RAM Ratings reaffirms Petroleum Sarawak’s AAA ratings

Published on 14 Nov 2022.

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RAM Ratings has reaffirmed the AAA/Stable/P1 corporate credit ratings of state-owned Petroleum Sarawak Berhad (PETROS or the Group). Concurrently, we have reaffirmed the AAA/Stable rating of the Multi-Currency Islamic Medium-Term Notes of up to RM15 billion (2021/2051) issued by PETROS’s wholly owned subsidiary, Petroleum Sarawak Exploration & Production Sdn Bhd. 

The ratings mirror Sarawak’s State Implicit Strength in view of the Group’s strategic role in developing the state’s sizeable oil & gas (O&G) reserves. As income from petroleum sales tax and royalties accounts for the bulk of the Sarawak government’s revenue, we expect PETROS to derive regulatory support and ready financial assistance from the state government, if required. 

The Group’s successful acquisition of participating interests in two production sharing contracts boosted its pre-tax profit to RM516.6 mil in FY Dec 2021 (FY Dec 2020: RM23.9 mil pre-tax loss). Backed by strong crude oil and natural gas prices, pre-tax profit climbed further to RM430.9 mil in 1H FY Dec 2022 (1H FY Dec 2021: RM168.2 mil). Going forward, the completion of remaining planned upstream investments will bolster PETROS’s revenue and profits. 

Due to the strong profit performance and the absence of major investments, PETROS’s gearing eased to 1.47 times as at end-June 2022 from 2.41 times a year earlier. Debt to operating profit before depreciation, interest and tax – another measure of leverage – improved to 1.51 times (end-June 2021: 1.91 times) while funds from operations debt coverage was a robust 0.71 times (end-June 2021: 0.48 times). Nevertheless, PETROS’s debts are anticipated to rise to fund upstream investments in the coming years, the impact of which can only be assessed when details are firmed up.

PETROS has been tasked with planning and developing Sarawak’s O&G sector, vested with that authority by the state government under the Ministers of the State Government (Assignment of Portfolios) Order, 2019. The Group is a state implementation vehicle under Sarawak’s Oil Mining Ordinance 1958 (amended in July 2018) and Distribution of Gas Ordinance 2016. PETROS aims to increase the state’s share of earnings from its vast O&G resources.


Analytical contacts
Joel Thum
(603) 3385 2517

Thong Mun Wai
(603) 3385 2522


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2022 by RAM Rating Services Berhad

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Ratings on Petroleum Sarawak Berhad