Malaysia's Petronas sees gloomy industry outlook as second quarter profit slumps

Mon Aug 22, 2016 6:35am EDT
 
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By Emily Chow

KUALA LUMPUR (Reuters) - Malaysian state-owned oil firm Petroliam Nasional Bhd (Petronas) [PETR.UL] on Monday said low oil prices dragged quarterly profit down 85 percent, and labelled the industry outlook "gloomy" well into 2017.

Petronas has seen a global slump in oil prices squeeze finances, which make up a third of Malaysia's oil and gas revenue. The benchmark Brent futures LCOc1 price, which hit a 12-year low earlier this year, rose 25 percent in the second quarter but remains lower than a year earlier.

"We should expect to see volatility continue and Petronas will not bank on optimistic oil prices to ease up on pressure," President and Chief Executive Wan Zulkiflee Wan Ariffin said at a news conference.

"The combined factors of oversupply, growing inventories and slower demand growth point to an ongoing gloomy outlook well into 2017."

Wan Zulkiflee said Petronas planned for an average price this year of $30 a barrel, unchanged from its February forecast. Brent crude, after a recent rally, traded at $49.50 at 1021 GMT.

For April-June, net profit hit 1.62 billion ringgit ($402.48 million) on revenue that fell 21 percent to 48.44 billion ringgit.

Petronas said highly volatile oil prices had led to impairment charges rising nearly 15 times from a year prior to 7.16 billion ringgit in the second quarter. It said it expects price volatility to lead to more charges, albeit to a lesser degree.

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A pump attendant works at a Petronas petrol station outside Kuala Lumpur, Malaysia, March 1, 2016.  REUTERS/Olivia Harris