Petroliam Nasional Berhad (PETRONAS) 197401002911 (20076-K) 2022

Audited
Financial Statements

Resolutely
Progressive

Petroliam Nasional Berhad (PETRONAS)

197401002911 (20076-K)
Tower 1, PETRONAS Twin Towers, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia

www.petronas.com H
H

H
Audited Financial Statements 2022

PFLNG

Passionate about Progress

Driving Cleaner Energy Solutions Contributing to Sustainable Growth
Intensifying efforts to achieve Delivering our commitment to meet society's
net zero carbon emissions by 2050 growing energy needs and contributing to a
better tomorrow
 PETRONAS Audited Financial Statements 2022

DIRECTORS’ REPORT
For the year ended 31 December 2022

Financial
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the
Company for the year ended 31 December 2022.

PRINCIPAL ACTIVITIES

Statements
The principal activities of the Company in the course of the financial year remained unchanged and consist of exploitation
of oil and gas, the marketing of petroleum and petroleum products and investment holding. The principal activities of key
subsidiaries, key associates and key joint arrangements are stated in Note 43, Note 44 and Note 45 to the financial
statements respectively. The principal activities of other subsidiaries are available in the respective subsidiaries’ Directors’
Report or at the Company’s registered office that the Board of Directors (“Board”) deems such information is included in
the Company’s Directors’ Report by such reference and shall form part of the Company’s Directors’ Report.

1 Directors‘ Report The Company is wholly-owned by the Government of Malaysia.

5 Statement by Directors
5 Statutory Declaration SUBSIDIARIES
6 Consolidated Statement of Financial Position The details of the Company’s key subsidiaries are disclosed in Note 43 to the financial statements.
7 Consolidated Statement of Profit or Loss
8 Consolidated Statement of Other Comprehensive Income RESULTS
9 Consolidated Statement of Changes in Equity In RM Mil Group Company

13 Consolidated Statement of Cash Flows Profit for the year 101,618 59,817
15 Statement of Financial Position
Profit attributable to:
16 Statement of Profit or Loss and Other Comprehensive Income
Shareholders of the Company 92,313 59,817
17 Statement of Changes in Equity Non-controlling interests 9,305 –
18 Statement of Cash Flows
19 Notes to the Financial Statements
DIVIDENDS
183 Independent Auditors’ Report
During the financial year, the amount of dividends paid by the Company were as follows:
188 Appendix I
• a dividend of RM250,000 per ordinary share amounting to RM25 billion declared to shareholders on 28 February 2022
and paid in instalments between March and November 2022.
• a dividend of RM250,000 per ordinary share amounting to RM25 billion declared to shareholders on 21 August 2022
and paid in instalments between September and December 2022.

The Directors had on 23 February 2023 declared a dividend of RM350,000 per ordinary share amounting to RM35 billion.
The dividend will be recognised and accounted for in equity as an appropriation of retained profits in the financial year
ending 31 December 2023.

Further details on dividends are disclosed in Note 29.

RESERVES AND PROVISIONS

There were no material movements to and from reserves and provisions during the year other than as disclosed in the
financial statements.

1
 PETRONAS Audited Financial Statements 2022

DIRECTORS’ REPORT DIRECTORS’ REPORT

For the year ended 31 December 2022 (continued) For the year ended 31 December 2022 (continued)

DIRECTORS ISSUE OF SHARES

Directors who served during the financial year until the date of this report are: There were no changes in the issued and paid up capital of the Company during the financial year.
Tan Sri Dato’ Seri Mohd Bakke bin Salleh (Chairman)
Datuk Tengku Muhammad Taufik
OPTIONS GRANTED OVER UNISSUED SHARES
Ainul Azhar bin Ainul Jamal
Tan Sri Zaharah binti Ibrahim No options were granted to any person to take up unissued shares of the Company during the financial year.
Dato Hj Ibrahim bin Baki
Dato’ Razali bin Mohd Yusof
Liza binti Mustapha INDEMNITY AND INSURANCE COSTS
Thayaparan a/l S Sangarapillai During the financial year, Petroliam Nasional Berhad (“PETRONAS”) and its subsidiaries maintained a Directors’ and Officers’
Datuk K.Y. Mustafa (appointed on 19 January 2022) Liability Insurance in accordance with Section 289 of the Companies Act, 2016. The total insured limit for the Directors
Datuk Seri Asri bin Hamidin @ Hamidon (appointed on 28 April 2022, resigned on 5 January 2023) and Officers Liability Insurance effected for the Directors and Officers of the Group was RM1,290 million (2021: RM1,290
Datuk Johan bin Mahmood @ Johan Mahmood Merican (appointed on 28 April 2022, resigned on 5 January 2023) million) per occurrence and in the aggregate. The insurance premium for the Group and the Company are RM2,628,000
Zakiah binti Jaafar (resigned on 12 April 2022) (2021: RM2,356,000) and RM543,000 (2021: RM540,000) respectively.

The Company has been granted a relief order pursuant to Section 255(1) of the Companies Act, 2016 relieving the
Company’s Directors from full compliance to the requirements under Section 253(2) of the Companies Act, 2016. OTHER STATUTORY INFORMATION
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps
The names of Directors of subsidiaries are available in the respective subsidiaries’ Directors’ Report or at the Company’s
to ascertain that:
registered office that the Board deems such information is included in the Company’s Directors’ Report by such reference
and shall form part of the Company’s Directors’ Report. (i) the necessary actions had been taken in relation to the writing off of bad debts and the provisioning of doubtful
debts and satisfied themselves that all known bad debts have been written off and adequate provision made for
doubtful debts; and
DIRECTORS’ INTERESTS (ii) any current assets which were unlikely to be realised in the ordinary course of business, their values as shown in the
The Directors in office at the end of the year who have interests and deemed interests in the shares of the Company and accounting records of the Group and of the Company, had been written down to an amount which they might be
of its related corporations other than wholly-owned subsidiaries as recorded in the Register of Directors’ Shareholdings expected so to realise.
are as follows:
At the date of this report, the Directors are not aware of any circumstances:
Number of ordinary shares in
KLCC Property Holdings Berhad (i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the
Group and in the Company inadequate to any substantial extent, or
Balance at Balance at
Name 1.1.2022 Bought Sold 31.12.2022 (ii) that would render the value attributed to the current assets in the financial statements of the Group and of the
Company misleading, or
Ainul Azhar bin Ainul Jamal 4,500 – – 4,500
(iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group
and of the Company misleading or inappropriate, or
None of the other Directors holding office at 31 December 2022 had any interest in the ordinary shares of the Company (iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial
and of its related corporations during the financial year. statements of the Group and of the Company misleading.

At the date of this report, there does not exist:

DIRECTORS’ BENEFITS
(i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and
Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive which secures the liabilities of any other person, or
any benefit (other than the benefits disclosed below), by reason of a contract made by the Company or a related corporation
with the Director or with a firm of which the Director is a member, or with a company in which the Director has a (ii) any material contingent liability in respect of the Group or of the Company that has arisen since the end of the
substantial financial interest. financial year.

Directors’ benefits paid to or receivable by the Directors in respect of the financial year ended 31 December 2022 was
RM17 million (2021: RM16 million) comprising fees, emoluments and other long-term and short-term employee benefits.

There were no arrangements during and at the end of the financial year which had the object of enabling Directors of
the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other
body corporate.
2 3
 PETRONAS Audited Financial Statements 2022

DIRECTORS’ REPORT
For the year ended 31 December 2022 (continued)
STATEMENT BY DIRECTORS
OTHER STATUTORY INFORMATION (continued) In the opinion of the Directors, the financial statements set out on pages 6 to 182, are drawn up in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies
No material contingent liability or other liability, other than as disclosed in the financial statements, of any company in
Act, 2016 in Malaysia so as to give a true and fair view of the financial position of the Group and of the Company as of
the Group has become enforceable, or is likely to become enforceable within the period of twelve months after the end
31 December 2022 and of their financial performance and cash flows for the financial year then ended on that date.
of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and
of the Company to meet their obligations as and when they fall due.
Signed on behalf of the Board of Directors
in accordance with a resolution of the Directors:
In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended
31 December 2022 have not been substantially affected by any item, transaction or event of a material and unusual nature
other than as disclosed in Note 17 and Note 32 to the financial statements, nor has any such item, transaction or event
occurred in the interval between the end of that financial year and the date of this report.

Tan Sri Dato’ Seri Mohd Bakke bin Salleh

SUBSEQUENT EVENTS
Chairman
There were no material events subsequent to the end of the financial year except as disclosed in Note 17 to the financial
statements.

AUDITORS
Datuk Tengku Muhammad Taufik
The auditors, KPMG PLT, have indicated their willingness to accept re-appointment.
Director
The auditors’ remuneration for the financial year ended 31 December 2022 is as follows:
Kuala Lumpur,
In RM Mil Group Company Date: 27 February 2023

KPMG PLT 7 2
Overseas affiliates of KPMG PLT
Other auditors
7
32
–
– STATUTORY DECLARATION
46 2

Signed on behalf of the Board of Directors I, Liza binti Mustapha, the Director primarily responsible for the financial management of PETRONAS, do solemnly and
in accordance with a resolution of the Directors: sincerely declare that the financial statements set out on pages 6 to 182 are, to the best of my knowledge and belief,
correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of provisions of
the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed

Tan Sri Dato’ Seri Mohd Bakke bin Salleh Liza binti Mustapha
Chairman MIA Membership Number: 47410
at Kuala Lumpur in Wilayah Persekutuan
on 27 February 2023.

BEFORE ME:

Datuk Tengku Muhammad Taufik

Director

Kuala Lumpur,
Date: 27 February 2023

4 5
 PETRONAS Audited Financial Statements 2022

CONSOLIDATED STATEMENT OF CONSOLIDATED STATEMENT OF

FINANCIAL POSITION PROFIT OR LOSS
As at 31 December 2022 For the year ended 31 December 2022

Note 31.12.2022 31.12.2021 1.1.2021 Note 2022 2021

In RM Mil Restated Restated In RM Mil Restated

ASSETS Continuing operations

Property, plant and equipment 3 301,218 284,613 291,520 Revenue 25 333,002 223,322
Investment properties 4 9,644 10,169 10,468 Cost of revenue (178,502) (137,831)
Land held for development 5 3,014 2,998 2,986
Gross profit 154,500 85,491
Investments in associates 7 2,621 2,103 5,755
Selling and distribution expenses (7,324) (8,334)
Investments in joint ventures 8 5,493 5,358 4,719
Administration expenses (13,888) (10,558)
Intangible assets 9 26,260 19,394 20,044
Net impairment (losses)/reversals1 (1,749) 4,711
Long-term receivables 10 41,127 33,751 21,232
Other expenses (3,312) (2,759)
Fund and other investments 11 1,425 1,444 1,009
Other income 7,723 4,338
Deferred tax assets 13 20,675 20,983 20,622
Operating profit 26 135,950 72,889
TOTAL NON-CURRENT ASSETS 411,477 380,813 378,355
Financing costs 27 (4,929) (4,841)
Trade and other inventories 14 15,612 14,477 12,491 Share of profit after tax and non-controlling interests of equity accounted
Trade and other receivables 15 53,998 48,324 40,583 associates and joint ventures 957 1,818
Fund and other investments 11 10,945 11,990 9,779
Cash and cash equivalents 16 201,220 164,556 130,523 Profit before taxation from continuing operations 131,978 69,866
Tax expense 28 (34,173) (20,211)
281,775 239,347 193,376
Assets classified as held for sale 17 17,318 14,791 18 Profit for the year from continuing operations 97,805 49,655

TOTAL CURRENT ASSETS 299,093 254,138 193,394 Discontinued operations

Profit for the year from discontinued operations, net of tax 17 3,813 1,214
TOTAL ASSETS 710,570 634,951 571,749
Profit for the year 101,618 50,869
EQUITY
Share capital 18 100 100 100 Profit attributable to:
Reserves 19 401,509 350,703 328,199 Shareholders of the Company 92,313 44,061
Non-controlling interests 9,305 6,808
Total equity attributable to shareholders of the Company 401,609 350,803 328,299
Non-controlling interests 20 58,822 53,484 50,413 PROFIT FOR THE YEAR 101,618 50,869

TOTAL EQUITY 460,431 404,287 378,712

LIABILITIES
Borrowings 21 96,345 86,619 76,808
Deferred tax liabilities 13 11,829 9,543 8,455
Other long-term liabilities and provisions 23 50,418 50,620 51,056

TOTAL NON-CURRENT LIABILITIES 158,592 146,782 136,319

Trade and other payables 24 63,677 51,825 43,728

Borrowings 21 7,812 21,212 11,421
Taxation 8,438 6,913 1,569

79,927 79,950 56,718

Liabilities classified as held for sale 17 11,620 3,932 –

TOTAL CURRENT LIABILITIES 91,547 83,882 56,718

TOTAL LIABILITIES 250,139 230,664 193,037 1

Excludes well costs and includes certain amount relating to write-back and write-off of other assets and loss on derecognition of
financial assets measured at amortised cost.
TOTAL EQUITY AND LIABILITIES 710,570 634,951 571,749

The notes set out on pages 19 to 182 are an integral part of these financial statements. The notes set out on pages 19 to 182 are an integral part of these financial statements.
6 7
 PETRONAS Audited Financial Statements 2022

CONSOLIDATED STATEMENT OF CONSOLIDATED STATEMENT OF

OTHER COMPREHENSIVE INCOME CHANGES IN EQUITY
For the year ended 31 December 2022 For the year ended 31 December 2022

Note 2022 2021 Attributable to shareholders of the Company

In RM Mil Restated
Non-distributable
Profit for the year 101,618 50,869
Foreign Fair Value
Capital Currency through
Other comprehensive income
Share and Other Translation OCI Hedging
Items that will not be reclassified subsequently to profit or loss
In RM Mil Note Capital Reserves Reserve Reserve Reserve
Net changes in fair value of equity investments at fair value through other
comprehensive income (“OCI”) (429) 639 Balance at 1 January 2022
Items that may be reclassified subsequently to profit or loss – As previously reported 100 15,838 33,370 574 (1,608)
Net movements from exchange differences 8,430 3,533 – Effect of Amendments to
Cash flow hedge 2,999 (174) MFRS 116 46 – – – – –
Others 185 170 At 1 January 2022, restated 100 15,838 33,370 574 (1,608)
Total other comprehensive income for the year, net of tax 11,185 4,168 Net changes of equity
investments at fair value
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 112,803 55,037 through OCI:
Total comprehensive income attributable to: – Changes in fair value – – – (429) –
Shareholders of the Company 100,926 47,279 Net movements from exchange
differences – – 6,422 – –
Non-controlling interests 11,877 7,758
Cash flow hedge – – – – 2,471
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 112,803 55,037 Other comprehensive income – 149 – – –

Total other comprehensive

income/(loss) for the year, net
of tax – 149 6,422 (429) 2,471
Profit for the year – – – – –

Total comprehensive income/

(loss) for the year – 149 6,422 (429) 2,471

Changes in ownership interests in

subsidiaries – – (21) – –
Redemption of redeemable
preference shares in a subsidiary – – – – –
Dividends 29 – – – – –

Total transactions with owners

of the Group – – (21) – –

Balance at 31 December 2022 100 15,987 39,771 145 863

continue to next page

The notes set out on pages 19 to 182 are an integral part of these financial statements.
The notes set out on pages 19 to 182 are an integral part of these financial statements.
8 9
 PETRONAS Audited Financial Statements 2022

CONSOLIDATED STATEMENT OF CONSOLIDATED STATEMENT OF

CHANGES IN EQUITY CHANGES IN EQUITY
For the year ended 31 December 2022 (continued) For the year ended 31 December 2022 (continued)

Attributable to shareholders of the Company Attributable to shareholders of the Company

Distributable Non-distributable

Non- Foreign Fair Value

General Retained controlling Total Capital Currency through
In RM Mil Note Reserve Profits Total Interests Equity Share and Other Translation OCI Hedging
In RM Mil Note Capital Reserves Reserve Reserve Reserve
Balance at 1 January 2022
– As previously reported 12,000 290,582 350,856 53,484 404,340 Balance at 1 January 2021
– Effect of Amendments to – As previously reported 100 15,685 30,557 (65) (1,221)
MFRS 116 46 – (53) (53) – (53) – Effect of Amendments to
MFRS 116 46 – – – – –
At 1 January 2022, restated 12,000 290,529 350,803 53,484 404,287
Net changes of equity At 1 January 2021, restated 100 15,685 30,557 (65) (1,221)
investments at fair value Net changes of equity
through OCI: investments at fair value
– Changes in fair value – – (429) – (429) through OCI:
Net movements from exchange – Changes in fair value – – – 639 –
differences – – 6,422 2,008 8,430 Net movements from exchange
Cash flow hedge – – 2,471 528 2,999 differences – – 2,813 – –
Other comprehensive income – – 149 36 185 Cash flow hedge – – – – (387)
Other comprehensive income – 153 – – –
Total other comprehensive
income/(loss) for the year, net Total other comprehensive
of tax – – 8,613 2,572 11,185 income/(loss) for the year, net
Profit for the year – 92,313 92,313 9,305 101,618 of tax – 153 2,813 639 (387)
Profit for the year – – – – –
Total comprehensive income/
(loss) for the year – 92,313 100,926 11,877 112,803 Total comprehensive income/
(loss) for the year – 153 2,813 639 (387)
Changes in ownership interests in
subsidiaries – (99) (120) 355 235 Changes in ownership interests in
Redemption of redeemable a subsidiary – – – – –
preference shares in a subsidiary – – – (855) (855) Redemption of redeemable
Dividends 29 – (50,000) (50,000) (6,039) (56,039) preference shares in a subsidiary – – – – –
Dividends 29 – – – – –
Total transactions with owners
of the Group – (50,099) (50,120) (6,539) (56,659) Total transactions with owners
of the Group – – – – –
Balance at 31 December 2022 12,000 332,743 401,609 58,822 460,431
Balance at 31 December 2021 100 15,838 33,370 574 (1,608)
continued from previous page
continue to next page

The notes set out on pages 19 to 182 are an integral part of these financial statements. The notes set out on pages 19 to 182 are an integral part of these financial statements.

10 11
 PETRONAS Audited Financial Statements 2022

CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
CONSOLIDATED STATEMENT
For the year ended 31 December 2022 (continued) OF CASH FLOWS
For the year ended 31 December 2022

Attributable to shareholders of the Company Note 2022 2021

In RM Mil Restated
Distributable
CASH FLOWS FROM OPERATING ACTIVITIES
Non-
General Retained controlling Total Profit before taxation from:
In RM Mil Note Reserve Profits Total Interests Equity – continuing operations 131,978 69,866
– discontinued operations 17 3,978 1,648
Balance at 1 January 2021
– As previously reported 12,000 273,565 330,621 50,413 381,034 Profit before taxation 135,956 71,514
– Effect of Amendments to Adjustments for:
MFRS 116 46 – (2,322) (2,322) – (2,322) Amortisation of intangible assets and contract costs 2,154 1,767
Change in contract liabilities (9) 166
At 1 January 2021, restated 12,000 271,243 328,299 50,413 378,712
Change in provisions (1,006) 392
Net changes of equity
investments at fair value Depreciation of property, plant and equipment and investment properties 31,791 32,650
through OCI: Financing costs 5,226 5,069
– Changes in fair value – – 639 – 639 Interest income (5,677) (2,998)
Net movements from exchange Loss on derecognition of financial assets measured at amortised cost 939 –
differences – – 2,813 720 3,533 Loss on remeasurement of net assets classified as held for sale 1,304 –
Cash flow hedge – – (387) 213 (174) Net impairment losses/(reversals) on:
Other comprehensive income – – 153 17 170 – intangible assets 1,348 (1,310)
– investments in associates – (155)
Total other comprehensive – loans and advances to joint ventures 141 61
income/(loss) for the year, net – property, plant and equipment and investment properties 26 (815) (5,136)
of tax – – 3,218 950 4,168 – trade and other receivables (230) 1,791
Profit for the year – 44,061 44,061 6,808 50,869 Net impairment/write–off on well costs 1,363 1,809
Total comprehensive income/ Net inventories written down to net realisable value/written off 233 188
(loss) for the year – 44,061 47,279 7,758 55,037 Net loss/(gain) on disposals of investments in subsidiaries, a business, associates,
joint ventures, property, plant and equipment and other investments 610 (656)
Changes in ownership interests in
Net unrealised gain on derivatives (33) (670)
a subsidiary – 225 225 – 225
Net unrealised loss/(gain) on foreign exchange 5,277 (862)
Redemption of redeemable
Net write-off of:
preference shares in a subsidiary – – – (4) (4)
– bad debts 42 11
Dividends 29 – (25,000) (25,000) (4,683) (29,683)
– property, plant and equipment 372 54
Total transactions with owners Share of profit after tax and non–controlling interests of equity accounted associates
of the Group – (24,775) (24,775) (4,687) (29,462) and joint ventures (968) (1,825)
Other non–cash items 80 (12)
Balance at 31 December 2021 12,000 290,529 350,803 53,484 404,287
Operating profit before changes in working capital 178,098 101,848
continued from previous page
continue to next page

The notes set out on pages 19 to 182 are an integral part of these financial statements. The notes set out on pages 19 to 182 are an integral part of these financial statements.

12 13
 PETRONAS Audited Financial Statements 2022

CONSOLIDATED STATEMENT
OF CASH FLOWS
STATEMENT OF FINANCIAL POSITION
As at 31 December 2022
For the year ended 31 December 2022 (continued)

Note 2022 2021 In RM Mil Note 2022 2021

In RM Mil Restated
ASSETS
CASH FLOWS FROM OPERATING ACTIVITIES (continued) Property, plant and equipment 3 16,493 16,559
Operating profit before changes in working capital (continued) 178,098 101,848 Investments in subsidiaries 6 157,629 148,792
Change in trade and other receivables (17,347) (17,351) Investments in associates 7 302 302
Change in trade inventories (4,750) (1,986) Investments in joint ventures 8 843 843
Change in trade and other payables 8,103 10,524 Intangible assets 9 80 44
Long-term receivables 10 88,270 113,171
Cash generated from operations 164,104 93,035
Fund and other investments 11 73 73
Interest income received 5,677 2,998
Deferred tax assets 13 8,236 7,646
Interest expenses paid (3,024) (3,584)
Taxation paid, net of refund (31,471) (13,904) TOTAL NON-CURRENT ASSETS 271,926 287,430
Net cash generated from operating activities 135,286 78,545
Trade and other inventories 14 91 91
Trade and other receivables 15 29,687 17,496
CASH FLOWS FROM INVESTING ACTIVITIES
Fund and other investments 11 6,949 6,979
Net cash used in investing activities 30 (39,431) (29,452)
Cash and cash equivalents 16 91,167 72,691
CASH FLOWS FROM FINANCING ACTIVITIES TOTAL CURRENT ASSETS 127,894 97,257
Net cash used in financing activities 31 (69,884) (16,056)
TOTAL ASSETS 399,820 384,687
NET INCREASE IN CASH AND CASH EQUIVALENTS 25,971 33,037
EQUITY
DECREASE IN CASH AND CASH EQUIVALENTS RESTRICTED 341 304
Share capital 18 100 100
NET FOREIGN EXCHANGE DIFFERENCES 10,514 2,076
Reserves 19 273,250 263,757
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 163,558 128,141
TOTAL EQUITY 273,350 263,857
CASH AND CASH EQUIVALENTS AT END OF THE YEAR 200,384 163,558

LIABILITIES
CASH AND CASH EQUIVALENTS
Borrowings 21 61,432 58,651
Cash and bank balances and deposits 16 201,220 164,556
Other long-term liabilities and provisions 23 39,331 37,968
Bank overdrafts 21 – (2)
Classified as held for sale: TOTAL NON-CURRENT LIABILITIES 100,763 96,619
– Cash and bank balances 1,173 384
– Bank overdrafts (970) – Trade and other payables 24 23,726 14,751
Borrowings 21 650 7,926
201,423 164,938
Taxation 1,331 1,534
Less: Cash and cash equivalents restricted 16 (1,039) (1,380)
TOTAL CURRENT LIABILITIES 25,707 24,211
200,384 163,558
TOTAL LIABILITIES 126,470 120,830
continued from previous page TOTAL EQUITY AND LIABILITIES 399,820 384,687

The notes set out on pages 19 to 182 are an integral part of these financial statements. The notes set out on pages 19 to 182 are an integral part of these financial statements.

14 15
 PETRONAS Audited Financial Statements 2022

STATEMENT OF PROFIT OR LOSS AND STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2022
OTHER COMPREHENSIVE INCOME
For the year ended 31 December 2022

In RM Mil Note 2022 2021 Attributable to shareholders of the Company

Revenue 25 169,670 97,792 Non-distributable Distributable

Cost of revenue (99,004) (63,771)
Share Hedging General Retained Total
Gross profit 70,666 34,021 In RM Mil Note Capital Reserve Reserve Profits Equity
Selling and distribution expenses (517) (466)
Balance at 1 January 2022 100 (126) 12,000 251,883 263,857
Administration expenses (8,225) (5,529)
Net impairment reversals/(losses)1 2,817 (12,148) Cash flow hedge – (324) – – (324)
Other expenses (217) (184) Profit for the year – – – 59,817 59,817
Other income 9,234 6,557 Total comprehensive (loss)/
Operating profit 26 73,758 22,251 income for the year – (324) – 59,817 59,493
Financing costs 27 (3,626) (2,894) Dividend representing transaction
with owners of the Company 29 – – – (50,000) (50,000)
Profit before taxation 70,132 19,357
Tax expense 28 (10,315) (4,868) Balance at 31 December 2022 100 (450) 12,000 261,700 273,350

Profit for the year 59,817 14,489 Balance at 1 January 2021 100 – 12,000 262,394 274,494

Other comprehensive loss Cash flow hedge – (126) – – (126)

Items that may be reclassified subsequently to profit or loss Profit for the year – – – 14,489 14,489
Cash flow hedge (324) (126) Total comprehensive (loss)/
Total other comprehensive loss for the year, net of tax (324) (126) income for the year – (126) – 14,489 14,363
Dividend representing transaction
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 59,493 14,363 with owners of the Company 29 – – – (25,000) (25,000)

Balance at 31 December 2021 100 (126) 12,000 251,883 263,857

1
Includes certain amounts relating to write-back and write-off of other assets and loss on derecognition of financial assets measured
at amortised cost.

The notes set out on pages 19 to 182 are an integral part of these financial statements. The notes set out on pages 19 to 182 are an integral part of these financial statements.

16 17
 PETRONAS Audited Financial Statements 2022

STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 December 2022 31 December 2022

In RM Mil Note 2022 2021 1. BASIS OF PREPARATION

CASH FLOWS FROM OPERATING ACTIVITIES 1.1 Statement of compliance

Profit before taxation 70,132 19,357 The financial statements of the Group and of the Company have been prepared in accordance with Malaysian
Adjustments for: Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and the requirements
Amortisation of intangible assets and contract costs 33 10 of the Companies Act, 2016 in Malaysia.
Change in contract liabilities (89) 560
Change in fair value of cess receivables (493) (387)
As of 1 January 2022, the Group and the Company had adopted amendments to MFRSs (“pronouncements”) that
Change in provisions (441) (484)
have been issued by the Malaysian Accounting Standards Board (“MASB”) as described fully in Note 41.
Depreciation of property, plant and equipment 1,611 1,942
Dividend income (28,074) (15,406)
MASB has also issued new and revised pronouncements which are not yet effective for the Group and the
Financing costs 3,626 2,894
Company and therefore, have not been adopted in these financial statements. These pronouncements including
Gain on disposals of property, plant and equipment (1) (9)
Gain on partial disposals of subsidiaries and other investments (50) (225) their impact on the financial statements in the period of initial application are set out in Note 41. New and revised
Interest income (4,599) (3,444) pronouncements that are not relevant to the operations of the Group and of the Company are set out in Note
Loss on derecognition of financial assets measured at amortised cost 21 – 41.
Net impairment losses/(reversals) on:
– intangible assets – 11 These financial statements were approved and authorised for issue by the Board of Directors on 27 February
– investments in subsidiaries (3,094) 11,458 2023.
– loans and advances to subsidiaries and a joint venture (25) (59)
– property, plant and equipment – 596 1.2 Basis of measurement
– trade and other receivables 281 139
The financial statements of the Group and of the Company have been prepared on historical cost basis except
Net unrealised gain on foreign exchange (2,517) (1,762)
for certain items which are measured at fair value, as disclosed in the accounting policies below.
Net unrealised loss on derivatives 191 21
Write-off of:
1.3 Functional and presentation currency
– property, plant and equipment – 3
Operating profit before changes in working capital 36,512 15,215 The individual financial statements of each entity in the Group are prepared using the currency of the primary
Change in trade and other receivables (6,929) (4,924) economic environment in which the entity operates (“the functional currency”). The functional currency of the
Change in trade inventories – (68) Company has been determined as Ringgit Malaysia (“RM”). The Group’s and the Company’s financial statements
Change in trade and other payables 7,510 2,346 are presented in Ringgit Malaysia, which is the Company’s reporting currency.

Cash generated from operations 37,093 12,569

All financial information is presented in Ringgit Malaysia and has been rounded to the nearest million, unless
Interest income received 3,992 3,367
otherwise stated.
Interest expenses paid (2,441) (2,375)
Taxation paid (11,108) (5,286)
1.4 Use of estimates and judgments
Net cash generated from operating activities 27,536 8,275
The preparation of financial statements in conformity with MFRS requires management to make judgments,
CASH FLOWS FROM INVESTING ACTIVITIES estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,
Net cash generated from investing activities 30 47,023 22,953 liabilities, income and expenses. Actual results may differ from these estimates.

CASH FLOWS FROM FINANCING ACTIVITIES Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
Net cash used in financing activities 31 (58,415) (13,556) recognised in the period in which the estimate is revised and in any future periods affected.

NET INCREASE IN CASH AND CASH EQUIVALENTS 16,144 17,672 In particular, information about significant areas of estimation uncertainty and critical judgments in applying
accounting policies that have the most significant effect on the amounts recognised in the financial statements
NET FOREIGN EXCHANGE DIFFERENCES 2,332 908
are described in the following Notes:
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 72,691 54,111
CASH AND CASH EQUIVALENTS AT END OF THE YEAR 91,167 72,691 (i) Note 3 : Property, plant and equipment
(ii) Note 9 : Intangible assets
CASH AND CASH EQUIVALENTS (iii) Note 13 : Deferred tax
Cash and bank balances and deposits 16 91,167 72,691 (iv) Note 21 : Borrowings
(v) Note 23 : Other long-term liabilities and provisions
(vi) Note 25 : Revenue
The notes set out on pages 19 to 182 are an integral part of these financial statements. (vii) Note 28 : Tax expense
(viii) Note 39 : Financial instruments
18 19
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

The accounting policies set out below have been applied consistently to all periods presented in these financial 2.1 Basis of consolidation (continued)
statements and have been applied consistently by the Group and the Company, unless otherwise stated.
Business combinations (continued)

2.1 Basis of consolidation Transaction costs, other than those associated with the issuance of debt or equity securities, that the Group
incurs in connection with a business combination are expensed as incurred.
Subsidiaries
Subsidiaries are entities, including structured entities, controlled by the Company. The Group controls an entity Business combinations arising from transfers of interests in entities that are under the control of the shareholder
when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest
to affect those returns through its power over the entity. Potential voting rights are considered when assessing comparative period presented, or, if later, at the date that common control was established; for this purpose,
control only when such rights are substantive. The Group considers it has de facto power over an investee when, comparatives are restated. The assets and liabilities acquired are recognised at the carrying amounts recognised
despite not having the majority of voting rights, it has the current ability to direct the activities of the investee previously in the Group controlling shareholder’s consolidated financial statements. The components of equity
that significantly affect the investee’s return. of the acquired entities are added to the same components within Group equity and any resulting gain or loss
is recognised directly in equity.
Investments in subsidiaries are measured in the Company’s statement of financial position at cost less any
impairment losses, unless the investment is classified as held for sale or distribution. The cost of investment Non-controlling interests
includes transaction costs.
Non-controlling interests at the end of the reporting period, being the portion of the net assets of subsidiaries
attributable to equity interests that are not owned by the Group, whether directly or indirectly through subsidiaries,
The financial statements of subsidiaries are included in the consolidated financial statements of the Group from
are presented in the consolidated statement of financial position and statement of changes in equity within equity,
the date that control commences until the date that control ceases.
separately from equity attributable to the shareholders of the Company.

All inter-company transactions are eliminated on consolidation and revenue and profits relate to external transactions
Non-controlling interests in the results of the Group are presented in the consolidated statement of profit or
only. Unrealised losses resulting from inter-company transactions are also eliminated unless cost cannot be
loss and consolidated statement of comprehensive income as an allocation of the profit or loss and total
recovered.
comprehensive income for the year between the non-controlling interests and shareholders of the Company.

Business combinations
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests
A business combination is a transaction or other event in which an acquirer obtains control of one or more even if doing so causes the non-controlling interests to have a deficit balance.
businesses. Business combinations are accounted for using the acquisition method from the acquisition date,
which is the date on which control is transferred to the Group. The identifiable assets acquired and liabilities The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as
assumed are measured at their fair values at the acquisition date. The cost of an acquisition is measured as the equity transactions between the Group and its non-controlling interest holders. Any difference between the
aggregate of the fair value of the consideration transferred and the amount of any non-controlling interests in Group’s share of net assets before and after the change, and any consideration received or paid, is adjusted to
the acquiree. Non-controlling interests are stated either at fair value or at the proportionate share of the acquiree’s or against Group reserves.
identifiable net assets at the acquisition date.
Loss of control
When a business combination is achieved in stages, the Group remeasures its previously held non-controlling
Upon loss of control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary,
equity interest in the acquiree at fair value at the acquisition date, with any resulting gain or loss recognised in
any non-controlling interests and other components of equity related to the former subsidiary from the consolidated
the profit or loss. Increase in the Group’s ownership interest in an existing subsidiary is accounted for as equity
statements of financial position except when the retained interest is a joint operation where the Group’s retained
transactions with differences between the fair value of consideration paid and the Group’s proportionate share
interest in the assets and liabilities of the former subsidiary are not derecognised. Any surplus or deficit arising
of net assets acquired, recognised directly in equity.
from the loss of control is recognised in the profit or loss. If the Group retains any interest in the previous
subsidiary, then such interest is measured at fair value at the date that control is lost except when the retained
The Group measures goodwill as the excess of the cost of an acquisition and the fair values of any previously
interest is a joint operation where such interest is measured at its carrying amount. Subsequently, it is accounted
held interest in the acquiree over the fair value of the identifiable assets acquired and liabilities assumed at the
for as an equity-accounted investee or as a fair value through other comprehensive income financial asset
acquisition date. When the excess is negative, a bargain purchase gain is recognised immediately in the profit or
depending on the level of influence retained.
loss.

Goodwill arising from business combinations prior to 1 October 2009 is stated at the previous carrying amount
less subsequent impairments, pursuant to the adoption of MFRS framework by the Group in the financial year
ended 31 December 2012.

