KUALA LUMPUR: Malaysia’s state energy company Petroliam Nasional Berhad, or Petronas, forecast oil prices to hold in the $50s and $60s in its 2018-2020 Activity Outlook report.

“In our view, the oil price outlook will hover around $50s to $60s per barrel,” said Petronas in the report released on Monday. Oil at $100 a barrel was a “thing of the past”, it said.

Sustained healthy global demand growth will help speed a drawdown in crude and fuel inventories, and hasten rebalancing in the oil markets, Petronas said.

“Currently, global oil demand is recorded at 98 million barrels per day and is expected to grow by 1.4 million barrels per day in 2018,” Petronas said in the report.

Nearly 60 per cent of the growth will be contributed from the Asia Pacific region, mainly by China and India, it said.

Petronas last forecast that oil prices at $50 a barrel should be taken as the new norm, but it also said in its recent earnings announcement that it expects its overall year-end performance to be better than last year, indicating an improved view of the energy market. Petronas’ oil output has been stagnant for years. The company is increasingly focusing on downstream projects like its Refinery and Petrochemical Integrated Development (RAPID) project in the southern state of Johor, which from 2019 onwards will refine crude oil into fuel and petrochemical products.

Petronas, like other oil majors, has taken a hit from lower oil prices the past few years. Brent crude, though, has seen a recovery this year, trading above $63 a barrel on Monday and up nearly 12 per cent for the year.

Petronas continues to focus on cutting costs amid expectations that a low oil price environment will continue, announcing last year it would cut spending by up to 50 billion ringgit ($12 billion) over the next four years.

Malaysian state energy firm Petroliam Nasional Berhad, or Petronas, on Thursday forecast higher full-year earnings for 2017, after posting a 64 per cent jump in third-quarter profit on improved oil prices.

A higher profit would be the second straight year of improved earnings at Petronas, reversing a two-year profit slump with the help of a modest recovery in oil prices and cost-cutting measures.

“Petronas expects the group’s overall year-end performance to be better than last year,” the company said, indicating an improved view of the energy market since August, when it expected its annual performance to be “fair”.

Petronas Chief Executive Wan Zulkiflee Wan Ariffin said the group remained committed to boosting efficiency across its operations.

“We intend to enhance our efforts to take advantage of the current recovery in oil prices for Petronas to close the year strongly,” he said.

Petronas, like other oil majors, has taken a hit from lower oil prices. Brent crude has fallen sharply since 2014, though it has somewhat recovered this year, trading near a two-year high on Thursday.

The firm has focused on cutting costs amid expectations that the low oil price environment will continue. Last year the company said it would cut spending by up to 50 billion ringgit ($12.2 billion) over the next four years.

Petronas is a key contributor to government coffers: its dividends last year accounted for 7.5 per cent of total government revenue. It is one of the country’s largest employers with a workforce of over 50,000.

HIGHER PROFIT

Petronas said its profit after tax for the quarter ending September, rose to 10 billion ringgit, compared with 6.1 billion ringgit for the same period last year.

Revenue totalled 53.7 billion ringgit, up 14 per cent from a year ago.

The revenue increase was due to higher prices for major products and a softer ringgit, but it was partially offset by lower sales volumes of crude oil and condensate, it said.

Total production volume for the quarter fell to 2,206 thousand barrels of oil equivalent (boe) per day, down from 2,227 tboe/day a year ago.

Petronas’ sales volume of liquefied natural gas (LNG) rose by 1 per cent to 7.22 million tonnes in the quarter.

The company, the world’s third-biggest LNG exporter after Australia, has been trying to diversify beyond its traditional LNG markets of Japan and South Korea amid a gas supply glut that has sent prices down sharply.

Petronas scrapped a proposed $29 billion LNG export terminal project in western Canada in July and is now focused on its Refinery and Petrochemical Integrated Development (RAPID) project in the southern Malaysian state of Johor.

RAPID, in which Saudi Aramco agreed to invest $7 billion, will contain a 300,000 barrel-per-day oil refinery and a petrochemical complex with a production capacity of 7.7 million metric tonnes per year. The complex remains on track to achieve ready for start-up status in 2019, Petronas said.

Meanwhile the Petronas unit agrees share swap with Shell’s Africa operator. Petroliam Nasional Bhd’s South African unit, Engen, and Vivo Energy Holding BV agreed to a deal worth as much as 3.5 billion rand ($256 million) to combine some of their African fuel-retail assets, according to people familiar with the matter.

The deal represents about 20 per cent of Engen’s equity value, said the people, who asked not to be identified.

The talks have been concluded, they said. Vivo Energy, which operates more than 1,800 gas stations across 15 African countries under the Royal Dutch Shell Plc brand, will exchange some of its shares for stock in Engen Holdings (Pty) Ltd., the companies said in an emailed statement on Monday.

The transaction may involve a “cash element,” they said, without disclosing the value or terms of the deal. Combining their operations will give Vivo Energy access to 300 Engen-branded outlets in countries including the Democratic Republic of Congo, Zimbabwe, Zambia, Gabon, Rwanda, Mozambique, Tanzania, Reunion, Malawi and Kenya, where it already has its own operations.

Engen will retain sole control of its operations in South Africa, Botswana, Lesotho, Swaziland, Namibia, Ghana, Mauritius as well as an oil refinery in South Africa that has the capacity to process 120,000 barrels of oil a day.

Vivo Energy is jointly owned by Geneva-based Vitol SA and Africa-focused private-equity firm Helios Investment Partners.

Petronas, Malaysia’s national oil company, bought Engen in 1998 in a deal that valued the company at about $700 million before selling a stake to Phembani.