PETALING JAYA: Petronas has managed to control its decline in earnings in the wake of low crude oil prices due to cost optimisation initiatives, ratings agency Moody’s said yesterday.
It described Petronas’ 6.7% decline in its earnings before interest, tax, depreciation and amortisation (ebitda) to RM70.4 billion for 2016 over 2015 as a “modest” decline.
“This is a modest earnings decline, considering that the crude oil prices have decreased by around 17% year-on-year, with Brent averaging US$43.69 per barrel (bbl) in 2016, as compared with US$52.46 per bbl in 2015,” Moody’s said in a report.
However, Petronas’ upstream earnings for 2016, measured by profit after tax, improved by 88%, The Sun Daily reported.
This, Moody’s said, was mainly due to operating costs reduction and lower impairment losses, compared with 2015.
Petronas’ crude oil and natural gas entitlement volumes increased by 10.5% to 1,794 barrels of oil equivalent per day (boed), the report said.
“We expect the LNG earnings contribution to increase with the company’s ninth natural gas liquefaction train (Train 9) already becoming operational in early 2017. The train has an additional annual LNG capacity of 3.6 million tonnes per annum (mmtpa), around 12% of Petronas’ current annual LNG sales volume.
“Assuming full capacity utilisation in 2017 and an average LNG selling price of US$6.00-7.50 (RM26.70-33.40) `per million British thermal units (MMBtu), the company’s topline for 2017 will increase by 2.3%-2.8%,” said Moody’s.
Meanwhile, downstream earnings have remained stable, with profit after tax amounting to RM8.3 billion, it reported.
“We expect the petrochemicals earnings to improve further next year with additional urea capacity being introduced in Sabah Ammonia Urea (Samur) in March 2017 and an aroma plant commencing its operations later during 2017,” said Moody’s.
On Saudi Arabian Oil Company taking a 50% stake in the Refinery and Petrochemical Integrated Development (Rapid) project, Moody’s said the US$7 billion equity injection would result in a significant decline in Petronas’ capital outlay and, therefore, would enable Petronas to conserve cash.
Petronas reported cash and cash equivalents of RM121.5 billion while borrowings amounted to RM67.6 billion as at Dec 31 last year.