20 21
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.2 Associates 2.3 Joint arrangements
Associates are entities in which the Group has significant influence including representation on the Board of Joint arrangements are arrangements of which the Group has joint control, established by contracts requiring
Directors, but not control or joint control, over the financial and operating policies of the investee company. unanimous consent for decisions about the activities that significantly affect the arrangements’ returns.

Associates are accounted for in the consolidated financial statements using the equity method less any impairment Joint arrangements are classified as either joint operation or joint venture. A joint arrangement is classified as
losses, unless it is classified as held for sale or distribution. The consolidated financial statements include the joint operation when the Group or the Company has rights to the assets and obligations for the liabilities relating
Group’s share of post-acquisition profits or losses and other comprehensive income of the equity-accounted to an arrangement. The Group and the Company account for each of its share of the assets, liabilities and
associates, after adjustments to align the accounting policies with those of the Group, from the date that significant transactions, including its share of those held or incurred jointly with the other investors, in relation to the joint
influence commences until the date that significant influence ceases. operation. A joint arrangement is classified as joint venture when the Group has rights only to the net assets of
the arrangements. The Group accounts for its interest in the joint venture using the equity method as described
The Group’s share of post-acquisition reserves and retained profits less losses is added to the carrying value of in Note 2.2.
the investment in the consolidated statement of financial position. These amounts are taken from the latest
audited financial statements or management financial statements of the associates. 2.4 Property, plant and equipment and depreciation
Recognition and measurement
When the Group’s share of post-acquisition losses exceeds its interest in an equity accounted associate, the
carrying amount of that interest (including any long-term investments such as loans and advances) is reduced Freehold land and projects-in-progress are stated at cost less accumulated impairment losses and are not
to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation depreciated. Other property, plant and equipment are stated at cost less accumulated depreciation and any
or has made payments on behalf of the associate. accumulated impairment losses.

When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs
entire interest in that associate, with the resulting gain or loss being recognised in the profit or loss. Any retained directly attributable to bringing the assets to working condition for their intended use, and the costs of dismantling
interest in the former associate at the date when significant influence is lost is measured at fair value and this and removing the items and restoring the site on which they are located. The cost of self-constructed assets
amount is regarded as the initial carrying amount of a financial asset. also includes the cost of material and direct labour. For qualifying assets, borrowing costs are capitalised in
accordance with the accounting policy on borrowing costs. Purchased software that is integral to the functionality
When the Group’s interest in an associate decreases but does not result in loss of significant influence, any of the related equipment is capitalised as part of that equipment.
retained interest is not remeasured. Any gain or loss arising from the decrease in interest is recognised in the
profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified When the use of a property changes from owner-occupied to investment property, the property is reclassified
proportionately to the profit or loss if that gain or loss would be required to be reclassified to profit or loss on as investment property at cost.
the disposal of the related assets and liabilities.
When significant components of an item of property, plant and equipment have different useful lives, they are
Unrealised profits arising from transactions between the Group and its associates are eliminated to the extent of accounted for as separate items (major components) of property, plant and equipment.
the Group’s interests in the associates. Unrealised losses on such transactions are also eliminated partially, unless
costs cannot be recovered. Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying
amount of the item if it is probable that the future economic benefits embodied within the component will flow
to the Group and the Company and its cost can be measured reliably. The carrying amount of the replaced item
of property, plant and equipment is derecognised with any corresponding gain or loss recognised in the profit
or loss accordingly. The costs of the day-to-day servicing of property, plant and equipment are recognised in
the profit or loss as incurred.

22 23
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.4 Property, plant and equipment and depreciation (continued) 2.5 Investment properties (continued)
Depreciation Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of
self-constructed investment property includes the cost of materials and direct labour, any other costs directly
Depreciation for property, plant and equipment other than freehold land, oil and gas properties (excluding oil
attributable to bringing the investment property to a working condition for its intended use and capitalised
and gas infrastructures) and projects-in-progress, is recognised in the profit or loss on a straight-line basis over
borrowing costs.
the estimated useful lives of each component of an item of property, plant and equipment. Property, plant and
equipment are not depreciated until the assets are ready for their intended use.
Depreciation is recognised in the profit or loss on a straight-line basis over their estimated useful lives ranging
between 10 and 100 years for buildings. An investment property is derecognised on its disposal, or when it is
Amortisation of producing oil and gas properties is computed based on the unit of production method using
permanently withdrawn from use and no future economic benefits are expected from its disposal. The difference
total proved reserves for capitalised acquisition cost, certain facilities and wells. For other capitalised exploration
between net disposal proceeds and the carrying amount is recognised in the profit or loss in the period in which
and development costs, facilities and wells, total proved developed reserves are used. Infrastructures are depreciated
the item is derecognised.
over a period of not more than 25 years.

The estimated useful lives of other property, plant and equipment are as follows:
2.6 Land held for development
Land held for property development consists of land or such portions thereof on which no development activities
• Buildings 5-100 years have been carried out or where development activities are not expected to be completed within the normal
• Plant and equipment 2-66 years operating cycle. Such land is classified as non-current asset and is stated at the lower of cost and net realisable
• Office equipment, furniture and fittings 2-20 years value consistent with the accounting policy for inventories as stated in Note 2.16.
• Computer software and hardware 2-20 years
• Motor vehicles 2-15 years Cost includes acquisition cost of land and attributable development expenditure. Cost associated with the acquisition
• Vessels 20-30 years of land includes the purchase price of the land, professional fees, stamp duties, commissions, conversion fees and
other relevant levies. Development expenditure includes the cost for development of main infrastructure works.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term (other than Land held for development is reclassified as properties under development at the point when development
certain right-of-use assets related to oil and gas properties which are depreciated using the unit of production activities have commenced and where it can be demonstrated that the development activities can be completed
method based on the earlier of reserve cut-off expiry of lease contract). Estimates in respect of certain items of within the normal operating cycle. Properties under development are in turn, reclassified as developed properties
property, plant and equipment were revised during the year (refer Note 3). held for sale upon completion of the development activities. Properties under development and developed
properties held for sale are recognised as trade and other inventories in current assets. The accounting policy is
The depreciable amount is determined after deducting residual value. The residual value, useful life and depreciation described separately in Note 2.16.
method are reviewed at each financial year end to ensure that the amount, period and method of depreciation
are consistent with the previous estimates and the expected pattern of consumption of the future economic 2.7 Leases
benefits embodied in the items of property, plant and equipment.
(i) Definition of a lease
Derecognition A contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset
for a period of time in exchange for a consideration. To assess whether a contract conveys the right to
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits
control the use of an identified asset, the Group and the Company assess whether:
are expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net
carrying amount is recognised in the profit or loss. • the contract involves the use of an identified asset – this may be specified explicitly or implicitly and
should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If
2.5 Investment properties the supplier has a substantive substitution right, then the asset is not identified;
Investment properties are properties which are owned to earn rental income or for capital appreciation or for • the customer has the right to obtain substantially all of the economic benefits from use of the asset
both, but not for sale in the ordinary course of business, use in the production or supply of goods or services throughout the period of use; and
or for administrative purpose. Properties that are occupied by the companies in the Group are accounted for as
• the customer has the right to direct the use of the asset when it has the decision-making rights that are
owner-occupied rather than as investment properties.
most relevant to changing how and for what purpose the asset is used. The customer has the right to
direct the use of the asset if either the customer has the right to operate the asset; or the customer
Freehold land and projects-in-progress are stated at cost and are not depreciated. Other investment properties
designed the asset in a way that predetermines how and for what purpose it will be used throughout the
are stated at cost less accumulated depreciation and accumulated impairment losses, if any, consistent with the
period of use.
accounting policy for property, plant and equipment as stated in Note 2.4.

At inception or on reassessment of a contract that contains a lease component, the Group and the Company
allocate the consideration in the contract to each lease and non-lease component on the basis of their
relative stand-alone prices.
24 25
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.7 Leases (continued) 2.7 Leases (continued)
(ii) Recognition and initial measurement (ii) Recognition and initial measurement (continued)
(a) As a lessee (a) As a lessee (continued)
The Group and the Company recognise a right-of-use asset and a lease liability at the lease commencement Where the Group or the Company is an operator and is the sole signatory to a lease contract of an
date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease asset to be used in the activities of a specific joint operation, the operator does so implicitly or explicitly
liability adjusted for any lease payments made at or before the commencement date, plus any initial on behalf of the joint arrangement. As this is the customary norm in upstream activities operated through
direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to joint arrangements, the operator will manage the lease, pay the lessor and subsequently re-bill the
restore the underlying asset or the site on which it is located, less any lease incentives received. partners for their share of the lease costs. In such instance, it is necessary to determine whether:

The lease liability is initially measured at the present value of the lease payments that are not paid at • the operator is the sole lessee in the external lease arrangement, and if so, whether the billings to
the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot partners may represent sub-leases, or
be readily determined, the respective Group entities’ incremental borrowing rate is used. Generally, the • it is in fact a joint arrangement, with each participant accounting for its proportionate share of the
Group entities use their incremental borrowing rate as the discount rate. lease.

Lease payments included in the measurement of the lease liability comprise the following: Where the Group is a non-operator, it is necessary to determine whether the finance sublease exists
in the lease arrangement.
• fixed payments, including in-substance fixed payments;
• variable lease payments that depend on an index or a rate, initially measured using the index or rate Depending on the facts and circumstances in each case, the Group recognises the lease liabilities based
as at the commencement date; on the principles described below.
• amounts expected to be payable under a residual value guarantee;
The Group as the operator of a joint operation
• the exercise price under a purchase option that the Group and the Company are reasonably certain
Where all partners in a joint operation are sharing the primary responsibility for lease payments under
to exercise; and
a contract, the related lease liability and right-of-use asset will be recognised by the Group, on the
• penalties for early termination of a lease unless the Group and the Company are reasonably certain basis of the Group’s participating interest in the joint operation.
not to early terminate the contract.
The Group will recognise a lease liability fully when it has or considered to have the primary responsibility
The Group and the Company exclude variable lease payments that are linked to future performance or for the full external lease payments.
usage of the underlying asset from the lease liability. Instead, these payments are recognised in profit
or loss in the period in which the performance or use occurs. The Group and the Company assess at When a finance sub-lease exists between the Group and the non-operators, the Group will derecognise
lease commencement whether it is reasonably certain to exercise the extension options in determining a portion of the right-of-use asset equal to the non-operator’s interests in the lease, and instead
the lease term. recognise a corresponding finance lease receivable. A finance sub-lease will typically exist when the
Group enters into a contract in its own name, where it has the primary responsibility for the external
The Group and the Company have elected not to recognise right-of-use assets and lease liabilities for lease payments, and the leased asset is to be used on one specific joint operation, and the costs and
short-term leases that have a lease term of 12 months or less and leases of low-value assets. The Group risks related to the use of this asset are carried by that specific joint operation.
and the Company recognise the lease payments associated with these leases as an expense on a
straight-line basis over the lease term. Where the use of the leased asset on a joint operation is not considered a finance sub-lease, the Group
will recognise the related right-of-use asset and lease liability on a gross basis. Such expenses have
The Group and the Company present right-of-use assets that do not meet the definition of investment under the previous lease accounting rules been reflected net by the Group, on the basis of the Group’s
property in ‘property, plant and equipment’ and lease liabilities in ‘borrowings’ in the statement of net participation interest in the joint operation. Expenses which are not included in a recognised lease
financial position. obligation, such as payments for short-term leases, non-lease components and variable lease payments
will continue to be reported net in the Group’s statement of profit or loss, on the basis of the Group’s
The accounting for lease arrangement in a joint operation depends on whether the Group or the net participation interest.
Company is the operator or non-operator of a joint arrangement.

26 27
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.7 Leases (continued) 2.7 Leases (continued)
(ii) Recognition and initial measurement (continued) (iii) Subsequent measurement
(a) As a lessee (continued) (a) As a lessee
The Group as a non-operator of a joint operation The right-of-use asset is subsequently depreciated using the straight-line method from the commencement
date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term
As a non-operator of a joint operation, the Group will recognise its proportionate share of a lease when
(other than certain right-of-use assets related to oil and gas properties which are depreciated using the
the Group shares the primary responsibility for lease payments under a contract. This includes contracts
unit of production method based on the earlier of reserve cut-off or expiry of lease contract).
where the Group has co-signed a lease contract and contracts for which the operator has been given
a legally binding mandate to sign the external lease contract on behalf of the licence partners.
The estimated useful lives of right-of-use assets are determined on the same basis as those of property,
plant and equipment. Depreciation of certain right-of-use assets are subsequently capitalised into carrying
The Group will also recognise its proportionate share when a lease contract is entered by the operator
amount of other assets whenever they meet the criteria for capitalisation. In addition, the right-of-use
of a joint operation, and where the operator’s use of the leased asset represents a sub-lease from the
asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of
operator to the non-operators. A sub-lease is considered to take place in situations where the operator
the lease liability.
agrees with the non-operators for a specified period of time, and where the use of the asset is deemed
to be controlled jointly by the joint operation.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured
(b) As a lessor when there is a change in future lease payments arising from a change in an index or rate, if there is
a revision of in-substance fixed lease payments, or if there is a change in the Group’s and the Company’s
When the Group and the Company act as a lessor, it determines at lease inception whether each lease estimate of the amount expected to be payable under a residual value guarantee, or if the Group and
is a finance lease or an operating lease. the Company change its assessment of whether it will exercise a purchase, extension or termination
option. The Group will reassess whether it is reasonably certain to exercise the extension option if there
To classify each lease, the Group and the Company make an overall assessment of whether the lease is a significant change in circumstances within its control.
transfers substantially all of the risks and rewards incidental to ownership of the underlying asset. If this
is the case, then the lease is a finance lease; if not, then it is an operating lease. When the lease liability is remeasured as described above, a corresponding adjustment is made to the
carrying amount of the right-of-use asset or is recorded in the profit or loss if the carrying amount of
If an arrangement contains lease and non-lease components, the Group and the Company apply MFRS the right-of-use asset has been reduced to zero.
15 Revenue from Contracts with Customers to allocate the consideration in the contract based on the
stand-alone selling price. When there is lease modification due to increase in the scope of lease by adding the right to use one
or more underlying assets, the Group and the Company assess whether the lease modification shall be
The Group and the Company recognise assets held under a finance lease in its statement of financial accounted for as a separate lease or similar to reassessment of lease liability.
position and presents them as a receivable at an amount equal to the net investment in the lease. The
Group and the Company use the interest rate implicit in the lease to measure the net investment in The Group and the Company account for lease modification as a separate lease when the consideration
the lease. for the lease increases by an amount commensurate with the stand-alone price for the increase in
scope and any appropriate adjustments.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-
lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use When there is lease modification due to decrease in scope, the Group and the Company reduce the carrying
asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short- amount of the right-of-use asset and remeasure the lease liability to reflect the partial or full termination
term lease to which the Group applies the exemption described above, then it classifies the sub-lease of the lease. The corresponding gain or loss shall be recognised in the profit or loss. Lease liabilities are
as an operating lease. remeasured for all other lease modifications with corresponding adjustments to the right-of-use asset.

(b) As a lessor
The Group and the Company recognise lease payments received under operating leases as income on
a straight-line basis over the lease term as part of ‘Revenue’.

The Group and the Company recognise finance income over the lease term, based on a pattern reflecting
a constant periodic rate of return on the Group’s and the Company’s net investment in the lease. The
Group and the Company aim to allocate finance income over the lease term on a systematic and rational
basis. The Group and the Company apply the lease payments relating to the period against the gross
investment in the lease to reduce both the principal and the unearned finance income. The net investment
in the lease is subject to impairment requirements in MFRS 9 Financial Instruments (see Note 2.12).

28 29
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.8 Investments 2.9 Intangible assets (continued)
Long-term investments in subsidiaries, associates and joint ventures are stated at cost less impairment losses, if Other intangible assets (continued)
any, in the Company’s financial statements unless the investment is classified as held for sale or distribution. The
Following initial recognition, intangible assets with finite useful lives are carried at cost less accumulated
cost of investments includes transaction costs. The carrying amount of these investments includes fair value
amortisation and any accumulated impairment losses.
adjustments on shareholder’s loans and advances, if any (see Note 2.12).
Amortisation for intangible assets with finite useful lives is recognised in the profit or loss on a straight-line
2.9 Intangible assets basis over the estimated economic useful lives, other than certain recoverable expenditure incurred under a
Goodwill service contract which is amortised based on unit of production method, calculated based on entitlement of
production for the period and estimated entitlement for the remaining life of the asset.
Goodwill arising from business combinations is initially measured at cost as described in Note 2.1. Following the
initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised
Estimates are made in relation to expected entitlement of production which are based on the actual cost
but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances
incurred but yet to be recovered and application of the prevailing crude oil price. The amortisation method and
indicate that the carrying value may be impaired.
the useful life for intangible assets are reviewed at least at each reporting date.
In respect of equity-accounted investees, the carrying amount of goodwill is included in the carrying amount of
Intangible assets with finite useful lives are assessed for impairment whenever there is an indication that it may
the investment. The entire carrying amount of the investment is reviewed for impairment when there is objective
be impaired. Impairment assessment on intangible assets with indefinite useful lives is performed annually.
evidence of impairment.

Exploration expenditure
2.10 Exploration and development expenditure
The Group follows the successful efforts method of accounting for the exploration and development expenditure.
Intangible assets also include expenditure on the exploration for and evaluation of oil and natural gas resources
(hereinafter collectively referred to as “exploration expenditure”). The accounting policy for exploration expenditure
Exploration expenditure
is described separately in Note 2.10.
Costs directly associated with an exploration well, including license acquisition and drilling costs, are initially
Allowances and certificates capitalised as intangible assets until the results have been evaluated.
Allowances and certificates consist of purchased carbon credit. These carbon credit will be utilised in settlement
If a well does not result in successful discovery of economically recoverable volume of hydrocarbons, such
of environmental carbon emission incurred by the Group in the normal course of doing business.
costs are written off as a dry well. If hydrocarbons are found and, subject to further appraisal activity which
may include the drilling of further wells and are likely to be capable of commercial development under prevailing
Allowances and certificates with indefinite useful lives are carried at cost less accumulated impairment losses.
economic conditions, the costs continue to be carried as intangible assets. All such carried costs are reviewed
These allowances and certificates are reviewed for impairment annually or more frequently if events or changes
at least once a year to determine whether the reserves found or appraised remain economically viable. When
in circumstances indicate that the carrying value may be impaired.
this is no longer the case, the costs are written off.
Utilisation of allowances and certificates will be charged to the profit or loss, within cost of revenue, which
Where development plan is commercially viable and approved by the relevant authorities, the related exploration
reflects the cost of allowances required to offset carbon emission for the current year. Any unutilised allowances
and evaluation costs are transferred to projects-in-progress in property, plant and equipment.
and certificates will remain as intangible assets to be utilised against future carbon emission.

Development expenditure
Other intangible assets
Development expenditure comprises all costs incurred in bringing a field to commercial production and is
Intangible assets other than goodwill and exploration expenditure are measured on initial recognition at cost.
capitalised as incurred. The amount capitalised includes attributable interests and other financing costs incurred
The costs of intangible assets acquired in a business combination are their fair values as at the date of acquisition.
on exploration and development before commencement of production.
Intangible assets related to development and production service contract (“DPSC”) which consist of expenditure
Upon commencement of production, the exploration and development expenditure initially capitalised as
incurred in bringing a field to first commercial production (“FCP”), are capitalised as incurred. The amount
projects-in-progress are transferred to oil and gas properties and are depreciated as described in the accounting
capitalised further includes capital expenditure after achieving FCP, interest and other financing cost incurred, if
policy for property, plant and equipment and depreciation (see Note 2.4).
any, on significant development activities prior to FCP. Other intangible cost also includes the right to use the
oil and gas producing assets. After FCP, the Group capitalises costs which qualify for capitalisation relating to
improvements or new development for respective DPSC.

Other intangible assets include trademarks which consist of brand names, patents and know-how being proprietary
processes which give an edge over competitors and customer relations which reflect the future value generation
related to core customers.

30 31
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.11 Non-current assets held for sale and discontinued operations 2.12 Financial instruments
Non-current assets held for sale Recognition and initial measurement
Non-current assets and disposal groups comprising assets and liabilities that are expected to be recovered A financial instrument is recognised in the statement of financial position when, and only when, the Group or
primarily through sale rather than through continuing use, are classified as held for sale. This condition is the Company becomes a party to the contractual provisions of the instrument. Regular way purchases or sales
regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present were recognised on the trade date i.e. the date that the Group and the Company commit to purchase or sell
condition. the financial asset.

Immediately before classification as held for sale, the assets (or all the assets and liabilities in a disposal group) A financial asset (unless it is a receivable without a significant financing component) and a financial liability is
are remeasured in accordance with the Group’s applicable accounting policies. Thereafter, on initial classification measured at fair value plus or minus, in the case of a financial instrument not at fair value through profit or loss,
as held for sale, the assets or disposal groups are measured at the lower of carrying amount and fair value less any directly attributable transaction cost incurred at the acquisition or issuance of the financial instrument. A trade
cost to sell. Any differences are charged to the profit or loss. receivable that does not contain a significant financing component is initially measured at the transaction price.

Any impairment loss on a disposal group is first allocated to goodwill, and then to remaining assets and liabilities Fair value adjustments on shareholder’s loans and advances at initial recognition, if any, are added to the carrying
on pro rata basis, except that no impairment loss is allocated to inventories, contract assets, contract costs, value of investments in the Company’s financial statements.
financial assets, deferred tax assets, employee benefit assets and investment properties, which continue to be
measured in accordance with the Group’s accounting policies. Impairment losses on initial classification as held Classification and subsequent measurement
for sale or distribution and subsequent gains or losses on remeasurement are recognised in the profit or loss. (i) Financial assets
Gains are not recognised in excess of any cumulative impairment losses.
Financial assets are classified as measured at amortised cost, fair value through other comprehensive income
Intangible assets, property, plant and equipment and investment properties once classified as held for sale are or fair value through profit or loss, as appropriate.
not amortised nor depreciated. In addition, equity accounting of equity-accounted investees ceases once classified
as held for sale. The Group and the Company determine the classification of financial assets at initial recognition and are
not reclassified subsequent to their initial recognition unless the Group and the Company changes its
Discontinued operations business model for managing financial assets in which case all affected financial assets are reclassified on
the first day of the first reporting period following the change in the business model.
A disposal group qualifies as discontinued operation if it is a component of an entity that either has been
disposed of, or is classified as held for sale, and: Amortised cost
• represents a separate major line of business or geographical area of operations; or Amortised cost category comprises financial assets that are held within a business model whose objective
• is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of is to hold assets to collect contractual cash flows and its contractual terms give rise on specified dates to
operations; or cash flows that are solely payments of principal and interest on the principal amount outstanding. The
financial assets are not designated as at fair value through profit or loss.
• is a subsidiary acquired exclusively with a view to resale.
Subsequent measurement
Discontinued operations are excluded from the results of continuing operations and are presented as a single
amount as profit or loss after tax from discontinued operations in the statement of profit or loss. Subsequent to initial recognition, these financial assets are measured at amortised cost using the effective
interest method (see Note 2.12 (v)). Interest income and foreign exchange gains and losses are recognised
Additional disclosures are provided in Note 17. All other notes to the financial statements include amounts of in profit or loss.
continuing operations, unless otherwise stated.
Fair value through other comprehensive income
Debt instruments
This category comprises debt instruments where it is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling financial assets, and its contractual terms
give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding. The debt instruments are not designated as at fair value through profit or loss.

Equity instruments
Fair value through other comprehensive income category also comprises investment in equity instruments
that are not held for trading, and the Group and the Company irrevocably elect to present subsequent
changes in the investment’s fair value in other comprehensive income. This election is made on an
investment-by-investment basis.
32 33
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.12 Financial instruments (continued) 2.12 Financial instruments (continued)
Classification and subsequent measurement (continued) Classification and subsequent measurement (continued)
(i) Financial assets (continued) (ii) Financial liabilities (continued)
Fair value through other comprehensive income (continued) Fair value through profit or loss (continued)
Subsequent measurement Financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair
value with gains or losses, including any interest expense are recognised in the profit or loss.
Financial assets categorised as fair value through other comprehensive income are subsequently measured
at fair value with unrealised gains and losses recognised directly in other comprehensive income and
For financial liabilities where it is designated as fair value through profit or loss upon initial recognition, the
accumulated under fair value through other comprehensive income reserve in equity. For debt instruments,
Group and the Company recognise the amount of change in fair value of the financial liability that is
when the investment is derecognised or determined to be impaired, the cumulative gain or loss previously
attributable to change in credit risk in the other comprehensive income and remaining amount of the
recorded in equity is reclassified to the profit or loss. For equity instruments, the gains or losses accumulated
change in fair value in the profit or loss, unless the treatment of the effects of changes in the liability’s
in other comprehensive income are never reclassified to the profit or loss. credit risk would create or enlarge an accounting mismatch.

Fair value through profit or loss Amortised cost

All financial assets not classified as measured at amortised cost or fair value through other comprehensive Subsequent to initial recognition, other financial liabilities are subsequently measured at amortised cost
income as described above are measured at fair value through profit or loss. This includes derivative financial using the effective interest method (see Note 2.12 (v)).
assets (except for a derivative that is a financial guarantee contract or a designated and effective hedging
instrument as per Note 2.12 (iii) and 2.12 (iv)). On initial recognition, the Group may irrevocably designate Gains and losses are recognised in the profit or loss when the liabilities are derecognised as well as through
a financial asset that otherwise meets the requirements to be measured at amortised cost or at fair value the amortisation process.
through other comprehensive income as at fair value through profit or loss if doing so eliminates or
significantly reduces an accounting mismatch that would otherwise arise. (iii) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse
Subsequent measurement
the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance
Financial assets categorised as fair value through profit or loss are subsequently measured at their fair value with the terms of a debt instrument.
with gains or losses recognised in the profit or loss. The methods used to measure fair value are stated
in Note 2.25. Financial guarantees issued are initially measured at fair value. Subsequently, they are measured at higher
of:
(ii) Financial liabilities
• the amount of the loss allowance; and
The categories of financial liabilities at initial recognition are as follows:
• the amount initially recognised less, when appropriate, the cumulative amount of income recognised in
accordance with the principles of MFRS 15 Revenue from Contracts with Customers.
Fair value through profit or loss
Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a Liabilities arising from financial guarantees are presented together with other provisions.
derivative that is a financial guarantee contract or a designated and effective hedging instrument), contingent
consideration in a business combination and financial liabilities that are specifically designated into this (iv) Derivative financial instruments
category upon initial recognition. The Group and the Company use derivative financial instruments such as interest rate and foreign currency
swaps, forward rate contracts, futures and options, to manage certain exposures to fluctuations in foreign
On initial recognition, the Group or the Company may irrevocably designate a financial liability that otherwise currency exchange rates, interest rates and commodity prices.
meets the requirements to be measured at amortised cost as at fair value through profit or loss:
Derivative financial instruments are initially recognised at fair value on the date on which a derivative
• if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise; or, contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial
assets when the fair value is positive and as financial liabilities when the fair value is negative.
• if a group of financial liabilities or financial assets and financial liabilities is managed and its performance
is evaluated on a fair value basis, in accordance with a documented risk management or investment Any gains and losses arising from changes in fair value on derivatives during the year are recognised in
strategy, and information about the Group is provided internally on that basis to the Group’s and the the profit or loss.
Company’s key management personnel; or
In general, contracts to sell or purchase non-financial items to meet expected own use requirements are
• if a contract contains one or more embedded derivatives and the host is not a financial asset in the not accounted for as financial instruments. However, contracts to sell or purchase commodities that can
scope of MFRS 9 Financial Instruments, where the embedded derivative significantly modifies the cash be net settled or which contain written options are required to be recognised at fair value, with gains and
flows and separation is not prohibited. losses recognised in the profit or loss.
34 35
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.12 Financial instruments (continued) 2.12 Financial instruments (continued)
Classification and subsequent measurement (continued) Classification and subsequent measurement (continued)
(iv) Derivative financial instruments (continued) (ix) Modification of financial instruments
An embedded derivative is recognised separately from the host contract where the host contract is not Financial asset
a financial asset, and accounted for separately if, and only if, the derivative is not closely related to the
The Group and the Company may renegotiate or otherwise modify the contractual cash flows of a financial
economic characteristics and risks of the host contract and the host contract is not measured at fair
asset. When this happens, the Group and the Company assess whether or not the new terms are substantially
value through profit or loss. The host contract, in the event an embedded derivative is recognised separately,
different from the original terms. The Group and the Company consider, among others, factors such as
is accounted for in accordance with policy applicable to the nature of the host contract.
the debtor’s financial difficulty, significant extension of the financial asset term and deterioration of credit
risk associated with the financial asset.
(v) Effective interest method
Amortised cost is computed using the effective interest method. This method used effective interest rate If the terms are substantially different, the Group and the Company derecognise the original financial asset
that exactly discounts estimated future cash receipts or payments through the expected life of the financial and recognise a “new” asset at fair value and recalculate a new effective interest rate for the asset. The
instrument to the net carrying amount of the financial instrument. Amortised cost takes into account any date of renegotiation is consequently considered to be the date of initial recognition for impairment
transaction costs and any discount or premium on settlement. calculation purposes, including for the purpose of determining whether a significant increase in credit risk
has occurred. However, the Group and the Company also assess whether the new financial asset recognised
(vi) Offsetting of financial instruments is deemed to be credit-impaired at initial recognition, especially in circumstances where the renegotiation
was driven by the debtor being unable to make the originally agreed payments. Differences in the carrying
Financial assets and financial liabilities are offset and the net amount is reported in the statement of
amount are also recognised in the profit or loss as a gain or loss on derecognition.
financial position if, and only if, there is a currently enforceable legal right to offset the recognised amounts
and there is an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously.
If the terms are not substantially different, the renegotiation or modification does not result in derecognition,
(vii) Amortised cost of financial instruments and the Group and the Company recalculate the gross carrying amount based on the revised cash flows
of the financial asset and recognise a gain or loss on remeasurement in profit or loss. The new gross
Interest income is recognised by applying effective interest rate to the gross carrying amount except for carrying amount is recalculated by discounting the modified cash flows at the original effective interest
credit impaired financial assets (see Note 2.13 (i)) where effective interest rate is applied to the amortised rate (or credit-adjusted effective interest rate for purchased or originated credit-impaired (“POCI”) financial
cost. assets).

(viii) Derecognition of financial instruments Financial liability

Financial asset The Group and the Company derecognise a financial liability when its terms are modified and the cash
A financial asset is derecognised when the rights to receive cash flows from the asset have expired or, flows of the modified liability are substantially different. In this case, a new financial liability based on the
the Group and the Company have transferred their rights to receive cash flows from the asset or have modified terms is recognised at fair value. The difference between the carrying amount of the financial
assumed an obligation to pay the received cash flows in full without material delay to a third party under liability derecognised and the consideration paid is accounted for in accordance with the policy set out in
a “pass-through” arrangement without retaining control of the asset or substantially all the risks and Note 2.12 (viii).
rewards of the asset. On derecognition of a financial asset, the difference between the carrying amount
and the sum of the consideration received (including any new asset obtained less any new liability assumed) If the terms are not substantially different, the modification does not result in derecognition, and the Group
and any cumulative gain or loss that had been recognised in equity is recognised in the profit or loss, and the Company recalculate the amortised cost of the liability by discounting the modified cash flows at
except for equity investments at fair value through other comprehensive income where the gain or loss the original effective interest rate and the resulting gain or loss on remeasurement is recognised in the
are recognised in other comprehensive income. profit or loss. For floating-rate financial liabilities, the original effective interest rate used to calculate the
gain or loss on remeasurement is adjusted to reflect current market terms at the time of the modification.
Financial liability Any costs and fees incurred are recognised as an adjustment to the carrying amount of the liability and
amortised over the remaining term of the modified financial liability by re-computing the effective interest
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
rate on the instrument.
expired. On derecognition of a financial liability, the difference between the carrying amount of the
financial liabilities extinguished or transferred to another party and the consideration paid, including any
non-cash assets transferred or liabilities assumed, is recognised in the profit or loss. In the case of waiver
of debt from owners, the gain is recognised in equity as capital reserve.

36 37
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.12 Financial instruments (continued) 2.12 Financial instruments (continued)
Hedge Accounting Interest rate benchmark reform
(i) Cash flow hedge The Group and the Company have applied the practical expedients provided in the amendments to MFRS 9
Financial Instruments, MFRS 139 Financial Instruments: Recognition and Measurement, MFRS 7 Financial Instruments:
A cash flow hedge is a hedge of the exposure to variability in cash flows that is attributable to a particular
Disclosures, MFRS 4 Insurance Contracts and MFRS 16 Leases (Interest Rate Benchmark Reform – Phase 2).
risk associated with all, or a component of, a recognised asset or liability or a highly probable forecast
transaction and could affect the profit or loss.
As of 31 December 2022, the Group and the Company have applied the practical expedients provided in the
amendments for benchmark rate that had been replaced with an alternative benchmark rate. Certain transitional
In a cash flow hedge, the portion of the gain or loss on the hedging instrument that is determined to be
activities are currently ongoing, with an aim to achieve economically equivalent transactions and minimal impact
an effective hedge is recognised in other comprehensive income and accumulated in equity and the
upon transition.
ineffective portion is recognised in the profit or loss. The effective portion of changes in the fair value of
the hedging instrument that is recognised in other comprehensive income is limited to the cumulative
change in fair value of the hedged item, determined on a present value basis, from inception of the hedge.
2.13 Impairment
(i) Financial assets, contract assets and finance lease receivables
The Group designates only the change in the intrinsic value of option contracts as the hedging instrument
The Group and the Company recognise loss allowances for expected credit losses on financial assets
in cash flow hedging relationships. The change in the time value element of option contracts is accounted
measured at amortised cost, debt instruments measured at fair value through other comprehensive income,
for as a cost of hedging, included in the cash flow hedge reserve within equity.
contract assets and finance lease receivables.

