KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will double the dividend payment to the government this year, to RM50 billion from RM25 billion promised earlier.
The RM50 billion, declared after Petronas announced today its net profit in the first half of 2022 more than doubled to RM46.4 billion, is one of the highest dividend the company will be paying within the year.
President and group chief executive officer Datuk Tengku Muhammad Taufik Tengku Aziz said the board had approved the amount which it viewed to be affordable after taken into account solvency and debt servicing of the company.
"Having considered the government's request for us to consider a range of dividend payment, this was what the board deemed affordable.
"This was after we accounted our spending, debt obligation, operational continuity, so we have agreed for an additional dividend of RM25 billion," he said during a media briefing on the company's second quarter results.
He said the original approved dividend was RM25 billion before the request for the consideration was made by the government.
He noted the highest dividend payment made by the company was in 2019 which totalled to RM54 billion.
Petronas had also expected oil prices to start correction next year as more supply regularised and the Organisation of Petroleum Exporting Countries (Opec) came back to increase production.
He said a natural correction would take place despite the high prices for crude oil at the current moment although the company was still cautious on the outlook.
"The eventual cyclicality of this industry will take effect and there will be a correction.
"Right now what we see is the elevated energy prices which is on the back of under investment in the past five years.
"But people are getting back to the investment cycle, and Opec and Opec+ have slowly been increasing their capacity.
"Natural correction will happen and therefore in the long run there is going to be a correction starting next year as more supply regularise and Opec comes back," he said.
On the impact of the conflict between Russia and Ukraine to the company, he said with regards to sanctions, Petronas had nothing deployed in Russia nor had any assets in the country.
However it did have a venture in Iraq whereby the company was planning to maintain the partnership.
"Our view is that the entity does not service for any Russian militants and therefore we are maintaining that partnership," he said.
However, he noted that there would still be an impact on supply chain disruptions mainly for items that the company relied on whereby the production came from Europe.
"Items with steel or precious metal supply chain is disrupted all over the workd.
"That has been factored in and we will continue to monitor the situation," he said.