29 April 2009

Petronas - "State Owned Success"

It was reported in the Financial Mail (from South Africa) on 24th April 2009 that Petronas is a "state owned success". (Ref: Financial Mail, 24th April 2009. State Owned Success: Petronas Accounts for Half Malaysia's GDP, and It's Not Cutting Back. URL: http://free.financialmail.co.za/09/0424/features/afeat.htm) The reporter, Matthew Hill, interviewed Tan Sri Mohd Hassan Marican, head of Petronas. Among the interesting points disclosed during the interview, were:

  • Despite oil prices coming down (from the high price of USD$147 per barrel), the cost of oil production (that rose during the boom) has not come down. Margins have thinned.
  • Thinning margins have led to deferment of exploration and development of new oil fields.
  • In the long run, a shortage of supply would raise oil prices.
  • Petronas did not get caught up in last year's "frenzy" (presumably, to develop its supply capacity). It now has capacity for development.
  • 40% of Petronas' revenue comes from its overseas businesses. Much of this 40% is derived from Petronas' investments in Africa.
  • In North Africa, Petronas' main activities are extracting oil and gas. In the South, it is focussed on "downstream activities like refining and retail".
  • Petronas must sell 5% of its 80% in Engen (Rwanda) to a black empowerment company by 2010.
  • Petronas is in talks with PetroSA about a $9 billion refinery in Coega -- including a stake in the refinery.
  • Petronas accounts for nearly 50% of Malaysia's GDP.

Recognising Petronas' large contribution to Malaysia's economy, we wonder what the giant has been up to. Naturally, having a large overseas base means that it is often in the news. These include, in recent news:

  • Oman - Petronas Carigali Sdn Bhd inks deal to explore for gas in a 3,709 square km block in the Western part of Oman.
  • Indonesia - Indonesia has offered Petronas a chance to develop its Natuna D-Alpha gas fields.
  • Ireland - Marathon Oil Corp. successfully sold its wholly-owned subsidiary, Marathon Oil Ireland Ltd. to PSE Ireland Ltd., a subsidiary of Petronas. The transaction has a total value of US$180 million with an effective date of Dec. 31, 2007.
  • Sudan - Petronas is a "key player in Sudan's growing oil and gas industry"

Petronas is incidentally ranked by Fortune as the world's 8th most profitable company. Its operations span 32 countries in the world. (Tehran Times, 19th April 2009. Petronas keen to invest in Oman's energy sector. URL: http://www.tehrantimes.com/index_View.asp?code=192574)

I am proud to be Malaysian and of course proud of Petronas's success.