The Group and the Company designate only the change in fair value of the spot element of forward
The Group and the Company measure loss allowances on debt instruments and cash and cash equivalent
exchange contracts as the hedging instrument in cash flow hedging relationships. The change in fair value
at an amount equal to lifetime expected credit loss, except for debt instruments that are determined to
of the forward element of forward exchange contracts (forward points) is accounted for as a cost of
have low credit risks at the reporting date, other debt instruments for which credit risk has not increased
hedging, included in the cash flow hedge reserve within equity.
significantly since initial recognition and finance lease receivables which are measured at 12-month expected
credit loss.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such
as inventory, the amount accumulated in the hedging reserve and the cost of hedging reserve is included
Loss allowances for trade receivables and contract assets are always measured at an amount equal to
directly in the initial cost of the non-financial item when it is recognised. This is not a reclassification
lifetime expected credit loss.
adjustment and will not be recognised in other comprehensive income for the period. This also applies
where the hedged forecast transaction of a non-financial asset or non-financial liability subsequently
When determining whether the credit risk of a financial asset has increased significantly since initial
becomes a firm commitment for which fair value hedge accounting is applied.
recognition and when estimating expected credit loss, the Group and the Company consider reasonable
and supportable information that is relevant and available without undue cost or effort. This includes both
For all other hedged forecast transactions, the amount accumulated in the hedging reserve and the cost
quantitative and qualitative information and analysis, based on the Group’s historical experience and informed
of hedging reserve is reclassified to profit or loss in the same period or periods during which the hedged
credit assessment and including forward-looking information, where available.
expected future cash flows affect profit or loss as a reclassification adjustment.
The Group and the Company assume that the credit risk on a financial asset has increased significantly if
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument expires or is
it is past due.
sold, terminated or exercised, then hedge accounting is discontinued prospectively. When hedge accounting
for cash flow hedge is discontinued, the amount that has been accumulated in the hedging reserve remains
The Group and the Company consider a financial asset to be in default when the borrower is unlikely to
in equity if the hedged future cash flows are still expected to occur. Otherwise, the amount will be
pay its credit obligations to the Group and the Company in full, without recourse by the Group and the
immediately reclassified to profit or loss as a reclassification adjustment. After discontinuation, once the
Company to actions such as realising security.
hedged cash flow occurs, any amount remaining in accumulated other comprehensive income must be
accounted for depending on the nature of the underlying transaction as described above.
Lifetime expected credit losses are the expected credit losses that result from all possible default events
over the expected life of a financial instrument, while 12-month expected credit losses are the portion of
(ii) Hedge of a net investment
expected credit losses that result from default events that are possible within the 12 months after the
Hedge of a net investment in a foreign operation, including a hedge of a monetary item that is accounted reporting date.
for as part of the net investment, are accounted for in a way similar to a cash flow hedge. Gains or losses
on the hedging instrument relating to the effective portion of the hedge are recognised in other comprehensive The maximum period considered when estimating expected credit losses is the maximum contractual period
income while any gains or losses relating to the ineffective portion are recognised in the profit or loss. On over which the Group and the Company is exposed to credit risk.
disposal of the foreign operation, the cumulative value of any such gains or losses recorded in equity is
transferred to the profit or loss. An impairment loss in respect of financial assets measured at amortised cost is recognised in profit or loss
and the carrying amount of the asset is reduced through the use of an allowance account.

38 39
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.13 Impairment (continued) 2.14 Cash and cash equivalents
(i) Financial assets, contract assets and finance lease receivables (continued) Cash and cash equivalents consist of cash on hand and bank balances, deposits with licensed financial institutions
and highly liquid investments which have an insignificant risk of changes in fair value and are used by the Group
POCI financial assets are assets that are credit-impaired on initial recognition. For POCI financial assets,
and the Company in the management of their short-term commitments. For the purpose of the statements of
lifetime expected credit losses are incorporated into the calculation of the effective interest rate on initial
cash flows, cash and cash equivalents are presented net of bank overdrafts and deposits restricted, if any.
recognition. Consequently, POCI financial assets do not carry an impairment allowance on initial recognition.
The amount recognised as a loss allowance subsequent to initial recognition is equal to the changes in
2.15 Contract assets and contract liabilities
lifetime expected credit losses since initial recognition of the asset.
Contract assets represent the Group’s and the Company’s right to consideration in exchange for goods or
An impairment loss in respect of debt investments measured at fair value through other comprehensive services that the entity has transferred to a customer when that right is conditioned on something other than
income is recognised in profit or loss and the allowance account is recognised in other comprehensive the passage of time. Contract assets are subjected to impairment in accordance to MFRS 9 Financial Instruments
income. (see Note 2.13 (i)).

All financial assets, except for those measured at fair value through profit or loss and equity investments Contract liabilities represent the Group’s and the Company’s obligation to transfer goods or services to a
measured at fair value through other comprehensive income, are subject to impairment (see Note 2.12(i)). customer for which the Group and the Company have received consideration, or the amount is due, from the
customer.
(ii) Other assets
The carrying amounts of other assets, other than inventories, deferred tax assets and non-current assets
2.16 Inventories
or disposal groups classified as held for sale, are reviewed at each reporting date to determine whether Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling
there is any indication of impairment. price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary
to make the sale.
If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised
if the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable Cost of crude oil and condensates includes costs of bringing the inventories to their present location and
amount. Impairment losses are recognised in the profit or loss. condition and is determined on a weighted average basis. Cost of crude oil and condensates for processing
includes costs of bringing the inventories to their present location and condition, less trade discounts and
A cash-generating unit is the smallest identifiable asset group that generates cash flows from continuing rebates and is determined on the first-in, first-out basis.
use that are largely independent from other assets and groups. An impairment loss recognised in respect
of a cash-generating unit is allocated first to reduce the carrying amount of any goodwill allocated to the Cost of petroleum products includes crude oil costs, export duty, transportation charges and processing costs
unit and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis. and is determined on a weighted average basis. Cost of liquefied natural gas (“LNG”) and petrochemical products
includes raw gas costs and production overheads and is determined on a weighted average basis.
The recoverable amount is the greater of the asset’s fair value less cost to sell and its value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre- Cost of material stores and spares consists of the invoiced value from suppliers and import duty charges and
tax discount rate that reflects current market assessments of the time value of money and the risks specific is determined on a weighted average basis.
to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount
is determined for the cash-generating unit to which the asset belongs. Cost of developed properties held for sale and properties under development consists of costs associated with
the acquisition of land, all costs that are directly attributable to development activities, appropriate proportions
For goodwill and intangible assets that have indefinite useful lives or that are not yet available for use, the of common costs attributable to developing the properties, and interest expenses incurred during the period
recoverable amount is estimated each period at the same time. of active development.

An impairment loss in respect of goodwill is not reversed in the subsequent period. In respect of other Lifting of offtake arrangements for crude oil and condensate produced in jointly-owned operations are such
assets, impairment losses are reversed if there has been a change in the estimates used to determine the that it is not practicable for each participant to receive or sell its precise share of the overall production during
recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount the period. At each reporting date, the extent of underlift is recognised as an asset at the lower of the cost
does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, and net realisable value, while overlift is recognised as a liability. The net movement of underlift and overlift is
if no impairment loss had been recognised. recognised in the profit or loss in cost of revenue.

Reversals of impairment losses are credited to the profit or loss in the year in which the reversals are
recognised. This includes certain amount of write-back for subsequent write-off.

40 41
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.17 Provisions, contingent liabilities and contingent assets 2.18 Employee benefits
Provisions Short term benefits

Provisions are recognised if, as a result of past events, the Group and the Company have a present legal or Wages and salaries, bonuses and social security contributions are recognised as an expense in the year in which
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits the associated services are rendered by employees of the Group and the Company.
will be required to settle the obligation. Provisions are determined by discounting the expected future net cash
flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific Long-term benefits
to the liability. Where discounting is used, the accretion in the provision due to the passage of time is recognised Long-term benefits are granted to eligible employees subject to meeting the pre-determined financial performance
as finance cost. and value growth targets of the Group and the Company over a vesting period of certain number of years.

The amount recognised as provisions is the best estimate of the expenditure required to settle the present Liability arising from long-term benefits is measured and reviewed at each reporting date, based on the
obligation at the reporting date. Provisions are reviewed at each reporting date and adjusted to reflect the management’s estimates on the achievement of the pre-determined targets, and it is recognised as an expense
current best estimate. over the performance period. The difference between estimate and actual will be recognised in the profit or
loss when incurred.
Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be Defined contribution plans
estimated reliably, the obligation is not recognised in the statements of financial position and is disclosed as a As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees
contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations whose Provident Fund.
existence will only be confirmed by the occurrence or non-occurrence of one or more future events not wholly
within the control of the Group, are not recognised in the financial statements but are disclosed as contingent Some of the Group’s foreign subsidiaries make contributions to their respective countries’ statutory pension
liabilities, unless the possibility of an outflow of economic resources is considered remote. schemes and certain other independently-administered funds which are defined contribution plans.

Contingent assets
Such contributions are recognised as an expense in the profit or loss as incurred.
When an inflow of economic benefit of an asset is probable where it arises from past events and where existence
will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly 2.19 Taxation
within the control of the entity, the asset is not recognised in the statement of financial position but is disclosed
Tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the profit
as a contingent asset. When the inflow of economic benefit is virtually certain, then the related asset is recognised.
or loss except to the extent it relates to a business combination or items recognised directly in equity, in which
case it is recognised in equity or other comprehensive income.
In particular, information about provisions that have the most significant effect on the amount recognised in
the financial statements is described in Note 23. Current tax

Onerous contract Current tax expense is the expected tax payable on the taxable income for the year, using the statutory tax
rates at the reporting date, and any adjustment to tax payable in respect of previous years.
A provision for onerous contract is recognised when the expected benefits to be derived by the Group and the
Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. Deferred tax
The provision is measured at the present value of the lower of the expected cost of terminating the contract
and the expected net cost of continuing with the contract. Before a provision is established, the Group and Deferred tax is provided for, using the liability method, on temporary differences at the reporting date between
the Company recognise any impairment loss on the assets associated with that contract. the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred
tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all
deductible temporary differences, unabsorbed capital allowances, unused reinvestment allowances, unused
investment tax allowances, unused tax losses and other unused tax credits to the extent that it is probable that
future taxable profit will be available against which the deductible temporary differences, unabsorbed capital
allowances, unused reinvestment allowances, unused investment tax allowances, unused tax losses and other
unused tax credits can be utilised.

42 43
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.19 Taxation (continued) 2.20 Foreign currency transactions (continued)
Deferred tax (continued) The income and expenses are translated at the exchange rates at the dates of the transactions or an average
rate that approximates those rates. Foreign currency differences are recognised in other comprehensive income
Deferred tax is not recognised for temporary differences arising from initial recognition of goodwill and an asset
and accumulated in the foreign currency translation reserve within equity.
or liability in a transaction which is not a business combination and any item that affects neither accounting
nor taxable profit or loss.
In the consolidated financial statements, when settlement of a monetary item receivable from or payable to
the Group’s foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised
and losses arising from such a monetary item are considered to form part of the net investment in a foreign
or the liability is settled, based on the laws that have been enacted or substantively enacted by the end of the
operation and are reclassified to other comprehensive income and accumulated under foreign currency translation
reporting period.
reserve in equity. Upon disposal of the investment, the cumulative exchange differences previously recorded in
equity are reclassified to the consolidated profit or loss.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities where they intend to settle current tax liabilities and assets on a net basis or their tax assets
2.21 Borrowing costs and foreign currency exchange differences relating to projects-in-progress
and liabilities will be realised simultaneously. Borrowing costs which are directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to be prepared for their intended use or sale,
Deferred tax asset is reviewed at each reporting date and is reduced to the extent that it is no longer probable are capitalised as part of the cost of those assets.
that the future taxable profit will be available against which the related tax benefit can be realised.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure
2.20 Foreign currency transactions for the assets is being incurred, borrowing costs are being incurred and activities that are necessary to prepare
the asset for its intended use or sale are in progress. Capitalisation of borrowing costs ceases when all activities
In preparing the financial statements of individual entities in the Group, transactions in currencies other than
necessary to prepare the qualifying asset for its intended use or sale are completed.
the entity’s functional currency (“foreign currencies”) are translated to the functional currencies at rates of
exchange ruling on the transaction dates.
Exchange differences arising from foreign currency borrowings, although regarded as an adjustment to borrowing
costs, are not capitalised but instead recognised in the profit or loss in the period in which they arise.
Monetary assets and liabilities denominated in foreign currencies at the reporting date have been retranslated
to the functional currency at rates ruling on the reporting date.
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is the weighted
average of borrowings that are outstanding during the year, other than borrowings made specifically for the
Non-monetary assets and liabilities denominated in foreign currencies, which are measured at fair value, are
purpose of financing a specific qualifying asset, in which the actual borrowing cost incurred on that borrowing
retranslated to the functional currency at the foreign exchange rates ruling at the date when the fair value was
less any investment income on the temporary investment of that borrowings, will be capitalised. Borrowing
determined. Non-monetary items that are measured in terms of historical cost in foreign currency are not
costs incurred subsequent to the completion of a specific qualifying asset are also included in the determination
retranslated.
of the capitalisation rate.
Gains and losses on exchange arising from retranslation are recognised in the profit or loss, except for differences
arising on the retranslation of equity instruments at fair value through other comprehensive income, which are
2.22 Revenue
recognised in equity and are never reclassified to profit or loss. Revenue from contracts with customers is measured based on the consideration specified in contracts with
customers and exclude amounts collected on behalf of third parties. The Group or the Company recognises
On consolidation, the assets and liabilities of subsidiaries with functional currencies other than Ringgit Malaysia, revenue when or as it transfers control over a product or service to the customer. An asset is transferred when
are translated into Ringgit Malaysia at the exchange rates ruling at reporting date, except for goodwill and fair or as the customer obtains control of the asset.
value adjustments arising from business combinations before 1 April 2011 which were stated at the previously-
translated carrying amounts in the Group’s financial statements. Goodwill and fair value adjustments arising from An entity transfers control of a good or service over time and, therefore, satisfies a performance obligation and
business combinations after 1 April 2011 are treated as assets and liabilities of the acquirer company and therefore recognises revenue over time, if one of the following criteria is met:
shall need to be translated using the closing rate at the end of each reporting period.
(a) the customer simultaneously receives and consumes the benefits provided by the entity’s performance as
The Group has deemed the amount of foreign currency translation reserve to be zero at 1 April 2011, other the entity performs; or
than reserve amount recorded by entities within the Group which had already adopted the IFRS prior to 1
January 2012. The gain or loss on subsequent disposal of any foreign operations of the Group shall include (b) the entity’s performance creates or enhances an asset (for example, work-in-progress) that the customer
translation differences subsequent to 1 April 2011. controls as the asset is created or enhanced; or

(c) the entity’s performance does not create an asset with an alternative use to the entity and the entity has
an enforceable right to payment for performance completed to date.

44 45
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

2. SIGNIFICANT ACCOUNTING POLICIES (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (continued)

2.22 Revenue (continued) 2.25 Fair value measurement (continued)
If a performance obligation is not satisfied over time in accordance with the above criteria, an entity satisfies (ii) Non-financial assets
the performance obligation and recognises revenue at a point in time.
For non-financial assets, the fair value measurement takes into account a market participant’s ability to
generate economic benefits by using the asset in its highest and best use or by selling it to another market
Revenue arising from shipping activities is mainly from freight income and charter income. Freight income and
participant that would use the asset in its highest and best use.
the relevant discharged costs of cargoes loaded onto vessels up to the reporting date are accrued for in the
profit or loss based on percentage of completion method. Charter income is accrued on time accrual basis.
When measuring the fair value of an asset or a liability, the Group and the Company use observable market
data as far as possible. Fair value are categorised into different levels in a fair value hierarchy based on the
Revenue arising from rental income of investment properties is recognised on a straight-line basis over the term
input used in the valuation technique as follows:
of the lease under the lease arrangement per Note 2.7.
• Level 1 – Quoted prices (unadjusted) in active markets for identifiable assets or liabilities.
Revenue arising from assets yielding interest and profit share margin from Islamic financing facilities are recognised • Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
on a time proportion basis that takes into account the effective yield on the assets. either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Revenue arising from investments yielding dividend is recognised when the shareholders’ right to receive payment • Level 3 – Inputs for the asset or liability that are not based on observable market data (unobservable input).
is established.
The fair value of an asset to be transferred between levels is determined as of the date of the event or change
Revenue arising from gas trading activities, where forward and future sale and purchase contracts for gas have in circumstances that caused the transfer.
been determined to be for trading purposes, the associated sales and purchases are reported net within sales.
The Group and the Company recognise transfers between levels of the fair value hierarchy as of the date of
2.23 Financing costs the event or change in circumstances that caused the transfers.

Financing costs comprise interest payable on borrowings and profit share margin on Islamic financing facilities, 2.26 Government grants
as well as accretion in provision due to the passage of time.
Government grants related to assets, including non-monetary grants at fair value, are deducted against the
All interests and other costs incurred in connection with borrowings are expensed as incurred, other than that construction cost of the assets. Subsequently, the grants are recognised in profit or loss on a systematic basis
capitalised in accordance with the accounting policy stated in Note 2.21. The interest component of finance over the life of the assets as a reduced depreciation expense.
lease payments is accounted for in accordance with the policy set out in Note 2.7.
2.27 Equity instruments
2.24 Operating segments Instruments classified as equity are measured at cost on initial recognition and are not remeasured subsequently.
An operating segment is a component of the Group and of the Company that engages in business activities
from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions Ordinary shares
with any of the Group’s and the Company’s other components, and for which discrete financial information is Ordinary shares are classified as equity.
available. An operating segment’s operating results are reviewed regularly by the chief operating decision maker,
which in this case is the PETRONAS Executive Leadership Team, to make decisions about resources to be Preference shares
allocated to the segment and to assess its performance.
Preference shares are classified as equity when it is redeemable but only at the Company’s option, and any
dividends are discretionary. Dividends thereon are recognised as distribution within equity.
2.25 Fair value measurement
Fair value of an asset or a liability, except for lease transactions, is determined as the price that would be Preference shares are classified as financial liabilities if it is redeemable on a specific date or at the option of
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the equity holders, or if dividend payment is not discretionary. Dividends thereon are recognised as interest
the measurement date. The measurement assumes that the transaction to sell the asset or transfer the liability expense in profit or loss as accrued.
takes place either in the principal market or in the absence of a principal market, in the most advantageous
market.

(i) Financial instruments

The fair value of financial instruments that are actively traded in organised financial markets are determined
by reference to quoted market prices at the close of business at the end of reporting date. For financial
instruments where there is no active market, fair value is determined using valuation techniques. Such
techniques may include using recent arm’s length market transactions, reference to the current fair value
of another instrument that is substantially the same, discounted cash flow analysis or other valuation models.
46 47
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT 3. PROPERTY, PLANT AND EQUIPMENT (continued)

At Group Acquisition Transfers/ Translation

Group 31.12.2021, Effect of 2022 of a Reclass/ exchange At
2022 as previously Amendments At 1.1.2022, Disposals/ In RM Mil subsidiary Adjustments difference 31.12.2022
In RM Mil reported to MFRS 116 restated Additions Write-offs
At cost:
At cost: Own use
Own use Freehold land 171 (186) 7 2,739
Freehold land 2,697 – 2,697 51 (1) Oil and gas properties – 14,361 7,448 378,869
Oil and gas properties 352,038 – 352,038 8,563 (3,541) Buildings 803 (1,460) 87 24,030
Buildings 24,537 – 24,537 121 (58) Plant and equipment 5,049 (369) 5,102 201,502
Plant and equipment 192,176 – 192,176 758 (1,214) Office equipment, furniture and fittings – (2) 29 4,303
Office equipment, furniture and fittings 4,304 – 4,304 98 (126) Computer software and hardware 170 (297) 42 5,790
Computer software and hardware 5,862 – 5,862 160 (147) Motor vehicles – (110) 9 347
Motor vehicles 460 – 460 14 (26) Vessels – (742) 1,847 10,806
Vessels 9,674 – 9,674 234 (207) Projects-in-progress
Projects-in-progress – oil and gas properties – (10,370) 262 25,404
– oil and gas properties 23,137 – 23,137 12,709 (334) – other projects* 787 (9,877) 1,830 40,474
– other projects* 34,052 (249) 33,803 14,129 (198)
6,980 (9,052) 16,663 694,264
648,937 (249) 648,688 36,837 (5,852)
Leased to others as operating lease
Leased to others as operating lease Buildings – 90 – 309
Buildings 216 – 216 3 – Vessels – 3,437 1,223 37,508
Vessels 33,497 – 33,497 216 (865) Plant and equipment – 17 – 326
Plant and equipment 309 – 309 – –
– 3,544 1,223 38,143
34,022 – 34,022 219 (865)
Right-of-use
Right-of-use Leasehold land – (99) – 10,045
Leasehold land 10,127 – 10,127 27 (10) Lease properties – (82) – 254
Lease properties 335 – 335 1 – Oil and gas properties – (885) 117 5,869
Oil and gas properties 5,485 – 5,485 1,170 (18) Buildings 37 (117) 38 1,572
Buildings 1,459 – 1,459 230 (75) Plant and equipment 33 (55) 48 3,510
Plant and equipment 3,354 – 3,354 150 (20) Computer software and hardware 3 – – 18
Computer software and hardware 27 – 27 1 (13) Motor vehicles 18 (28) – 349
Motor vehicles 348 – 348 43 (32) Vessels – 576 462 9,537
Vessels 6,589 – 6,589 2,622 (712)
91 (690) 665 31,154
27,724 – 27,724 4,244 (880)
7,071 (6,198)
a,b,c
18,551 763,561
710,683 (249) 710,434 a
41,300 (7,597)
continued from previous page
continue to next page
* Other projects-in-progress are mainly in relation to plant and equipment and vessels.
* Other projects-in-progress are mainly in relation to plant and equipment and vessels.

a
Includes net transfers out of RM3,630 million comprising transfer out to assets classified as held for sale of RM7,125 million offset
by transfers in from intangible assets of RM3,323 million and investment properties of RM172 million.
b
Includes downward revision to future cost of decommissioning and restoration amounting to RM2,527 million.
c
Includes downward adjustments to right-of-use assets following lease modification in accordance with MFRS 16 Leases amounting
a
Includes addition to future cost of decommissioning and restoration amounting to RM1,161 million. to RM41 million.
48 49
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT (continued) 3. PROPERTY, PLANT AND EQUIPMENT (continued)

At Group Acquisition Impairment Transfers/ Translation

Group 31.12.2021, Effect of 2022 of a (reversals)/ Reclass/ exchange At
2022 as previously Amendments At 1.1.2022, Charge Disposals/ In RM Mil subsidiary losses Adjustments difference 31.12.2022
In RM Mil reported to MFRS 116 restated for the year Write-offs
Accumulated depreciation and
Accumulated depreciation and impairment losses:
impairment losses: Own use
Own use Freehold land 3 – – – 3
Freehold land – – – – – Oil and gas properties – (93) 2,906 6,177 282,412
Oil and gas properties 259,388 – 259,388 17,480 (3,446) Buildings 381 (30) (777) 53 10,435
Buildings 10,433 (188) 10,245 621 (58) Plant and equipment 2,736 (2,549) (2,909) 2,968 119,495
Plant and equipment 113,866 (1,344) 112,522 7,909 (1,182) Office equipment, furniture and fittings – – (47) 28 3,333
Office equipment, furniture and fittings 3,200 – 3,200 265 (113) Computer software and hardware 100 (2) (323) 52 4,225
Computer software and hardware 4,124 – 4,124 283 (9) Motor vehicles – – (69) 4 269
Motor vehicles 329 – 329 29 (24) Vessels – 204 (565) 674 3,476
Vessels 2,300 – 2,300 1,061 (198) Projects-in-progress
Projects-in-progress – oil and gas properties – 1,559 1 46 3,000
– oil and gas properties 1,394 – 1,394 – – – other projects* – 6 – 138 2,955
– other projects* 3,243 (432) 2,811 – –
3,220 (905) (1,783) 10,140 429,603
398,277 (1,964) 396,313 27,648 (5,030)
Leased to others as operating lease
Leased to others as operating lease Buildings – – – – 13
Buildings 9 – 9 4 – Vessels – 94 – 486 20,452
Vessels 19,265 – 19,265 1,199 (592) Plant and equipment – – – – 21
Plant and equipment 14 – 14 7 –
– 94 – 486 20,486
19,288 – 19,288 1,210 (592)
Right-of-use
Right-of-use Leasehold land – – (6) 8 2,568
Leasehold land 2,390 – 2,390 176 – Lease properties – – (59) – 22
Lease properties 79 – 79 2 – Oil and gas properties – – (200) 123 4,297
Oil and gas properties 3,283 – 3,283 1,106 (15) Buildings 24 (74) (14) 16 748
Buildings 667 – 667 204 (75) Plant and equipment 19 – (14) 16 2,164
Plant and equipment 1,920 – 1,920 241 (18) Computer software and hardware 1 – – – 15
Computer software and hardware 27 – 27 – (13) Motor vehicles 10 – (13) – 196
Motor vehicles 164 – 164 64 (29) Vessels – – 209 242 2,244
Vessels 1,690 – 1,690 748 (645)
54 (74) (97) 405 12,254
10,220 – 10,220 2,541 (795)
3,274 (885) a
(1,880) 11,031 462,343
427,785 (1,964) 425,821 31,399 (6,417)
continued from previous page
continue to next page
* Other projects-in-progress are mainly in relation to plant and equipment and vessels.
* Other projects-in-progress are mainly in relation to plant and equipment and vessels.

a
Includes net transfers out of RM1,880 million comprising transfer out to asset classified as held for sale of RM1,892 million offset
by transfer in from investment properties RM12 million.
50 51
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT (continued) 3. PROPERTY, PLANT AND EQUIPMENT (continued)

At Group Transfers/ Translation

Group 31.12.2020, Effect of 2021 Disposal of a Reclass/ exchange At
2021 as previously Amendments At 1.1.2021, Disposals/ In RM Mil subsidiary Adjustments difference 31.12.2021
In RM Mil reported to MFRS 116 restated Additions Write-offs
At cost:
At cost: Own use
Own use Freehold land – 14 (8) 2,697
Freehold land 2,697 — 2,697 3 (9) Oil and gas properties – (18,566) 5,500 352,038
Oil and gas properties 369,557 — 369,557 5,385 (9,838) Buildings – 1,978 (78) 24,537
Buildings 22,486 — 22,486 195 (44) Plant and equipment – 21,296 2,613 192,176
Plant and equipment 168,918 — 168,918 323 (974) Office equipment, furniture and fittings – 188 42 4,304
Office equipment, furniture and fittings 4,076 — 4,076 70 (72) Computer software and hardware – 1,034 63 5,862
Computer software and hardware 4,875 — 4,875 102 (212) Motor vehicles – 14 (5) 460
Motor vehicles 460 — 460 16 (25) Vessels – (1,538) 570 9,674
Vessels 10,671 — 10,671 147 (176) Projects-in-progress
Projects-in-progress – oil and gas properties – (11,182) 201 23,137
– oil and gas properties 26,053 — 26,053 8,604 (539) – other projects* – (28,105) 1,548 33,803
– other projects* 47,453 (197) 47,256 13,122 (18)
– (34,867) 10,446 648,688
657,246 (197) 657,049 27,967 (11,907)
Leased to others as operating lease
Leased to others as operating lease Buildings – 191 – 216
Buildings 25 — 25 — — Vessels – 417 757 33,497
Vessels 33,514 — 33,514 149 (1,340) Plant and equipment – 287 – 309
Plant and equipment 22 — 22 — —
– 895 757 34,022
33,561 — 33,561 149 (1,340)
Right-of-use
Right-of-use Leasehold land – (4) 21 10,127
Leasehold land 10,019 — 10,019 100 (9) Lease properties – (231) 1 335
Lease properties 565 — 565 — — Oil and gas properties – 58 6 5,485
Oil and gas properties 4,642 — 4,642 779 — Buildings (12) 74 33 1,459
Buildings 1,033 — 1,033 362 (31) Plant and equipment – (401) 43 3,354
Plant and equipment 4,320 — 4,320 135 (743) Computer software and hardware – (1) – 27
Computer software and hardware 28 — 28 — — Motor vehicles – 63 3 348
Motor vehicles 140 — 140 159 (17) Vessels – (92) 399 6,589
Vessels 5,508 — 5,508 956 (182)
(12) (534) 506 27,724
26,255 — 26,255 2,491 (982)
(12) a,b,c,d,e
(34,506) 11,709 710,434
717,062 (197) 716,865 a
30,607 (14,229)
continued from previous page
continue to next page
* Other projects-in-progress are mainly in relation to plant and equipment and vessels.
* Other projects-in-progress are mainly in relation to plant and equipment and vessels.

a
Includes net transfers out of RM33,170 million comprising transfers out to assets classified as held for sale of RM31,722 million
and other receivables of RM2,693 million offset by transfers in from intangible assets of RM1,241 million and investment properties
of RM4 million.
b
Includes downward revision to future cost of decommissioning and restoration amounting to RM1,035 million.
c
Includes downward adjustments to right-of-use assets following lease modification in accordance to MFRS 16 Leases amounting
to RM280 million.
d
Includes reclassification of certain assets from accumulated depreciation to cost of RM31 million.
a
Includes additional to future cost of decommissioning and restoration amounting to RM1,473 million. e
Includes downward effect from Amendments to MFRS 116 of RM52 million.
52 53
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT (continued) 3. PROPERTY, PLANT AND EQUIPMENT (continued)

At Group Impairment Transfers/ Translation

Group 31.12.2020, Effect of 2021 Disposal of a (reversals)/ Reclass/ exchange At
2021 as previously Amendments At 1.1.2021, Charge Disposals/ In RM Mil subsidiary losses Adjustments difference 31.12.2021
In RM Mil reported to MFRS 116 restated for the year Write-offs
Accumulated depreciation and
Accumulated depreciation and impairment losses:
impairment losses: Own use
Own use Freehold land – – – – –
Freehold land – – – – – Oil and gas properties – (5,312) (21,681) 4,426 259,388
Oil and gas properties 271,815 – 271,815 18,350 (8,210) Buildings – 138 89 15 10,245
Buildings 9,438 – 9,438 596 (31) Plant and equipment – 913 2,753 1,650 112,522
Plant and equipment 100,610 – 100,610 7,526 (930) Office equipment, furniture and fittings – 1 34 37 3,200
Office equipment, furniture and fittings 2,896 – 2,896 303 (71) Computer software and hardware – 12 (28) (18) 4,124
Computer software and hardware 3,824 – 3,824 540 (206) Motor vehicles – – (4) (2) 329
Motor vehicles 325 – 325 33 (23) Vessels – 78 (1,057) 414 2,300
Vessels 2,044 – 2,044 986 (165) Projects-in-progress
Projects-in-progress – oil and gas properties – (1,179) 651 103 1,394
– oil and gas properties 1,867 – 1,867 – (48) – other projects* – 294 (2,760) 269 2,811
– other projects* 5,082 – 5,082 – (74)
– (5,055) (22,003) 6,894 396,313
397,901 – 397,901 28,334 (9,758)
Leased to others as operating lease
Leased to others as operating lease Buildings – – – – 9
Buildings 1 – 1 8 – Vessels – 15 – 236 19,265
Vessels 18,852 – 18,852 1,092 (930) Plant and equipment – – – – 14
Plant and equipment 2 – 2 12 –
– 15 – 236 19,288
18,855 – 18,855 1,112 (930)
Right-of-use
Right-of-use Leasehold land – 9 11 5 2,390
Leasehold land 2,166 – 2,166 200 (1) Lease properties – – (109) – 79
Lease properties 188 – 188 – – Oil and gas properties – – (99) 25 3,283
Oil and gas properties 2,358 – 2,358 999 – Buildings (2) (108) 63 24 667
Buildings 508 – 508 205 (23) Plant and equipment – – (3) 24 1,920
Plant and equipment 2,237 – 2,237 373 (711) Computer software and hardware – – – – 27
Computer software and hardware 22 – 22 5 – Motor vehicles – – 53 1 164
Motor vehicles 71 – 71 54 (15) Vessels – – (171) 11 1,690
Vessels 1,039 – 1,039 968 (157)
(2) (99) (255) 90 10,220
8,589 – 8,589 2,804 (907)
(2) (5,139)
a
(22,258)
b,c
7,220 425,821
425,345 – 425,345 32,250 (11,595)
continued from previous page
continue to next page
* Other projects-in-progress are mainly in relation to plant and equipment and vessels.
* Other projects-in-progress are mainly in relation to plant and equipment and vessels.

a
Includes downward effect from Amendments to MFRS 116 of RM1,964 million.
b
Includes net transfers out of RM22,289 million comprising transfer out to asset classified as held for sale of RM22,298 million
offset by transfers in from intangible assets RM6 million and investment properties of RM3 million.
c
Includes reclassification of certain assets from accumulated depreciation to cost of RM31 million.
54 55
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT (continued) 3. PROPERTY, PLANT AND EQUIPMENT (continued)

Company Company
2022 At Disposals/ 2022 Transfers/ At
In RM Mil 1.1.2022 Additions write-offs In RM Mil Adjustments 31.12.2022

At cost: At cost:
Own use Own use
Oil and gas properties 30,897 165 (361) Oil and gas properties (76) 30,625
Buildings 298 – – Buildings (5) 293
Plant and equipment 21 – – Plant and equipment – 21
Office equipment, furniture and fittings 102 3 (1) Office equipment, furniture and fittings – 104
Computer software and hardware 495 – (25) Computer software and hardware 5 475
Motor vehicles 16 2 (3) Motor vehicles – 15
Projects-in-progress Projects-in-progress
– oil and gas properties – 47 – - oil and gas properties – 47
– other projects* 1,106 1,829 – - other projects* (683) 2,252

32,935 2,046 (390) (759) 33,832

Right-of-use Right-of-use
Leasehold land 349 4 – Leasehold land – 353
Buildings 6,573 254 – Buildings – 6,827
Plant and equipment 1,485 – – Plant and equipment – 1,485

8,407 258 – – 8,665

41,342 2,304
a,b c
(390) (759)
a,b,c
42,497
continue to next page continued from previous page

* Other projects-in-progress are mainly in relation to plant and equipment. * Other projects-in-progress are mainly in relation to plant and equipment.

a
Includes addition to future cost of decommissioning and restoration amounting to RM161 million. a
Includes downward revision to future cost of decommissioning and restoration amounting to RM76 million.
b
Includes upward adjustments to right-of-use assets following lease modification in accordance with MFRS 16 Leases amounting b
Includes net transfers out of RM678 million comprising transfers to subsidiaries of RM494 million and intangible assets of
to RM91 million and addition of new right-of-use asset amounting to RM163 million. RM64 million and reclassification to profit or loss of RM120 million.
c
Includes oil and gas properties disposed upon decommissioning. c
Includes downwards revision of building cost amounting RM5 million.
56 57
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT (continued) 3. PROPERTY, PLANT AND EQUIPMENT (continued)

Company Company
2022 At Charge for 2022 Disposals/ At
In RM Mil 1.1.2022 the year In RM Mil Write-offs 31.12.2022

Accumulated depreciation and impairment losses: Accumulated depreciation and impairment losses:
Own use Own use
Oil and gas properties 21,897 1,156 Oil and gas properties (361) 22,692
Buildings 55 4 Buildings – 59
Plant and equipment 9 3 Plant and equipment – 12
Office equipment, furniture and fittings 87 3 Office equipment, furniture and fittings (1) 89
Computer software and hardware 434 29 Computer software and hardware (25) 438
Motor vehicles 12 1 Motor vehicles (3) 10
Projects-in-progress Projects-in-progress
– oil and gas properties – – – oil and gas properties – –
– other projects* – – – other projects* – –

22,494 1,196 (390) 23,300

Right-of-use Right-of-use
Leasehold land 43 7 Leasehold land – 50
Buildings 1,086 300 Buildings – 1,386
Plant and equipment 1,160 108 Plant and equipment – 1,268

2,289 415 – 2,704

24,783 1,611 (390) 26,004

continue to next page continued from previous page

* Other projects-in-progress are mainly in relation to plant and equipment. * Other projects-in-progress are mainly in relation to plant and equipment.

