Petronas Q3 profit drops 12.4%

Profit fell from $5bn a year earlier to $4.45bn in July- September

Petronas said it will review spending after the oil price slump.
Petronas said it will review spending after the oil price slump.

Petronas, Malaysia's state oil company, reported on Friday a 12.4% fall in third-quarter profit on weakness in oil prices, the US dollar and liquefied natural gas (LNG) sales, Reuters has reported.

The company’s profit fell from $5bn a year earlier to $4.45bn in July, while revenue declined $23.7bn.

Excess oil and gas supplies, sluggish energy demand and slowing global growth will mean earnings in the fourth quarter will be even lower, Chief Financial Officer George Ratilal told reporters after the results.

Unlisted Petronas, whose shares are not on the official stockmarket list, accounts for more than half of Malaysia's government revenue.

The company said it is working to secure larger overseas oil and gas reserves to remain profitable at a time of declining domestic output and global oil prices.

Chief Executive Shamsul Azhar Abbas told reporters that payments to the government in the form of dividends, tax and royalties could be 37% lower next year if oil stays around $75 a barrel.

Brent crude fell 1.8% to $71.30 a barrel on Friday after the Organisation of Petroleum Exporting Countries not to cut oil output.

The price decline is likely to have a short-term impact on oil and gas projects, and could necessitate a 15% to 20% cut in the company's 2015 capital expenditure, Shamsul said.

"We need to channel income as capex. We have to be disciplined in our cash management and adhere strictly to our dividend policy," he said. "If oil prices remain, we have to cut dividends to the government next year," he added.

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