Petronas earnings fell amid oil market volatility

Petronas, Malaysia’s state-owned oil and gas giant, reported a drop in its first-half profit on Thursday amid continued market volatility, lower natural gas prices and higher taxes paid.

Petronas’ profit after tax fell 19 percent to $7.48 billion (32.4 billion Malaysian ringgit) in the first half of 2024.

Revenues were up 2% year over year due to favorable exchange rates. But profits were lower due to market volatility, higher taxation and the deconsolidation of subsidiaries, the company said in its interim report for the first half of 2024.

Lower natural gas and LNG prices in the first half of the year were also a drag on after-tax earnings as they offset the impact of higher crude oil prices.

Petronas expects “to see more dynamic changes in the operational landscape for the remainder of the year,” group president and CEO Tengku Muhammad Taufik said in a statement.

The executive also cited “continued market volatility and the global economic slowdown” in the first half of the year.

Looking ahead, Petronas says “protracted geopolitical tensions and macroeconomic uncertainties remain key drivers of heightened volatility that continues to negatively impact the global market.”

The Malaysian company aims to accelerate its energy transition strategy to position itself for future growth, it said.

Petronas remains committed to “ensuring energy security and encouraging continuous collaboration with stakeholders to protect the nation’s interests and support nation-building efforts,” the state-owned firm said.

Petronas faces the prospect of lower natural gas revenues as Sarawak, Malaysia’s largest state, is set to take control of its natural gas assets as the Borneo island state now seeks more autonomy from the federal government.

Sarawak has long sought more royalties from the Malaysian government and Petronas. However, Sarawak did not have much success in this until the 2022 elections, which now makes the federal government coalition dependent on the support of Sarawak Chief Minister Abang Johari Openg.

By Tsvetana Paraskova for Oilprice.com

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