58 59
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT (continued) 3. PROPERTY, PLANT AND EQUIPMENT (continued)

Company Company Transfers/

2021 At Disposals/ 2021 Reclass/ At
In RM Mil 1.1.2021 Additions Write-offs In RM Mil Adjustments 31.12.2021

At cost: At cost:
Own use Own use
Oil and gas properties 31,103 105 (112) Oil and gas properties (199) 30,897
Buildings 277 – – Buildings 21 298
Plant and equipment 12 – – Plant and equipment 9 21
Office equipment, furniture and fittings 87 – – Office equipment, furniture and fittings 15 102
Computer software and hardware 471 – – Computer software and hardware 24 495
Motor vehicles 15 3 (2) Motor vehicles – 16
Projects-in-progress Projects-in-progress
- oil and gas properties 279 – – - oil and gas properties (279) –
- other projects* 996 298 (3) - other projects* (185) 1,106

33,240 406 (117) (594) 32,935

Right-of-use Right-of-use
Leasehold land 349 – – Leasehold land – 349
Buildings 6,573 – – Buildings – 6,573
Plant and equipment 1,485 – – Plant and equipment – 1,485

8,407 – – – 8,407

41,647 a
406 (117) (594)
a,b
41,342
continue to next page continued from previous page

* Other projects-in-progress are mainly in relation to plant and equipment. * Other projects-in-progress are mainly in relation to plant and equipment.

a
Includes downward revision to future cost of decommissioning and restoration amounting to RM199 million.
b
Includes net transfers out of RM395 million comprising transfers to subsidiaries of RM118 million and intangible assets of
a
Includes addition to future cost of decommissioning and restoration amounting to RM92 million. RM15 million and reclassification to profit or loss of RM262 million.
60 61
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT (continued) 3. PROPERTY, PLANT AND EQUIPMENT (continued)

Company Company
2021 At Charge for Impairment 2021 Disposals/ At
In RM Mil 1.1.2021 the year losses In RM Mil Write-offs 31.12.2021

Accumulated depreciation and impairment losses: Accumulated depreciation and impairment losses:
Own use Own use
Oil and gas properties 19,944 1,357 596 Oil and gas properties – 21,897
Buildings 52 3 – Buildings – 55
Plant and equipment 5 4 – Plant and equipment – 9
Office equipment, furniture and fittings 83 4 – Office equipment, furniture and fittings – 87
Computer software and hardware 387 47 – Computer software and hardware – 434
Motor vehicles 13 1 – Motor vehicles (2) 12
Projects-in-progress Projects-in-progress
– oil and gas properties – – – – oil and gas properties – –
– other projects* – – – – other projects* – –

20,484 1,416 596 (2) 22,494

Right-of-use Right-of-use
Leasehold land 36 7 – Leasehold land – 43
Buildings 780 306 – Buildings – 1,086
Plant and equipment 947 213 – Plant and equipment – 1,160

1,763 526 – – 2,289

22,247 1,942 596 (2) 24,783

continue to next page continued from previous page

* Other projects-in-progress are mainly in relation to plant and equipment. * Other projects-in-progress are mainly in relation to plant and equipment.

62 63
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT (continued) 3. PROPERTY, PLANT AND EQUIPMENT (continued)

Group Company 3.1 As a lessee

Right-of-use assets
2022 2021 2022 2021
In RM Mil Restated Depreciation of right-of-use assets

Carrying amount Group Company

Own use In RM Mil 2022 2021 2022 2021
Freehold land 2,736 2,697 – –
Oil and gas properties 96,457 92,650 7,933 9,000 Capitalised in property, plant and equipment 117 108 – –
Buildings 13,595 14,292 234 243 Recognised in profit or loss 2,424 2,696 415 526
Plant and equipment 82,007 79,654 9 12 Total depreciation 2,541 2,804 415 526
Office equipment, furniture and fittings 970 1,104 15 15
Computer software and hardware 1,565 1,738 37 61 Extension options
Motor vehicles 78 131 5 4
Some lease contracts contain extension options exercisable only by the Group and the Company before the end
Vessels 7,330 7,374 – –
of the non-cancellable contract period. Where practicable, the Group and the Company include extension options
Projects-in-progress
in lease contracts to provide operational flexibility. The discounted potential future lease payments arising from
– oil and gas properties 22,404 21,743 47 –
exercisable extension options has been included in the lease liabilities except for when the extension terms are
– other projects 37,519 30,992 2,252 1,106
uncertain as the Group is finalising the extension terms as at reporting date.
264,661 252,375 10,532 10,441
Significant judgments and assumptions in relation to leases
Leased to others as operating lease
Buildings 296 207 – – The Group and the Company assess at lease commencement by applying significant judgments whether it is
Vessels 17,056 14,232 – – reasonably certain to exercise the extension options. The Group and the Company consider all facts and
Plant and equipment 305 295 – – circumstances including their past practice and any cost that will be incurred to change the asset if an option
to extend is not taken, to help them determine the lease term.
17,657 14,734 – –

Right-of-use The Group and the Company also applied judgments and assumptions in determining the incremental borrowing
Leasehold land 7,477 7,737 303 306 rate of the respective leases. The Group and the Company first determine the closest available borrowing rates
Lease properties 232 256 – – before using significant judgments to determine the adjustments required to reflect the term, security, value or
Oil and gas properties 1,572 2,202 – – economic environment of the respective leases.
Buildings 824 792 5,441 5,487
3.2 As a lessor
Plant and equipment 1,346 1,434 217 325
Computer software and hardware 3 – – – Property, plant and equipment leased to others as operating lease
Motor vehicles 153 184 – –
Vessels 7,293 4,899 – – The following are recognised in the profit or loss:

18,900 17,504 5,961 6,118 Group

301,218 284,613 16,493 16,559 In RM Mil 2022 2021

Lease income 2,551 1,990

64 65
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT (continued) 3. PROPERTY, PLANT AND EQUIPMENT (continued)
3.2 As a lessor (continued) 3.7 Estimation of oil and gas reserves (continued)
Property, plant and equipment leased to others as operating lease (continued) The term “reserves” describes quantities of oil and gas volumes anticipated to be commercially recoverable by
application of development projects to known accumulations given the prevailing economic situation present at
The operating lease payments to be received are as follows: the time of estimation. The reserves can be characterised into developed and undeveloped based on their
Group development and production status. Developed reserves are quantities expected to be recovered from existing
and operating wells and facilities. Undeveloped reserves are quantities expected to be recovered through future
In RM Mil 2022 2021 significant investments, which have been sanctioned and approved, and remain so until production commences
Less than one year 2,103 1,894 when they would be characterised as developed reserves.
One to five years 6,872 6,039
More than five years 4,422 4,616 Estimation of reserves is reviewed annually. These estimates are inherently imprecise, require the application of
judgments and are subject to regular revision, either upward or downward, based on new information available
Total undiscounted lease payments 13,397 12,549 such as new geological information gathered from the drilling of additional wells, observation of long-term
reservoir performance under producing conditions and changes in economic factors, including product prices,
Included in property, plant and equipment leased to others as operating lease are certain vessels which are leased contract terms or development plans.
out by the Group. The leases typically run for a period range of 2 to 20 years (2021: 2 to 19 years).
Such revisions will impact the Group’s and the Company’s reported financial position and results which include:
3.3 Security
(i) carrying value of oil and gas properties and their corresponding amortisation charges;
Property, plant and equipment of certain subsidiaries costing RM12,960 million (2021: RM10,390 million) have
(ii) carrying value of projects-in-progress;
been pledged as security for loan facilities as set out in Note 21 and Note 22 to the financial statements.
(iii) provisions for decommissioning and restoration; and
(iv) carrying value of deferred tax assets/liabilities.
3.4 Projects-in-progress
Included in additions to projects-in-progress of the Group is borrowing costs capitalised during the year of 3.8 Impairment review of property, plant and equipment
RM1,248 million (2021: RM678 million) and capitalisation of depreciation charge for the year of right-of-use assets
As at 31 December 2022, the Group recognised net impairment reversals on certain property, plant and equipment
of RM117 million (2021: RM108 million). The interest rate on borrowing costs capitalised ranges from 2.2% to
amounting to RM885 million (2021: RM5,139 million) mainly from the business segments as described below.
7.2% (2021: 2.8% to 5.5%) per annum.

In 2022, Gas segment reported net impairment reversals of RM2,560 million mainly in relation to floating LNG
3.5 Restriction of land title
plant integrated operations in Malaysia, driven by an improvement in the future gas price outlook. Conversely,
The titles to certain freehold and leasehold land are in the process of being registered in the Company’s and Upstream segment reported net impairment losses of RM1,467 million on oil and gas properties primarily for
subsidiaries’ name. Certain long-term leasehold land of the Group and the Company cannot be disposed of, certain petroleum operations in Malaysia due to unfavourable changes in operational outlook of specific assets.
charged or sub-leased without the prior consent of the relevant authority.
In the prior year, the Company recognised net impairment losses on oil and gas properties amounting to RM596
3.6 Change in estimates million due to unfavourable changes in economic outlook of certain assets.
During the year, the Group and the Company revised the estimated future cost of decommissioning of oil and
In arriving at the net impairment reversals amounts, the carrying amount of each previously impaired cash-
gas properties and other property, plant and equipment. The revision was accounted for prospectively as a change
generating unit is compared with the recoverable amount of the cash-generating unit. The impairment reversals
in accounting estimates resulting in a decrease in cost of property, plant and equipment of the Group and the
are limited only to the extent that the asset’s carrying amount does not exceed the carrying amount that would
Company by RM2,527 million (2021: RM1,035 million) and RM76 million (2021: RM199 million) respectively (refer
have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Note 23).

The Group’s recoverable amount for the relevant impairment reversals/losses during the year of RM16,474 million
3.7 Estimation of oil and gas reserves
(2021: RM70,143 million) were determined from the value in use calculations using cash flow projections and fair
Oil and gas reserves are key elements in the Group’s and the Company’s investment decision-making process. value less costs to sell.
Reserves estimation principles and methodologies are based on globally recognised industry standards, such as
the Petroleum Resources Management System developed by the Society of Petroleum Engineers. The Company’s recoverable amount for the relevant impairment losses in the prior year of RM4,135 million was
determined from the value in use calculations using cash flow projections.

66 67
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

3. PROPERTY, PLANT AND EQUIPMENT (continued) 4. INVESTMENT PROPERTIES

3.8 Impairment review of property, plant and equipment (continued) Group
The Group and the Company use a range of long-term assumptions including prices, volumes, margins and costs 2022 At
based on past performance and management’s expectations of market development. The projected cash flows In RM Mil 1.1.2022 Additions Disposals
were discounted using discount rates ranging between 7.6% and 8.0% (2021: 7.4% and 17.6%).
At cost:
Freehold land 1,468 – (1)
Price assumptions and sensitivity
Leasehold land 993 – –
Price assumptions applied for impairment testing are reviewed on an annual basis. Reviews include comparison Buildings 13,616 23 (34)
with available market data and forecasts that reflect fundamental developments in global demand and supply. Projects-in-progress 1,860 170 –
The nominal term of average Brent price assumptions applied in impairment testing scenarios in 2022 were as
follows: 17,937 193 (35)

Price assumptions 2023-2027 >2027 continue to next page

Brent (USD/bbl) 75 60 At Charge for Impairment

1.1.2022 the year Disposals losses
The main sensitivity in relation to impairment reversals during the year is the price assumptions used in Gas
Accumulated depreciation and impairment losses:
segment. An increase or a decrease of 10 to 20 percent in price assumptions over the entire cash flow projection
Buildings 7,768 509 (14) 15
period would ceteris paribus increase or decrease the recoverable amount and impairment reversals by approximately
the following amounts: continue to next page
Increase/(Decrease)
Group
Recoverable Impairment
2021 At
In RM Mil amount reversals
In RM Mil 1.1.2021 Additions Disposals
Price sensitivity
At cost:
Increase of 10%-20% 1,779 to 3,572 Nil
Freehold land 1,469 – –
Decrease of 10%-20% (1,788) to (3,576) Nil to (612)*
Leasehold land 990 3 –
Buildings 13,588 13 (1)
* A decrease of 20 percent in price assumptions would have resulted in lower impairment reversals by RM612 Projects-in-progress 1,670 190 –
million during the year.
17,717 206 (1)
continue to next page

At Charge for Impairment

1.1.2021 the year Disposals losses

Accumulated depreciation and impairment losses:

Buildings 7,249 508 – 3
continue to next page

68 69
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

4. INVESTMENT PROPERTIES (continued) 4. INVESTMENT PROPERTIES (continued)

Carrying amount
Group Translation Group
2022 exchange At In RM Mil 2022 2021
In RM Mil Transfers difference 31.12.2022
Freehold land 1,467 1,468
At cost: Leasehold land 973 993
Freehold land – – 1,467 Buildings 5,222 5,848
Leasehold land (20) – 973 Projects-in-progress 1,982 1,860
Buildings (122) 22 13,505
9,644 10,169
Projects-in-progress (48) – 1,982
a
(190) 22 17,927 Fair value information
continued from previous page The Directors of the subsidiaries have estimated the fair value of investment properties as at 31 December 2022 to
be RM17,425 million (2021: RM18,181 million).
Translation
exchange At The fair value of investment properties are categorised as follows:
Transfers difference 31.12.2022 Level 3
Group
Accumulated depreciation and impairment losses: In RM Mil 2022 2021
Buildings b
(14) 19 8,283
Freehold land 1,771 1,815
continued from previous page Leasehold land 1,000 1,000
Buildings 14,654 15,366
Group Translation
17,425 18,181
2021 exchange At
In RM Mil Transfers difference 31.12.2021
The Group uses various valuation techniques in determining the fair value of its investment properties. Such techniques
At cost: include discounted cash flows method, investment method, residual method and market comparable method.
Freehold land (1) – 1,468
Leasehold land – – 993 Leases as lessor
Buildings 3 13 13,616
The Group via its subsidiary has entered into non-cancellable operating lease agreements for Government Office
Projects-in-progress – – 1,860 Buildings (“GOB”) in accordance with the Concession Agreement (“CA”) with the Government of Malaysia. Under the
c
2 13 17,937 CA, the Group will construct various parcels of GOB on land belonging to the Government. Upon completion of each
parcel, the Government will execute a 25-year lease agreement over the land of the said parcel to the Group.
continued from previous page
Simultaneously, the Group will sub-lease the same land and buildings to the Government for the same period in
return for lease rentals based on predetermined rates per square foot per month. None of these leases include
Translation
contingent rentals.
exchange At
Transfers difference 31.12.2021
These leases have remaining period of non-cancellable lease terms between 2 and 19 years (2021: 3 and 20 years).
Accumulated depreciation and impairment losses:
Buildings (3)
d
11 7,768 The maturity analysis of the undiscounted lease payments receivables for the Group inclusive of GOB are as follows:
continued from previous page Group

In RM Mil 2022 2021

Less than one year 1,740 1,747

Between one and five years 7,114 7,840
More than five years 2,584 2,728
a
Comprises transfer out to property, plant and equipment of RM172 million and assets classified as held for sale of RM18 million. Total undiscounted lease payments 11,438 12,315
b
Comprises transfer out to property, plant and equipment of RM12 million and assets classified as held for sale of RM2 million.
c
Comprises transfer in from assets classified as held for sale of RM6 million and transfer out to property, plant and equipment of
RM4 million.
d
Comprises transfer out to property, plant and equipment of RM3 million.
70 71
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

5. LAND HELD FOR DEVELOPMENT 8. INVESTMENTS IN JOINT VENTURES

Included in land held for development is freehold land amounting to RM2,766 million (2021: RM2,764 million). Group Company

2022 2021 2022 2021

6. INVESTMENTS IN SUBSIDIARIES In RM Mil Restated

Investments at cost
Company
– unquoted shares 5,552 5,065 475 475
In RM Mil 2022 2021 Fair value adjustments on financial guarantee 377 377 377 377
Investments at cost Share of post-acquisition losses and reserves (421) (69) – –
– quoted shares 14,907 14,907 5,508 5,373 852 852
– unquoted shares 146,066 140,437 Less: Impairment losses (15) (15) (9) (9)
Fair value adjustments on loans and advances and financial guarantee 9,904 9,790
5,493 5,358 843 843
170,877 165,134

Less: Impairment losses Share of joint ventures’ contingent liabilities:

– unquoted shares (13,248) (16,342) Claims filed by/disputes with various parties (27) (65) – –

157,629 148,792
The Group’s share of the current year and cumulative losses of certain joint ventures amounting to RM631 million
(2021: RM62 million) and RM1,277 million (2021: RM646 million) respectively have not been recognised in the Group’s
Market value of quoted shares 93,494 93,474 profit or loss as equity accounting has ceased when the Group’s share of losses of these joint ventures exceeded the
carrying amount of its investment in these joint ventures since the Group has no obligation in respect of these losses.
Details of key subsidiaries are stated in Note 43 to the financial statements.
The shares of a joint venture are pledged as a security for a borrowing taken by the joint venture.

7. INVESTMENTS IN ASSOCIATES Summarised financial information has not been included as the joint ventures are not individually material to the
Group.
Group Company

In RM Mil 2022 2021 2022 2021 Details of key joint ventures are stated in Note 45 to the financial statements.

Investments at cost
– quoted shares 314 309 302 302
– unquoted shares 3,127 2,933 – –
Share of post-acquisition profits and reserves 1,673 1,426 – –

5,114 4,668 302 302

Less: Impairment losses
– unquoted shares (2,493) (2,565) – –

2,621 2,103 302 302

Market value of quoted shares 1,181 1,120 630 630

The Group’s share of the current year losses and cumulative losses of certain associates amounting to RM100 million
(2021: RM76 million) and RM308 million (2021: RM208 million) respectively have not been recognised in the Group’s
profit or loss as equity accounting has ceased when the Group’s share of losses of these associates exceeded the
carrying amount of its investment in these associates since the Group has no obligation in respect of these losses.

Summarised financial information has not been included as the associates are not individually material to the Group.

Details of key associates are stated in Note 44 to the financial statements.

72 73
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

9. INTANGIBLE ASSETS 9. INTANGIBLE ASSETS (continued)

Group Acquisition Translation
Group
2022 of a exchange At
2022 At Disposals/
In RM Mil subsidiary Transfers difference 31.12.2022
In RM Mil 1.1.2022 Additions Write-offs
At cost:
At cost:
Goodwill 2,885 (492) (38) 8,900
Goodwill 6,545 – –
Exploration expenditure – (3,382) 878 15,796
Exploration expenditure 16,220 2,892 (812) Other intangible assets 6,431 48 2,137 51,296
Other intangible assets 39,463 3,243 (26) Projects-in-progress
Projects-in-progress – other projects – (5) – 23
– other projects 20 8 –
9,316 a
(3,831) 2,977 76,015
62,248 6,143 (838)
continued from previous page
continue to next page
Acquisition Translation
of a exchange At
At Charge for Disposals/ Impairment
subsidiary Transfers difference 31.12.2022
1.1.2022 the year Write-offs losses
Accumulated amortisation and impairment losses:
Accumulated amortisation and impairment losses:
Goodwill – (168) 3 2,494
Goodwill 1,376 – – 1,283
Exploration expenditure – 12 560 8,848
Exploration expenditure 7,713 – (12) 575
Other intangible assets 598 – 1,877 38,413
Other intangible assets 33,765 2,134 (15) 54
598 (156)
a
2,440 49,755
42,854 2,134 (27) 1,912
continued from previous page
continue to next page
Group Translation
2021 exchange At
Group
In RM Mil Transfers difference 31.12.2021
2021 At Disposals/
In RM Mil 1.1.2021 Additions Write-offs At cost:
Goodwill (4) 4 6,545
At cost:
Exploration expenditure (5,545) 296 16,220
Goodwill 6,545 – –
Other intangible assets (218) 1,145 39,463
Exploration expenditure 24,529 1,482 (4,542)
Projects-in-progress
Other intangible assets 37,431 1,148 (43) – other projects – – 20
Projects-in-progress
– other projects – 20 –
b
(5,767) 1,445 62,248

68,505 2,650 (4,585) continued from previous page

continue to next page Translation

exchange At
Transfers difference 31.12.2021
Impairment
At Charge for Disposals/ (reversals)/ Accumulated amortisation and impairment losses:
1.1.2021 the year Write-offs losses Goodwill – (12) 1,376
Exploration expenditure (4,472) 171 7,713
Accumulated amortisation and impairment losses: Other intangible assets (6) 973 33,765
Goodwill 1,388 – – –
Exploration expenditure 15,995 – (1,445) (2,536)
b
(4,478) 1,132 42,854
Other intangible assets 31,078 1,749 (40) 11 continued from previous page
48,461 1,749 (1,485) (2,525) a
Comprises net transfers out to property, plant and equipment of RM3,323 million and assets classified as held for sale of
continue to next page RM352 million.
b
Comprises net transfers out to property, plant and equipment of RM1,235 million, other receivables of RM52 million and assets
classified as held for sale of RM2 million.
74 75
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

9. INTANGIBLE ASSETS (continued) 9. INTANGIBLE ASSETS (continued)

Impairment review of goodwill
Company
2022 At At For the purpose of impairment testing, goodwill is allocated to groups of cash-generating units which represent the
In RM Mil 1.1.2022 Additions Transfers Write-offs 31.12.2022 lowest level within the Group and at which the goodwill is monitored for internal management purposes.

At cost: In assessing whether goodwill has been impaired, the carrying amount of the cash-generating unit (including goodwill)
Other intangible assets 61 – 64 (11) 114 is compared with the recoverable amount of the cash-generating unit. The recoverable amount is the higher of fair
Projects-in-progress value less costs to sell and value in use. In the absence of any information about the fair value of a cash-generating
– other projects 14 8 (3) – 19 unit, the value in use is deemed to be the recoverable amount.

75 8 c
61 (11) 133 Included in goodwill is an amount of RM1,851 million (2021: RM3,123 million) net of accumulated impairment arising
from the acquisition of PETRONAS Lubricants Italy S.p.A Group (“PLI Group”). The recoverable amount of PLI Group
unit was based on its value in use and was determined with the assistance of an independent valuer. The value in
At Charge for Impairment At use was determined by using the discounted cash flow method based on management’s business plan cash flow
1.1.2022 the year reversals 31.12.2022 projections for 5 financial years from 2023 to 2027 (2021: 2022 to 2026), adjusted with an estimated terminal value.
Accumulated amortisation: The cash flow assumes a long term growth rate of 2.00% (2021: Nil) and is discounted to present value using discount
rate of 8.10% (2021: 6.50%) for Lubricants division and 8.40% (2021: 7.00%) for Car Care division.
Other intangible assets 31 33 (11) 53
Based on the assessment, the carrying amount was higher than its recoverable amount, with an impairment of RM1,283
Company million recognised as a result of macroeconomic challenges arising from global inflation and supply chain disruption
2021 At At which led to prolonged post-pandemic recovery. The impairment was allocated fully to goodwill.
In RM Mil 1.1.2021 Additions Transfers Write-offs 31.12.2021
The above estimates are sensitive to the following factors:
At cost:
Other intangible assets 46 – 15 – 61 (i) A decrease of 0.5 percentage point in long term growth rate used would have increased the impairment by
Projects-in-progress approximately RM219 million.
– other projects – 14 – – 14
(ii) An increase of 0.5 percentage point in discount rate used would have increased the impairment by approximately
46 14 d
15 – 75 RM280 million.

The recoverable amount of the remaining goodwill was based on value in use, derived from the respective cash-
At Charge for Impairment At generating units’ business plan cash flow projections, adjusted with an estimated terminal value. The cash flows assume
1.1.2021 the year losses 31.12.2021 a long term average growth rate of the respective industries those units are engaged in and are discounted to present
value using discount rate of 6.80% to 10.00% (2021: 6.15% to 10.00%).
Accumulated amortisation:
Other intangible assets 10 10 11 31 For impairment testing of goodwill relating to current year acquisition, the consideration paid represented the best
evidence of the subsidiary’s fair value less cost to sell since there were no significant adverse events between the
date of acquisition until the year end.
Group Company
In RM Mil
Carrying amount 2022 2021 2022 2021 Based on the above, the recoverable amount of goodwill of the remaining units were determined to be higher than
their carrying amount, thus no impairment loss was recognised during the year.
Goodwill 6,406 5,169 – –
Exploration expenditure 6,948 8,507 – – Impairment review of exploration expenditure
Other intangible assets 12,883 5,698 61 30
As at 31 December 2022, the Group recognised net impairment losses on certain exploration expenditure amounting
Projects-in-progress
to RM575 million (2021: net impairment reversals of RM2,536 million) related to oil and gas exploration cash-generating
– other projects 23 20 19 14
units and certain wells which are no longer capable of commercial development. The impairment on well costs will
26,260 19,394 80 44 be subsequently written off in accordance with the policy set out in Note 2.10.

Included in the balances are intangible assets and goodwill arising from the acquisition of Perstorp Holding AB
(“Perstorp”). The intangible assets relate to the fair value of trademarks, patents and know-how, customer relations
and other intangibles, whilst the goodwill reflects the synergy that Perstorp will contribute to the Group (see Note
32).
c
Comprises net transfer in of RM64 million from property, plant and equipment and reclassification to profit or loss of RM3 million.
d
Comprises net transfer in of RM15 million from property, plant and equipment.
76 77
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

10. LONG-TERM RECEIVABLES 10. LONG-TERM RECEIVABLES (continued)

Group Company 10.3 Finance lease receivables (continued)

The following table sets out the maturity analysis of the present value of lease receivables, showing the discounted
In RM Mil Note 2022 2021 2022 2021
lease payments to be received after the reporting date.
Term loans and advances:
Group
Loans and advances due from subsidiaries 10.1 – – 48,553 78,403
Loans and advances due from associates In RM Mil Note 2022 2021
and joint ventures 10.2 8,292 7,496 6,747 6,138
Not later than 1 year 1,229 1,099
8,292 7,496 55,300 84,541 Later than 1 year and not later than 2 years 1,106 1,088
Amount due from a subsidiary – – 1,677 – Later than 2 years and not later than 5 years 3,218 3,260
Amount due from joint arrangements 7,414 5,878 123 181 Later than 5 years 7,944 8,592
Contract assets 6,676 2,769 – –
13,497 14,039
Finance lease receivables 10.3 12,268 12,940 – –
Less: Allowance for impairment losses (261) (57)
Other receivables and prepayments 10.4 7,922 7,280 31,637 28,865
Derivative assets 12 1,014 141 – – 13,236 13,982

43,586 36,504 88,737 113,587 Analysed as:

Less: Allowance for impairment losses Due within 12 months 15 1,229 1,099
– Term loans and advances (1,236) (1,008) (124) (149) Due after 12 months 12,007 12,883
– Trade receivable from a subsidiary – – (42) – 13,236 13,982
– Amount due from joint arrangements (701) (1,474) (11) (47)
– Finance lease receivables (261) (57) – –
The following table sets out the maturity analysis of lease receivables, showing undiscounted lease payments
– Other receivables and prepayments (261) (214) (290) (220)
to be received after the reporting date.
41,127 33,751 88,270 113,171 Group

In RM Mil 2022 2021

10.1 The Company’s loans and advances due from subsidiaries bear interest at rates ranging from 2.70% to 7.43%
Less than one year 2,197 2,062
(2021: 1.09% to 5.20%) per annum.
One to two years 1,975 1,970
10.2 The Group’s and the Company’s loans and advances due from associates and joint ventures bear interest at Two to three years 1,875 1,916
rates ranging from 1.20% to 10.00% (2021: 1.20% to 10.00%) and 2.21% (2021: 2.21%) per annum respectively. Three to four years 1,860 1,831
Four to five years 1,756 1,815
10.3 Finance lease receivables More than five years 12,396 12,672

Finance lease receivables represent lease rental and interest receivable from customers in relation to the lease Total undiscounted lease payments 22,059 22,266
of offshore floating assets, buildings and pipelines entered by the subsidiaries of the Group. Unearned interest income (8,562) (8,227)

13,497 14,039
The movement of long-term finance lease receivables during the financial year are as follows:
Group The effective interest rate of the Group’s lease receivables are between 2.20% to 9.40% (2021: 2.20% to 8.30%).
In RM Mil 2022 2021 Included in minimum lease receivables are the estimated unguaranteed residual values of the leased assets of
RM31 million (2021: RM33 million).
At 1 January 12,940 9,670
Additions 120 4,626
Interest income 975 998
Lease payments received (1,767) (2,354)

At 31 December 12,268 12,940

78 79
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

10. LONG-TERM RECEIVABLES (continued) 11. FUND AND OTHER INVESTMENTS (continued)
10.4 Included in the Group’s other receivables and prepayments is a concession arrangement entered into by a Group Company
subsidiary of the Group with the Government of Malaysia to construct government buildings on a build-lease-
maintain-transfer basis. The concession period is 28 years and 6 months commencing from the construction In RM Mil 2022 2021 2022 2021
date.
Current
Fair value through profit or loss
Included in the Company’s other receivables and prepayments is abandonment cess contribution to the
Quoted securities – 143 – –
Abandonment Cess Fund, which is reimbursable to the Company upon execution of the abandonment of the
Quoted shares 1,269 1,438 5 5
oil and gas properties in accordance with the terms of the production sharing contracts (“PSCs”) as described
Corporate Bonds and Sukuk 7,862 8,299 5,275 5,066
in Note 38. The amount of cess payable to the PSC Contractors is disclosed in Note 23.
Malaysian Government Securities 1,814 1,710 1,669 1,678

10,945 11,590 6,949 6,749

11. FUND AND OTHER INVESTMENTS
Fair value through other comprehensive income
Group Company Quoted shares – 30 – –

In RM Mil 2022 2021 2022 2021 Amortised cost

Unquoted securities – 370 – 230
Non-current
Fair value through profit or loss Total current investments 10,945 11,990 6,949 6,979
Unquoted shares 77 73 – – Total fund and other investments 12,370 13,434 7,022 7,052
Fair value through other comprehensive income Representing items:
Quoted shares 184 751 – – At amortised cost – 400 – 230
Unquoted shares 1,164 590 73 73 At fair value 12,370 13,034 7,022 6,822
1,348 1,341 73 73 12,370 13,434 7,022 7,052
Amortised cost
Unquoted securities – 30 – – Included in fund and other investments of the Group is an amount of RM1,941 million (2021: RM2,231 million) which
are held for the purpose of future decommissioning activities of oil and gas properties.
Total non-current investments 1,425 1,444 73 73
Included in Corporate Bonds and Sukuk of the Company are securities issued by subsidiaries amounting to RM562
million (2021: RM571 million).

