Malaysia’s Petronas reported on Tuesday that first-half net profits more than doubled on the back of higher oil and gas prices, but the state-backed energy company sees higher prices reversing next year as global supplies stabilise.
For the first half 2022, Petronas posted a net profit of 46.4 billion ringgit (US$10.4 billion) compared to 18.8 billion ringgit over the same period in 2021. Revenue increased 57% to 172.1 billion ringgit from 109.6 billion ringgit.
However, Petronas chief executive Tengku Muhammad Taufik, noted that energy prices are expected to fall next year.
“I am very cautious about the future… I believe that the market would see a price correction slowly from the beginning of next year as supply normalises, but that would depend on the resolution that is achieved on the Russia and Ukraine front,” Taufik told a news conference, reported the Nikkei Asia.
“We have repeatedly mentioned cycle, which means the prices will not always stay above $100,” he said at the event held at the Petronas Twin Towers in Kuala Lumpur.
The strong performance was mainly attributed to elevated oil and gas prices arising from a widening supply gap and dwindling system capacity, Petronas said in a statement.
Petronas plans to spend about 60 billion ringgit every year for the next five years on capital spending, returning to pre-pandemic levels.
“Over 30% of the capex would be spent domestically as we remain committed to strengthening the local oil and gas services and equipment ecosystem,” said Taufik.
As part of its efforts to promote sustainability, he said the group would continue to reinvest toward the decarbonisation of its operations and seize new opportunities of growth in this space. Petronas is setting aside up to 20% of its capital expenditure for green project investments over the next five years.
Petronas will pay the government, its sole shareholder, a total of 50 billion ringgit ($11.16 billion) in dividends this year, Taufik told the media briefing.
The company was earlier expected to pay 25 billion ringgit, the same as last year, but the government made a request for a higher amount, he said.
Petronas is a key source of revenue for the Malaysian government, which is scrambling to fund a record $18 billion in subsidies and cash aid to offset inflation.