KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will likely pay more dividends to the government this year than the RM25 billion it has previously committed given record-high oil prices and its best ever quarterly profit in at least a decade, industry observers said.
Oil prices on both sides of the Atlantic have soared to their highest in over a decade in 2022 and are up more that 55 per cent so far this year.
On June 1, Brent crude futures were up 1.59 per cent to trade near US$123.60 per barrel, while US West Texas Intermediate crude futures were trading at US$117.31 a barrel on May 31, up US$2.24 from last Friday's close.
Putra Business School associate professor Dr Ahmed Razman Abdul Latif said the higher dividend payment was possible considering that the government would have to bear around RM28 billion in various forms of subsidy for 2022.
"There is a possibility that the government would expect Petronas to announce a higher dividend this year," he told the New Straits Times.
RHB Research feels that it is highly likely for Petronas to pay more especially when the fuel subsidy is ballooning amid high oil prices.
"Petronas, in our view, has the capability to pay another RM10 billion to RM20 billion in special dividends in 2022-2023, to reduce the government's financial burden without a significant deterioration to its net cash position," the firm said.
RHB Research has maintained its 2022-2023 crude oil price forecasts at US$104-US$85 per barrel.
"We see upside to our forecasts, as the European Union ban on Russian oil is not within our base case," it said.
Kenanga Research said Petronas' dividend commitments had stayed flat at RM25 billion in 2022, of which RM3 billion had been paid during the first quarter, despite the better profits.
"A read-through of Petronas' first quarter of 2022 (Q1 FY22) results shows yet another strong set of earnings, its best ever in at least a decade, thanks to the higher average realised prices for all products, in tandem with the strength in crude oil prices," the firm said.
Petronas on Tuesday announced a 154.15 per cent surge in net profit to RM23.44 billion in the first quarter ended March 31 2022 from RM9.22 billion in the same period in 2021 as operating profit more than doubled following upward trend in prices.
Group quarterly revenue rose 49.87 per cent to RM78.75 billion, from RM52.55 billion, which the natronal oil company said was predominantly due to price impact for major products, in line with higher benchmark prices.
The last time the Brent average breached the US$100 per barrel was in FY13, when Petronas' full-year net profit came in at RM65.59 billion, with the highest quarterly net profit recorded that year being RM20.37 billion in Q1 FY13.