80 81
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

12. DERIVATIVE ASSETS/(LIABILITIES) 12. DERIVATIVE ASSETS/(LIABILITIES) (continued)

2022 2021 2022 2021

In RM Mil Note Assets Liabilities Assets Liabilities In RM Mil Note Assets Liabilities Assets Liabilities

Group Company
Non-current Current
Derivatives not designated as hedging Derivatives not designated as hedging
instruments instruments
Forward foreign exchange contracts – (13) 7 – Forward foreign exchange contracts 66 (78) 63 (74)

Derivatives designated as hedging Derivatives designated as hedging

instruments instruments
Interest rate swaps 917 (7) 110 (168) Commodity derivatives 626 – 1,505 –
Forward foreign exchange contracts 97 (26) 24 (4)
Total derivatives 692 (78) 1,568 (74)
1,014 (33) 134 (172)
Included within:
Total non-current derivatives 1,014 (46) 141 (172)
Trade and other receivables 15 692 – 1,568 –
Trade and other payables 24 – (78) – (74)
Current
Derivatives not designated as hedging 692 (78) 1,568 (74)
instruments
Forward foreign exchange contracts 96 (84) 78 (87) In the normal course of business, the Group and the Company enter into derivative financial instruments to manage
Commodity derivatives 1,213 (424) 120 (394) their normal business exposures in relation to commodity prices, foreign currency exchange rates and interest rates,
including management of the balance between floating rate and fixed rate debt, consistent with the risk management
1,309 (508) 198 (481)
policies and objectives.
Derivatives designated as hedging
instruments The Group and the Company apply hedge accounting whereby hedges meeting the criteria for hedge accounting
are classified as cash flow hedges. The effective portion of the gain or loss on the hedging instruments is recognised
Interest rate swaps – – – (52)
directly in equity until the hedged transaction occurs, while the ineffective portion is recognised in the profit or loss.
Forward foreign exchange contracts 213 (61) 74 (14)
Details of cash flow hedges are disclosed in Note 39 to the financial statements.
Commodity derivatives 1,385 – 1,505 (1,415)

1,598 (61) 1,579 (1,481)

Total current derivatives 2,907 (569) 1,777 (1,962)

Total derivatives 3,921 (615) 1,918 (2,134)

Included within:
Long-term receivables 10 1,014 – 141 –
Trade and other receivables 15 2,907 – 1,777 –
Other long-term liabilities and provisions 23 – (46) – (172)
Trade and other payables 24 – (569) – (1,962)

3,921 (615) 1,918 (2,134)

82 83
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

13. DEFERRED TAX 13. DEFERRED TAX (continued)

Recognised deferred tax assets/(liabilities) Unrecognised deferred tax assets
Deferred tax assets and liabilities are attributable to the following: Deferred tax assets have not been recognised in respect of the following items (stated at gross):
Assets Liabilities Net Group Company

In RM Mil 2022 2021 2022 2021 2022 2021 In RM Mil 2022 2021 2022 2021

Group Deductible temporary differences 1,301 1,143 – –

Property, plant and equipment and Unabsorbed capital allowances 2,519 2,586 – 107
intangible assets 9,434 9,343 (23,363) (23,478) (13,929) (14,135) Unused tax losses 57,446 60,061 23,931 25,377
Lease liabilities 2,179 2,377 – – 2,179 2,377 Unused reinvestment allowances 27 27 – –
Unused tax losses 8,635 9,965 – – 8,635 9,965 Unused investment tax allowances 1,417 1,381 – –
Unabsorbed capital allowances 1,664 1,844 – – 1,664 1,844
62,710 65,198 23,931 25,484
Unused reinvestment allowances 447 447 – – 447 447
Unused investment tax allowances 5,056 5,932 – – 5,056 5,932
Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable
Provision for decommissioning and
profit will be available against which the Company and the respective subsidiaries can utilise the benefits.
restoration 5,597 5,572 – – 5,597 5,572
Others 2,369 967 (3,172) (1,529) (803) (562)
In accordance with the provision of Malaysian Finance Act 2021, the utilisation of unused tax losses will be limited
Tax assets/(liabilities) 35,381 36,447 (26,535) (25,007) 8,846 11,440 to ten years with effect from year of assessment 2019.
Set off tax (14,706) (15,464) 14,706 15,464 – –
Unabsorbed capital allowances and unused investment tax allowances do not expire under current tax legislation.
Net tax assets/(liabilities) 20,675 20,983 (11,829) (9,543) 8,846 11,440
The Group and the Company have unused tax losses carried forward of approximately RM93,425 million (2021:
Company
RM101,582 million) and RM31,931 million (2021: RM36,206 million), unabsorbed capital allowances of approximately
Property, plant and equipment 261 251 (885) (972) (624) (721)
RM9,452 million (2021: RM10,269 million) and RM154 million (2021: RM199 million), and unused investment tax
Unused tax losses 1,920 2,599 – – 1,920 2,599
allowances of approximately RM22,484 million (2021: RM26,098 million) and RM1,897 million (2021: RM2,371 million)
Unabsorbed capital allowances 37 22 – – 37 22
respectively, which give rise to the recognised and unrecognised deferred tax assets as above.
Unused investment tax allowances 721 901 – – 721 901
Provision for decommissioning and The Group also has unused reinvestment allowances of approximately RM1,890 million (2021: RM1,890 million) which
restoration 5,304 4,770 – – 5,304 4,770 give rise to the recognised and unrecognised deferred tax assets as above.
Others 1,145 465 (267) (390) 878 75

Tax assets/(liabilities) 9,388 9,008 (1,152) (1,362) 8,236 7,646

Set off tax (1,152) (1,362) 1,152 1,362 – –

Net tax assets 8,236 7,646 – – 8,236 7,646

84 85
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

13. DEFERRED TAX (continued) 13. DEFERRED TAX (continued)

Unrecognised deferred tax assets (continued) Group Translation
The components and movements of deferred tax liabilities and assets during the year prior to offsetting are as follows: 2022 exchange At
In RM Mil Equity difference 31.12.2022
Credited/
Group (Charged) Acquisition Deferred tax liabilities
2022 At to profit of a Property, plant and equipment and intangible assets – (339) (23,363)
In RM Mil 1.1.2022 or loss subsidiary Transfers Others – (50) (3,172)

Deferred tax liabilities – (389) (26,535)

Property, plant and equipment and intangible assets (23,478) 671 (432) 215
Deferred tax assets
Others (1,529) (331) (1,262) –
Property, plant and equipment and intangible assets – 200 9,434
(25,007) a
340 (1,694) 215 Lease liabilities – 64 2,179
Unused tax losses – 148 8,635
Deferred tax assets Unabsorbed capital allowances – 30 1,664
Property, plant and equipment and intangible assets 9,343 (109) – – Unused reinvestment allowances – – 447
Lease liabilities 2,377 (150) – (112) Unused investment tax allowances – 52 5,056
Unused tax losses 9,965 (1,478) – – Provision for decommissioning and restoration – 4 5,597
Unabsorbed capital allowances 1,844 (409) 199 – Others (47) 377 2,369
Unused reinvestment allowances 447 – – –
Unused investment tax allowances 5,932 (928) – – (47) 875 35,381
Provision for decommissioning and restoration 5,572 255 – (234) Total (47) 486 8,846
Others 967 1,324 66 (318)
continued from previous page
36,447 b
(1,495) 265 (664)

Total 11,440 (1,155) (1,429) c

(449)
continue to next page

a,b
Includes reclassification between deferred tax liabilities and deferred tax assets.
c
Relates to transfer out to assets/(liabilities) classified as held for sale.
86 87
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

13. DEFERRED TAX (continued) 13. DEFERRED TAX (continued)

Credited/
(Charged)/
Company (Charged)
Group Credited Translation
2022 At to profit At
2021 At to profit exchange At
In RM Mil 1.1.2022 or loss 31.12.2022
In RM Mil 1.1.2021 or loss Transfers Equity difference 31.12.2021
Deferred tax assets
Deferred tax liabilities Property, plant and equipment (721) 97 (624)
Property, plant and equipment Unused tax losses 2,599 (679) 1,920
and intangible assets (20,775) (3,183) 702 – (222) (23,478) Unabsorbed capital allowances 22 15 37
Others (1,986) 510 – – (53) (1,529) Unused investment tax allowances 901 (180) 721
(22,761) a
(2,673) 702 – (275) (25,007) Provision for decommissioning and restoration 4,770 534 5,304
Others 75 803 878
Deferred tax assets 7,646 590 8,236
Property, plant and equipment
and intangible assets 9,511 (350) – – 182 9,343 Credited/
Lease liabilities 2,023 336 – – 18 2,377 (Charged)
Unused tax losses 10,765 (947) – – 147 9,965 2021 At to profit At
Unabsorbed capital allowances 1,874 (34) – – 4 1,844 In RM Mil 1.1.2021 or loss 31.12.2021
Unused reinvestment allowances 435 12 – – – 447
Deferred tax assets
Unused investment tax
allowances 5,254 678 – – – 5,932 Property, plant and equipment (754) 33 (721)
Provision for decommissioning Unused tax losses 2,692 (93) 2,599
and restoration 3,834 1,725 – – 13 5,572 Unabsorbed capital allowances 34 (12) 22
Others 1,232 (324) (73) (9) 141 967 Unused investment tax allowances – 901 901
Provision for decommissioning and restoration 4,302 468 4,770
34,928 b
1,096 (73) (9) 505 36,447 Others 169 (94) 75
Total 12,167 (1,577) c
629 (9) 230 11,440 6,443 1,203 7,646

a,b
Includes reclassification between deferred tax liabilities and deferred tax assets.
c
Relates to transfer out to assets/(liabilities) classified as held for sale.
88 89
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

14. TRADE AND OTHER INVENTORIES 15. TRADE AND OTHER RECEIVABLES

Group Company Group Company

In RM Mil 2022 2021 2022 2021 In RM Mil Note 2022 2021 2022 2021

Crude oil and condensates 3,170 1,763 63 62 Trade

Petroleum products 3,467 5,608 28 28 Trade receivables 39 33,304 29,880 3,133 2,766
Petrochemical products 2,028 951 – – Amount due from:
Liquefied natural gas 2,146 1,317 – – – subsidiaries – – 14,204 10,344
Stores, spares and others 3,035 2,804 – 1 – associates and joint arrangements 4,527 4,269 – –
Developed properties held for sale 816 842 – – Contract assets 183 185 – –
Properties under development 950 1,192 – – Derivative assets 12 2,798 1,625 626 1,505
Less: Allowance for impairment losses
15,612 14,477 91 91
– Trade receivables 39 (926) (1,466) (6) (374)
– Amount due from subsidiaries 39 – – (1) (5)
Recognised in profit or loss:
– Amount due from associates and joint
Inventories recognised as cost of sales 142,797 87,188 – –
arrangements (178) (933) – –
Write-down to net realisable value 233 188 – –
39,708 33,560 17,956 14,236

Non-trade
Other receivables, deposits and prepayments 13,477 14,830 1,363 1,107
Amount due from:
– subsidiaries – – 10,325 2,123
– associates and joint arrangements 649 320 1 3
Tax recoverable 325 461 – –
Finance lease receivables 10 1,229 1,099 – –
Derivative assets 12 109 152 66 63
Less: Allowance for impairment losses
– Amount due from subsidiaries – – (12) (25)
– Other receivables, deposits and
prepayments (1,499) (2,098) (12) (11)

14,290 14,764 11,731 3,260

53,998 48,324 29,687 17,496

Amount due from subsidiaries, associates and joint arrangements arose in the normal course of business.

Contract assets are mainly in relation to sale of property development whereby they represent the timing differences
in revenue recognition and the milestone billings. The milestone billings are either governed by the relevant regulations
or structured and/or negotiated with customers and stated in the contracts.

Tax recoverable is subject to the agreement with the relevant tax authorities.

90 91
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

16. CASH AND CASH EQUIVALENTS 17. ASSETS/(LIABILITIES) CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS
Assets/(liabilities) classified as held for sale
Group Company
Assets and liabilities held for sale are disposal groups intended to be disposed in the immediate future. Included in
In RM Mil 2022 2021 2022 2021
the disposal groups during the year are other disposal groups that are not material in relation to the consolidated
Cash and bank balances 19,050 13,694 6,527 4,850 results of the Group and therefore not presented separately as discontinued operations.
Deposits placed 182,170 150,862 148,471 120,121
The financial performance and the net cash flows of disposal group that is material in relation to the consolidated
201,220 164,556 154,998 124,971
results of the Group is presented separately as discontinued operations in the Group’s financial statements.
Less: Subsidiaries’ cash with PETRONAS Integrated
Financial Shared Service Centre – – (63,831) (52,280)
The following amount represents carrying values of assets owned by the Group with the intention of disposal in the
201,220 164,556 91,167 72,691 immediate future. The carrying amounts of these assets represent the lower of carrying amounts or fair values. The
amount also includes a disposal group from prior year, which continues to be classified as held for sale following
The Company manages the cash and cash equivalents on behalf of certain subsidiaries through its Integrated Financial the Group’s commitment to sell the assets with expected completion in 2023, upon fulfilment of the set conditions
Shared Service Centre in order to allow for more efficient management of cash. The cash and cash equivalents precedent.
reported in the Company’s financial statements do not include the amounts managed on behalf of the subsidiaries.
Group
Included in cash and bank balances of the Group and the Company are interest-bearing balances amounting to
In RM Mil 2022 2021
RM14,396 million (2021: RM12,111 million) and RM6,527 million (2021: RM4,850 million) respectively.
Assets classified as held for sale
Included in deposits with banks of the Group is an amount of RM25,902 million (2021: RM23,462 million) which is Property, plant and equipment 6,028 9,515
held for the purpose of future decommissioning and restoration activities of oil and gas properties. Investments in associates 660 4,059
Intangible assets 348 2
Included in the cash and cash equivalents are restricted amounts in relation to: Deferred tax assets 472 73
Trade and other inventories 3,642 56
(i) retention account of RM727 million (2021: RM941 million) which is restricted for use because it is pledged to Trade and other receivables 4,761 326
the bank for the purpose of acquisition of vessels; Cash and other assets 1,407 760

(ii) held by a trustee of RM38 million (2021: RM28 million). The amount represents the unutilised value of e-wallet 17,318 14,791
monies and amount due to service providers for value utilised;
Liabilities classified as held for sale
(iii) deposits held under designated accounts for redemption of Islamic financing facilities of RM272 million (2021: Borrowings (3,282) (40)
RM310 million); and Deferred tax liabilities (707) (702)
Taxation (51) –
(iv) deposits restricted for certain payments under the requirements of the borrowing facilities agreement of RM2 Other liabilities and provision (7,580) (3,190)
million (2021: RM101 million).
(11,620) (3,932)

Amounts included in accumulated OCI

Foreign currency translation reserve 1,546 (806)
Other reserves (173) –

Reserves of disposal group classified as held for sale 1,373 (806)

92 93
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

17. ASSETS/(LIABILITIES) CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS (continued) 17. ASSETS/(LIABILITIES) CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS (continued)
Fair value information Discontinued operations (continued)
In accordance with MFRS 5 Non-current Assets Held for Sale and Discontinued Operations, certain assets classified The net cash flows incurred by Engen Group are as follows:
as held for sale were written down to their fair value less costs to sell. The fair value less costs to sell is based on Group
the most recent market transactions of the disposal groups.
In RM Mil 2022 2021
The fair value of certain assets which are carried at fair value are categorised as Level 2.
Net cash generated from operating activities 612 1,908
Net cash used in investing activities (381) (462)
Discontinued operations
Net cash generated from financing activities 135 414
On 7 February 2023, PETRONAS via its wholly-owned subsidiary, PETRONAS Marketing International Sdn. Bhd. (“PMISB”),
Net increase in cash and cash equivalents 366 1,860
signed a Sale and Purchase Agreement (“SPA”) for the sale of its entire 74% equity interests in its subsidiary, namely
Engen Limited and its subsidiaries (“Engen Group”) to Vitol Emerald Bidco (Pty) Ltd and Vitol Africa B.V. The divestment
is expected to be completed in 2023 upon fulfilment of customary conditions precedent including regulatory approvals. The net effect arising from the disposal of Engen Group is not expected to be material in relation to the consolidated
net profit of the Group for the year.
The business of Engen Group represents the major composition of the Group’s geographical segment for South Africa
and has been classified as disposal group held for sale and discontinued operations as at 31 December 2022.
18. SHARE CAPITAL
The results of Engen Group for the year are presented below:
Company

Group In RM Mil 2022 2021

In RM Mil Note 2022 2021 Issued and fully paid shares with no par value classified as equity instrument:
100,000 ordinary shares of RM1,000 each 100 100
Revenue 25 42,265 24,641
Cost of revenue (36,374) (20,868)
Ordinary shares
Gross profit 5,891 3,773
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to
one vote per share at meetings of the Company. Ordinary share has no par value.
Selling and distribution expenses (989) (1,089)
Administration expenses (993) (978)
Net impairment losses1 (45) (26)
Other expenses (433) (377)
Other income 833 566

Operating profit 4,264 1,869

Financing costs 27 (297) (228)

Share of profit after tax and non-controlling interest of equity accounted
associates and joint ventures 11 7

Profit before tax from discontinued operations 3,978 1,648

Tax expense 28 (165) (434)

Profit for the year from discontinued operations 3,813 1,214

Other comprehensive income
Net changes in fair value of equity investments at fair value through OCI (4) 20
Net movements from exchange differences of discontinued operations 2 (200)

Other comprehensive income from discontinued operations 3,811 1,034

1
Includes certain amount relating to write-off of assets.
94 95
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

19. RESERVES 21. BORROWINGS

The Company has sufficient retained profits to distribute the following dividends: Group Company

(i) Dividends paid out of income derived from petroleum operations which are not chargeable to tax pursuant to In RM Mil 2022 2021 2022 2021
the Petroleum (Income Tax) Act, 1967.
Non-current
Secured
(ii) Single tier dividends paid out of income derived from other operations other than petroleum operations which
Term loans 14,189 12,151 – –
are exempt in the hands of shareholder pursuant to Paragraph 12B, Schedule 6 of the Income Tax Act, 1967.
Islamic financing facilities 3,045 3,301 – –
Lease liabilities 13,291 11,498 6,561 6,800
(iii) Exempt dividends paid out of income which are exempt pursuant to Section 12 of Income Tax (Amendment)
Act, 1999, Paragraph 28, Schedule 6 and Schedule 7A of the Income Tax Act, 1967. Total non-current secured borrowings 30,525 26,950 6,561 6,800

Unsecured
Capital and other reserves
Term loans 1,570 2,818 – –
Capital reserves represent primarily reserves created upon issuance of bonus shares and redemption of preference Notes and Bonds 61,917 54,337 54,871 51,851
shares by subsidiaries. Other reserves comprise the Group’s share of its associate and joint venture companies’ reserves. Islamic financing facilities 2,333 2,514 – –

Foreign currency translation reserve Total non-current unsecured borrowings 65,820 59,669 54,871 51,851

The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the Total non-current borrowings 96,345 86,619 61,432 58,651
financial statements of subsidiaries whose functional currencies are different from that of the Company’s functional
currency as well as foreign currency differences arising from the translation of monetary items that are considered Current
to form part of a net investment in a foreign operation. Secured
Term loans 2,054 6,328 – –
Fair value through other comprehensive income reserve Islamic financing facilities 261 328 – –
Lease liabilities 1,782 1,345 650 623
This reserve records the changes in fair value of equity securities designated at fair value through other comprehensive
income. On disposal or impairment of equity securities, the cumulative changes in fair value are transferred to the Total current secured borrowings 4,097 8,001 650 623
retained profits.
Unsecured
Term loans 2,735 4,624 – –
Hedging reserve
Notes and Bonds – 7,303 – 7,303
Hedging reserve includes the cash flow hedge reserve that records the effective portion of the gain or loss on Islamic financing facilities 533 529 – –
derivatives designated as hedging instrument in a cash flow hedge. Amounts are subsequently transferred out from Revolving credits 154 637 – –
equity to either profit or loss or the carrying value of assets, as appropriate. Hedging reserve also includes the cost Bankers’ acceptances 293 116 – –
of hedging reserve which records the changes in the time value of option contracts and the forward element of Bank overdrafts – 2 – –
forward contracts.
Total current unsecured borrowings 3,715 13,211 – 7,303
General reserve Total current borrowings 7,812 21,212 650 7,926
General reserve represents appropriation of retained profits for general purposes rather than for a specific item of Total borrowings 104,157 107,831 62,082 66,577
future loss or expense. In effect, it is a reserve for unspecified possible events.

20. NON-CONTROLLING INTERESTS

This consists of the non-controlling interests’ proportion of share capital and reserves of partly-owned subsidiaries.

96 97
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

21. BORROWINGS (continued) 21. BORROWINGS (continued)

Terms and debt repayment schedule Secured term loans

Under 1-2 2-5 Over The secured term loans obtained by the subsidiaries and joint operation company primarily comprise:
In RM Mil Total 1 year years years 5 years
In Mil Securities 2022 2021
Group
USD Term loans Secured by way of a charge over certain property, plant and US$3,275 US$4,424
Secured
equipment, together with charter agreements and insurance of
Term loans 16,243 2,054 1,454 8,434 4,301
the relevant assets of certain subsidiaries, as well as ordinary shares
Islamic financing facilities 3,306 261 613 898 1,534 and land lease rights of joint operation company.
Lease liabilities 15,073 1,782 2,056 3,752 7,483
RM Term loans Secured by way of a charge over certain property, plant and RM877 RM877
34,622 4,097 4,123 13,084 13,318 equipment and insurance of the relevant property, plant and
Unsecured equipment of certain subsidiaries.
Term loans 4,305 2,735 – 738 832
Notes and Bonds 61,917 – – 13,213 48,704 The secured term loans bear interest at rates ranging from 1.10% to 6.23% (2021: 1.39% to 4.49%) per annum and
Islamic financing facilities 2,866 533 1,321 916 96 are fully repayable at their various due dates from 2023 to 2037.
Revolving credits 154 154 – – –
Bankers’ acceptances 293 293 – – – Unsecured term loans

69,535 3,715 1,321 14,867 49,632 The unsecured term loans obtained by the subsidiaries primarily comprise:

104,157 7,812 5,444 27,951 62,950 In Mil 2022 2021

USD Term loans US$2,284 US$4,677

Company
EUR Term loans €436 €436
Secured
Lease liabilities 7,211 650 498 1,259 4,804
These unsecured term loans bear interest at rates ranging from 0.71% to 6.60% (2021: 0.60% to 5.13%) per annum
Unsecured and are fully repayable at their various due dates from 2023 to 2035.
Notes and Bonds 54,871 – – 8,810 46,061

62,082 650 498 10,069 50,865 Unsecured Notes and Bonds

The unsecured Notes and Bonds comprise:
Islamic financing facilities
Details of Islamic financing facilities are included in Note 22. In Mil 2022 2021

USD Notes and Bonds:

3.125% Guaranteed Notes due 2022^ – US$750
7.875% Guaranteed Notes due 2022^ – US$1,000
3.625% Guaranteed Notes due 2025* US$400 –
3.500% Guaranteed Notes due 2025^ US$1,500 US$1,500
7.625% Bonds due 2026# US$500 US$500
3.750% Guaranteed Notes due 2027* US$600 –
2.112% Guaranteed Notes due 2028* US$600 US$600
3.500% Guaranteed Notes due 2030^ US$2,250 US$2,250
2.480% Guaranteed Notes due 2032^ US$1,250 US$1,250
4.500% Guaranteed Notes due 2045^ US$1,500 US$1,500
4.550% Guaranteed Notes due 2050^ US$2,750 US$2,750
4.800% Guaranteed Notes due 2060^ US$1,000 US$1,000
3.404% Guaranteed Notes due 2061^ US$1,750 US$1,750

#
Obtained by the Company.
^
Obtained by the Company via a subsidiary.
* Obtained by a subsidiary.

98 99
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

21. BORROWINGS (continued) 22. ISLAMIC FINANCING FACILITIES

Unsecured Notes and Bonds (continued) Secured Islamic financing facilities
In connection with the long term borrowing facility agreements, the Group and the Company have agreed on the The secured Islamic financing facilities obtained by the subsidiaries comprise:
following significant covenants with the bondholders:
In RM Mil 2022 2021
(i) not to allow any material indebtedness (the minimum aggregate amount exceeding USD30,000,000 for the Al Bai’Bithaman Ajil Facilities – 300
7.625% Bonds due 2026 and USD200,000,000 for the remaining Guaranteed Notes or its equivalent in any other
Musharakah Mutanaqisah Term Finances 206 206
currency) for borrowed money of the Company to become due or capable of being declared due before its
Murabahah Medium Term Notes 4,455 4,455
stated maturity, any guarantee of the Company for material indebtedness of any other person is not discharged
at maturity or when validly called or the Company goes into default;
The secured Islamic financing facilities bear yield payable/profit rate ranging from 2.03% to 4.80% (2021: 2.03% to
7.25%) per annum and are fully repayable at their various due dates from 2023 to 2040.
(ii) the Company (not including any of its subsidiaries) not to create, incur or have outstanding any mortgage, pledge,
lien, charge, encumbrance or any other lien upon the whole or any part of its property or assets, present or
The Islamic financing facilities are secured by way of a charge over certain property, plant and equipment and
future indebtedness of itself or any other person, unless the aggregate outstanding principal amount of all such
investment properties.
secured indebtedness (other than indebtedness secured by the liens already in existence) plus attributable debt
of the Company in respect of sales and leaseback transactions would not exceed 10% of the consolidated net
Unsecured Islamic financing facilities
tangible assets for the 7.625% Bonds due 2026 and 15% of the consolidated net tangible assets for the remaining
Guaranteed Notes; The unsecured Islamic financing facilities obtained by the subsidiaries comprise:

(iii) the Company (not including any of its subsidiaries) not to enter into any sale and leaseback transaction, unless In Mil 2022 2021
the attributable debt in respect of such sale and leaseback transaction and all other sale and leaseback transaction Murabahah Note Issuance Facilities RM1,300 RM1,900
plus the aggregate outstanding principal amount of indebtedness for borrowed money secured by security interests
Murabahah Note Issuance Facilities – CNY216
(other than permitted security interests) then outstanding which have not equally and rateably secured the total
Sukuk Musyarakah RM4,500 RM4,500
outstanding would not exceed 10% of the consolidated net tangible assets for the 7.625% Bonds due 2026 and
15% of the consolidated net tangible assets for the remaining Guaranteed Notes provided that, within 12 months
after such sale and leaseback transaction, it applies to the retirement of indebtedness for borrowed money, the The unsecured Islamic financing facilities bear yield payable ranging from 3.44% to 4.58% (2021: 2.12% to 6.17%) per
repayment obligations hereunder and which are not secured by any security interest, an amount to the greater annum and are fully repayable at their various due dates from 2023 to 2026.
of:

• the net proceeds of the sale or transfer of the property or other assets which are the subject of such sale
and leaseback transaction as determined by the Company; or

• the fair market value of the property or other assets so leased as determined by the Company;

(iv) the Company, PETRONAS Capital Limited (“PCL”) and PETRONAS Energy Canada Ltd (“PECL”), without consent
of a majority bondholders may not consolidate with, or merge into, or sell, transfer, lease or convey substantially
all of its assets to any corporation unless any successor corporation expressly assumes the obligations of the
Company, PCL or PECL, as the case may be under the Notes and Bonds.

Unsecured revolving credits and bank overdrafts

The unsecured revolving credits and bank overdrafts are obtained by the subsidiaries and primarily bear interest at
rates ranging from 1.50% to 7.25% (2021: 0.33% to 6.00%) per annum.

100 101
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

23. OTHER LONG-TERM LIABILITIES AND PROVISIONS 23. OTHER LONG-TERM LIABILITIES AND PROVISIONS (continued)

Group Company The movement of provision for decommissioning and restoration during the financial year are as follows:

In RM Mil Note 2022 2021 2022 2021

In RM Mil Group Company
Provision for decommissioning and
At 1 January 2022 39,756 17,078
restoration of:
Additions 1,161 161
– oil and gas properties 35,147 37,351 17,362 17,078
Net changes in provision (2,747) (210)
– other property, plant and equipment 1,445 1,822 – –
Transfer to liabilities classified as held for sale (1,536) –
Financial guarantees – – 150 184
Derivative liabilities 12 46 172 – – Provision utilised (936) (88)
Contract liabilities 3,367 3,340 9,175 8,853 Unwinding of discount 1,514 712
Abandonment cess payables 38 4,460 4,192 12,516 11,750 Disposals (11) –
Others 5,953 3,743 128 103 Translation exchange difference 285 –

50,418 50,620 39,331 37,968 At 31 December 2022 37,486 17,653

Provision for decommissioning and restoration of oil and gas properties and other property, plant and equipment is In RM Mil Note Group Company
recognised when there is an obligation to abandon a facility or an item of property, plant and equipment and to
Included within:
restore the site on which it is located, and when a reasonable estimate of that liability can be made. In the case of
provision for decommissioning and restoration of oil and gas properties, the obligation is stipulated in certain PSCs Other long-term liabilities and provisions 36,592 17,362
as described in Note 38. Trade and other payables 24 894 291

37,486 17,653
The provision recognised is the present value of the Group’s and the Company’s obligations of the estimated future
costs determined in accordance with current conditions and requirements.
As at 31 December 2022, the provision for decommissioning and restoration is expected to be utilised as follows:

A corresponding asset of an amount equivalent to the provision is also created. This asset is depreciated in accordance
with the policy set out in Note 2.4. The increase in the present value of the provision for the expected costs due to In RM Mil Group Company
the passage of time is included within finance costs. 1 to 10 years 13,127 3,076
11 to 20 years 14,853 11,051
Most of these removal events are many years in the future and precise requirements that will have to be met when More than 20 years 9,506 3,526
the removal events actually occur are uncertain. The actual timing and net cash outflows can differ from estimates
due to changes in laws, regulations, public expectations, technologies, prices and conditions, therefore, the carrying 37,486 17,653
amount of provisions, together with the interest rate used in discounting the cash flows and inflation rate, are regularly
reviewed and adjusted to take account of such changes. The interest rates and inflation rates used to determine the The Group and the Company use a range of long-term assumptions including prices, volumes, margins and costs
significant obligations as at 31 December 2022 ranges from 3.28% to 7.91% (2021: 1.31% to 10.48%) and 2.00% to based on past performance and management expectations of market development in the estimation of the present
5.51% (2021: 0.73% to 10.74%) respectively. Changes in the expected future costs are reflected in both the provision value of the provision.
and the asset.

102 103
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

23. OTHER LONG-TERM LIABILITIES AND PROVISIONS (continued) 25. REVENUE

During the year, the provision for decommissioning and restoration of oil and gas properties and other property, plant Group Company
and equipment of the Group and the Company decreased by RM3,117 million (2021: RM3,744 million) and RM783
million (2021: RM2,534 million) respectively as a result of change in the discount rates, partly offset by an increase 2022 2021 2022 2021
in the provision by RM370 million (2021: RM2,340 million) and RM573 million (2021: RM1,851 million) respectively In RM Mil Restated
resulting from other changes in the estimated cash flows.
Continuing operations
Revenue from contracts with customers 317,960 212,089 130,666 77,702
The adjustments were accounted for prospectively as a change in accounting estimates resulting in the following:
Other revenue
In RM Mil Group Company – shipping and shipping related services 3,320 2,901 – –
– rental of properties 2,501 2,135 – –
Decrease in provision for decommissioning and restoration (2,747) (210)
– rendering of services 1,226 2,194 766 389
Decrease in cost of property, plant and equipment (2,527) (76)
– others 3,439 1,624 8,036 3,365
Increase in net profits 220 134
10,486 8,854 8,802 3,754

– dividend income
24. TRADE AND OTHER PAYABLES
Quoted
Group Company – subsidiaries – – 4,458 3,986
– associates – – 18 14
In RM Mil Note 2022 2021 2022 2021 – other investments 62 44 – 1
Trade payables 15,847 12,732 2,317 1,603 Unquoted
Other payables 45,973 35,920 15,120 8,842 – subsidiaries – – 23,486 11,272
Contract liabilities 22 1 16 – – associates and joint arrangements 131 88 104 129
Amount due to: – other investments 8 5 8 4
– subsidiaries – – 6,186 4,180 201 137 28,074 15,406
– associates and joint arrangements 1,266 1,210 9 52
Derivative liabilities 12 569 1,962 78 74 – interest income 4,355 2,242 2,128 930

63,677 51,825 23,726 14,751 Total revenue from continuing operations 333,002 223,322 169,670 97,792

Discontinued operations
Included in other payables of the Group are amounts owing to suppliers, contractors and joint operation partners
Revenue from contracts with customers 42,265 24,641 – –
which mainly arose in the normal course of business as well as purchase of property, plant and equipment and cash
payments to the Federal and State Governments of Malaysia. Total revenue 375,267 247,963 169,670 97,792

Included in other payables of the Group and the Company are the provision for decommissioning and restoration of
RM894 million (2021: RM583 million) and RM291 million (2021: RM Nil) respectively, which are expected to be utilised
in the next twelve months.

Amount due to subsidiaries, associates and joint arrangements arose in the normal course of business.

104 105
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

25. REVENUE (continued) 25. REVENUE (continued)

Disaggregation of revenue from contracts with customers Disaggregation of revenue from contracts with customers (continued)
In the following table, revenue is disaggregated by primary geographical markets and major products/services lines. Group
2021
Group Restated Corporate
2022 Corporate In RM Mil Upstream Gas Downstream and others Total
In RM Mil Upstream Gas Downstream and others Total
Primary geographical markets
Primary geographical markets – Asiaa 13,688 32,999 37,245 298 84,230
– Asiaa 23,929 58,887 42,159 334 125,309 – Malaysia 2,756 15,079 37,444 1,403 56,682
– Malaysia 3,312 20,871 53,293 2,727 80,203 – Japan 762 17,463 1,442 – 19,667
– Japan 735 30,975 1,953 – 33,663 – South Africa – – 21,157 – 21,157
– South Africa – – 34,592 – 34,592 – Rest of the worldb 20,328 7,547 23,320 3,799 54,994
– Rest of the worldb 28,017 10,260 42,012 6,169 86,458
37,534 73,088 c
120,608 5,500 236,730
55,993 120,993 c
174,009 9,230 360,225
Major products/services lines
Major products/services lines – Petroleum products 398 – 88,837 – 89,235
– Petroleum products 443 – 129,699 – 130,142 – Crude oil and condensates 23,995 269 6,556 – 30,820
– Crude oil and condensates 40,524 315 10,106 – 50,945 – Liquefied natural gas – 57,134 352 – 57,486
– Liquefied natural gas – 95,513 2,638 – 98,151 – Natural and processed gas 12,383 15,237 42 – 27,662
– Natural and processed gas 14,307 25,012 45 – 39,364 – Petrochemical products – – 22,475 – 22,475
– Petrochemical products – – 28,296 – 28,296 – Construction contracts – – – 2,735 2,735
– Construction contracts – – – 5,060 5,060 – Sales of properties – – – 206 206
– Sales of properties – – – 337 337 – Others 758 448 2,346 2,559 6,111
– Others 719 153 3,225 3,833 7,930
37,534 73,088 c
120,608 5,500 236,730
55,993 120,993 c
174,009 9,230 360,225
Revenue from contracts with
Revenue from contracts with customers 37,534 73,088 120,608 5,500 236,730
customers 55,993 120,993 174,009 9,230 360,225 Other revenue 2,566 2,322 483 5,862 11,233
Other revenue 4,687 1,756 833 7,766 15,042
Total revenue 40,100 75,410 121,091 11,362 247,963
Total revenue 60,680 122,749 174,842 16,996 375,267

a
Excludes Malaysia and Japan. a
Excludes Malaysia and Japan.
b
Comprises revenue that is not material by individual country. b
Comprises revenue that is not material by individual country.
c
Includes revenue from discontinued operations of RM42,265 million. c
Includes revenue from discontinued operations of RM24,641 million.
106 107
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

25. REVENUE (continued) 25. REVENUE (continued)

Disaggregation of revenue from contracts with customers (continued) Transaction price allocated to remaining performance obligations

Company The Group and the Company entered into long-term contracts for the sales of various oil and gas products with
In RM Mil 2022 2021 remaining tenures ranging between 2 to 20 years (2021: 2 to 21 years). The future revenue of the Group and of the
Company is dependent on the prevailing market price, exchange rate on the transaction date as well as production
Primary geographical markets volume, which is based on contractual requirement.
– Asiaa 16,865 8,557
– Malaysia 108,719 66,488 In addition to the above, the Group and the Company entered into spot and short-term contracts for the sales of
– Rest of the worldb 5,082 2,657 various oil and gas products with remaining tenures of less than one year.
130,666 77,702
The Group also entered into long-term construction contracts. The following table shows revenue expected to be
recognised in the future related to performance obligations of construction contracts that are unsatisfied (or partially
Major products/services lines
unsatisfied) as at 31 December 2022. The disclosure is only providing information for contracts that have a duration
– Crude oil and condensates 55,525 36,240
of more than one year.
– Liquefied natural gas 9,829 2,070
– Natural and processed gas 65,312 39,392
Group Under 1-5
130,666 77,702 In RM Mil 1 year years Total

Revenue from contracts with customers 130,666 77,702 Construction contracts 2,574 957 3,531
Other revenue 39,004 20,090

Total revenue 169,670 97,792

Nature of goods and services

Sales of oil and gas products
Revenue from sales of oil and gas products namely petroleum products, crude oil and condensates, liquefied natural
gas, natural gas, processed gas and petrochemical products is recognised when control of the goods has transferred
to the customers. Depending on the terms of the contract with the customer, controls transfer either upon delivery
of the goods to a location specified by the customers or upon delivery of the goods on board vessels or tankers for
onward delivery to the customers. There is no significant financing element present for most of the contracts, as the
Group’s and the Company’s sales of oil and gas products are made either on cash or credit terms as per the industry
practices.

Construction contracts
Revenue from construction contracts is recognised progressively based on percentage of completion method determined
by reference to the completion of the physical proportion of contract work to date. The amount receivable from the
customers is based on agreed milestones as per the terms of the contract.

