Petroliam Nasional Bhd., Malaysia's state oil company, said profit dropped 96 per cent last quarter after it was hit by oil prices that remained sharply lower than a year earlier.
Net income fell to 348-million ringgit ($111.9-million Canadian) in the three months through June, from 9.1-billion ringgit a year ago, the company said Monday. Revenue slid 21 per cent to 48.4-billion ringgit.
"The first half of 2016 remained difficult for Petronas," chief executive officer Wan Zulkiflee Wan Ariffin told reporters in Kuala Lumpur. "The continuous volatility of oil prices means that we cannot let up, but instead continue to grow on the back of better operational efficiencies, more controllable" spending on operations, he said.
Petronas, as the company is known, said earlier this year a change in its business structure will result in the loss of about 1,000 jobs, joining global oil majors including Royal Dutch Shell Plc in cutting spending as crude prices fell. It had about 51,000 workers at the end of 2014. The company will focus on non-performers for any further head-count reductions, without aiming for a specific target, Mr. Wan Zulkiflee said.
Petronas is planning to lower capital and operating expenditure by as much as 20 billion ringgit in 2016, with a planned reduction of 50 billion ringgit over four years, Mr. Wan Zulkiflee said in February. While Petronas has said that it may need to raise debt and tap its cash reserves to cover spending and dividend payments to the government, no debt-raising has been planned so far, chief financial officer George Ratilal said Monday.
Despite tighter spending control, construction on a refining development in the southern state of Johor is expected to be completed by the first quarter of 2019 as planned, Mr. Wan Zulkiflee said.
Brent crude, the global benchmark, averaged almost $47 (U.S.) a barrel in the second quarter, compared with about $63 during the same period last year. Petronas is sticking with its assumption for Brent to average $30 a barrel in 2016 for budget-planning purposes, Mr. Wan Zulkiflee said. The average oil price this year is still lower than 2015, he said.
Petronas will review its liquefied natural gas development in Canada after the government there finishes its own assessment of the project around September or October, Mr. Wan Zulkiflee said Monday. The company plans to revisit the cost, schedule and market conditions for the project before making a final investment decision with its partners after delays in securing regulatory approvals, he said.
The Canadian government is evaluating the company's final submission for the $36-billion (Canadian) Pacific NorthWest LNG project before deciding if the company can proceed with its plan to ship gas from the country's Pacific Coast. Construction was originally scheduled to start in 2015, but the approval has been mired over concerns about the impact on fish, wildlife and the traditional ways of life of First Nations in the region.