PETRONAS announced a solid performance for the first half of 2021 driven by the Group’s continuous pursuit of operational excellence and fiscal discipline. The Group’s performance was supported by the recovery in commodity prices following improved economic conditions coupled with lower costs.
First Half FY2021 Results (Analysis against First Half FY2020)
For the first half of 2021, the Group posted a revenue of RM109.6 billion, a 17 per cent increase from RM93.6 billion in the first half of 2020, mainly attributed to favourable average realised prices for major products and higher sales volume impact mainly for liquefied natural gas (LNG) and sales gas.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) stood at RM46.1 billion, a jump of 57 per cent from RM29.4 billion, mainly attributable to higher revenue coupled with lower operating expenditure.
Profit After Tax (PAT) rose more than 100 per cent at RM18.9 billion compared to the Loss After Tax (LAT) of RM16.5 billion in the corresponding period last year, in tandem with higher EBITDA and lower impairment loss following upward trending in prices.
Cash Flows from Operating Activities (CFFO) as at 30 June 2021 increased by 24 per cent to RM32.7 billion from RM26.3 billion previously, mainly due to higher cash operating profits.
Total Assets strengthened to RM609.1 billion as at 30 June 2021 as compared to RM574.1 billion as at 31 December 2020, mainly contributed by higher cash and fund investments as well as receivables.
Shareholders’ Equity increased to RM331.1 billion as compared to RM330.6 billion as at 31 December 2020 mainly attributable to profit recorded during the period.
Capital Investments (CAPEX) amounted to RM12.7 billion, mainly attributed to Upstream projects.
Q2 FY2021 Results (Analysis against Q2 FY2020)
For the second quarter ended 30 June 2021, the Group recorded a revenue of RM57.1 billion, an increase of 68 per cent from RM34.0 billion in the corresponding quarter last year. This was mainly driven by favourable impact on prices for major products and higher sales volume impact for LNG and petroleum products.
EBITDA stood at RM23.2 billion, an increase of RM14.1 billion from RM9.1 billion recorded in the second quarter of 2020, in line with higher revenue partially offset by higher product costs and operating expenditure.
The Group registered PAT of RM9.6 billion compared to the LAT of RM21.0 billion in the same quarter last year, in tandem with higher EBITDA and lower impairment loss recorded in the current period.
Tengku Muhammad Taufik, President and Group Chief Executive Officer, PETRONAS
“PETRONAS’ solid performance was attributable to our response in enabling continued operational excellence during a period of favourable market conditions in the first half of 2021.
“This was made possible by the dedicated and selfless service of our front liners and employees Group-wide. PETRONAS was thus able to leverage its integrated value chain with a sharper focus on commercial excellence and preserve healthy levels of liquidity, which have proven to be advantageous.
“Amidst an uncertain outlook, the Group remains steadfast in delivering cost-effective solutions with a lower carbon footprint by advancing its technology and digitalisation agenda. PETRONAS will continue to progress its three-pronged growth strategy at pace and intensify its sustainability efforts to secure new opportunities in the energy transition.”
The oil and gas industry has seen a recovery in price and demand following the reopening of key economies globally. Nevertheless, the anticipated rise in oil supply and fresh lockdowns triggered by the emergence of new COVID-19 variants may impact the price and demand recovery.
PETRONAS will continue to focus on maximising value by leveraging the Group’s integrated value chain to capture new opportunities and mitigate the impact of market uncertainties.
The Board expects this year’s financial performance to be affected by the above factors.
Update on PETRONAS’ Response to COVID-19
Since the onset of the COVID-19 outbreak, PETRONAS has taken decisive measures to ensure the safety of its employees and contractors, implementing the necessary procedures and protocols in strict adherence to the guidance and directives of the authorities.
PETRONAS has also stepped up its participation in national endeavours to mitigate the impact of the pandemic on businesses and communities as well as to support Malaysia’s National Recovery Plan.
To date, PETRONAS has contributed approximately RM128.5 million to various COVID-19 relief efforts. These include contributions to the National Food Basket Programme as well as medical supplies and equipment to various hospitals across Malaysia. Other efforts undertaken by PETRONAS also extend to participation in the Graduate Employability Enhancement Scheme and support of the CERDIK initiative to provide devices with data connectivity to more than 12,000 less privileged students.