Sales of properties
Revenue from sales of properties is recognised when control of the properties has been transferred to the buyer.
There is no significant financing element present as the Group’s sales of properties are made on credit terms as per
the industry practices.

a
Excludes Malaysia.
b
Comprises revenue that is not material by individual country.
108 109
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

26. OPERATING PROFIT 26. OPERATING PROFIT (continued)

Group Company Group Company

2022 2021 2022 2021 2022 2021 2022 2021

In RM Mil Restated In RM Mil Restated

Included in operating profit are the following and credits:

charges: Net impairment reversals on:
Auditors’ remuneration – property, plant and equipment 830 5,139 – –
– Statutory audits – investments in subsidiaries – – 3,094 –
– KPMG PLT 7 7 2 2 – intangible assets – 1,310 – –
– Overseas affiliates of KPMG PLT 7 6 – – – investment in associates – 155 – –
– Other auditors 32 26 – – – trade and other receivables:
Amortisation of: – contracts with customers 612 613 – –
– intangible assets 2,134 1,749 33 10 – loan and advances to subsidiaries – – 55 69
– contract costs 20 18 – – Bad debts recovered 3 1 – –
Depreciation of: Net gain on disposals/partial disposals of:
– property, plant and equipment 31,282 32,142 1,611 1,942 – property, plant and equipment – 560 1 9
– investment properties 509 508 – – – investment in a business 88 – – –
Net impairment losses on: – investments in subsidiaries 136 – 50 225
– intangible assets 1,348 – – 11 – investments in associates 15 74 – –
– investments in subsidiaries – – – 11,458 – investments in joint ventures – 19 – –
– investment properties 15 3 – – – other investments – 5 – –
– loans and advances to joint ventures 141 61 30 10 Net gain on foreign exchange 954 895 2,517 1,762
– property, plant and equipment – – – 596 Net change in contract liabilities 9 – 89 –
– trade and other receivables: Net change in fair value of cess receivables – – 493 387
– contracts with customers – – 281 92 Interest income – others 1,322 756 2,471 2,514
– joint arrangements 382 2,404 – 47 Rental income on land and buildings 385 349 359 323
Net impairment/write-off on well costs 1,363 1,809 – –
Net inventories written down to net realisable
value/written off 233 188 – –
Net write-off of:
– bad debts 42 11 – –
– property, plant and equipment 372 54 – 3
Loss on derecognition of financial assets measured
at amortised cost 939 – 21 –
Loss on remeasurement of net assets classified as
held for sale 1,304 – – –
Net loss on disposals of:
– investment in a subsidiary – 2 – –
– property, plant and equipment 844 – – –
– other investments 5 – – –
Net change in contract liabilities – 166 – 560
Net loss on derivatives 3,454 4,985 2,348 1,396
Rental of facilities and equipments 429 237 71 77
Research and development expenditure 124 70 1 1
Staff costs:
– wages, salaries and others 12,851 11,081 2,560 2,343
– contributions to pension fund 1,303 1,117 348 289
Contribution to Tabung Amanah Negara 2,000 500 2,000 500

110 111
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

27. FINANCING COSTS 28. TAX EXPENSE

Group Company Group Company

In RM Mil 2022 2021 2022 2021 In RM Mil 2022 2021 2022 2021

Recognised in the profit or loss: Tax expense from continuing operations 34,173 20,211 10,315 4,868
Continuing operations Tax expense from discontinued operations 165 434 – –
Interest expense of financial liabilities at
Total tax expenses 34,338 20,645 10,315 4,868
amortised cost 2,683 2,812 2,388 2,402
Interest expense on lease liabilities 736 663 400 405
Components of tax expense include:
Other finance costs 1,510 1,366 838 87
Current tax expenses
4,929 4,841 3,626 2,894 Malaysia
Current year 30,471 16,077 12,063 6,997
Discontinued operations
Prior year (1,438) 1,071 (1,158) (926)
Interest expense of financial liabilities at
Overseas
amortised cost 70 45 – –
Current year 3,659 1,901 – –
Interest expense on lease liabilities 139 134 – –
Prior year 491 19 – –
Other finance costs 88 49 – –
Total current tax expenses 33,183 19,068 10,905 6,071
297 228 – –

Capitalised into qualifying assets: Deferred tax expenses

– Term borrowings 1,181 655 – – Origination and reversal of temporary differences 1,262 873 (590) (1,203)
– Lease liabilities 67 23 – – (Over)/Under provision in prior year (107) 704 – –

1,248 678 – – Total deferred tax expenses/(income) 1,155 1,577 (590) (1,203)

Total financing costs 6,474 5,747 3,626 2,894 Total tax expenses 34,338 20,645 10,315 4,868

112 113
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

28. TAX EXPENSE (continued) 29. DIVIDENDS

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income 2022
tax expense at the effective income tax rate of the Group and of the Company is as follows: In RM Mil Total

Dividend of RM250,000 per ordinary share 25,000

2022 2021
Dividend of RM250,000 per ordinary share 25,000
In RM Mil % % Restated
Total 50,000
Group
Profit before taxation 135,956 71,514
2021
Taxation at Malaysian statutory tax rate 24 32,629 24 17,163 In RM Mil Total
Effect of different tax rates in foreign jurisdictions 1 1,325 (1) (667)
Dividend of RM180,000 per ordinary share 18,000
Effect of different tax rates between corporate income tax and
Dividend of RM70,000 per ordinary share 7,000
petroleum income tax 4 5,905 6 4,148
Effect of differences in tax rates (3) (3,513) (4) (3,014) Total 25,000
Net non-deductible expenses 1 1,328 3 2,151
Tax exempt income (1) (1,476) (2) (1,577) The Directors had on 23 February 2023 declared a dividend of RM350,000 per ordinary share amounting to RM35
Tax incentives – (173) (2) (1,679) billion. The dividend will be recognised and accounted for in equity as an appropriation of retained profits in the
Effect of deferred tax benefits not recognised – (597) 3 1,927 financial year ending 31 December 2023.
Reversal of deferred tax benefits previously recognised – – 1 375
Foreign exchange translation difference – (36) – 24

26 35,392 28 18,851

(Over)/Under provision in prior years (1,054) 1,794

Tax expense 34,338 20,645

Company

Profit before taxation 70,132 19,357

Taxation at Malaysian statutory tax rate 24 16,832 24 4,646

Effect of different tax rates between corporate income tax and
petroleum income tax 4 3,001 13 2,487
Net (non-assessable income)/non-deductible expenses (1) (765) 7 1,420
Tax exempt income (10) (7,248) (20) (3,920)
Tax incentives – – (6) (1,082)
Effect of deferred tax benefits not recognised (1) (347) 10 1,868
Reversal of deferred tax benefits previously recognised – – 2 375

16 11,473 30 5,794

Over provision in prior years (1,158) (926)

Tax expense 10,315 4,868

In measuring the provision for taxation and deferred taxation at reporting date, the management applied judgments
and estimates in relation to certain interpretation of tax legislation in arriving at the Company’s tax position. Judgments
and estimates are based on the current tax legislation and best available information as at the reporting date. The
management continuously reassess its judgments and estimates whenever there is a change in circumstances.

114 115
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

30. NET CASH (USED IN)/GENERATED FROM INVESTING ACTIVITIES 31. NET CASH USED IN FINANCING ACTIVITIES
The cash (used in)/generated from investing activities comprise: The cash used in financing activities comprise:
Group Company
Group Company
In RM Mil 2022 2021 2022 2021
2022 2021 2022 2021
In RM Mil Restated Dividends paid (50,000) (25,000) (50,000) (25,000)
Dividends paid to non-controlling interests (6,039) (4,683) – –
Acquisition of:
Drawdown of:
– subsidiaries, net of cash acquired (11,107) (1) – –
– term loans 12,571 13,815 – –
– additional shares in subsidiaries – – (7,076) (2,630)
– Islamic financing facilities 612 1,169 – –
Dividends received 850 1,456 28,074 15,406
– revolving credits 7,407 4,320 – –
Investments in:
– Notes and Bonds 4,413 14,683 – 12,266
– associates and joint ventures (710) (323) – –
– bankers’ acceptances 730 615 – –
– securities and other investments (3,681) (4,036) (1,147) (2,633)
Payment of lease liabilities* (4,024) (4,344) (865) (822)
Long–term receivables and advances repaid from
Repayment of:
subsidiaries – – 25,704 12,131
– term loans (17,813) (7,720) – –
Proceeds from disposal/partial disposal of:
– Islamic financing facilities (955) (1,500) – –
– investments in a subsidiary and a business,
– revolving credits (7,915) (5,400) – –
net of cash disposed 257 – 225 225
– Notes and Bonds (7,699) – (7,550) –
– investments in associates 829 64 – –
– bankers’ acceptances (552) (2,232) – –
– investments in joint ventures – 51 – –
Payment to non-controlling interests on
– property, plant and equipment 8,480 1,869 1 9
redemption of redeemable preference shares (855) (4) – –
– securities and other investments 3,494 1,581 785 669
Payment to non-controlling interests on
Purchase of property, plant and equipment,
additional equity interests – (13) – –
investment properties, intangible assets and land
Proceeds from partial disposal of equity interest
held for development (37,843) (30,113) (815) (406)
to non-controlling interests 235 238 – –
Redemption of preference shares in a subsidiary – – 1,272 182
(69,884) (16,056) (58,415) (13,556)
(39,431) (29,452) 47,023 22,953

* Payment of lease liabilities comprises principal and interest paid in relation to lease liabilities.

116 117
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

31. NET CASH USED IN FINANCING ACTIVITIES (continued) 31. NET CASH USED IN FINANCING ACTIVITIES (continued)
Reconciliation of movement of liabilities to cash flows arising from financing activities: 2021 Group Company
In RM Mil Borrowings Borrowings
2022 Group Company
In RM Mil Borrowings Borrowings Balance at 1 January 2021 88,229 52,854
Changes from financing cash flows
Balance at 1 January 2022 107,831 66,577
Drawdown/(Repayment) of:
Changes from financing cash flows
– term loans 6,095 –
(Repayment)/Drawdown of:
– Islamic financing facilities (331) –
– term loans (5,242) –
– revolving credits (1,080) –
– Islamic financing facilities (343) –
– Notes and Bonds 14,683 12,266
– revolving credits (508) –
– bankers’ acceptances (1,617) –
– Notes and Bonds (3,286) (7,550)
– lease liabilities (3,524) (822)
– bankers’ acceptances 178 –
– bank overdrafts (708) –
– lease liabilities (3,082) (865)
– bank overdrafts 999 – Total changes from financing cash flows 13,518 11,444
Total changes from financing cash flows (11,284) (8,415)
Changes arising from obtaining or losing control of subsidiaries
or other business
Changes arising from obtaining or losing control of subsidiaries
– lease liabilities (58) –
or other business
– term loans (995) – The effect of changes in foreign exchange rates
– lease liabilities (1,240) – – term loans 131 –
– bank overdrafts (1,003) – – Islamic financing facilities (141) –
– revolving credits 334 –
(3,238) –
– Notes and Bonds 1,945 1,845
The effect of changes in foreign exchange rates – bankers’ acceptances 76 –
– term loans 609 – – lease liabilities 399 2
– Islamic financing facilities (7) – – bank overdrafts 12 –
– revolving credits 23 –
2,756 1,847
– Notes and Bonds 3,561 3,241
– bankers’ acceptances (1) – Liability-related other changes
– lease liabilities 1,237 – – acquisition of new leases 2,874 –
– bank overdrafts 2 – – remeasurement of lease liabilities (371) –
– financing costs 883 432
5,424 3,241
Total liability-related other changes 3,386 432
Liability-related other changes
– acquisition of new leases 4,441 163 Balance at 31 December 2021 107,831 66,577
– remeasurement of lease liabilities 41 91
– financing costs 942 425

Total liability-related other changes 5,424 679

Balance at 31 December 2022 104,157 62,082

118 119
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

32. ACQUISITION OF A SUBSIDIARY AND BUSINESS 32. ACQUISITION OF A SUBSIDIARY AND BUSINESS (continued)
Acquisition of a Subsidiary Acquisition of a Subsidiary (continued)
On 14 May 2022, PETRONAS via its partly-owned subsidiary, PETRONAS Chemicals International B.V. (“PCIBV”), a In RM Mil At fair value
wholly-owned subsidiary of PETRONAS Chemicals Group Berhad (“PCG”), signed a Securities Purchase Agreement
(“SePA”) with Financière Forêt S.à r.l., a company under PAI Partners, a European private equity firm (“Seller”) for the Net identifiable assets and liabilities 4,825
acquisition of 100% equity interests in Perstorp Holding AB (“Perstorp”). Less: Non-controlling interest (195)
Add: Goodwill on acquisition 2,885
On 11 October 2022, PCG has fulfilled all the required conditions precedent and paid purchase price of EUR1,612.8
Purchase consideration 7,515
million to the Seller, satisfied wholly in cash, to complete the acquisition. Following this completion, Perstorp has
Add: Settlement of existing loans 4,060
become an indirect wholly-owned subsidiary of PCG.
Payment for acquisition 11,575
PCIBV had repaid all outstanding and unpaid amounts owed by Perstorp and its subsidiaries as of the closing date of the Less: Cash and cash equivalents acquired (468)
SePA that relates to their existing financing agreements which amounts to EUR895.2 million and paid earn-out payment
Payment for acquisition, net of cash acquired 11,107
into an escrow account which amounts to EUR45.0 million related to Perstorp’s new plant in Sayakha, India. The amount
in the escrow account will be disbursed to the Seller subject to meeting certain conditions as agreed in the SePA.
The fair value of the net identifiable assets and goodwill are based on provisional figures which will be finalised within
Purchase price allocation twelve months after the acquisition date. The goodwill reflects the synergy that Perstorp will contribute to the Group.

As at reporting date, a provisional purchase price allocation for the acquisition has been performed whereby the fair The net effect arising from this acquisition is not material in relation to the consolidated net profit of the Group for
value of the net assets and goodwill were updated based on provisional valuation of Perstorp which resulted in the the year.
recognition of intangible assets and fair value for certain tangible assets along with the corresponding deferred tax
liabilities. The intangible assets relate to the fair value of trademarks, patents and know-how, customer relations and
other intangibles, whilst the goodwill reflects the synergy that Perstorp will contribute to the Group. Acquisition of a business
On 27 April 2022, PETRONAS Petróleo Brasil Ltda (“PPBL”), a wholly-owned subsidiary of PETRONAS, and its consortium
The effect of acquisitions on the cash flows and fair values of assets and liabilities acquired are as follows: partners signed a Production Sharing Contract for the Sépia field, located in the Santos Basin, pursuant to the Second
Transfer of Rights Surplus Bidding Round held in Rio De Janeiro on 17 December 2021. Following this, PPBL holds
In RM Mil At fair value 21% Participating Interests (“PI”) alongside the operator, PETRÓLEO BRASILEIRO S.A. with 30% PI, TotalEnergies EP
Property, plant and equipment 3,797 Brasil Ltda with 28% PI and QP Brasil Ltda with 21% PI.
Intangible assets 5,833
Deferred tax assets 265
Other non-current assets 133 33. DISPOSAL OF PARTICIPATING INTERESTS IN PETROLEUM ARRANGEMENT
Trade and other inventories 1,206 Divestment of 15.5% stake in Shah Deniz offshore gas field and its related assets
Trade and other receivables 670
On 6 October 2021, PETRONAS via its wholly-owned subsidiaries, PETRONAS South Caucasus S.à r.l. and PETRONAS
Tax recoverable 7
Azerbaijan (Shah Deniz) S.à r.l., signed an SPA for the sale of its entire 15.5% stake in the Shah Deniz offshore gas
Cash and cash equivalents 468
field and its related assets (herein known as “Azerbaijan Assets”) to LUKOIL Overseas Shah Deniz Limited and LUKOIL
Borrowings (4,092)
Overseas Shah Deniz Midstream Limited (collectively as “LUKOIL”). On 10 December 2021, in line with the pre-emptive
Lease liabilities (37)
rights exercised by other existing partners, a revised SPA was signed with LUKOIL, whereas new SPAs were signed
Deferred tax liabilities (1,694)
with BP Exploration (Azerbaijan) Limited, BP Pipeline (SCP) Limited, Azerbaijan (Shah Deniz) Limited and Azerbaijan
Other non-current liabilities (351)
(South Caucasus Pipeline) Limited, for the Azerbaijan Assets mentioned above.
Trade and other payables (1,370)
Taxation (10) The divestment was completed in February 2022. The net effect arising from the disposal of Azerbaijan Assets is not
material in relation to the consolidated net profit of the Group for the year.

120 121
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

34. COMMITMENTS 35. CONTINGENT LIABILITIES

Outstanding commitments in respect of capital expenditure at the end of the reporting year not provided for in the Material litigation
financial statements are:
There were no material contingent liabilities since the last audited consolidated statement of financial position as at
31 December 2021.
Group Company
Other guarantees
In RM Mil 2022 2021 2022 2021
Other than those disclosed elsewhere in the financial statements, the Group and the Company had entered into
Capital expenditure*
agreements which may include agreements to provide guarantees to third parties for the benefit of subsidiaries,
Approved and contracted for associates and joint ventures (“Guaranteed Entities”). Such unsecured guarantees are normally provided in support of
Less than one year 19,114 16,984 754 518 the Guaranteed Entities’ normal and on-going business requirements, consistent with generally acceptable and
Between one and five years 26,962 20,176 1,410 1,184 recognised industry practices. The liability of the Group and the Company is therefore contingent and would only
46,076 37,160 2,164 1,702 trigger upon the default of the Guaranteed Entities’ obligation under the guarantee.

Approved but not contracted for

Less than one year 21,576 18,914 ^26,269 328 36. RELATED PARTY DISCLOSURES
Between one and five years 63,369 44,381 2,327 752
More than five years 3,467 53 – – For the purposes of these financial statements, parties are considered to be related to the Group or the Company if
the Group or the Company has the ability, directly or indirectly, to control or jointly control the party or exercise
88,412 63,348 28,596 1,080 significant influence over the party in making financial and operating decisions, or vice versa, or where the Group or
134,488 100,508 30,760 2,782 the Company and the party are subject to common control. Related parties may be individuals or other entities.

Share of capital expenditure of associates and Related parties also include key management personnel defined as those persons having authority and responsibility
joint ventures for planning, directing and controlling the activities of the Group and the Company either directly or indirectly and
Approved and contracted for an entity that provides key management personnel services to the Group and the Company. The key management
Less than one year 9,214 9,021 – – personnel include all the Directors of the Company.
Between one and five years 5,071 6,564 – –
More than five years 105 158 – – The Company’s related parties include key management personnel, subsidiaries, associates, joint ventures as well as
the Government of Malaysia and its related entities as the Company is wholly-owned by the Government of Malaysia.
14,390 15,743 – –

Approved but not contracted for Key management personnel compensation

Less than one year 2,642 3,159 – – Group and Company
Between one and five years 20,047 21,865 – – In RM Mil 2022 2021
22,689 25,024 – – Director fees, emoluments, gratuity and benefit plan 17 16
37,079 40,767 – –
The estimated monetary value of Directors’ benefits-in-kind is RM95,000 (2021: RM88,000).
171,567 141,275 30,760 2,782

* Includes right-of-use assets committed but not commenced and investment in shares.
^ Includes RM25 billion for the purpose of PETRONAS’ decarbonisation and clean energy pursuits.

122 123
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

36. RELATED PARTY DISCLOSURES (continued) 36. RELATED PARTY DISCLOSURES (continued)
Significant transactions with related parties Significant transactions with related parties (continued)
In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the Company
following transactions with related parties during the financial year: In RM Mil 2022 2021

Federal and State Governments of Malaysia:

Group
Cash payments (14,512) (9,008)
In RM Mil 2022 2021
Subsidiaries:
Federal and State Governments of Malaysia: Sales of crude oil, petroleum products, processed gas and natural gas 106,373 64,881
Cash payments (14,512) (9,008) Interest income from subsidiaries 2,121 2,264
Lease income 1,289 1,289 Purchase of crude oil, natural gas and liquefied natural gas (55,765) (34,383)
Sales of petroleum products 475 261 Gas processing and transportation fee payable (2,127) (2,484)
Sales of utilities 183 179 Centralised head office services charges 690 966
Building maintenance income 311 339 Research cess 225 142
Government of Malaysia’s related entities: Supplemental payments and signature bonus 4,405 1,284
Sales of petroleum products, petrochemical products and processed gas 10,560 4,969 Abandonment cess
Other income 221 230 – paid (1,751) (1,980)
Associate companies: – received 1,828 2,134
Sales of petrochemical products and processed gas 9,248 7,605 Joint ventures:
Joint arrangements: Gas processing fee (20) (29)
Sales of industrial utilities 1,116 458
Allocated expenses charged out 6 607 Information regarding outstanding balances arising from related party transactions as at 31 December 2022 are
Site services charges 165 697 disclosed in Note 10, Note 15 and Note 24.
Sales of petrochemical products 724 644
Project expenses (417) (110) Information regarding impairment losses on receivables and bad debts written off during the financial year are disclosed
in Note 26.

The Directors of the Company are of the opinion that the above transactions have been entered into in the normal
course of business and have been established on a commercial basis. The above has been stated at contracted
amount.

124 125
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

37. OPERATING SEGMENTS, PRODUCTS AND SERVICES AND GEOGRAPHICAL INFORMATION 37. OPERATING SEGMENTS, PRODUCTS AND SERVICES AND GEOGRAPHICAL INFORMATION (continued)
Effective first quarter of 2022, New Energy sector has been managed separately from Gas segment. As a result, Gas Consolidation
and New Energy is now known as Gas segment and the Group’s reportable operating segments as at 31 December Group adjustments
2022 comprise Upstream, Gas and Downstream. Accordingly, the Group has restated the operating segment information 2022 Corporate and
for the prior periods. In RM Mil Upstream Gas Downstream and others eliminations Total

Each reportable segment offers different products and services and are managed separately because they require Revenue
different technology and marketing strategies. Third parties 60,680 122,749 174,842 16,996 – 375,267
Inter-segment 97,503 14,871 10,415 4,489 (127,278) –
The following summary describes the operations in each of the Group’s reportable segments:
Total revenue 158,183 137,620 185,257
a
21,485 (127,278) 375,267

• Upstream - activities include oil and natural gas exploration, development and production, together with related Reportable segment
pipeline and transportation activities. profit 51,266 43,219 a
7,514 213 (594) 101,618

• Gas - activities include purchase of natural gas from Upstream, liquefaction and processing of natural gas as well Included in the measure of segment profit are:
as marketing and trading of liquefied natural gas and processed gas.
Depreciation and
• Downstream - activities include the supply and trading, refining, manufacturing, marketing and transportation of amortisation (20,357) (5,860) (4,726) (3,426) 424 (33,945)
crude oil, petroleum and petrochemical products. Net impairment
(losses and write-
Corporate and others comprise primarily logistic and maritime segment, property segment and central treasury, project off)/reversals on
delivery and technology function as well as clean energy solutions. assets and well
costs (2,551) 2,467 (1,695) (859) 420 (2,218)
For each of the reportable segment, the Group chief operating decision maker, which in this case is the PETRONAS Interest income 1,578 666 540 5,307 (2,414) 5,677
Executive Leadership Team, reviews internal management reports at least on a quarterly basis. Interest expense (3,537) (1,714) (802) (2,788) 3,615 (5,226)
Share of profit/(loss)
There are varying levels of integration between Upstream segment, Gas segment, Downstream segment and others. after tax and
This integration includes transfers of products and services between segments. non-controlling
interests of equity
Inter-segment pricing is established on a commercial basis. accounted
associates and joint
Inter-segment revenues include sales of crude oil and condensates, petroleum products, gas and shipping services ventures – 1,099 (101) (30) – 968
between business segments. These transactions are eliminated on consolidation. Tax expense (23,889) (9,689) (976) (511) 727 (34,338)

Performance is measured based on segment profit after tax (“PAT”), as included in the internal management reports. Segment assets 247,562 150,571 158,729 223,898 (70,190) 710,570
Segment PAT is used to measure performance as the PETRONAS Executive Leadership Team believes that such
information is the most relevant in evaluating the results of the segments. Included in the measure of segment assets are:
Investments in
Segment assets are measured based on total assets (including goodwill) of a segment, as included in the internal associates and joint
management reports and are used to measure the return of assets of each segment. ventures 333 2,290 3,493 1,998 – 8,114

Segment liabilities information is neither included in the internal management reports nor provided regularly to the Additions to non-
PETRONAS Executive Leadership Team. Hence, no disclosure is made on segment liability. current assets
other than financial
Segment capital expenditure is the total cost incurred during the financial year to acquire non-current assets other instruments and
than financial instruments and deferred tax assets. deferred tax assets 23,692 5,633 16,392 4,411 – 50,128

a
Includes revenue and profit from discontinued operations of RM42,265 million and RM3,813 million respectively.
126 127
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

37. OPERATING SEGMENTS, PRODUCTS AND SERVICES AND GEOGRAPHICAL INFORMATION (continued) 37. OPERATING SEGMENTS, PRODUCTS AND SERVICES AND GEOGRAPHICAL INFORMATION (continued)

Group Consolidation Products and services information

2021 adjustments The following are revenue from external customers by products and services:
Restated Corporate and
In RM Mil Upstream Gas Downstream and others eliminations Total
Group 2022 2021
Revenue In RM Mil Restated
Third parties 40,100 75,410 121,091 11,362 – 247,963
Petroleum products 130,142 89,235
Inter-segment 64,325 10,059 3,414 5,121 (82,919) –
Crude oil and condensates 50,945 30,820
Total revenue 104,425 85,469 124,505
a
16,483 (82,919) 247,963 Liquefied natural gas 98,151 57,486
Natural and processed gas 39,364 27,662
Reportable segment
Petrochemical products 28,296 22,475
profit/(loss) 34,452 15,111 3,034
a
(1,466) (262) 50,869
Shipping services 3,320 2,901
Investment income 4,355 2,242
Included in the measure of segment profit/(loss) are:
Others 20,694 15,142
Depreciation and 375,267 247,963
amortisation (20,784) (5,536) (5,250) (3,228) 381 (34,417)
Net impairment Geographical information
reversals/(losses
and write-off) on Geographical revenue is determined based on location of customers. The amounts presented in non-current assets
assets and well are based on the geographical location of the assets and do not include financial instruments, investments in associates
costs 6,938 (367) (3,586) (148) 39 2,876 and joint ventures nor deferred tax assets.
Interest income 1,020 150 324 4,040 (2,536) 2,998
Revenue
Interest expense (3,418) (1,636) (511) (3,367) 3,863 (5,069)
Group 2022 2021
Share of profit after
In RM Mil Restated
tax and non-
controlling interests Asiaa 125,436 84,674
of equity Malaysia 93,635 65,828
accounted Japan 33,663 19,670
associates and joint South Africa 34,592 21,158
ventures 275 425 837 288 – 1,825 Rest of the worldb 87,941 56,633
Tax expense (13,479) (3,564) (3,008) (897) 303 (20,645)
375,267
c c
247,963
Segment assets 252,443 121,159 134,866 192,075 (65,592) 634,951
Non-current assets
Included in the measure of segment assets are: Group 2022 2021
Investments in In RM Mil Restated
associates and joint Malaysia 224,087 224,098
ventures 333 1,669 3,712 1,747 – 7,461 Rest of the world 116,049 93,076
Additions to non- 340,136 317,174
current assets
other than financial Major customers
instruments and
deferred tax assets 14,714 6,833 3,871 5,019 – 30,437 As at 31 December 2022 and 31 December 2021, there are no major customers that contribute to more than 10
percent of the Group’s revenue.

a
Excludes Malaysia and Japan.
b
Comprises revenue that is not material by individual country.
a
Includes revenue and profit from discontinued operations of RM24,641 million and RM1,214 million respectively. c
Includes revenue from discontinued operations of RM42,265 million (2021: RM24,641 million).
128 129
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

38. PETROLEUM ARRANGEMENTS 38. PETROLEUM ARRANGEMENTS (continued)

The Petroleum Development Act, 1974 vests the entire ownership, rights, powers, liberties and privileges of exploiting Production sharing contracts (“PSCs”) (continued)
petroleum resources on land and offshore Malaysia in PETRONAS. In addition, the Group via its subsidiaries participated
Outside Malaysia
in various petroleum arrangements outside Malaysia as contractors.
The international PSC arrangements, where the Group acts as a contractor, has largely similar arrangements as per
Production Sharing Contracts (“PSCs”) Malaysia PSCs subject to the relevant laws and regulations in the respective countries. In respect of abandonment
for most of the countries, the Group makes contribution into escrow accounts/any other approved accounts.
Malaysia
The monetisation of petroleum resources is carried out primarily by means of PSCs between PETRONAS, its subsidiaries Service contracts
and other oil and gas companies (“PSC Contractors”). Under the terms of the various PSCs, the PSC Contractors shall
Risk Service Contract (“RSC”) Malaysia
bear all the costs and may recover their costs in barrels of crude oil or gas equivalent in accordance with the terms
of their respective PSCs. Under the terms of the RSC, RSC contractors provide services for the development and production of oil and gas
resources on behalf of PETRONAS, in return for cost reimbursement upon commercial production and performance
Certain terms of the PSCs are: based remuneration fees. PETRONAS retains ownership of the assets and crude oil and gas produced.

i. Research cess, supplemental payments and crude oil or gas entitlement Development and Production Service Contracts (“DPSCs”)
Under the terms of DPSCs, the subsidiaries of the Group act as contractors that provide services for development
The determination of research cess, supplemental payments and PETRONAS’ and the PSC Contractors’ entitlements
and production of oil and gas resources on behalf of host authority.
to crude oil or gas produced is based on the method of valuation of crude oil or gas and the costs incurred and
claimed by contractors subject to the maximum rate provided under the respective PSCs. PETRONAS’ entitlements
Certain terms of DPSCs are:
to crude oil and natural gas are taken up as income on the basis of liftings and sales respectively made by the
Company. Research cess and supplemental payments are not applicable for certain PSCs that are reaching tail-end
i. Crude oil and gas entitlement
of production life cycle.
DPSC contractors shall incur all upfront costs during the initial period of investment and will be reimbursed once
ii. Property, plant and equipment and intangible assets
the contractual obligation upon production of crude oil and gas is met. Under the terms of DPSCs, the host
authority owns the title to all equipment and other assets acquired by the contractors during the contractual
Title to all equipment and other assets purchased or acquired by PSC Contractors exclusively for the purpose of
period of the DPSCs.
petroleum operations, and which costs are recoverable in barrels of cost oil or gas equivalent, is vested with
PETRONAS. However, the values of these assets are not taken up in the financial statements of PETRONAS other
Contractors are entitled to recover their expenditure incurred in relation to the petroleum operations of the DPSCs,
than:
based on the provisions stipulated in the DPSCs.

• the property, plant and equipment of a subsidiary which is also a contractor to PETRONAS under certain PSCs;
Contractors are also entitled to remuneration fees which commensurate with their performance as stipulated in
and
the provision of the DPSCs.

• the estimated costs of decommissioning and removing the assets and restoring the site on which they are
All barrels of crude oil and gas produced belong to the host authority. The Group’s entitlements to oil and gas
located where there is an obligation to do so.
are recognised as revenue based on two elements, costs reimbursement and remuneration fees.

iii. Inventories
ii. Intangible assets and other financial assets

Title to all crude oil held in inventories by the PSC Contractors lies with PETRONAS and title to the contractors’
Title to all equipment and other assets constructed belong to the host authority and contractually, the contractors
entitlement passes only upon delivery at point of export.
acquire the right to use these assets for the duration specified under the DPSCs. The right to use these assets is
recognised in the financial statements of the Group as intangible assets, as per accounting policies set out in Note
iv. Abandonment
2.9.

The PSCs stipulate the rights and obligations of PETRONAS and the PSC Contractors in relation to the abandonment
In circumstances where the contractors have the right to receive cash or other financial assets for their services
of the oil and gas properties. The PSC Contractors have the obligation to undertake abandonment activities during
from or at the discretion of the host authority, these assets are recognised as trade receivables.
the PSCs period except for certain PSCs or facilities where the abandonment obligation lies with PETRONAS.

In addition, the PSC Contractors are also required to make abandonment cess contribution to the Abandonment
Cess Fund via PETRONAS in accordance with the terms of the PSCs. The PSC Contractors have the right to request
PETRONAS to reimburse the abandonment cess up to the cumulative amount paid upon the execution of the
abandonment activities.

130 131
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

38. PETROLEUM ARRANGEMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Concession Agreements Categories of financial instruments (continued)
Under the terms of Concession Agreements, the subsidiaries of the Group participate in Consortium Agreements for Derivatives
the rights to carry out exploration and exploitation activities. The consortium bears all costs as outlined in the Annual Group designated Total
Work Program and Budget. Title to all equipment and other assets purchased and acquired by the consortium for 2022 FVOCI - as hedging Amortised carrying
the purpose of petroleum operations will remain with the consortium for the duration of the Concession Agreements In RM Mil Note FVTPL EIDUIR instruments cost amount
and the equity value of the assets is recognised in the financial statements of the relevant subsidiaries of the Group
as property, plant and equipment as per accounting policies set out in Note 2.4. Financial assets
Long-term receivables * – – 1,014 21,342 22,356
Upon production, the title to the crude oil and gas produced to which the consortium is entitled to, shall pass to Fund and other investments 11 11,022 1,348 – – 12,370
the consortium at the point of production at the wellhead. Each member of the consortium shall own and may Trade and other receivables * 1,309 – 1,598 46,317 49,224
separately take or dispose of its own share of the crude oil. Cash and cash equivalents 16 – – – 201,220 201,220

12,331 1,348 2,612 268,879 285,170

The consortium shall pay the host authority a royalty on the consortium’s total production of the crude oil and gas
for each calendar month in-kind or in-cash. By virtue of its petroleum operations, the consortium is subject to direct
Financial liabilities
tax on profits, where each member of the consortium shall separately calculate its taxable income and shall remain
Borrowings * – – – (89,084) (89,084)
responsible for its own corporate income tax return.
Other long-term liabilities * (13) – (33) (4,460) (4,506)
Trade and other payables * (508) – (61) (49,353) (49,922)
39. FINANCIAL INSTRUMENTS (521) – (94) (142,897) (143,512)
Categories of financial instruments
2021
The following table provides an analysis of financial instruments categorised as follows: Financial assets
Long-term receivables * 7 – 134 17,722 17,863
(i) Fair value through profit or loss (“FVTPL”) Fund and other investments 11 11,663 1,371 – 400 13,434
– Mandatorily required by MFRS 9 Trade and other receivables * 198 – 1,579 39,500 41,277
Cash and cash equivalents 16 – – – 164,556 164,556
– Designated upon initial recognition
11,868 1,371 1,713 222,178 237,130
– Derivatives designated as hedging instruments
Financial liabilities
(ii) Fair value through other comprehensive income (“FVOCI”)
Borrowings * – – – (94,988) (94,988)
– Equity instrument designated upon initial recognition (“EIDUIR”) Other long-term liabilities * – – (172) (5,432) (5,604)
Trade and other payables * (481) – (1,481) (39,617) (41,579)
(iii) Amortised cost
(481) – (1,653) (140,037) (142,171)

* These balances exclude non-financial instruments balances.

Certain fund and other investments have been designated at fair value through profit or loss upon initial recognition
as management internally monitors these investments on fair value basis.

