Petronas drops to loss as LNG sales slip

Malaysian energy giant Petronas dropped to a loss in the first six months of the year.

The company noted the results reflect the uncertainties faced by the oil and gas industry as it was further compounded with the effect of weak demand caused by global lockdowns and movement restrictions, excess capacity, and a fragile outlook for oil prices.

The accelerated energy transition which sees the push towards a lower carbon economy is also expected to further impact the demand for natural resources.

The industry is also challenged by the downward revision of price outlook at the back of the current macroeconomic landscape combined with the growing pace of energy transition. This has led to sizeable impairments recognised during the period, Petronas said.

The impairments have hurt Petronas profit for the period under review with the company posting a loss of 16.5 billion Malaysian ringgit ($3.97 billion). This compares to a 28.9 billion profit ($696 billion) profit in H1 2019.

Brent prices continued to slide in the second quarter of 2020, with the dated Brent averaging $29.20/bbl compared to $68.83/bbl in the second quarter of 2019. For the first half of this year, the dated Brent average was US$39.73/bbl, compared to US$66.02/bbl in the previous corresponding period.

For the first half of 2020, the group recorded a revenue of 93.6 billion Malaysian ringgit ($22.5 billion), a decline of 23 per cent from 121.1 billion Malaysian ringgit ($29.2 billion) in the corresponding period last year.

This is largely driven by lower average realised prices for all products and lower sales volume mainly from processed gas and LNG.

Petronas reported a dip in liquefied natural gas sales during the first half of the year.

The company reported its LNG sales reached 16.7 million tonnes for the first six months of the year. This is 3 per cent below the 17.2 million tonnes sold in the corresponding period in 2019.

LNG production volumes reached 13.2 million tones, 7 per cent down from the 14.2 million tons produced in the first half of 2019.

The company reported that over the period under review, it had delivered over 11,315 LNG cargoes from its LNG complex in Bintulu.

Looking forward Petronas aims to intensify its efforts to protect revenue together with cost optimisation to mitigate the negative impact on its profitability and liquidity. The Board expects its 2020 performance to be severely affected by the low oil price and weak demand environment.

Petronas’ second floating LNG facility, PFLNG Dua, is currently continuing its commissioning work as planned.

The unit is currently moored at the Rotan gas field 140 km offshore Kota Kinabalu, Sabah.

Once ready for commercial operations, PFLNG Dua will be able to monetise deep-water gas fields in depths of up to 1,500 metres with a production capacity of 1.5 mtpa.