KUALA LUMPUR: Petroliam Nasional Bhd has seen "positive" earnings for most of its businesses during the first six months of the year, despite the unprecedented twin shocks of global oil price slump and Covid-19.
This suggests that the worst is over for the national oil company, although its president and group chief executive officer, Tengku Muhammad Taufik Tengku Aziz, had downplayed the notion of a recovery in the remaining two quarters of the year.
Petronas posted a net loss of RM16.5 billion in the first half, dragged by huge impairments on assets in the second quarter ended June 30, 2020. This was achieved on a 23 per cent drop in revenue to RM93.6 billion from RM121.1 billion in the same period last year.
For the second quarter, Pet-ronas posted a net loss of RM21 billion to reverse the RM14.7 billion net profit recorded in the same quarter last year.
Group revenue for the quarter dropped 42 per cent to RM34 billion from RM59.1 billion recorded in the second quarter of 2019.
This was mainly due to lower average realised prices for major products and lower sales volume especially from petroleum products, liquefied natural gas and processed gas.
Taufik said Petronas would post a net profit of RM7.7 billion for the first half if the impairments were taken out.
He said the impairments were a result of revised global oil price outlook and that most international oil companies had also taken significant impairment losses.
"The industry is challenged by the downward revision of commodity price outlook given the macroeconomic landscape and growing appetite of energy transition.
"This has resulted in most oil companies recognising huge impairment in the second quarter including Petronas," he added.
Petronas said during the second quarter, Brent prices continued to slide with the dated Brent averaging US$29.20 per barrel compared with US$68.83 per barrel in the second quarter of 2019.
For the first six months, the dated Brent average was US$39.73 per barrel, compared with US$66.02 per barrel in the previous corresponding period.
Taufik said the oil and gas industry continued to operate in a challenging and unprecedented market environment arising from a combination of severe demand destructions due to the Covid-19 pandemic and global oil market glut.
"The days of oil prices hitting US$70, US$80 or even US$100
per barrel are long gone," he said, adding that Petronas had reviewed its long-term price outlook to a range of US$55 to US$60 per barrel.
Overall, he said, Petronas' financial performance reflected the uncertainties faced by the overall industry as it was further compounded by weak demand caused by the global lockdowns and movement restrictions, excess capacity and a fragile outlook for oil prices.
Petronas remained resilient and agile in responding to the strong headwinds, he said.
It had taken decisive measures to optimise production to preserve the value of its integrated value chains, exercising tighter fiscal discipline and continuously driving down costs to mitigate the negative impact on its profitability and liquidity.
"Petronas has endured a very challenging first half of the year and we expect our performance to be affected by the volatility of oil prices, which continues to be exacerbated by the uncertainties brought about by the ongoing Covid-19 pandemic.
"We are committed to undertaking all necessary measures in our path to recovery which will involve reshaping our portfolio mix, retooling our human capital equation and emphasising on focused execution with pace," Taufik said.
The board, he said, expected Petronas' 2020 performance to be severely affected by the low oil price and weak demand environment.
"We are seeing green shoots for consumption recovery globally with the easing of the lockdown.
"For now, we see a recovery in the second half of next year, where demand might meet 2019 levels."