KUALA LUMPUR, Feb 26 — Petroliam Nasional Bhd (Petronas) today reported a group loss after tax of RM21.0 billion for the financial year ended Dec 31, 2020 (FY20) due to net impairment losses totalling RM31.5 billion—its biggest so far—compared to a profit after tax (PAT) of RM40.5 billion in 2019. 

Excluding impairment, the national oil company recorded a PAT of RM10.5 billion for the year, a decrease of 78 per cent compared to RM48.8 billion in the previous year in line with lower revenue realised, partially offset by lower group costs incurred.

“I want to emphasise that impairment is not cashflow. In line with the rest of the industry, we have had to make this provisioning because our carrying value of our assets have been staggeringly impacted by the events of last year and very depressed outlook for oil and gas prices,” president and group chief executive officer Tengku Muhammad Taufik Tengku Aziz told a virtual press conference today.

Petronas’s revenue fell to RM178.7 billion against RM240.3 billion in the previous financial year, largely due to the effects of plummeting oil prices which saw lower average realised prices for all products, along with demand disruption resulting in lower sales volume from processed gas, petroleum products and liquefied natural gas (LNG).

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Petronas senior vice president and group chief financial officer Liza Mustapha said FY20’s impairment was about 12 per cent of the group’s total assets at RM574.3 million, down from RM622.4 million last year.

“On comparative measures, most of our peers which are the international majors recorded an impairment of between 12 per cent and 16 per cent of their assets,” she added.

In response to the strong headwinds from reduced demand and lower oil prices, Petronas has responded by immediately taking several decisive and prudent measures, including cost compression efforts.

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The cost compression efforts implemented along with continued tight fiscal disciplines adopted have resulted in the delivery of positive cash flows from operating activities of RM40.7 billion, albeit 55 per cent lower than the RM90.8 billion in financial year 2019.

Liza said on the back of the low oil price and reduced demand brought about by the prolonged impact of Covid-19, the upstream division recorded a total daily production average of 2,209 thousand barrels of oil equivalent (BOE) per day, lower by 8.2 per cent than the 2,406 thousand BOE per day achieved in 2019.

Looking forward, Petronas remains cautiously optimistic and is looking to future-proof its portfolio by venturing into new energy spaces and pursuing innovation with focused execution.

The group remains confident that its efforts and continued focus on commercial and operational excellence, while preserving healthy levels of liquidity, will ensure its business sustainability.

“Given the pronounced volatility in the last 12 months, which has amplified (the oil prices) into an unprecedented levels, it has been particularly difficult.

“What I can commit is Petronas will always make its plans with extreme frugality and very prudent financial discipline, which has been a hallmark of the way that we spent and invested. In that fashion, we can say that we always work around things (projects) being viable at US$40 per barrel mark,” said Tengku Muhammad Taufik. — Bernama