KUALA LUMPUR (May 31): Petroliam Nasional Bhd (Petronas) posted a 10.5% drop in first quarter net profit from a year earlier while flagging a prolonged volatile pricing landscape.

Net profit for the three months ended March 31, 2024 (1QFY2024) was RM21.3 billion versus RM23.8 billion a year earlier, the national oil and gas company said in a statement. Revenue for the quarter edged up 0.4% year-on-year to RM89.7 billion from RM89.3 billion.

Going forward, Petronas expects increasingly difficult headwinds for the remainder of the financial year, said president and group chief executive officer Tan Sri Tengku Muhammad Taufik. The company will leverage the strength of its integrated portfolio to reinvest, he noted.

Petronas has a clear strategy for the energy transition — developing hydrocarbons with measurable and effective decarbonisation initiatives and pursuing cleaner energy solutions, he said.

“The group remains steadfast in its approach to generate profitable growth responsibly and sustainably,” he stressed. “At all times, Petronas will continue to exercise prudent management of its financial commitments and debt obligations.”

Capital expenditure stood at RM10.72 billion, up from RM10.49 billion a year earlier, which went into gas and upstream projects, including the ongoing LNG Canada, La Amarga Chica in Argentina as well as the near-shore floating liquefied natural gas project and Kasawari carbon dioxide sequestration facilities in Malaysia.

The oil major’s domestic spending rose 20% to RM5.5 billion from RM4.6 billion previously.

In 1QFY2024, net profit at its upstream segment slipped 8.6% to RM11.32 billion from RM12.38 billion in 1QFY2023, as higher product costs, operating expenditure and cash payments offset the 6.8% increase in revenue to RM38.11 billion, which was boosted by currency gains.

The oil and gas market remained affected by the instability of the macroeconomics and geopolitical dynamics amid the energy transition for the first quarter of 2024, which led to a prolonged volatile pricing landscape, Petronas said.

The gas segment’s net profit fell 28.3% to RM6.28 billion from RM8.76 billion a year earlier, on a 3.2% drop in revenue to RM31.52 billion from RM32.55 billion previously, on top of higher taxation.

Revenue at the gas segment dropped, as lower average realised prices of liquefied natural gas and processed gas offset higher sales volume and impact from foreign exchange gains.

As for the downstream segment, net profit climbed 16.5% to RM1.92 billion versus RM1.65 billion a year earlier, mainly driven by lower product costs. Revenue, however, declined 6.9% to RM44.69 billion from RM48 billion previously, on lower selling prices and volume.

At the end of March, total assets stood at RM796.33 billion, while shareholders’ equity stood at RM434.46 billion.