22.10.2012, 05:14
PETRONAS Makes Press Statement
OREANDA-NEWS. October 22, 2012. With reference to the press conference held yesterday by Yang Berhormat Dato’ Seri Ahmad Husni Mohamad Hanadzlah, Minister of Finance II, PETRONAS wishes to offer the following statement:
The sustainability of PETRONAS’ ability to contribute to the nation will come into question should “royalty” payments to the States be increased from the present rate of 5 per cent to 20 per cent.
This increase will result in lower petroleum income tax payments. PETRONAS’ profits will also be reduced, thereby potentially affecting its ability to pay dividends to its shareholder.
The increase in “royalty” payments will also reduce the profitability and economic viability of all current and future oil and gas projects under development. This will deter PETRONAS and PSC contractors from further investing in these projects.
Over the next five years, planned projects with a total capital expenditure worth approximately RM170 Billion are at risk of being cancelled. Coupled with declining production from maturing domestic fields, this will actually result in lower “royalty” payments to the States over time.
A reduction in the oil and gas production will also threaten the energy security of the nation. Apart from this direct impact, the resulting slowdown will have an adverse multiplier effect on the domestic oil and gas industry such as service companies as well as spin-off industries, leading to a reduction in employment opportunities for the people residing in those States.
PETRONAS has been successfully developing and adding value to the nation’s oil and gas resources for over three decades. This was made possible through continuous substantial capital investments that will not be viable under a 20 per cent “royalty” payment scenario.
The sustainability of PETRONAS’ ability to contribute to the nation will come into question should “royalty” payments to the States be increased from the present rate of 5 per cent to 20 per cent.
This increase will result in lower petroleum income tax payments. PETRONAS’ profits will also be reduced, thereby potentially affecting its ability to pay dividends to its shareholder.
The increase in “royalty” payments will also reduce the profitability and economic viability of all current and future oil and gas projects under development. This will deter PETRONAS and PSC contractors from further investing in these projects.
Over the next five years, planned projects with a total capital expenditure worth approximately RM170 Billion are at risk of being cancelled. Coupled with declining production from maturing domestic fields, this will actually result in lower “royalty” payments to the States over time.
A reduction in the oil and gas production will also threaten the energy security of the nation. Apart from this direct impact, the resulting slowdown will have an adverse multiplier effect on the domestic oil and gas industry such as service companies as well as spin-off industries, leading to a reduction in employment opportunities for the people residing in those States.
PETRONAS has been successfully developing and adding value to the nation’s oil and gas resources for over three decades. This was made possible through continuous substantial capital investments that will not be viable under a 20 per cent “royalty” payment scenario.
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