PETRONAS revenue up, profit down as foreign exchange boosts revenue, but higher taxes hit profit

PETRONAS, Malaysia’s state-owned energy giant, reported a revenue increase to RM171.7 billion (approximately USD 36.06 billion) for the first half of 2024 (1H 2024), up from RM169.0 billion (USD 35.49 billion) during the same period last year. This slight rise was primarily driven by the impact of foreign exchange rates, partially offset by lower average realized prices for liquefied natural gas (LNG), reflecting the decline in benchmark prices.

Drop in Profit and Financial Highlights

Despite the higher revenue, the Group’s Profit After Tax (PAT) declined significantly by 19% to RM32.4 billion (USD 6.8 billion). This drop was largely due to the deconsolidation of subsidiaries and an increase in taxation. The company’s Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) also fell by 9% to RM64.1 billion (USD 13.46 billion), aligning with the reduced profits.

PETRONAS reported a decrease in Cash Flows from Operating Activities (CFFO), which stood at RM54.8 billion (USD 11.51 billion), down by RM3 billion (USD 630 million) or 5% from the same period last year. This was also in line with the lower profits generated during the period.

Capital expenditures (CAPEX) reached RM25.7 billion (USD 5.4 billion), driven mainly by development and exploration activities in the Upstream business. The company saw an 18% increase in domestic CAPEX compared to the same period in 2023. Total assets grew to RM798.6 billion (USD 167.7 billion) as of June 30, 2024, up from RM773.3 billion (USD 162.4 billion) at the end of 2023, attributed mainly to these capital investments.

Shareholders’ equity rose to RM443.9 billion (USD 93.2 billion), due to the profits recorded during the financial period, offset by dividends declared to shareholders totaling RM32.0 billion (USD 6.7 billion).

CEO’s Statement on PETRONAS’s Performance and Strategy

PETRONAS President and Group CEO, Tan Sri Tengku Muhammad Taufik, described the results as a “commendable performance” amid ongoing market volatility and global economic slowdown. “As we cross the 50-year mark, PETRONAS remains unwavering in its duty as a National Oil Company to deliver long-term sustainable value for Malaysia’s economic growth,” he stated.

He highlighted the company’s commitment to strengthening collaborations with partners both domestically and internationally, accelerating technology adoption, and implementing the Energy Transition Strategy to ensure future growth.

Outlook: Navigating a Volatile Market

PETRONAS continues to face challenges from prolonged geopolitical tensions and macroeconomic uncertainties, which heighten volatility in the global market. Despite these challenges, the company remains agile in recognizing and prioritizing growth opportunities. It aims to preserve value through cost rationalization and value-focused investments, with ongoing efforts to monetize its Upstream resources and expand its renewable energy portfolio.

Sustainability Initiatives and Social Impact

PETRONAS has achieved a 5.1% reduction in greenhouse gas (GHG) emissions, recording 21.78 million tonnes of carbon dioxide equivalent (Mil tCO2e) for its Malaysian operations in 1H 2024, down from 22.95 Mil tCO2e in the same period last year. This reduction resulted from continuous improvements such as reduced flaring and venting in operations.

The company’s Lost Time Injury Frequency (LTIF) increased by 18%, reaching 0.13 per million man-hours in 1H 2024, up from 0.11 per million man-hours in 1H 2023. This increase indicates the need for enhanced safety protocols.

In terms of social impact, PETRONAS contributed over RM230 million (USD 48.3 million) through more than 270 activations across three focus areas: Powering Knowledge (Education), Uplifting Lives (Community Well-being and Development), and Planting Tomorrow (Environment).

Operational Highlights Across Business Segments

Upstream: The average total daily production increased to 2,482 thousand barrels of oil equivalent (boe) per day in 1H 2024, compared to 2,425 thousand boe per day in 1H 2023, driven mainly by higher natural gas production both within Malaysia and internationally. Key achievements included first hydrocarbon production for five projects in Malaysia and two in South Sudan, and 12 final investment decisions (FIDs) across various projects.

PETRONAS expanded its portfolio in Indonesia and secured a 20-year extension for the Ketapang Production Sharing Contract (PSC) and a multi-year contract for the Bobara Working Area. It also acquired a 50% share of the Papua New Guinea Petroleum Prospecting License.

Gas & Maritime Business: The Gas Business achieved an Overall Equipment Effectiveness (OEE) of 92.6% across all segments and delivered 192 LNG cargoes from the PETRONAS LNG Complex in Bintulu. PETRONAS’ Floating LNG facilities also delivered 19 LNG cargoes, and the company completed an average sales gas volume of 2,320 MMscfd in Peninsular Malaysia.

Downstream: Downstream operations remained stable with an OEE of 88.7%, slightly below 89.0% in 1H 2023. The chemicals business recorded higher sales volume due to increased production, but overall marketing sales volume decreased to 12.35 billion liters due to the divestment of stakes in Engen Limited.

Gentari Sdn Bhd: In renewable energy, Gentari added 0.7 GW of installed and under-construction capacity in 1H 2024, contributing to a cumulative capacity of 3.6 GW. The company also deployed a fleet of 3,874 electric vehicles (EVs) and partnered with various organizations to promote green mobility.

Future Prospects: Commitment to Energy Security and Sustainable Growth

As PETRONAS celebrates its 50th anniversary, the company continues to prioritize energy security, stakeholder collaboration, and sustainability. PETRONAS remains focused on steering through the complexities of the global energy landscape while executing its Energy Transition Strategy to foster sustainable growth.