As oil slumps, Petronas to cut capex by up to 20%

By BERNAMA

Petronas is looking at cutting 15-20 per cent of its RM60 billion capital expenditure (capex) for new projects next year, given the current backdrop of low oil prices.

President and Chief Executive Officer Shamsul Azhar Abbas said the group would channel most of its income to capex, which required it to be disciplined in capital management, including a strict dividend policy.

“If global oil prices remained between US$70 and US$75 per barrel next year, we plan to reduce dividend and tax to the government to RM17 billion, each, while oil and gas royalty reduced to RM9 billion.

“If we are expected to maintain the current level of dividend or higher, it will have a significant impact on our growth,” he told a media briefing on the group’s third quarter financial performance here today.

However, the group will maintain its dividend contribution to the government of RM29 billion, tax of RM26 billion and royalty of RM13 billion for 2014.

Shamsul Azhar Abas

Shamsul Azhar said to sustain growth the group needed to further develop its domestic reserves and pursue opportunities internationally, which would require a substantial amount of capex.

He said the company would be comfortable if global oil prices maintained at between US$70 and US$80 per barrel next year.

Petronas’ pre-tax profit for the nine months ended Sept 30, 2014 was slightly higher at RM78 billion from RM76.7 billion in the same period last year.

Revenue grew to RM249.78 billion for the period under review from RM232.51 billion previously.

For the third quarter, however, pre-tax profit was 12 per cent lower at RM22.8 billion on the back of lower revenue of RM80.37 billion.