Petroliam Nasional Bhd, Malaysia’s state oil company, announced plans to tackle the Southeast Asian nation’s gas supply shortage as it reported a 48 per cent jump in quarterly profit.
The Kuala Lumpur-based group, which manages all the country’s energy reserves, will build a fourth gas import terminal and a second floating liquefied natural gas plant, Chief Executive Officer Shamsul Azhar Abbas told reporters today. It also agreed to partially absorb extra costs incurred by power producer Tenaga Nasional Bhd due to supply disruptions, he said.
Gas shortages have forced Tenaga to buy costlier oil and distillate for electricity generation. This incurs additional cost of RM400 million (US$127 million) every month, Chief Executive Officer Che Khalib Mohamad Noh said on Oct. 28. Petroliam Nasional, or Petronas, has reduced supplies of low- cost, subsidized natural gas due to maintenance of plants.
“As a national company, we’ll play our part and share the misery,” Shamsul said. “We hope Tenaga will play its part too. Tenaga is encouraged to be inefficient and we’re not prepared to fund the inefficiency.”
Petronas spends as much as RM20 billion a year to subsidize gas at below market price to industrial users including Tenaga, said Shamsul. Malaysia needs to shift to a market-driven mechanism to determine prices, he said.
Tenaga posted a RM453.9 million loss in the three months ended Sept. 30, while Petronas said net income climbed to RM16 billion from RM10.8 billion a year earlier. Sales grew 26 per cent to RM71.8 billion, the oil corporation said in a statement.
Boosting Reserves
Increased earnings will boost the amount of spare cash Petronas has to spend on discovering new energy reserves after paying RM30 billion in dividends to the Malaysian government again this year.
Crude oil prices in New York averaged US$89.63 a barrel in the three months ended Sept. 30, up from US$76.20 a year earlier. Higher oil prices in the three months through September also boosted quarterly earnings of Royal Dutch Shell Plc, Europe’s biggest oil company.
Oil prices will likely average US$85 to US$87 a barrel in 2012, Shamsul said.
Petronas may venture into the power generation business in Japan and India, the chief executive said. It’s also bidding for an oil and gas rights in Myanmar, Anuar Ahmad, executive vice president of gas and power business told reporters in Kuala Lumpur. -- Bloomberg
