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Malaysia's Petronas sees tough times ahead despite higher oil, LNG sales

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Malaysia's Petronas sees tough times ahead despite higher oil, LNG sales

Singapore — Petronas said Friday that rising sales of petroleum products and LNG helped the state-run Malaysian firm post profit and revenue growth in the first half of 2019, but warned that ongoing trade tensions, sluggish demand and slowing global growth could pose challenges in the second half.

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"The oil and gas market is expected to continue to be volatile in the second half of 2019 amid protracted trade issues that have spread beyond the United States and China, sluggish oil demand growth, as well as the slowing global economy," the company said in a statement.

"These prevailing uncertainties are expected to pose challenges to the overall year-end performance of the Petronas Group," it added.

Petronas's revenue rose to MR121.1 billion ($28.98 billion) in H1 from MR117.2 billion in the same period a year ago. Profit after tax rose 9% to MR28.9 billion from MR 26.6 billion in the corresponding period last year.

"The first half of 2019 has been dominated by greater price volatility in the oil and gas sector, geopolitical upheavals and protracted trade disputes that threatened to slow economic growth faster than previously expected," the statement said.

The company made capital investments of MR15.7 billion in H1, largely in upstream projects.

The company's total upstream production in H1 was 2.42 million b/d of oil equivalent, rising marginally from 2.38 million boe/d in H1 2018, mainly due to higher natural gas production from Malaysia.

Eleven projects achieved first hydrocarbons, adding 63,000 boe/d of new production in H1 in Malaysia, as well as in Iraq, Sudan and Argentina. It also made four exploration discoveries in H1 -- one each in Malaysia, Mexico, Egypt and Indonesia.

Total LNG sales volumes in H1 rose 5% year on year to 15.23 million mt, mainly due to higher volumes from the LNG complex in Bintulu and higher trading activity.

Petronas said domestic market reforms were on track with market-parity gas pricing achieved for non-power sector effective July 2019.

"Market-driven gas pricing is critical to provide the right economic incentives for Malaysia's long-term energy supply security, through sustained indigenous production and supplemented by LNG imports," Petronas said.

The company's Pengerang Integrated Complex (PIC) is on track to achieve commercial operation in the fourth quarter of 2019, with an overall progress rate of 99.7% by the end of June.

-- Sambit Mohanty,

-- Edited by Shashwat Pradhan,