Petronas Posts Lower First-Half Profit Despite Rise in Crude

(Bloomberg) -- Malaysia’s national oil company Petroliam Nasional Bhd. posted a 19% decline in first-half net income due to higher taxes and a shrinking of its asset base.

Petronas recorded net income of 32.4 billion ringgit ($7.5 billion) in the six months ended June, down from 40.2 billion ringgit in the same period a year earlier, according to a statement on Thursday. Revenue rose 2% to 171.7 billion ringgit, mainly due to foreign exchange gains although a drop in liquefied natural gas prices was a drag.

The drop in net income was “primarily due to the deconsolidation of subsidiaries and higher taxation,” the company said. Profits have been under pressure in recent earnings periods after energy prices retreated from their 2022 surge caused by Russia’s invasion of Ukraine. 

This time around, the company encountered higher oil prices, as geopolitical tensions and output cuts at OPEC+ lifted crude markets, it said. That raised profits from drilling although refining margins suffered, dropping 30% on year.

Brent crude has since fallen to around $73 a barrel from over $86 at the end of the first half. The company expects prices to range between $70 and $80 in the near term, Chief Executive Officer Muhammad Taufik said at a briefing on Thursday.

The company has faced other headwinds this year, including an unceremonious exit from South Sudan, and an attempt by Malaysia’s biggest state of Sarawak to carve out the company’s gas trading rights in Borneo.

“Negotiations are difficult, but discussions are ongoing with Sarawak state government and federal government,” Taufik said. “We remain a strategic partner for Sarawak. We have invested heavily in Sarawak.”

Petronas is expected to pay a lower dividend of 32 billion ringgit this year to the Malaysian government, which leans heavily on the company for revenue. 

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