PETRONAS Dagangan Berhad (PDB) recently launched the PETRONAS Food Bank programme at its Mesra service stations nationwide. PETRONAS employees have also come together to donate through a voluntary salary contribution initiative to further support COVID-19 relief efforts.
A portion of PETRONAS’ total contribution was extended by its international outfits to help combat the pandemic in their respective countries of operation. These include Azerbaijan, Brazil, Brunei, Canada, China, Egypt, Gabon, Gambia, India, Iraq, Italy, Myanmar, Mexico, South Sudan, Spain and Suriname.
Operational Highlights – 1H FY2021
- Total daily production average of 2,345 thousand barrels of oil equivalent (boe) per day recorded in the first half of this year is higher than the 2,255 thousand boe per day recorded in the first half of 2020, mainly driven by higher gas production due to increase in demand, both in domestic and international operations.
- Upstream successfully achieved the following in the first half of 2021:
- Six projects in Malaysia achieved first hydrocarbon – three brownfields and three greenfields.
- Three projects achieved final investment decision (FID) – two are in Malaysia and one in Indonesia.
- Six exploration discoveries – four discoveries offshore Sarawak and Sabah in Malaysia, one discovery offshore East Java in Indonesia, and one discovery offshore Brunei.
- PETRONAS and the National Unitisation Secretariat of Brunei formalised the Unitisation Agreement (UA) for Gumusut-Kakap and Geronggong-Jagus East offshore fields in April 2021 (GK-GJE) following the earlier Unitisation Frame Agreement signed in 2017. The finalisation of the GK-GJE UA is a testament to the synergy between the parties to maximise hydrocarbon recovery from the fields that straddled between Malaysia and Brunei.
- Progress Resources Gulf of Mexico LLC, a subsidiary of PETRONAS, entered into a Multi-Well Participation Agreement with Chevron USA Inc., in the Gulf of Mexico, U.S.A in April 2021. This is its second venture in the US Gulf of Mexico and the transaction is in line with PETRONAS’ continuous efforts to explore opportunities in the Americas as part of its global growth strategy.
- Malaysia Petroleum Management (MPM), which manages Malaysia’s hydrocarbon resources on behalf of resource owner PETRONAS, launched the Malaysia Bid Round (MBR) 2021 to potential investors on 26 February 2021. Gas discovery from the Kulintang-1 well in Block SK438 in May 2021 was added to the list of successful discoveries from blocks awarded in past MBR series. For the first half of the year, other discoveries recorded were from the Dokong-1 well in Block SK417 Production Sharing Contract (PSC) in February 2021 and an oil and gas discovery from the Sirung-1 well in Block SK405B PSC in March 2021, all located offshore Sarawak.
- Successful loadout, sail away and topside structure installation of a Wellhead Platform (WHP) for the Kasawari Gas Development Project in the prolific Central Luconia Province, off the coast of Sarawak. The Kasawari greenfield project aims to develop gas and condensate which will be supplied to the PETRONAS LNG Complex, Bintulu in 2023.
- PETRONAS Energy Canada Ltd (PETRONAS Canada) reached a significant milestone in June 2021 by successfully drilling 100 wells since October 2018, validating its commitment as an active player in the Canadian market. Over the years, PETRONAS Canada has significantly improved its drilling efficiencies and cost performance while drilling longer and faster wells. PETRONAS Canada has also recorded an impressive safety record of Zero Lost Time Injury in over five years.
- In line with our aspiration towards net zero carbon emissions by 2050, we completed two major Greenhouse Gas (GHG) emissions reduction projects, located off the coast of Sarawak, in June. The integrated Bokor-Betty project achieved zero continuous flaring and venting of hydrocarbon, while the project in Baronia achieved zero continuous venting of hydrocarbon.
- Achieved RM175 million of financial value creation through Wells Cost Compression efforts, including design and operations optimisation, process simplification and implementation of wells technologies.
- Successful sail away and arrival of the Garagol Deniz Drilling Platform (GDDP-A) topside at the Garagol Deniz West (GDW) field in Block 1, Turkmen Sector of the Caspian Sea in April 2021. The GDW project is a significant milestone for PETRONAS Carigali (Turkmenistan) Sdn. Bhd and Turkmengaz towards developing Turkmenistan’s oil and gas sector.
