Petronas hurt by rising costs

Petronas26 August 2013, News Wires – Lower oil prices and higher operating costs eroded increased revenue for Petronas in the second quarter, resulting in a profits dip at the Malaysian state-owned energy company.

The Kuala Lumpur-based player recorded net profit for the quarter of 15.26 billion ringgit ($4.6 billion), down 1% from the previous year’s figure of 15.4 billion ringgit.

Revenue increased 5% to 74.4 billion ringgit due to higher oil and gas trading volumes on the back as production increased 12% over the year to nearly 2.1 million barrels of oil equivalent per day, fuelled by Malaysian fields.

However, a reduction in realised oil prices acted as a brake on profitability while Petronas is also battling higher operating costs that may result in the postponement of some strategic projects.

“We have suffered from lower oil prices. But if you look at the costs, they have increased further. If there is a need to defer some of projects, we will do that,” chief executive Shamsul Azhar Abbas was reported as saying by Reuters.

He suggested the company could even scrap a planned $19 billion petrochemicals project in southern Malaysia – the country’s largest infrastructure investment – if costs sky-rocket and make the complex unfeasible.

Petronas is due to a final investment decision on the project in March 2014, with planned start-up in the fourth quarter of 2017.

– Upstream

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