132 133
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Categories of financial instruments (continued) Financial risk management
As an integrated oil and gas company, the Group and the Company are exposed to various risks that are particular
Derivatives
to its core business operations. These risks, which arise in the normal course of the Group’s and of the Company’s
Company designated Total
business, comprise credit risk, liquidity risk and market risk relating to interest rates, foreign currency exchange rates,
2022 FVOCI - as hedging Amortised carrying
equity prices and commodity prices.
In RM Mil Note FVTPL EIDUIR instruments cost amount

Financial assets The Group has policies and guidelines in place that sets the foundation for a consistent approach towards establishing
Long-term receivables * 29,259 – – 58,195 87,454 an effective financial risk management across the Group.
Fund and other investments 11 6,949 73 – – 7,022
Risk taking activities are undertaken within acceptable level of risk or risk appetite, whereby the risk appetite level
Trade and other receivables * 66 – 626 27,985 28,677
reflects business considerations and capacity to assume such risks. The risk appetite is established at Board level,
Cash and cash equivalents 16 – – – 91,167 91,167
where relevant, based on defined methodology and translated into operational thresholds.
36,274 73 626 177,347 214,320
The Group’s and the Company’s goal in risk management are to ensure that the management understands, measures
Financial liabilities and monitors the various risks that arise in connection with their operations. Policies and guidelines have been
Borrowings * – – – (54,871) (54,871) developed to identify, analyse, appraise and monitor the dynamic risks facing the Group and the Company. Based on
Other long-term liabilities * – – – (12,666) (12,666) this assessment, each business unit adopts appropriate measures to mitigate these risks in accordance with the business
Trade and other payables * (78) – – (23,305) (23,383) unit’s view of the balance between risk and reward.

(78) – – (90,842) (90,920) Credit risk

Credit risk is the potential exposure of the Group and of the Company to losses in the event of non-performance
2021
by counterparties. The Group’s and the Company’s exposures to credit risk arise principally from their receivables
Financial assets
from customers, fund and other investments and financial guarantees given to financial institutions for credit facilities
Long-term receivables * 27,092 – – 85,155 112,247 granted to subsidiaries, joint arrangements and associates. Credit risks are controlled by individual subsidiaries in line
Fund and other investments 11 6,749 73 – 230 7,052 with PETRONAS’ policies and guidelines.
Trade and other receivables * 63 – 1,505 15,027 16,595
Cash and cash equivalents 16 – – – 72,691 72,691 Receivables and contract assets
33,904 73 1,505 173,103 208,585 Risk management objectives, policies and processes for managing the risk
The Group and the Company minimise credit risk by ensuring that all potential third party counterparties are assessed
Financial liabilities
prior to registration and entering into new contracts. Existing third party counterparties are also subject to regular
Borrowings * – – – (59,154) (59,154) reviews, including reappraisal and approval of granted limits. The creditworthiness of counterparties is assessed based
Other long-term liabilities * – – – (11,934) (11,934) on an analysis of all available quantitative and qualitative data regarding business risks and financial standing, together
Trade and other payables * (74) – – (14,661) (14,735) with the review of any relevant third party and market information. Reports are prepared and presented to the
(74) – – (85,749) (85,823) management that cover the Group’s overall credit exposure against limits and securities, exposure by segment and
overall quality of the portfolio.

* These balances exclude non-financial instruments balances. Depending on the types of transactions and counterparty creditworthiness, the Group and the Company further
mitigate and limit risks related to credit by requiring collateral or other credit enhancements such as cash deposits,
Certain fund and other investments have been designated at fair value through profit or loss upon initial recognition letter of credit and bank guarantees.
as management internally monitors these investments on fair value basis.
Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated
at their realisable values.

At each reporting date, the Group and the Company assess whether any of the trade receivables and contract assets
are credit impaired.

The gross carrying amounts of credit impaired trade receivables and contract assets are written off (either partially or
fully) when there is no realistic prospect of recovery. This is generally the case when the Group or the Company
determines that the debtor does not have assets or sources of income that could generate sufficient cash flows to
repay the amounts subject to the write-off. Nevertheless, trade receivables and contract assets that are written off
could still be subject to enforcement activities.

134 135
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Receivables and contract assets (continued) Receivables and contract assets (continued)
Exposure to credit risk, credit quality and collateral Recognition and measurement of impairment losses (continued)
As at the end of the reporting period, the maximum exposure to credit risk arising from trade receivables and contract The following table provides information about the exposure to credit risk and ECL for trade receivables and contract
assets are represented by the carrying amounts in the statement of financial position. assets as at the reporting date which are grouped together as they are expected to have similar risk nature.

At each reporting date, the Group and the Company assess whether financial assets carried at amortised cost and Allowance
debt securities at FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have Group Gross for
a detrimental impact on the estimated future cash flows of the financial asset have occurred. 2022 carrying impairment Net
In RM Mil Note amount losses balance
Evidence that a financial asset is credit-impaired includes the following observable data:
Credit Risk Rating
(i) significant financial difficulty of the customer; or
Sovereign 308 – 308
(ii) a breach of contract such as a default; or Excellent 2,797 – 2,797
Good 29,860 (65) 29,795
(iii) it is probable that the customer will enter bankruptcy or other financial reorganisation.
Fair 14,610 (739) 13,871
Exposure to losses increases with concentrations of credit risk which may exist when a number of counterparties are 47,575 (804) 46,771
involved in similar activities or operate in the same industry sector or geographical area, which may result in their Credit impaired
ability to meet contractual obligations being impacted by changes in economic, political or other conditions. The Individually impaired 1,001 (1,001) –
Group’s principal customers with which it conducts business are located globally and there is no significant concentration 48,576 (1,805) 46,771
of credit risk at reporting date.
Representing
Recognition and measurement of impairment losses Trade receivables 15 33,304 (926) 32,378
In managing credit risk of trade receivables and contract assets, the Group manages its debtors and takes appropriate Amount due from associates and joint arrangements * 8,413 (879) 7,534
actions (including but not limited to legal actions) to recover long overdue balances. Contract assets 10,15 6,859 – 6,859

48,576 (1,805) 46,771

The Group and the Company perform credit rating assessment of all its counterparties in order to measure Expected
Credit Loss (“ECL”) of trade receivables for all segments using the PETRONAS Credit Risk Rating system. This credit 2021
rating assessment considers quantitative assessment using the counterparties’ financial statements or a qualitative Credit Risk Rating
assessment of the counterparties which includes but is not limited to their reputation, competitive position, industry
Sovereign 290 – 290
and geopolitical outlook.
Excellent 2,530 – 2,530
Good 33,515 (1,651) 31,864
In determining the ECL, the probability of default assigned to each counterparty is based on their individual credit
Fair 1,947 (23) 1,924
rating. This probability of default is derived by benchmarking against available third party and market information,
which also incorporates forward looking information. 38,282 (1,674) 36,608
Credit impaired
Individually impaired 2,199 (2,199) –
Loss given default is the assumption of the proportion of financial assets that cannot be recovered by conversion of
collateral to cash or by legal process, and is assessed based on the Group’s and the Company’s historical experience. 40,481 (3,873) 36,608

Representing
Trade receivables 15 29,880 (1,466) 28,414
Amount due from associates and joint arrangements * 7,647 (2,407) 5,240
Contract assets 10,15 2,954 – 2,954

40,481 (3,873) 36,608

* These balances exclude non-financial instruments balances.

136 137
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Receivables and contract assets (continued) Receivables and contract assets (continued)
Recognition and measurement of impairment losses (continued) Recognition and measurement of impairment losses (continued)

Allowance The ageing of trade receivables net of impairment amount as at the end of the reporting period is analysed below:
Company Gross for
Group Company
2022 carrying impairment Net
In RM Mil Note amount losses balance In RM Mil 2022 2021 2022 2021
Credit Risk Rating At net
Sovereign 165 – 165 Not past due 43,590 28,049 19,001 8,222
Excellent 137 – 137 Past due 1 to 30 days 226 1,292 20 4,068
Good 17,895 (45) 17,850 Past due 31 to 60 days 228 162 3 1
Fair 940 (15) 925 Past due 61 to 90 days 34 139 – 1
Past due more than 90 days 2,693 6,966 53 573
19,137 (60) 19,077
46,771 36,608 19,077 12,865
Representing
Trade receivables 15 3,133 (6) 3,127 The Group and the Company have not recognised any loss allowance for trade receivables that are secured by
Amount due from subsidiaries 15 14,204 (1) 14,203 collateral and/or other credit enhancements such as cash deposits, letter of credit, bank guarantees and trust funds.
Trade receivables from a subsidiary 10 1,677 (42) 1,635
Amount due from joint arrangements 10 123 (11) 112 The movements in the allowance for impairment losses of trade receivables measured at lifetime expected credit loss
19,137 (60) 19,077 during the year are as follows:

2021 Group Company

Credit Risk Rating In RM Mil 2022 2021 2022 2021
Sovereign 137 – 137
Excellent 462 – 462 Opening balance 3,873 2,209 426 378
Good 11,837 (53) 11,784 Impairment (reversals)/losses recognised (1,591) 1,748 5 48
Fair 484 (2) 482 Impairment written off (383) (7) (371) –
Transfer to assets held for sale (115) – – –
12,920 (55) 12,865 Translation exchange difference 21 (77) – –
Credit impaired
Individually impaired 371 (371) – Closing balance 1,805 3,873 60 426
13,291 (426) 12,865
The movement of loss allowance for trade receivables includes changes arising from lifetime expected credit losses
Representing due to reassessment of the expected timing of realisation for certain amounts of trade receivables of the Group and
Trade receivables 15 2,766 (374) 2,392 the Company.
Amount due from subsidiaries 15 10,344 (5) 10,339
Amount due from joint arrangements 10 181 (47) 134 Fund and other investments

13,291 (426) 12,865 The Group and the Company are also exposed to counterparty credit risk from financial institutions, government and
corporate counterparties through fund and other investment activities comprising primarily money market placements
and investments in bonds and equities. These exposures are managed in accordance with existing policies and
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is equal to the
guidelines that define the parameters within which the investment activities shall be undertaken in order to achieve
carrying amount.
the Group’s investment objective of preserving capital and generating optimal returns above appropriate benchmarks
within allowable risk parameters.

Investments are only made with approved counterparties who met the appropriate rating and other relevant criteria,
and within approved credit limits, as stipulated in the policies and guidelines. The treasury function is governed by a
counterparty credit risk management framework.

138 139
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Fund and other investments (continued) Liquidity risk (continued)
The maximum exposure to credit risk is represented by the carrying amounts in the statement of financial position. Maturity analysis (continued)
Contractual
The credit risk on a financial instrument is considered low, if the financial instrument has a low risk of default, the interest/
borrower has a strong capacity to meet its contractual cash flow obligations in the near term and adverse changes Group profit
in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower 2022 Carrying rates per Contractual
to fulfil its contractual cash flow obligations. In RM Mil amount annum % cash flows

Amortised cost
As at the reporting date, the Group and the Company have invested significantly in domestic market. The fund and
Lease liabilities 15,073 1.00-9.50 21,566
other investments are unsecured, however, in view of the sound credit rating of counterparties, management does
Secured term loans
not expect any counterparty to fail to meet its obligation.
USD floating rate loans 4,438 1.83 5,024
USD fixed rate loans 7,429 2.70 7,629
Financial guarantees
RM floating rate loans 430 4.37 482
The Group and the Company provide financial guarantees to banks in respect of banking facilities granted to certain RM fixed rate loans 362 3.94 377
subsidiaries, joint ventures and associates (“Group entities”). The Group and the Company monitor on an ongoing Other floating rate loans 3,354 5.58 3,696
basis, the results of the Group entities and repayments made by the Group entities. Other fixed rate loans 230 9.04 250
Unsecured term loans
The Group’s certain joint arrangement entities have undertaken project financing facilities (the “Borrower”), under an USD floating rate loans 3,884 3.97 4,115
integrated borrowing structure for the repayment of bridge loan facilities and other expenditures. Under the integrated EUR floating rate loans 141 0.71 143
borrowing structure, the Borrowers provide cross guarantee to the project financing lenders on each other’s loan. Other fixed rate loans 280 1.78 307
Upon failure to pay by a Borrower, the project financing lenders would have primary recourse to that Borrower as
Unsecured Notes and Bonds
well as to the other Borrower under the cross-guarantee.
USD Guaranteed Notes 59,709 3.33 105,001
USD Bonds 2,208 7.63 2,880
The Group’s share of maximum exposure to credit risk mainly relates to the cross-guarantee provided by the joint
Unsecured revolving credits
operation company to a joint venture amounting to RM15,669 million (2021: RM15,995 million) which represents the
Other floating revolving credits 154 3.33 154
outstanding loans of the joint venture as at financial year end. Similarly, the cross-guarantee provided by the joint
Unsecured bankers’ acceptances
venture to the Group’s joint operation company as at financial year end is RM1,842 million (2021: RM1,880 million),
RM fixed bankers’ acceptances 272 4.37 272
being the Group’s share in the joint operation company.
Other floating bankers’ acceptances 21 4.37 21
The maximum exposure to credit risk for the Company amounted to RM4,483 million (2021: RM4,571 million), which Secured Islamic financing facilities
represents the outstanding banking facilities of the Group’s entities as at reporting date. As at reporting date, there RM Islamic financing facilities 3,306 4.06 3,828
was no indication that any entities would default on repayment. The fair value of the financial guarantee recognised Unsecured Islamic financing facilities
is disclosed in Note 23. RM Islamic financing facilities 2,866 3.80 2,990
Other long-term liabilities 4,460 – 6,024
Liquidity risk Financial guarantee – – 15,669
Trade and other payables 49,353 – 49,353
Liquidity risk is the risk that the Group and the Company will not be able to meet their financial obligations as they
Derivative liabilities 615 – 615
fall due. The Group’s and the Company’s exposure to liquidity risk arise principally from their trade and other payables,
and borrowings. In managing its liquidity risk, the Group and the Company maintain sufficient cash and liquid marketable 158,585 230,396
assets. The Company’s current credit rating enables it to access banking facilities in excess of current and immediate
continue to next page
future requirements of the Group and of the Company. The Group’s and the Company’s borrowing power is not
limited by its Articles of Association. However, certain covenants included in agreements impose limited restrictions
on some of the debt level of PETRONAS’ subsidiaries.

Maturity analysis
The following table summarises the maturity profile of the Group’s and of the Company’s financial liabilities as at the
reporting date based on undiscounted contractual payments:

140 141
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Liquidity risk (continued) Liquidity risk (continued)
Maturity analysis (continued) Maturity analysis (continued)
Contractual
Group
interest/
2022 Within 1-2 2-5 More than
Group profit
In RM Mil 1 year years years 5 years
2021 Carrying rates per Contractual
Amortised cost (continued) In RM Mil amount annum % cash flows
Lease liabilities 2,054 3,477 6,808 9,227
Amortised cost
Secured term loans
Lease liabilities 12,843 1.20-10.13 17,223
USD floating rate loans 620 429 1,121 2,854
Secured term loans
USD fixed rate loans 822 794 4,664 1,349
USD floating rate loans 2,913 1.69 3,313
RM floating rate loans 43 36 403 –
USD fixed rate loans 11,413 2.95 16,721
RM fixed rate loans 39 41 135 162
RM floating rate loans 423 4.48 471
Other floating rate loans 774 250 2,307 365
RM fixed rate loans 420 3.80 468
Other fixed rate loans 10 29 102 109
Unsecured term loans Other floating rate loans 3,015 3.89 3,015
USD floating rate loans 2,736 – 577 802 Other fixed rate loans 295 9.25 295
EUR floating rate loans – – 143 – Unsecured term loans
Other fixed rate loans 127 – 42 138 USD floating rate loans 5,265 1.24 5,365
Unsecured Notes and Bonds USD fixed rate loans 769 0.60 771
USD Guaranteed Notes 2,042 2,042 13,545 87,372 EUR floating rate loans 510 0.71 955
USD Bonds 168 168 2,544 – Other fixed rate loans 103 0.62 103
Unsecured revolving credits Other floating rate loans 795 4.71 795
Other floating revolving credits 154 – – – Unsecured Notes and Bonds
Unsecured bankers’ acceptances USD Guaranteed Notes 59,553 4.60 104,681
RM fixed bankers’ acceptances 272 – – – USD Bonds 2,087 7.63 2,882
Other floating bankers’ acceptances 21 – – – Unsecured revolving credits
Secured Islamic financing facilities USD floating revolving credits 292 0.21 293
RM Islamic financing facilities 365 669 1,035 1,759 USD fixed revolving credits 209 0.69 209
Unsecured Islamic financing facilities RM floating revolving credits 16 2.83 16
RM Islamic financing facilities 586 1,350 954 100 Other floating revolving credits 120 3.40 121
Other long-term liabilities 59 35 1,982 3,948 Unsecured bankers’ acceptances
Financial guarantee 15,669 – – – RM fixed bankers’ acceptances 99 2.06 99
Trade and other payables 49,353 – – – Other floating bankers’ acceptances 17 2.06 17
Derivative liabilities 569 44 2 – Unsecured bank overdrafts
Other bank overdrafts 2 3.98 2
76,483 9,364 36,364 108,185
Secured Islamic financing facilities
continued from previous page RM Islamic financing facilities 3,629 3.95 4,763
Unsecured Islamic financing facilities
RM Islamic financing facilities 2,901 3.52 3,202
CNY Islamic financing facilities 142 6.17 142
Other long-term liabilities 5,432 – 5,770
Financial guarantee – – 16,055
Trade and other payables 39,617 – 39,617
Derivative liabilities 2,134 – 2,134

155,014 229,498

continue to next page

142 143
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Liquidity risk (continued) Liquidity risk (continued)
Maturity analysis (continued) Maturity analysis (continued)
Contractual
Group
interest/
2021 Within 1-2 2-5 More than
Company profit
In RM Mil 1 year years years 5 years
2022 Carrying rates per Contractual
Amortised cost (continued) In RM Mil amount annum % cash flows
Lease liabilities 1,644 1,906 4,503 9,170
Amortised cost
Secured term loans
Lease liabilities 7,211 5.22 11,072
USD floating rate loans 1,308 142 – 1,863
Unsecured Notes and Bonds
USD fixed rate loans 4,920 823 2,682 8,296
USD Guaranteed Notes 52,663 3.82 97,956
RM floating rate loans 28 29 414 –
USD Bonds 2,208 7.63 2,880
RM fixed rate loans 52 49 156 211
Other long-term liabilities 12,516 – 18,764
Other floating rate loans 420 44 2,190 361
Financial guarantees – – 4,483
Other fixed rate loans 29 29 100 137
Trade and other payables 23,305 – 23,305
Unsecured term loans
Fair value through profit or loss
USD floating rate loans 3,822 53 1,310 180
Derivative liabilities 78 – 78
USD fixed rate loans 771 – – –
EUR floating rate loans – – 587 368 97,981 158,538
Other fixed rate loans 66 – 37 –
Other floating rate loans 9 – 786 – continue to next page
Unsecured Notes and Bonds 2021
USD Guaranteed Notes 9,510 2,211 11,849 81,111 In RM Mil
USD Bonds 159 159 2,564 – Amortised cost
Unsecured revolving credits Lease liabilities 7,423 5.41 11,555
USD floating revolving credits 293 – – – Unsecured Notes and Bonds
USD fixed revolving credits 209 – – – USD Notes 4,174 7.88 4,338
RM floating revolving credits 16 – – – USD Guaranteed Notes 52,893 3.81 97,447
Other floating revolving credits 121 – – – USD Bonds 2,087 7.63 2,882
Unsecured bankers’ acceptances Other long-term liabilities 11,750 – 16,256
RM fixed bankers’ acceptances 99 – – – Financial guarantees – – 4,571
Other bankers’ acceptances 17 – – – Trade and other payables 14,640 – 14,640
Unsecured bank overdrafts Fair value through profit or loss
Other bank overdrafts 2 – – – Derivative liabilities 74 – 74
Secured Islamic financing facilities
RM Islamic financing facilities 567 421 1,607 2,168 93,041 151,763
Unsecured Islamic financing facilities
RM Islamic financing facilities 641 576 1,958 27 continue to next page
CNY Islamic financing facilities – 142 – –
Other long-term liabilities 50 200 2,126 3,394
Financial guarantee 16,055 – – –
Trade and other payables 39,617 – – –
Derivative liabilities 2,134 – – –

82,559 6,784 32,869 107,286

continued from previous page

144 145
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Liquidity risk (continued) Market risk
Maturity analysis (continued) Market risk is the risk or uncertainty arising from change in market prices and their impact on the performance of
Company the business. The market price changes that the Group and the Company are exposed to include interest rates, foreign
2022 Within 1-2 2-5 More than currency exchange rates, commodity prices, equity prices and other indices that could affect the value of the Group’s
In RM Mil 1 year years years 5 years and the Company’s financial assets, liabilities or expected future cash flows.

Amortised cost (continued) Interest rate risk

Lease liabilities 883 905 2,137 7,147
The Group’s and the Company’s investments in fixed rate debt securities and fixed rate borrowings are exposed to a
Unsecured Notes and Bonds
risk of change in their fair values due to changes in interest rates. The Group’s variable rate borrowings are exposed
USD Guaranteed Notes 2,042 2,042 11,782 82,090
to a risk of change in cash flows due to changes in interest rates. Investments in equity securities and short-term
USD Bonds 168 168 2,544 –
receivables and payables are not significantly exposed to interest rate risk.
Other long-term liabilities 494 557 4,370 13,342
Financial guarantees 4,483 – – –
All interest rate exposures are monitored and managed proactively in line with PETRONAS’ policies and guidelines.
Trade and other payables 23,305 – – – The Group enters into hedging transactions with respect to interest rate on certain long-term borrowings and other
Fair value through profit or loss debts where necessary and appropriate, in accordance with policies and guidelines.
Derivative liabilities 78 – – –

31,453 3,672 20,833 102,579 The Group and the Company are also exposed to the ongoing interbank offered rates (IBOR) reforms on its financial
instruments that will be replaced or reformed as part of these market-wide initiatives.
continued from previous page
The Group’s and the Company’s main IBOR exposure are indexed to USD LIBOR, the cessation of which has been
2021 extended to 30 June 2023. The alternative reference rate is Secured Overnight Financing Rate (SOFR). The Group has
In RM Mil established PETRONAS LIBOR Transition Committee which monitors and manages the groupwide transition to alternative
rates with an aim to achieve economically equivalent transactions and minimal impact upon transition. As at reporting
Amortised cost (continued)
date, transitional activities are currently ongoing, and the Group and the Company have applied the practical expedients
Lease liabilities 850 812 2,299 7,594
to negotiated contracts for which the benchmark rate had been replaced with an alternative benchmark rate.
Unsecured Notes and Bonds
USD Notes 4,338 – – –
USD Guaranteed Notes 5,110 2,149 11,723 78,465
USD Bonds 159 159 2,564 –
Other long-term liabilities 159 95 1,971 14,031
Financial guarantees 4,571 – – –
Trade and other payables 14,640 – – –
Fair value through profit or loss
Derivative liabilities 74 – – –

29,901 3,215 18,557 100,090

continued from previous page

146 147
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Market risk (continued) Market risk (continued)
Interest rate risk (continued) Foreign exchange risk (continued)
The interest rate profile of the Group’s and the Company’s interest-bearing financial instruments based on carrying The Group’s and the Company’s significant exposure to foreign currency risk, based on carrying amounts as at the
amount as at reporting date is as follows: reporting date is as follows:

Group Company
Group
In RM Mil 2022 2021 2022 2021 In RM Mil 2022 2021

Fixed rate instruments Denominated in USD

Financial assets 217,581 184,093 111,683 117,289 Financial assets
Financial liabilities (89,600) (92,287) (62,082) (66,577) Loan and advances to subsidiaries and a joint venture 51,832 77,392
Cash and cash equivalents 55,482 42,529
127,981 91,806 49,601 50,712
Trade and other receivables 15,779 10,165
Floating rate instruments Long-term receivables *– 27
Financial assets 9,870 10,012 46,236 44,948 Fund and other investments 12 105
Financial liabilities (14,564) (15,764) – – Derivative assets 730 1,530
(4,694) (5,752) 46,236 44,948 123,835 131,748

Financial liabilities
Since most of the Group’s and the Company’s financial assets and liabilities are fixed rate instruments measured at
Loan and advances from holding company (19,708) (13,968)
amortised cost, a change in interest rate is not expected to have material impact on the Group’s and the Company’s
Borrowings (57,648) (61,769)
profit or loss.
Trade and other payables (6,857) (6,717)
Other financial liabilities (2,293) (2,381)
Foreign exchange risk
(86,506) (84,835)
The Group and the Company are exposed to varying levels of foreign exchange risk when they enter into transactions
that are not denominated in the respective companies’ functional currencies and when foreign currency monetary Net exposure 37,329 46,913
assets and liabilities are translated at the reporting date. The main underlying economic currencies of the Group’s
cash flows are Ringgit Malaysia and US Dollars. Denominated in RM
Financial assets
The Group’s and the Company’s foreign exchange management policy are to minimise economic and significant Cash and cash equivalents 4,216 1,675
transactional exposures arising from currency movements. The Group coordinates the handling of foreign exchange Trade and other receivables 5,993 4,849
risks centrally typically by matching receipts and payments for the same currency. For major capital projects, the Derivative assets 2 1
Group performs assessment of potential foreign exchange risk exposure at the investment decision phase to determine
the appropriate foreign exchange risk management strategy. Residual net positions are actively managed and monitored 10,211 6,525
against prescribed policies and control procedures. When deemed necessary and appropriate, the Group will enter Financial liabilities
into derivative financial instruments to hedge and minimise its exposures to the foreign currency movements. Borrowings (814) (572)
Trade and other payables (8,675) (5,607)

(9,489) (6,179)

Net exposure 722 346

* Amount less than RM1 million

148 149
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Market risk (continued) Market risk (continued)
Foreign exchange risk (continued) Foreign exchange risk (continued)
Company The following table demonstrates the indicative pre-tax effects on the profit or loss and equity of applying reasonably
In RM Mil 2022 2021 foreseeable market movements in the following currency exchange rates:
Denominated in USD
Financial assets Group Company
Appreciation in foreign
Loan and advances to subsidiaries and a joint venture 34,133 63,917
2022 currency rate Profit or Profit or
Cash and cash equivalents 93,300 74,845 In RM Mil % Equity loss Equity loss
Trade and other receivables 13,740 7,850
Derivative assets 626 1,505 USD 10 934 2,799 – 4,204
MYR 10 – 72 – –
141,799 148,117
2021
Financial liabilities USD 10 2,714 1,977 – 4,884
Cash and cash equivalents - subsidiaries’ cash with PETRONAS MYR 10 – 35 – –
Integrated Financial Shared Service Centre (38,850) (34,459)
Borrowings (54,871) (59,154)
A depreciation in foreign currency rate above would have had equal but opposite effect, on the basis that all other
Trade and other payables (5,376) (4,711)
variables remain constant.
Other financial liabilities (660) (947)

(99,757) (99,271) Equity price risk

Net exposure 42,042 48,846 Equity price risk arises from the Group’s and the Company’s investments in equity securities. Exposures to equity price
risk are managed in accordance with the Group’s existing policies and guidelines. The Group and the Company
Sensitivity analysis for a given market variable provided in this note, discloses the effect on profit or loss and equity monitor the equity investments on a portfolio basis and a performance benchmark is established for each investment
as at 31 December 2022 assuming that a reasonably possible change in the relevant market variable had occurred at portfolio giving consideration to portfolio objectives and return expectation. All buy and sell decisions are monitored
31 December 2022 and been applied to the risk exposures in existence at that date to show the effects of reasonably by the Group Treasury Division.
possible changes in price on profit or loss and equity to the next annual reporting date. Reasonably possible changes
in market variables used in the sensitivity analysis are based on implied volatilities, where available, or historical data The Group and the Company also hold equity investments for strategic purposes, that are classified as FVTPL and
for equity and commodity prices and foreign exchange rates. Reasonably possible changes in interest rates are based FVOCI financial assets. Reports on the equity portfolio performance are submitted to the Group’s and the Company’s
on management judgment and historical experience. senior management on a regular basis.

The sensitivity analysis is hypothetical and should not be considered to be predictive of future performance because The Group’s and the Company’s exposure to equity price risk based on carrying amounts as at the reporting date is
the Group’s actual exposure to market prices is constantly changing with changes in the Group’s portfolio of among as follows:
others, commodity, debt and foreign currency contracts. Changes in fair values or cash flows based on a variation Group Company
in a market variable cannot be extrapolated because the relationship between the change in market variable and the In RM Mil 2022 2021 2022 2021
change in fair value or cash flows may not be linear. In addition, the effect of a change in a given market variable
is calculated independently of any change in another assumption and mitigating actions that would be taken by the Local equities 1,116 946 5 5
Group. In reality, changes in one factor may contribute to changes in another, which may magnify or counteract the Foreign equities 337 1,273 – –
sensitivities. 1,453 2,219 5 5

150 151
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Market risk (continued) Cash flow hedge
Equity price risk (continued) In the normal course of business, the Group and the Company enter into derivative financial instruments to manage
their normal business exposures in relation to commodity prices, foreign currency exchange rates and interest rates,
The following table demonstrates the indicative pre-tax effects on the profit or loss and equity of applying reasonably
including management of the balance between floating rate and fixed rate debt, consistent with risk management
foreseeable market movements in the following equities:
policies and objectives.
Group Company
Increase in price based The Group and the Company have entered into commodity derivatives to manage the volatility attributable to price
2022 on average change in Profit or Profit or fluctuations of crude oil and gas by hedging the price volatility of forecasted crude oil and gas sales in accordance
In RM Mil index rate % Equity loss Equity loss with the Group’s risk management strategy.
Local equities 10 – 112 – 1
There is an economic relationship between the hedged items and the hedging instruments as the terms of the
Foreign equities 15 28 23 – –
commodity derivatives match the terms of the expected highly probable forecast transactions (i.e. nominal amount
2021 and expected payment date). The Group and the Company have established a hedge ratio of 1:1 for the hedging
Local equities 10 – 95 – 1 relationships as the underlying risk of the commodity derivatives are identical to the hedged risk components. To test
Foreign equities 15 117 74 – – the hedge effectiveness, the Group and the Company compare the changes in the fair value of the hedging instruments
against the changes in fair value of the hedged items attributable to the hedged risks.
A decrease in price based on average change in index rate above would have had equal but opposite effect, on the
basis that all other variables remain constant. The hedge ineffectiveness can arise from any of the followings:
• changes in economic relationship between the hedged items and the hedging instruments; or
Commodity price risk
• change in the nominal value of the hedged items; or
The Group is exposed to changes in crude oil, gas and petroleum products prices which may affect the value of the
Group’s assets, liabilities or expected future cash flows. To mitigate these exposures from a business perspective, the • change in settlement dates or terms; or
Group enters into various financial instruments. In effecting these transactions, the Group operates within policies, • change in credit risk whereby the counterparty may not be able to deliver on their financial obligation.
guidelines and procedures designed to ensure that risks are minimised. All financial instruments positions are marked
to market by an independent risk management department and reported to management for performance monitoring As at 31 December 2022, the Group and the Company held commodity swaps and options contracts to hedge the
and risk management purposes on a daily basis. price of crude oil and gas of highly probable forecast transactions.

Since the Group undertakes hedging using commodity derivatives for the majority of its transactions, a change in The Group has also entered into an interest rate swap to hedge the cash flow risk in relation to the floating interest
commodity price is not likely to result in a significant impact on the Group’s profit or loss and equity. rate of the borrowings. The interest rate swap is settled on every specified period, consistent with the interest repayment
schedule of the borrowings.

The Group determines the existence of an economic relationship between the hedging instrument and hedged item
based on the reference interest rates, tenure, maturities and the nominal amounts. If a hedging relationship is directly
affected by uncertainty arising from LIBOR reform, then the Group assumes for this purpose that the benchmark
interest rate is not altered as a result of interest rate benchmark reform.

The Group uses derivative financial instruments such as forward foreign exchange contracts to manage the impact
of fluctuation in foreign currency rate to certain exposures.

The Group ensures that the critical terms of the forward foreign exchange contracts align with the hedged items.
The Group determines the existence of an economic relationship between the hedging instruments and the hedged
items based on the currency, amount and timing of the respective cash flows.

152 153
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Cash flow hedge (continued) Cash flow hedge (continued)
The Group held the following instruments to hedge exposures to changes in interest rates, foreign currency exchange Net carrying amounts comprise derivative assets and derivative liabilities for the respective hedging instruments.
and commodity prices.
Maturity As at 31 December 2022, the Group and the Company held net commodity derivatives assets amounting to RM1,385
million (2021: RM90 million) and RM626 million (2021: RM1,505 million) respectively. The hedging instruments mature
Group Net More within 12 months from the relevant financial year end.
2022 Nominal carrying Within 1-2 2-5 than
In RM Mil amount amount Total 1 year years years 5 years The maximum expected commodity derivatives loss to the Group and the Company are RM292 million (2021: RM3,046
million) and RM1,051 million (2021: RM1,631 million) respectively.
Interest rate risk
Interest rate swaps 11,505 910 910 – 170 438 302
The Group’s and the Company’s contract prices for commodity derivatives are based on prices negotiated with the
Average hedged interest rate (%) – 1.86 1.86 2.02
respective counterparties at the inception of the hedging instruments.
Foreign currency risk
The amounts relating to hedging instruments, hedged items, hedge effectiveness and the effect of the cash flow
Forward foreign exchange contracts 5,250 223 223 152 (20) 6 85
hedge in the statement of profit or loss and OCI are as follows:
Average forward rate (USD/CAD) 1.31-1.35 1.28-1.35 1.28-1.33 1.32
Average forward rate (USD/EUR) 0.89 0.85 0.84 – Change in
Average forward rate (USD/JPY) 116.00 110.38 109.75 – fair value
Average forward rate (USD/CNY) 6.78 6.65 6.66 – gain/(loss)
Average forward rate (USD/AUD) 0.65-0.66 – – – Group Carrying amount used for
Average forward rate (RM/USD) 4.52 – – – 2022 measuring Hedging
In RM Mil Assets Liabilities ineffectiveness Reserve
Commodity price risk
Commodity derivatives 24,520 1,385 1,385 1,385 – – – Note 12 Note 12
Average crude oil and gas prices Interest rate risk
(in USD/boe) 81 – – – Interest rate swaps 917 (7) 549 429
Floating interest rate term loans (549)
2021 Foreign currency risk
In RM Mil Forward foreign exchange contracts 310 (87) 251 122
Interest rate risk Expected future receipts and payments (251)
Interest rate swaps 11,527 (110) (110) (52) (9) (27) (22)
Average hedged interest rate (%) 1.64 1.51 1.51-1.72 1.73 Commodity price risk
Commodity derivatives 1,385 – 1,461 312
Foreign currency risk Forecast sales (1,461)
Forward foreign exchange contracts 5,816 80 80 60 15 3 2 2,612 (94) 863
Average forward rate (USD/CAD) 1.26-1.29 1.27-1.31 1.27-1.28 1.27
Average forward rate (USD/EUR) 1.13 – – –
Average forward rate (USD/JPY) 106.11 106.03 108.06 –
Average forward rate (USD/CNY) 6.66 6.71 6.71 –
Average forward rate (USD/AUD) 0.74-0.75 – – –
Average forward rate (RM/USD) 4.54 – – –

Commodity price risk

Commodity derivatives 37,988 90 90 90 – – –
Average crude oil and gas prices
(in USD/boe) 68 – – –

154 155
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Cash flow hedge (continued) Cash flow hedge (continued)
Change in
Movement of cash flow hedge attributable to
fair value
shareholders of the Company
gain/(loss)
Amount Movement Group Carrying amount used for
reclassified Amount of cash 2021 measuring Hedging
Total from reclassified flow hedge In RM Mil Assets Liabilities ineffectiveness Reserve
hedging hedging from attributable Total
Note 12 Note 12
Group gain/(loss) reserve to hedging to Non- movement
Interest rate risk
2022 recognised profit reserve controlling of cash
Interest rate swaps 110 (220) 216 (120)
In RM Mil in OCI or loss to assets Total Interests flow hedge
Floating interest rate term loans (216)
Interest rate risk
Foreign currency risk
Interest rate swaps 549 – – 549 528 1,077
Forward foreign exchange contracts 98 (18) 16 49
Foreign currency risk Expected future receipts and payments (16)
Forward foreign exchange contracts 251 (178) – 73 – 73
Commodity price risk
Commodity price risk Commodity derivatives 1,505 (1,415) (3,798) (1,537)
Commodity derivatives (1,211) 3,060 – 1,849 – ^1,849 Forecast sales 3,798

(411) 2,882 – 2,471 528 2,999 1,713 (1,653) (1,608)

^ Includes cost of hedging reserve movement of RM324 million. Movement of cash flow hedge attributable to
shareholders of the Company
Hedge ineffectiveness and reclassifications from hedging reserve to profit or loss are recognised in cost of revenue,
financing costs and other income or expenses respectively depending on the nature of transactions. Amount Movement
reclassified Amount of cash
Total from reclassified flow hedge
hedging hedging from attributable Total
Group gain/(loss) reserve to hedging to Non- movement
2021 recognised profit reserve controlling of cash
In RM Mil in OCI or loss to assets Total Interests flow hedge

Interest rate risk

Interest rate swaps 216 – – 216 213 429

Foreign currency risk

Forward foreign exchange contracts 39 (25) (23) (9) – (9)

Commodity price risk

Commodity derivatives (5,320) 4,726 – (594) – ^(594)

(5,065) 4,701 (23) (387) 213 (174)

^ Includes cost of hedging reserve movement of RM126 million.

