Petronas curtails its loss, delays second FLNG unit due to spending cuts

Malaysian oil and gas company Petronas wrapped up an extremely difficult 2015 with a net loss and lower revenues amidst a depressed oil price environment.

The company said on Monday it will reduce its spending in 2016 which will impact the company’s current projects, including its second floating liquified natural gas unit, FLNG 2.

Petronas on Monday posted a net loss of RM2.96 billion ($703 million) for the fourth quarter 2015, compared to RM7.28 billion ($1.72B) loss in the same period of 2014.

Furthermore, Petronas’ revenues dropped by 24% as the company recorded a revenue of RM60.1 billion, compared to RM79.4 billion in the corresponding period in 2014. The decrease was due to lower average realized prices recorded across all major products following the downward trend of key benchmark prices, coupled with the impact of lower petroleum product, crude oil and condensate and processed gas sales volume.

The company’s crude oil, condensate and natural gas production volume in 4Q 2015 was 2,326 thousand barrels of oil equivalent (boe) per day, a decrease compared to 2,359 thousand boe per day in the same period last year.

The company said it anticipates its financial performance for 2016 to continue to be affected by the prolonged volatility in oil prices and is intensifying efforts to cushion the impact to remain competitive and sustainable.

Petronas President and Group CEO, Datuk Wan Zulkiflee Wan Ariffin, said that the next two years would continue to be challenging for Petronas. He also added that the company’s cash flow from operations is unlikely to be able to cover the remaining capex and its RM16 billion dividend commitments to the Government.

Forecasting the oil prices to remain low in 2016, Petronas has taken its cost-optimisation measures to another level to counter adverse impact to its business.

“These include additional reduction in CAPEX and OPEX of RM50 billion over the next four years, starting with RM15 to RM20 billion in 2016,” said Datuk Wan Zulkiflee.

“These cuts will impact some of our capital projects. At this point, we have taken the decision to re-phase the Petronas Floating LNG 2 project, to be commissioned at a later date than originally planned.”

Offshore Energy Today Staff