Gas + New Energy
- In the first half of 2021, PETRONAS successfully delivered over 11,790 LNG cargoes from the PETRONAS LNG Complex (PLC) in Bintulu. This marks close to four decades of world-class asset performance since operations began in 1983. PETRONAS has also secured LNG sales of 3.17 million tonnes per annum (MTPA).
- PETRONAS recorded higher sales gas in the first half of 2021 compared to the same period last year mainly due to higher demand from the power sector. Additionally, PETRONAS has secured up to 619.7 mmscfd of natural gas supply deals from new and existing customers.
- PETRONAS continues to provide reliable supply of LNG to off-grid and marine industry customers with a total of 180 Virtual Pipeline System (VPS) deliveries completed in Peninsular Malaysia and nine LNG Bunkering deliveries in the Straits of Malacca which includes PETRONAS’ first LNG bunkering operation in Port Klang. PETRONAS has also strengthened Malaysia’s position as an LNG ISO tank export hub following the commencement of the ISO tank facility in Pengerang, complementing our operations in Bintulu, Sarawak.
- PETRONAS expanded its fleet of LNG carriers with six additional 174,000 m3 LNG vessels ordered through a Time Charter Party (TCP) signed with Hyundai LNG Shipping (HLS). The vessels will be delivered progressively from 2024. These energy efficient LNG carriers will be used to lift cargoes primarily from PETRONAS’ North America portfolio.
- PETRONAS New Energy grew its solar capacity under operation and development to over 1GW. These include 118MW in Malaysia and 976MW in India through PETRONAS’ wholly owned distributed energy company, Amplus Energy Solutions (Amplus).
- Downstream business recorded stable operations in the first half of 2021, with Overall Equipment Effectiveness (OEE) recording 93.1 per cent, similar to the same period last year. This performance was attributed to strong plant reliability and the dedication of our people on the ground despite the Movement Control Order restrictions.
- PETRONAS Chemicals Group Berhad (PCG) sustained its operational performance and recorded plant utilisation above 90 per cent, producing 5.2 million metric tonnes of petrochemical products. With statutory turnaround implemented, the business remained stable and recorded overall sales volume of 4.1 million metric tonnes, comparable to the same period last year. Overall, the petrochemical market saw higher product spreads, in line with the market price recovery.
- Overall Marketing business recorded an improved sales volume, with total sales of 10.2 billion litres contributed by international operations. PETRONAS Lubricants International Sdn. Bhd. (PLI) recorded an improved sales volume of 18 per cent compared to the same period last year, contributed by higher demand for base oil. A similar trend was observed for Engen Limited which also recorded 10 per cent increase in sales volume compared to the corresponding period last year.
- Our domestic operations, PETRONAS Dagangan Berhad (PDB) recorded improved financial performance following the improved economic activities compared to the same period last year. However, the rising number of COVID-19 cases across Malaysia, continues to challenge the business due to the limited movement and restrictions imposed by the Government. While managing these risks and ongoing business challenges, PDB remains committed to help affected Malaysians through its Food Bank programme with an allocation of RM600,000 worth of food and essential items, available at over 400 participating PETRONAS stations nationwide. The programme was first initiated by the station dealers and PDB orchestrated the expansion of the programme for greater impact through PDB’s network and digital platforms.
- In June 2021, through PETRONAS Marine, PETRONAS successfully conducted the first LNG Bunkering operation via its LNG Bunker Vessel (LBV), known as MV Avenir Advantage, at the Pintu Gedung anchorage in Port Klang. The 7,500 cubic meter MV Avenir Advantage is a Type-C tank that is capable of transferring the LNG bunker to all vessels equipped with Membrane tanks. This service is the first of its kind for Southeast Asia.
- Social Enterprise Education Laboratory (SEEd.Lab) officially announced its second cohort of social entrepreneurs with a passion to make a difference for a better Malaysia. SEEd.Lab has widen its focus on specific social challenges within four challenge areas: Food & Agriculture; Health & Hygiene; Education & Skills; and Personal & Financial Security. A total of 50 aspiring social entrepreneurs have been selected for the programme which will kick off in September 2021.