* Producer needs overseas reserves to offset falling output
* Company pushes for new dividend policy tied to profits
KUALA LUMPUR Nov 29 Malaysia's Petroliam
Nasional Bhd posted a 22 percent fall in third-quarter
net profit as a halt in production in Sudan and pressure on its
margins dented its performance.
Petronas said its profit for the quarter ended Sept. 30 fell
22 percent to 12.4 billion ringgit ($4.06 billion) from 15.9
billion ringgit a year ago.
"The environment remains challenging, but we are quite happy
with what we have achieved," CEO Shamsul Azhar Abbas told
Unlisted Petronas accounts for nearly half of Malaysia's
government budget revenues and needs to secure more overseas
reserves to offset declining output and maintain profits.
The oil firm has been pushing for a new dividend policy that
would set the annual payout to the government at 30 percent of
profits instead of the flat 28 billion ringgit it will pay this
A lower payout to the government would preserve money to
reinvest in global oil and gas exploration in order to
compensate for declining domestic supplies.
A Reuters analysis of Petronas and government financial data
has shown Petronas would have paid close to 17 billion ringgit
in the March 2011 fiscal year if the 30 percent dividend formula
was in place.
The government has yet to agree to the 30 percent cap on
Shamsul said Petronas had paid out some 61 percent of its
profits in dividends for the financial year 2011, compared with
the 38 percent average paid by its global peers and criticized
calls for higher oil royalties from various oil-producing state
"We should focus on enlarging the pie, not scramble for a
bigger piece of a shrinking pie," he said, labelling the calls
for higher royalty payments "counter-productive."
Geopolitical concerns in Sudan have led to a halt in oil
production there and hit profits at Petronas.
"On the international side, it is not looking good. The
damage is mainly from Sudan where we are still struggling to
start production," Shamsul said.
Within Malaysia, the picture has been brighter, with seven
new oil discoveries during the quarter and improved domestic oil
production, he added.
That said, he noted that the company has to spend more to
maintain its level of production as many of its oil fields are
Petronas data shows third-quarter hydrocarbon production in
Malaysia stood at 1.5 million barrels of oil equivalent per day
compared to 1.52 million barrels a year ago.
To stem declining production at home, Petronas has embarked
on a series of projects with partners like Exxon Mobil Corp
and Shell to tap more oil from marginal fields, part of
the government's initiative to attract $444 billion in
investment by 2020.