair earnings for 2013, the company’s president and CEO Shamsul Azhar Abbas said.
The company said its net profits for the fourth quarter of 2012 fell by 45 percent to RM8.72 billion, with the loss of over 120,000 barrels per day (bpd) of production in Sudan since second quarter of 2012, and it also wrote down RM5 billion on its investment in Egyptian gas.
Despite reporting steady revenues, its net profits for the full year ended December 2012 was also down 14 percent at RM59 billion.
“Sudan is our cash cow,” Petronas President and CEO Shamsul Azhar Abbas told a packed press conference. “Our boys are onsite, ready to flow the oil provided the government gives permission. It’s a waiting game as far as Petronas is concerned.”
Shamsul said that Petronas’ entitlement from south Sudan was at 134,000 barrels per day (bpd) and 50,000-70,000 bpd from the North. He said the loss of production could last two years as even after restarting, there was a 5-6 months lead time before they can export the first cargo.
He however added that Petronas has not recorded any loss in assets as south Sudan had granted Petronas a five-year extension on its oil entitlement.
On Egypt, another company official said Petronas has suffered an impairment of RM5 billion.
Egypt’s gas reserves were smaller than initially expected and because of the political situation in the country, liquefied natural gas (LNG) exports were also cut short to supply more to the domestic market. The company said that they also faced payment issues in Egypt.
Petronas said that excluding Sudan, its oil and gas output rose three percent to 1.987 million barrels of oil equivalent (boe) per day in 2012, up from 1.928 million boe/day in 2011. “We have given a shot of adrenalin into Malaysia’s O&G industry in 2012,” Shamsul said.
In upstream overseas, the company said it had acquired three new exploration blocks, two in Myanmar and one in Sierra Leone. Petronas said it also started production from Iraq’s Halfaya oil block, which was pumping at 25,000 barrels per day. So far 1 million barrels of oil have been lifted, Shamsul said. Petronas’ other three blocks in Iraq may start producing by year end, he added.
Gross operating profit for its exploration and production sector was down 38 percent to RM29 billion. For its downstream sector, Petronas said gross operating profits were down 8 percent to RM 6.1 billion. Its gas and power sector saw gross operating profits rise 26 percent to RM16.4 billion.
The company’s total assets stood at RM488.3 billion in December 2012, compared with RM475.1 billion in 2011.
On its capital expenditure, Petronas said that it had spent 50 percent of a total RM63.4 billion in Malaysia for 2012.The RM63.4 billion figure included its widely reported RM18 billion deal to buy Canada’s Progress Energy, which was approved in December last year.
For 2012, Petronas added 2.077 million boe/day to its total hydrocarbon resources and overall resource replenishment ratio stood at 3.5 times, if including gas from the Progress buy.
On its plan to construct and export LNG from Canada’s British Columbia, Shamsul said that this may happen by end of 2018. Besides Japex, which took a 10 percent stake in the US$11 billion LNG project, Petronas was also in talks with five other potential gas buyers. These would include its regular customers in South Korea and Taiwan,
Petronas will pay a dividend of RM28 billion to the government for FY2012 and expected to pay RM27 billion for FY2013. Petronas also doubled its payment to the National Trust Fund (KWAN) to RM2 billion for 2012. Before 2011, Petronas had paid RM100 million a year to KWAN.