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KUALA LUMPUR: Petroliam Nasional Bhd, which posted net losses in the first half ended June 30, 2020 due to impairments and weak prices, warned that its financial performance this year is expected to be affected by low oil prices and the weak demand environment.
The national oil company said in a statement on Friday that it will continue to intensify its efforts to protect revenues along with optimizing costs to mitigate the impact on its profitability and liquidity.
Petronas said the industry continues to operate in a challenging and unprecedented market environment that arises from a combination of severe demand destruction due to the Covid-19 pandemic and global market glut.
Group Chairman and 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 volatility in oil prices, which continues to be exacerbated by uncertainties caused by the current Covid-19 pandemic
Petronas said the first half performance reflects the uncertainties facing the oil and gas industry, compounded by weak demand caused by global lockdowns and movement restrictions, overcapacity and a fragile outlook for oil prices. .
“The accelerated energy transition that sees the push towards a lower carbon economy is also expected to have an additional impact on the demand for natural resources,” he said.
In 2Q, Brent crude oil averaged US $ 29.20 per barrel compared to US $ 68.83 a year ago.
For the first half of this year, Brent averaged $ 39.73 compared to $ 66.02 a year ago.
Tengku Taufik said Petronas has committed to taking all necessary steps on its road to recovery, which will involve reshaping its portfolio mix, restructuring its human capital equation and emphasizing paced execution.
On the issue of pay cuts, he said: “Final deliberations are ongoing. Any decision on the matter will be communicated to our employees first,” which means a decision on this matter has not yet been made.
He added that Petronas expects the price of oil to be between $ 50 and $ 60 a barrel in the next 20 years.
He said Petronas also wants to increase its renewable energy production by 2020 to three gigawatts, mainly in South Asia and Asia Pacific, mainly from solar and wind power.
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