Malaysia's Petronas says net profit up 12 percent in 2016

Malaysia-based Petronas is pulling out of its Can$36 billion liquefied natural gas exporting project on Canada's west coast

Malaysia's state energy firm Petronas Tuesday announced a 12 percent rise in annual profits for last year, after it slashed spending to offset slumping oil prices.

The firm is the single largest source of Malaysian government revenue and national export earnings.

Net profit came in at 23.5 billion ringgit ($5.28 billion), up from 20.9 billion ringgit in 2015, "mainly due to lower operating expenditures and tax expenses", the company said in a statement.

Chief executive Wan Zulkiflee Wan Ariffin said Petronas, which was among the energy-related firms worldwide hammered by depressed oil prices, is in a "stronger position" heading into the rest of 2017.

"I am encouraged that Petronas has emerged from 2016 as a more resilient corporation with strong underlying performance driven by our new structure, significant cost reductions and improved performance," he said.

Revenues stood at 204.9 billion ringgit, down 17 percent.

Oil prices fell to near 13-year lows of below $30 a barrel in February 2016 before staging a rebound after the Organization of the Petroleum Exporting Countries (OPEC) and 11 non-OPEC members agreed on November 30 to cut production in a bid to reduce a global supply glut.

Despite the rebound, increased US shale production is making it difficult for OPEC to reach a target price of at least $60, analysts say.

Petronas suffered a net loss of 4.69 billion ringgit in the fourth quarter of 2015 and reported sharp profit drops in the first two quarters of last year before recovering in the second half.

Unlisted Petronas, Malaysia's only Fortune 500 company, responded early last year with cuts in capital and operating spending of 50 billion ringgit over four years, starting with 15-20 billion ringgit in 2016.

It also said it would axe 1,000 jobs as part of its cost-cutting measures.

The results come on the heels of another boost for Petronas after Saudi Arabia's Aramco said last month it will invest $7 billion in a giant oil refinery project of the Malaysian firm.