Malaysian oil firm Petronas posts 17 per cent drop in 2012 profit, sees further headwinds

KUALA LUMPUR, Malaysia – Malaysia’s national oil company Petronas said Thursday its profit fell 17 per cent last year, partly due to a shutdown of production in South Sudan, and warned of further headwinds.

Petronas said revenue rose by 1 per cent to 291 billion ringgit ($93.6 billion) but net profit slipped to 49.4 billion ringgit ($15.9 billion) in the financial year ended Dec 31.

It suffered a 45 per cent drop in profit for the last quarter of the year.

Petronas, which is Malaysia’s only Fortune 500 company and the country’s most profitable, attributed the lower profit to rising costs, loss of production in South Sudan and impairment of its Egypt investment.

South Sudan shut down its oil production early last year amid a dispute with its northern neighbour Sudan, causing millions in lost revenue to both governments and oil majors operating there.

“The environment in 2013 is not expected to be any more different than 2012. We continue to face headwinds due to the slow recovery of the global economy,” Chief Executive Shamsul Azhar Abbas told reporters.

He said Petronas will focus on increasing domestic output to sustain profit.

In South Sudan, he said Petronas lost 120,000 barrels a day in production last year due to the shutdown. He hailed an agreement signed earlier Thursday between the two sides that will pave the way for a resumption of southern oil production.

He said Petronas is ready to resume operations if given the nod but even so, it will only contribute to the company’s profit in 2014.

Shamsul said overseas operations contributed 40 per cent to the group’s revenue, but only 13 per cent to its profit, reflecting a tough operating environment and higher costs. Petronas hopes to rationalize its investments abroad to ensure asset quality that will contribute 30 per cent to its group profit, he said, without elaborating.

Petronas recently completed a $5.3 billion takeover of Canadian gas producer Progress Energy.

Shamsul said Petronas, a major contributor of revenue to the Malaysian government, will pay 27 billion ringgit ($8.7 billion) in dividends to the state this year, down from 28 billion ringgit ($9 billion) in 2012. The oil firm has said it hopes to tie dividend payments to profit, rather than a flat fee, to have more funds for investment but the matter is still under discussion.