PETRONAS Perseveres Through a Difficult 2015, Takes Strong Steps to Face Tougher Times Ahead

Kuala Lumpur, 29 February 2016 – Petroliam Nasional Berhad (PETRONAS) wrapped up an extremely difficult 2015 with lower revenue and profit after tax (PAT) amidst a depressed oil price environment and net impairment on assets.

PETRONAS recorded a revenue of RM248 billion, a 25 per cent decline compared to the same period in 2014. Its PAT and PAT excluding identified items were logged at RM21 billion and RM40 billion respectively, 56 per cent and 42 per cent lower than 2014.

The company anticipates its financial performance for 2016 to continue to be affected by the prolonged volatility in oil prices and is intensifying efforts to cushion the impact to remain competitive and sustainable.

Speaking at a press conference today, PETRONAS’ President and Group CEO, Datuk Wan Zulkiflee Wan Ariffin said that PETRONAS had persevered through the challenging year to remain profitable and fulfil its dividend commitment to its shareholders.

“Our strong operations are a testament to the hard work put in by the dedication of our team to keep this organisation going during these trying times,” he said.

With Brent price averaging USD52 per barrel and despite the current industry downturn, PETRONAS in 2015 achieved notable operational milestones in both its upstream and downstream businesses.

PETRONAS’ 2015 operational highlights include:

• An increase in upstream production by three per cent as compared to 2014, driven by enhanced production and new production streams from Malaysia and Indonesia, and additional production from Azerbaijan.
• However, the sharp and prolonged decline in oil prices resulted in a 64% per cent drop in Upstream Business’ PAT to RM19.6 billion. Non-cash impairments of RM18 billion brought this down further to RM1.6 billion for the year.
• The achievement of Greenfield first hydrocarbon from 11 fields, six of which are located in Malaysia.
• Seventeen exploration discoveries in 2015 places three-year average overall resource replenishment ratio at 1.1; while reserve additions in 2015 bring the three-year average replenishment ratio to 1.2.
• Better performance from Downstream Business, where the segment’s profit margin rose by over 50% to RM8.9 billion.
• The Downstream Business’ result was attributed to the realisation of post-acquisition synergies at PETRONAS’ Melaka Refinery, PETRONAS Gas Berhad’s transformation initiative, cross-business plant performance improvement initiatives, as well as cost savings initiatives across PETRONAS’ global lubricants business.
• The Pengerang Integrated Complex project is progressing as planned with the refinery and steam cracker construction on-track.
• PETRONAS Chemicals Group Berhad acquired three of PETRONAS’ petrochemical companies undertaking RAPID’s petrochemical projects.
• PETRONAS Lubricants International broke ground on its first lubricants blending plant in India.

Datuk Wan Zulkiflee in his speech anticipated that the next two years would continue to be challenging for PETRONAS. He also added that the company’s cash flow from operations is unlikely to be able to cover the remaining CAPEX and its RM16 billion dividend commitments to the Government.

Forecasting the oil prices to remain low in 2016, PETRONAS has taken its cost-optimisation measures to another level to counter adverse impact to its business.

“These include additional reduction in CAPEX and OPEX of RM50 billion over the next four years, starting with RM15 to RM20 billion in 2016,” said Datuk Wan Zulkiflee.

“These cuts will impact some of our capital projects. At this point, we have taken the decision to re-phase the PETRONAS Floating LNG 2 project, to be commissioned at a later date than originally planned.”

He added that the company had also completed a review of its business operating model to facilitate higher efficiency levels and robustness in the organisation, resulting in a new organisation structure which wouldtake effect on 1 April.

“I am confident of our internal initiatives laid out to strategically respond to the external challenges. These will navigate PETRONAS securely through the current downturn, and position us in a more resilient and competitive stead for future growth,” said Datuk Wan Zulkiflee.

Issued by
Media Relations Department
Group Strategic Communications
PETRONAS