PETALING JAYA: Petroliam Nasional Bhd’s plan to slash its budget could see it saving some RM17bil, but this may be insufficient for the state-owned oil and gas (O&G) giant to weather the challenging economic environment, according to a local research house.
UOB Kay Hian Research said even with the US$6bil bonds raised by Petronas last month and its strong cash position of RM144bil, it might not fully protect the group from a perfect storm that will cause more free cash flow downside and an upside risk on dividends.
It said contract deferrals were likely to increase the sector’s earnings risk despite an oil price recovery as Petronas has been slow in implementing cost cuts as compared to its peers.
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