Petronas to focus on raising local output

2013 OUTLOOK: Group expects more production from domestic discoveries

PETROLIAM Nasional Bhd (Petronas) will focus on increasing domestic production this year after posting a 45 per cent year-on-year drop in fourth-quarter net profit.

The national oil group posted RM8.72 billion in net profit for the three months ended December 31 2012 from RM15.85 billion in the same period a year ago.

Its president and chief executive officer Tan Sri Shamsul Azhar Abbas said for overseas operations, the group will concentrate on increasing gains from quality assets.

“Off-hand revenue split between domestic and overseas, 42 per cent comes from overseas. In terms of profit, I think about 12 or 13 per cent is from overseas.

“That is the main reason since the last two years we’ve been trying to rationalise overseasasset portfolio ... in terms of going for quality ones.

“Moving forward, we need to increase profitfrom the international portion,” he said at a briefing to announce Petronas’ financial year 2012 results here yesterday.

Shamsul Azhar said Petronas hopes the increase in production will come mainly from new domestic discoveries, which the company made recently.

During the year under review, a total of 24 discoveries were made, of which 22 were domestic and two international.

Excluding production in South Sudan, he said production during the year under review was three per cent above that of 2011.

“Depending on the price of crude oil, we reckon there would be not much change (in outlook for this year against 2012). We reckon more or less about the same number.

“What is important for us this year is to catch up in terms of increasing production.”

Shamsul Azhar said internationally, three more fields in Iraq, including Majnoon and Gharaff, will come onstream by the fourth quarter of this year, while one field commenced production
last year "We are not just producing in Malaysia.

"We are also producing in Chad, Sudan, Iraq, out of Indonesia, and Myanmar, and that is the least of our problem, in terms of increasing production."

Petronas' pre-tax profit declined to RM89.08 billion for the full financial year ended December 31 2012 compared with RM103.79 billion a year earlier, amid challenging circumstances.

Profit and net operating profit after tax also fell by RM9.6 billion and RM7.7 billion, respectively, due to lower margins from higher operating costs and impairment losses on certain properties, plants and equipment.

However, revenue for the year rose to RM291 billion from RM288.5 billion previously.

On whether Petronas will be able to extend its presence in Venezuela's oil and gas industry after the death of President Hugo Chavez on Wednesday, Shamsul Azhar said the company has to adopt a wait-and-see attitude.

"It was fairly difficult to operate in that country a couple of years back. It depends on the wait-and-see game now. Hopefully, all will change, with bankers far more friendly to give out loans.

"Let's wait and see whether the environment will improve. But we remain interested if the terms and environment are right.

"I do not see the reason why we should not go further," he said, referring to Petronas' participation in the Carabobo-2 field project.

Petronas has an 11 per cent stake in the project.