KUALA LUMPUR: Petroliam Nasional Bhd, which posted net losses in the first half ended June 30, 2020 due to impairments and weak prices, cautioned that its financial performance of this year is expected to be impacted by the low oil price and weak demand environment.
The national oil company said in a statement on Friday it would continue to step up its efforts to protect revenue together with cost optimsation to mitigate the impact on its profitability and liquidity.
Petronas said the industry continues to operate in a challenging and unprecedented market environment arising from a combination of severe demand destruction due to the Covid-19 pandemic and global market glut.
Its president and group CEO Tengku Muhammad Taufik said Petronas had 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
Petronas said the first-half performance reflected the uncertainties faced by the oil and gas industry, compounded by by weak demand caused by the global lockdowns and movement restrictions, excess capacity, and a fragile outlook for oil prices.
“The accelerated energy transition which sees the push towards a lower carbon economy is also expected to further impact the demand for natural resources,” it said.
In 2Q, Brent crude oil averaged US$29.20 per barrel compared with US$68.83 a year ago.
For the first half of this year, Brent average was US$39.73 compared with US$66.02 a year ago.
Tengku Taufik said Petronas was committed to undertake all necessary measures in its path to recovery and which will involve reshaping its portfolio mix, retooling its human capital equation and emphasising on focused execution with pace.
On the question of pay cuts, he said: “The final deliberations are ongoing. Any decision on the matter will be conveyed to our employees first,” signifying that a decision has not yet been made on this matter.
He added Petronas sees oil price at between US$50 and US$60 per barrel in the next 20 years.
He said Petronas also wants to increase its renewable energy output by 2020 to three gigawatt, mainly in South Asia and Asia Pacific, mainly from solar and wind.