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 percent 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 400 million ringgit ($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 20 billion ringgit 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 453.9 million ringgit loss in the three months ended Sept. 30, while Petronas said net income climbed to 16 billion ringgit from 10.8 billion ringgit a year earlier. Sales grew 26 percent to 71.8 billion ringgit, the oil corporation said in a statement.
Increased earnings will boost the amount of spare cash Petronas has to spend on discovering new energy reserves after paying 30 billion ringgit in dividends to the Malaysian government again this year.
Crude oil prices in New York averaged $89.63 a barrel in the three months ended Sept. 30, up from $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 $85 to $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, Wee Yiaw Hin, executive vice president of exploration and production, told reporters in Kuala Lumpur.