KUALA LUMPUR: Petroliam Nasional Bhd will most likely see 2020 as one of its worst years but the national oil company seems poised to enjoy a banner year in 2021, market specialists said.
The agony of weak oil price after Covid-19 ravaged global economy last year might be replaced with a windfall from "more petrodollar" this year, they added.
Petronas is set announce a weak set of results for the year ended December 31 2020 on Friday, having made more than RM32 billion impairments in the first nine months.
Axi chief global market strategist Stephen Innes said 2021 was expected to be a banner year for the oil and gas industry, with some market observers expecting crude prices to hit US$80 per barrel.
"The windfall from more petrodollar per barrel than forecast will offset some of the 2020 hardships and will provide significant financial wiggle room to allow for the transformation into renewable energy," he told the New Straits Times.
Innes said oil and gas companies globally had taken a hit last year, and Petronas was not spared, having set aside an impairment of RM20.78 billion in the second quarter of 2020 and RM32.12 billion in the first nine months.
Fortunately, he said crudes prices had recovered well from November 2020, which helped assuage concerns somewhat.
Market players such as Petron Malaysia Refining & Marketing Bhd noted that the benchmark dated Brent crude price had rallied to reach US$50 per barrel in December 2020 from its September average of US$41 as anticipation grows for the rollout of effective Covid-19 vaccines.
Oil prices are currently hovering above US$60 per barrel.
Petronas recorded RM19.9 billion net loss for the first nine months of 2020, compared to RM36.4 billion net profit a year ago.
In the third quarter ended September 30 2020, the net loss stood at RM3.4 billion, reversing the RM7.4 billion net profit in the same quarter in 2019.
Innes believes that it would be game over for industry players that failed to respond to market changes and transform.
"The writing is on the wall for regional oil giants who will need to play a significant catch-up role in the industry. Transforms from fossil fuel energy to green energy," Innes said.
Petronas may not be one of the failing giants, though.
The group, it is learnt, had initiated timely tactical interventions to minimise the impact of Covid-19, energy market imbalance and energy transition, as well as meet increased stakeoholder demands.
Petronas had been emphasising on cost compression efforts to maintain resiliency as well as undertaking various operational and commercial excellence measures to preserve a relatively strong financial position, said an industry observer.
Besides that, it had further invested in renewables and specialty chemicals to future-proof the organisation while positioning itself with more customer-centric solutions and technological advancements to provide cleaner energy solutions towards realising its net zero carbon emissions by 2050 aspiration, the observer added.
Last December, Petronas president and group chief executive officer Tengku Muhammad Taufik said it had maintained a prudent view despite the collapse in oil prices and would continue to accelerate the transition towards a low-carbon economy, spurring policy intervention and global collaborations across industries.
According Petronas Activity Outlook for 2021-2023, while gas remained a crucial and cleaner source of fuel, diversification into renewable energy was imperative.
Tengku Taufik said the group had measured steps that demonstrate its stronger commitment to sustainability as it was taking cognisance of the acceleration of the global energy transition, heightened by stakeholder expectations and its vast opportunities.