Hedge ineffectiveness and reclassifications from hedging reserve to profit or loss are recognised in cost of revenue,
financing cost and other income or expenses respectively depending on the nature of transactions.

156 157
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Cash flow hedge (continued) Cash flow hedge (continued)

Carrying amount The following table provides reconciliation of hedging reserves by risk category and analysis of other comprehensive
income items, net of tax, resulting from cash flow of hedge accounting:
Hedging
Company Assets Liabilities Reserve
2022 Group Company
In RM Mil Note 12 Note 12 Hedging Hedging
Commodity price risk In RM Mil reserve reserve
Commodity derivatives 626 – (450) As at 1 January 2021 (1,221) –
Changes in fair value:
Amount – Interest rate risk 216 –
Total reclassified – Foreign currency risk 16 –
hedging from Total – Commodity price risk* (5,320) (1,522)
Company loss hedging movement Amount reclassified to profit or loss 4,701 1,396
2022 recognised reserve to of cash flow As at 1 January 2022 (1,608) (126)
In RM Mil in OCI profit or loss hedge Changes in fair value:
Commodity price risk – Interest rate risk 549 –
Commodity derivatives (2,672) 2,348 ^(324) – Foreign currency risk 251 –
– Commodity price risk* (1,211) (2,672)
Amount reclassified to profit or loss 2,882 2,348
Carrying amount As at 31 December 2022 863 (450)
Hedging
Company Assets Liabilities Reserve
2021 * Included in changes in fair value of commodity price risk is loss on the portion excluded from the designated
In RM Mil Note 12 Note 12 hedging instrument of RM2,672 million (2021: RM1,522 million) that relates to the time value and forward element
of commodity derivatives and forward contracts respectively. It is initially recognised in other comprehensive income
Commodity price risk and accounted for similarly to gains or losses in the cash flow hedge reserve.
Commodity derivatives 1,505 – (126)
Fair value information
Amount The carrying amounts of cash and cash equivalents, short-term receivables and payables and short-term borrowings,
Total reclassified reasonably approximate their fair values due to the relatively short-term nature of these financial instruments.
hedging from Total
Company loss hedging movement It was not practicable to estimate the fair value of the Group’s investment in unquoted shares due to the lack of
2021 recognised reserve to of cash flow comparable quoted prices in an active market and the fair value cannot be reliably measured.
In RM Mil in OCI profit or loss hedge
The following table analyses financial instruments carried at fair value and those not carried at fair value for which
Commodity price risk
fair value is disclosed, together with their fair values and carrying amounts shown in the statement of financial position.
Commodity derivatives (1,522) 1,396 ^(126)

^ The amount relates to cost of hedging.

Hedge ineffectiveness and reclassifications from hedging reserve to profit or loss are recognised in cost of revenue.

158 159
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Fair value information (continued) Fair value information (continued)

Group Fair value of financial instruments carried at fair value Group Fair value of financial instruments carried at fair value
2022 2021
In RM Mil Level 1 Level 2 Level 3 Total In RM Mil Level 1 Level 2 Level 3 Total

Financial assets Financial assets

Quoted shares 1,453 – – 1,453 Quoted shares 2,219 – – 2,219
Unquoted shares – – 1,241 1,241 Quoted securities 143 – – 143
Malaysian Government Securities – 1,814 – 1,814 Unquoted shares – – 663 663
Corporate Bonds and Sukuk – 7,862 – 7,862 Malaysian Government Securities – 1,710 – 1,710
Interest rate swaps – 917 – 917 Corporate Bonds and Sukuk – 8,299 – 8,299
Forward foreign exchange contracts – 406 – 406 Interest rate swaps – 110 – 110
Commodity derivatives 1,213 1,385 – 2,598 Forward foreign exchange contracts – 183 – 183
Commodity derivatives 116 1,509 – 1,625
2,666 12,384 1,241 16,291
2,478 11,811 663 14,952
Financial liabilities
Interest rate swaps – (7) – (7) Financial liabilities
Forward foreign exchange contracts – (184) – (184) Interest rate swaps – (220) – (220)
Commodity derivatives (396) (28) – (424) Forward foreign exchange contracts – (105) – (105)
Commodity derivatives (374) (1,435) – (1,809)
(396) (219) – (615)
(374) (1,760) – (2,134)

Fair value of financial instruments

Group
not carried at fair value Fair value of financial instruments
2022 Carrying Group
not carried at fair value
In RM Mil Level 2 Level 3 Total amount 2021 Carrying
In RM Mil Level 2 Level 3 Total amount
Financial assets
Long-term receivables – 21,342 21,342 21,342 Financial assets
Finance lease receivables – 12,007 12,007 12,007 Unquoted securities – 30 30 30
Long-term receivables – 17,722 17,722 17,722
– 33,349 33,349 33,349
Finance lease receivables – 12,883 12,883 12,883
Financial liabilities
– 30,635 30,635 30,635
Notes and Bonds (54,910) – (54,910) (61,917)
Term loans – (16,796) (16,796) (15,759) Financial liabilities
Islamic financing facilities – (5,187) (5,187) (5,378) Notes and Bonds (62,126) – (62,126) (54,337)
Other long-term liabilities – (4,460) (4,460) (4,460) Term loans – (13,018) (13,018) (14,969)
Islamic financing facilities – (5,810) (5,810) (5,815)
(54,910) (26,443) (81,353) (87,514)
Other long-term liabilities – (5,432) (5,432) (5,432)

(62,126) (24,260) (86,386) (80,553)

160 161
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Fair value information (continued) Fair value information (continued)

Company Fair value of financial instruments carried at fair value Company Fair value of financial instruments carried at fair value
2022 2021
In RM Mil Level 1 Level 2 Level 3 Total In RM Mil Level 1 Level 2 Level 3 Total

Financial assets Financial assets

Quoted shares 5 – – 5 Quoted shares 5 – – 5
Unquoted shares – – 73 73 Unquoted shares – – 73 73
Malaysian Government Securities – 1,669 – 1,669 Malaysian Government Securities – 1,678 – 1,678
Corporate Bonds and Sukuk – 5,275 – 5,275 Corporate Bonds and Sukuk – 5,066 – 5,066
Forward foreign exchange contracts – 66 – 66 Forward foreign exchange contracts – 63 – 63
Commodity derivatives – 626 – 626 Commodity derivatives – 1,505 – 1,505
Long-term receivables – – 29,259 29,259 Long-term receivables – – 27,092 27,092

5 7,636 29,332 36,973 5 8,312 27,165 35,482

Financial liabilities Financial liabilities

Forward foreign exchange contracts – (78) – (78) Forward foreign exchange contracts – (74) – (74)

Fair value of financial instruments Fair value of financial instruments

Company Company
not carried at fair value not carried at fair value
2022 Carrying 2021 Carrying
In RM Mil Level 2 Level 3 Total amount In RM Mil Level 2 Level 3 Total amount

Financial assets Financial assets

Long-term receivables – 61,185 61,185 58,195 Long-term receivables – 82,773 82,773 85,155

Financial liabilities Financial liabilities

Notes and Bonds (48,738) – (48,738) (54,871) Notes and Bonds (59,638) – (59,638) (51,851)
Other long-term liabilities – (12,668) (12,668) (12,666) Other long-term liabilities – (11,935) (11,935) (11,934)

(48,738) (12,668) (61,406) (67,537) (59,638) (11,935) (71,573) (63,785)

Derivative financial instruments

The calculation of fair value for derivative financial instruments depends on the type of instruments. The fair value of
interest rate swap agreements are estimated by discounting expected future cash flows using current market interest
rates and yield curve over the remaining term of the instrument. The fair value of forward foreign exchange contracts
is based on the fair value difference between forward exchange rates and the contracted rate. The fair value of
commodity options, commodity swap and commodity forward contracts is based on the fair value difference between
market price at the date of measurement and the contracted price.

Non-derivative financial instruments

For non-derivative financial liabilities, fair value, which is determined for disclosure purposes, is calculated based on
the present value of future principal and interest cash flows, discounted at the market rate of interest at the end of
the reporting period. In respect of the liability component of convertible notes, the market rate of interest is determined
by reference to similar liabilities that do not have a conversion option. For other borrowings, the market rate of
interest is determined by reference to similar borrowing arrangements.

162 163
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

39. FINANCIAL INSTRUMENTS (continued) 39. FINANCIAL INSTRUMENTS (continued)

Income/(expense), net gains and losses arising from financial instruments Income/(expense), net gains and losses arising from financial instruments (continued)

Group Net Company Net

2022 Interest Interest impairment 2022 Interest Interest impairment
In RM Mil income expense losses Others Total In RM Mil income expense losses Others Total

Financial assets at fair value: Financial assets at fair value through

– through profit or loss 513 – – (403) 110 profit or loss 277 – – 493 770
– through OCI – – – (429) (429) Financial assets at amortised cost 4,322 – (256) 5,737 9,803
Financial assets at amortised cost: Financial liabilities at amortised cost – (2,477) – (3,241) (5,718)
– recognised in profit or loss 5,164 – (889) 4,195 8,470 Derivatives designated as hedging
– recognised in equity – – – 510 510 instruments – – – (2,672) (2,672)
Financial liabilities at amortised cost – (2,753) – (3,241) (5,994)
4,599 (2,477) (256) 317 2,183
Derivatives designated as hedging
instruments – – – 52 52 2021
5,677 (2,753) (889) 684 2,719 Financial assets at fair value through
profit or loss 231 – – 387 618
2021 Financial assets at amortised cost 3,213 – (80) 3,601 6,734
Financial assets at fair value: Financial liabilities at amortised cost – (1,842) – (1,839) (3,681)
– through profit or loss 460 – – (235) 225 Derivatives designated as hedging
– through OCI – – – 639 639 instruments – – – (1,522) (1,522)
Financial assets at amortised cost: 3,444 (1,842) (80) 627 2,149
– recognised in profit or loss 2,538 – (1,862) 2,734 3,410
– recognised in equity – – – 944 944
Others relate to gains and losses arising from financial instruments such as realised and unrealised foreign exchange
Financial liabilities at amortised cost – (2,857) – (1,839) (4,696)
gains or losses, dividend income and fair value gains or losses.
Derivatives designated as hedging
instruments – – – (4,875) (4,875)

2,998 (2,857) (1,862) (2,632) (4,353) 40. CAPITAL MANAGEMENT

The Group, as an essential part of its capital management strategy, is committed towards achieving financial resilience
* The amounts include continuing and discontinued operations. and ensuring long-term business sustainability as outlined in the PETRONAS Financial Policy. The Group’s capital
structure consists of consolidated equity plus debt, defined as the current and long-term portions of the Group’s
Others relate to gains and losses arising from financial instruments such as realised and unrealised foreign exchange debt.
gains or losses, dividend income and fair value gains or losses.
The objective of the Group’s capital management is to maintain an optimal capital structure and ensure availability
of funds in order to meet financial obligations, support business growth and maximise shareholders’ value. The Group
monitors and maintains a prudent level of total debt to total assets.

There were no changes in the Group’s approach to capital management during the year.

164 165
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

41. AMENDMENTS TO MFRS AND PRONOUNCEMENTS ISSUED BY MASB 41. AMENDMENTS TO MFRS AND PRONOUNCEMENTS ISSUED BY MASB (continued)
Adoption of new and revised pronouncements Pronouncements yet in effect
During the financial year, the Group and the Company adopted the following pronouncements that have been issued The following pronouncements that have been issued by the MASB will become effective in future financial reporting
by the MASB and are applicable as listed below: periods and have not been adopted by the Group and the Company in these financial statements:

Effective for annual periods beginning on or after 1 January 2022 Effective for annual periods beginning on or after 1 January 2023
Amendments to MFRS 9 Financial Instruments (Annual Improvements to MFRS Standards 2018−2020) MFRS 17 Insurance Contracts
Amendments to Illustrative Examples accompanying MFRS 16 Leases (Annual Improvements to MFRS Standards Amendments to MFRS 17 Insurance Contracts
2018−2020) Amendment to MFRS 17 Insurance Contracts (Initial Application of MFRS 17 and MFRS 9 – Comparative Information)
Amendments to MFRS 3 Business Combinations (Reference to the Conceptual Framework) Amendments to MFRS 101 Presentation of Financial Statements and MFRS Practice Statement 2 (Disclosure of Accounting
Amendments to MFRS 116 Property, Plant and Equipment (Property, Plant and Equipment−Proceeds before Intended Policies)
Use) Amendments to MFRS 108 Accounting Policies, Changes in Accounting Estimates and Errors (Definition of Accounting
Amendments to MFRS 137 Provisions, Contingent Liabilities and Contingent Assets (Onerous Contracts−Cost of Fulfilling Estimates)
a Contract) Amendments to MFRS 112 Income Taxes (Deferred Tax related to Assets and Liabilities arising from a Single Transaction)

The initial application of the above-mentioned pronouncements did not have any material impact to the financial Effective for annual periods beginning on or after 1 January 2024
statements of the Group. The principal changes on Amendments to MFRS 116 and their effects are set out below:
Amendments to MFRS 16 Leases (Lease Liability in a Sale and Leaseback)
Amendments to MFRS 101 Presentation of Financial Statements (Classification of Liabilities as Current or Non-current)
Amendments to MFRS 116 Property, Plant and Equipment (Property, Plant and Equipment-Proceeds before
Amendments to MFRS 101 Presentation of Financial Statements (Non-current Liabilities with Covenants)
Intended Use)
The Amendments to MFRS 116 no longer allow companies to deduct any net proceeds from selling items produced Effective for a date yet to be confirmed
while bringing an asset to the location and condition necessary for it to be capable of operating in the manner
Amendments to MFRS 10 Consolidated Financial Statements: Sale or Contribution of Assets between an Investor and
intended by management, from an item of property, plant and equipment. Instead, the proceeds from selling such
its Associate or Joint Venture
items and the costs of producing those items are recognised in the statement of profit or loss.
Amendments to MFRS 128 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
Accordingly, the Group has restated its comparative financial information arising from the retrospective application of
the Amendments to MFRS 116, to items of property, plant and equipment made available for use on or after the
The Group and the Company are expected to apply the above-mentioned pronouncements beginning from the
beginning of the earliest period presented in the financial statements by adjusting the cumulative effect to the retained
respective dates the pronouncements become effective. The initial application of the above-mentioned pronouncements
earnings as at 1 January 2021 as presented below:
are not expected to have any material impacts to the financial statements of the Group and the Company.

Impact on adoption New and revised pronouncements not applicable to the Group and the Company
of Amendments
The MASB has issued pronouncements which are not relevant to the Group and the Company and hence, no further
to MFRS 116 to
disclosure is warranted.
Group opening balance
In RM Mil at 1 January 2021
Effective for annual periods beginning on or after 1 January 2022
Decrease in property, plant and equipment (197)
Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards (Annual Improvements to
Decrease in investments in joint ventures (2,125)
MFRS Standards 2018−2020)
Decrease in equity (2,322)
Amendments to MFRS 141 Agriculture (Annual Improvements to MFRS Standards 2018−2020)

The restatement impact on comparative information is disclosed in Note 46.

166 167
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

42. PETRONAS’ Pathway to Net Zero Carbon Emissions by 2050 43. KEY SUBSIDIARIES AND ACTIVITIES
In 2022, PETRONAS has announced PETRONAS’ Pathway to Net Zero Carbon Emissions by 2050 (“the Pathway”). The The subsidiary undertakings of the Company at 31 December 2022 and 2021 and the Group percentage of share
Pathway addresses emissions from operations and includes growth ambitions for cleaner energy solutions. capital are set out below.
Effective
PETRONAS has set its short-term, mid-term and long-term targets in achieving reduction of greenhouse gas emissions. ownership interest
The short-term target is to bring operational emissions to 49.5 million tonnes of carbon dioxide equivalent by 2024 and voting interest
in Malaysia and achieve 25 percent absolute emissions reduction groupwide by 2030, and to ultimately reach net
zero carbon emissions by 2050. 2022 2021 Country of
% % Incorporation Principal Activities
The energy transition towards net zero must balance between energy security, affordability and sustainability. Efforts
* PETRONAS Carigali Sdn. Bhd. 100 100 Malaysia Petroleum and gas
will focus on the development of oil and gas resources incorporating low emissions or emissions abatement technologies
exploration, development
and pursue switching-out of high carbon intensity assets.
and production

PETRONAS acknowledges that climate change can present risk to business operations and strategies. PETRONAS is PC JDA Limited 100 100 Mauritius Petroleum operations
strengthening the risk management efforts and corresponding disclosures to ensure consistency with global sustainability
PETRONAS Carigali Overseas Sdn. Bhd. 100 100 Malaysia Investment holding and
frameworks and standards. In due course, the Company aims to fully align with the Recommendations of the Task
petroleum operations
Force on Climate-related Financial Disclosure (“TCFD”) and the World Economic Forum Stakeholder Capitalism Metrics.
E&P Malaysia Venture Sdn. Bhd. 100 100 Malaysia Petroleum operations
PETRONAS aims to allocate 20 percent of total capital expenditure between 2022 and 2026, for operational
Vestigo Petroleum Sdn. Bhd. 100 100 Malaysia Petroleum operations
decarbonisation, renewables projects and other clean energy solutions subject to customary technical and economic
evaluation of the projects, with the objectives of reducing emissions and growing new energy offerings for our ∞*PETRONAS International Corporation Ltd. 100 100 Malaysia Investment holding
customers in support of their respective net zero ambitions.
PETRONAS Carigali Iraq Holding B.V. 100 100 Netherlands Petroleum operation,
development and production

PETRONAS Carigali Chad Exploration & 100 100 Cayman Islands Investment holding
Production Inc.

PETRONAS Carigali (Chad EP) Inc. 100 100 Cayman Islands Petroleum operation,
development and production

PETRONAS Chad Marketing Inc. 100 100 Cayman Islands Marketing and selling of crude
oil

PETRONAS Australia Pty Limited 100 100 Australia Investment holding

PAPL (Upstream) Pty Limited 100 100 Australia Exploration and production of
coal seam gas

PAPL (Downstream) Pty Limited 100 100 Australia Distribution of coal seam gas

PETRONAS Carigali (Jabung) Ltd. 100 100 Bahamas Petroleum operation,

development and production

PETRONAS Carigali Nile Ltd. 100 100 Mauritius Petroleum operation,

development and production

PETRONAS (E&P) Overseas Ventures Sdn. 100 100 Malaysia Investment holding
Bhd.

Natuna 1 B.V. 100 100 Netherlands Petroleum operation,

development and production

PETRONAS Carigali Canada B.V. 100 100 Netherlands Investment holding

PETRONAS Energy Canada Ltd. 100 100 Canada Petroleum operation,

development and production

168 169
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

43. KEY SUBSIDIARIES AND ACTIVITIES (continued) 43. KEY SUBSIDIARIES AND ACTIVITIES (continued)

Effective Effective
ownership interest ownership interest
and voting interest and voting interest

2022 2021 Country of 2022 2021 Country of

% % Incorporation Principal Activities % % Incorporation Principal Activities

North Montney LNG Limited Partnership 100 100 Canada Petroleum operation, ∞*PETRONAS Floating LNG 1 (L) Ltd. 100 100 Malaysia Purchase and liquefaction
development and of natural gas and
production marketing of LNG

PETRONAS E&P Argentina S.A. 100 100 Argentina Petroleum operation, ∞*PETRONAS Floating LNG 2 (L) Ltd. 100 100 Malaysia Purchase and liquefaction
development and of natural gas and
production marketing of LNG

PETRONAS South Caucasus S.à r.l. 100 100 Luxembourg Investment holding * PETRONAS Energy & Gas Trading Sdn. 100 100 Malaysia Trading and marketing of
Bhd. processed gas and
PETRONAS Azerbaijan (Shah Deniz) S.à r.l. 100 100 Luxembourg Petroleum operation,
liquefied natural gas
development and
production @
* PETRONAS Gas Berhad 51 51 Malaysia Processing and
transmission of natural
PETRONAS Carigali (Turkmenistan) Sdn. 100 100 Malaysia Petroleum operations
gas
Bhd.
∞ PICL (Egypt) Corporation Ltd. Regas Terminal (Sg. Udang) Sdn. Bhd. 51 51 Malaysia Manage and operate LNG
100 100 Malaysia Investment holding,
regasification terminal
exploration and
production of oil and gas Pengerang LNG (Two) Sdn. Bhd. 33.2 33.2 Malaysia Manage and operate LNG
regasification terminal
PC Oman Ventures Ltd. 100 100 Mauritius Petroleum operation,
development and * PETRONAS Marketing International Sdn. 100 100 Malaysia Investment holding
production Bhd.

PETRONAS Petróleo Brasil Ltda. 100 100 Brazil Petroleum operation, Engen Limited 74 74 South Africa Refining of crude oil and
development and marketing of refined
production petroleum products

PETRONAS LNG Sdn. Bhd. 100 100 Malaysia Investment holding @

* PETRONAS Dagangan Berhad 63.9 63.9 Malaysia Domestic marketing of
∞ PETRONAS LNG Ltd. petroleum products
100 100 Malaysia Trading of natural gas and
LNG * PETRONAS Refinery & Petrochemical 100 100 Malaysia Development and
Corporation Sdn. Bhd. management of
PETRONAS Energy Trading Limited 100 100 United Kingdom Trading of energy and gas
Pengerang Integrated
marketing
Complex
* Malaysia LNG Sdn. Bhd. 90 90 Malaysia Liquefaction and sale of
PRPC Utilities & Facilities Sdn. Bhd. 100 100 Malaysia Supply and service of
LNG
utilities, common facilities
* Malaysia LNG Dua Sdn. Bhd. 80 80 Malaysia Liquefaction and sale of and infrastructures
LNG
Pengerang Power Sdn. Bhd. 100 100 Malaysia Developing and operating
* Malaysia LNG Tiga Sdn. Bhd. 60 60 Malaysia Liquefaction and sale of a power generation plant
LNG and distribution of
electricity and steam
* PETRONAS LNG 9 Sdn. Bhd. 65 65 Malaysia Purchase and liquefaction
of natural gas and * PETRONAS Penapisan (Melaka) Sdn. Bhd. 100 100 Malaysia Refining and condensation
marketing of LNG of crude oil

170 171
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

43. KEY SUBSIDIARIES AND ACTIVITIES (continued) 43. KEY SUBSIDIARIES AND ACTIVITIES (continued)

Effective Effective
ownership interest ownership interest
and voting interest and voting interest

2022 2021 Country of 2022 2021 Country of

% % Incorporation Principal Activities % % Incorporation Principal Activities

* Malaysian Refining Company Sdn. Bhd. 100 100 Malaysia Refining and condensation PETRONAS Chemicals Olefins Sdn. Bhd. 64.3 64.3 Malaysia Processing of feedstock
of crude oil into ethylene, propylene
and other hydrocarbon
* PETRONAS Penapisan (Terengganu) Sdn. 100 100 Malaysia Refining and condensation
by-products
Bhd. of crude oil
Asean Bintulu Fertilizer Sdn. Bhd. 40.8 40.8 Malaysia Processing of natural gas
* PETRONAS Trading Corporation Sdn. Bhd. 100 100 Malaysia Marketing of crude oil, into urea and ammonia
trading in crude oil and
PETRONAS Chemicals Derivatives 64.3 64.3 Malaysia Processing of feedstock
petroleum products and
Sdn. Bhd. into ethylene oxide
investment holding
PETRONAS Chemicals Polyethylene Sdn. 64.3 64.3 Malaysia Processing of ethylene into
∞ PETCO Trading Labuan Company Ltd. 100 100 Malaysia Marketing of crude oil and Bhd. polyethylene
trading in crude oil and
petroleum products PETRONAS Chemicals Ethylene Sdn. Bhd. 56.3 56.3 Malaysia Processing of ethane into
ethylene
PETCO Trading (UK) Limited 100 100 United Kingdom Marketing of crude oil and
PETRONAS Chemicals Fertiliser Sabah 64.3 64.3 Malaysia Production and sale of
trading in crude oil and
Sdn. Bhd. ammonia and urea
petroleum products
PETRONAS Chemicals LDPE Sdn. Bhd. 64.3 64.3 Malaysia Production and sale of
PETCO Trading DMCC 100 100 United Arab Trading of petroleum low-density polyethylene
Emirates products pellets (“LDPE”)
* PETRONAS Chemicals Group Berhad
@
64.3 64.3 Malaysia Investment holding PETRONAS Chemicals International B.V. 64.3 64.3 Netherlands Investment holding
PETRONAS Chemical Isononanol Sdn. Bhd. 64.3 64.3 Malaysia Production and sale of Da Vinci Group B.V. 64.3 64.3 Netherlands Own-brand reselling,
processed chemicals, all formulating and
petrochemicals and manufacturing of
chemicals products silicones, lube oil
additives and chemicals
∞ PETRONAS Chemicals Marketing (Labuan) 64.3 64.3 Malaysia Marketing and trading of
Ltd. petrochemical products Perstorp Holding AB 64.3 – Sweden Investment holding
Perstorp Financial Services AB 64.3 – Sweden Investment and trading
PETRONAS Chemicals Fertiliser Kedah Sdn. 64.3 64.3 Malaysia Production and sale of
company
Bhd. urea, ammonia and
methanol Perstorp AB 64.3 – Sweden Investment holding
company
PETRONAS Chemicals International 64.3 64.3 Malaysia Investment holding
Holdings Sdn. Bhd. formerly known as Perstorp Specialty Chemicals AB 64.3 – Sweden Manufacturing of basic and
(“f.k.a”) PETRONAS Chemicals Marketing specialty polyols,
Sdn. Bhd. formates, organic acids
and formaldehyde
PETRONAS Chemicals Methanol Sdn. Bhd. 64.3 64.3 Malaysia Processing of feedstock
* PETRONAS Lubricants International 100 100 Malaysia Investment holding,
into methanol
Sdn. Bhd. manufacturing and
PETRONAS Chemicals MTBE Sdn. Bhd. 64.3 64.3 Malaysia Processing of feedstock trading of lubricant
into methyl tertiary butyl products
ether (MTBE), propylene
and n-butane

172 173
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

43. KEY SUBSIDIARIES AND ACTIVITIES (continued) 43. KEY SUBSIDIARIES AND ACTIVITIES (continued)

Effective Effective
ownership interest ownership interest
and voting interest and voting interest

2022 2021 Country of 2022 2021 Country of

% % Incorporation Principal Activities % % Incorporation Principal Activities

PLI (Netherlands) B.V. 100 100 Netherlands Investment holding Putrajaya Holdings Sdn. Bhd. 64.4 64.4 Malaysia Property development and
investment
PETRONAS Lubricants Italy S.p.A 100 100 Italy Manufacturing and
marketing of lubricant Cititower Sdn. Bhd. 68.8 68.8 Malaysia Property investment
products @
KLCC Property Holdings Berhad 66.9 66.9 Malaysia Investment holding,
PETRONAS Lubrificantes Brasil S.A. 100 100 Brazil Manufacturing and property investment and
marketing of lubricant provision of management
products services

PETRONAS Lubricants China Company 100 100 Hong Kong Investment holding
^@
KLCC Real Estate Investment Trust (“KLCC – – Malaysia To invest in a Shariah
Limited REIT”) compliant portfolio of
real estate assets and real
@
* MISC Berhad 51 51 Malaysia Shipping and shipping estate related assets
related activities
Suria KLCC Sdn. Bhd. 39 39 Malaysia Property investment
AET Tanker Holdings Sdn. Bhd. 51 51 Malaysia Investment holding
Putrajaya Homes Sdn. Bhd. 64.4 64.4 Malaysia General construction and
@
Malaysia Marine and Heavy Engineering 33.9 33.9 Malaysia Investment holding property development
Holdings Berhad
Putrajaya Ventures Sdn. Bhd. 64.4 64.4 Malaysia Property development
∞ Gas Asia Terminal (L) Pte. Ltd. 51 51 Malaysia Development and
ownership of LNG Putrajaya Bina Sdn. Bhd. 64.4 64.4 Malaysia Leasing of building and
floating storage units property management

∞ MISC Offshore (Americas) Holdings Pte. 51 51 Malaysia Investment holding * Institute of Technology PETRONAS Sdn. 100 100 Malaysia Institute of higher learning
Bhd.
Ltd.
∞*Energas Insurance (L) Limited 100 100 Malaysia Offshore captive insurance
∞ AET Pte. Ltd. 51 51 Singapore Investment holding
business
∞ Gumusut-Kakap Semi-Floating Production 51 51 Malaysia Owning and leasing of
* PrimeSourcing International Sdn. Bhd. 100 100 Malaysia Marketing and trading of
System (L) Limited semi-submersible floating
steel, mechanical and
production system
electrical instrumentation,
∞ Portovenere and Lerici (Labuan) Private 51 51 Malaysia Investment holding chemical and catalyst
Limited ∞*PETRONAS Capital Limited 100 100 Malaysia Investment holding
MISC Tankers Sdn. Bhd. 51 51 Malaysia Investment holding and
β∞PETRONAS Global Sukuk Limited – – Malaysia Investment holding
provision of management
services β Petroleum Research Fund – – Malaysia Provision of financial
contributions to research
* KLCC (Holdings) Sdn. Bhd. 100 100 Malaysia Investment holding, activities relating to
property development petroleum and other
management and energy sources industry
provision of management
services β Abandonment Cess Fund – – Malaysia Manage, hold and utilise
the trust fund to
Rantau Recreation Sdn. Bhd. 100 100 Malaysia Property investment discharge obligations for
the Abandonment of
Petroleum Facilities in
Malaysia

174 175
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

43. KEY SUBSIDIARIES AND ACTIVITIES (continued) 43. KEY SUBSIDIARIES AND ACTIVITIES (continued)

Effective Effective
ownership interest ownership interest
and voting interest and voting interest

2022 2021 Country of 2022 2021 Country of

% % Incorporation Principal Activities % % Incorporation Principal Activities

* PETRONAS Assets Sdn. Bhd. 100 100 Malaysia Owning and leasing of * Gentari Sdn. Bhd. f.k.a. PETRONAS Gas & 100 100 Malaysia Investment holding
assets New Energy Sdn. Bhd.

PETRONAS Digital Sdn. Bhd. 100 100 Malaysia Provision of computer PETRONAS International Power 100 100 Mauritius Investment holding
services Corporation (Mauritius) Ltd.

* PETRONAS Hartabina Sdn. Bhd. 100 100 Malaysia Property holding * PETRONAS International Power 100 100 Netherlands Investment holding
Corporation B.V.
* PETRONAS Technical Training Sdn. Bhd. 100 100 Malaysia Provision of training
services Amplus Energy Solutions Pte. Ltd. 100 100 Singapore Investment holding of
(Singapore) solar power generation
* PETRONAS Management Training Sdn. 100 100 Malaysia Provision of training
entities in India
Bhd. services

* PETRONAS NGV Sdn. Bhd. 100 100 Malaysia Promoting and retailing of * Subsidiaries held directly by the Company.
natural gas for vehicles ∞ Companies incorporated under the Labuan Companies Act 1990.
* PETRONAS Research Sdn. Bhd. 100 100 Malaysia Provision of research,
@
The shares of these subsidiaries are quoted on the Main Market of Bursa Malaysia Securities Berhad.
advisory and technology ^ The Group does not hold any ownership interest in KLCC Real Estate Investment Trust (“KLCC REIT”). However,
development services the Group exercises power by virtue of its control over KLCC REIT Management Sdn. Bhd., the manager of KLCC
REIT. KLCC REIT units are stapled to the ordinary shares of KLCC Property Holdings Berhad (“KLCCP”) such that
* PETRONAS Technical Services Sdn. Bhd. 100 100 Malaysia Provision of technical and the shareholders of KLCCP are exposed to variable returns from its involvement with KLCC REIT and the Group
project management has the ability to affect those returns through its power over KLCC REIT. Consequently, KLCC REIT is regarded as
services a subsidiary of the Group.
β The Group does not hold any ownership interest in these funds/entities. However, the Group has the rights to
PTV International Ventures Ltd. 100 100 Cayman Islands Investment holding
appoint and remove members of Board of Trustees funds/Directors, which is the decision making body of the
PIV Fund I, LP 100 100 Cayman Islands Investment fund funds/entities and able to determine the manner in which balance of the funds, after fulfilment of certain obligation,
should be distributed upon dissolution. Consequently, the funds/entities is regarded as subsidiaries of the Group.
* Petrosains Sdn. Bhd. 100 100 Malaysia Management of a
petroleum discovery
centre

* Sanzbury Stead Sdn. Bhd. 100 100 Malaysia Operation and

maintenance of airport,
aerodromes and related
services and activities

* OGP Technical Services Sdn. Bhd. 100 100 Malaysia Provision of technical and
project management
services

* Marmel Incorporated 100 100 Republic of Investment holding

Liberia

* Gentari Renewables Sdn. Bhd. f.k.a. 100 100 Malaysia Investment holding
PETRONAS Power Sdn. Bhd.

176 177
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

44. KEY ASSOCIATES AND ACTIVITIES 45. KEY JOINT ARRANGEMENTS AND ACTIVITIES

Effective Effective
ownership interest ownership interest
and voting interest and voting interest

2022 2021 Country of 2022 2021 Country of

% % Incorporation Principal Activities % % Incorporation Principal Activities

BASF PETRONAS Chemicals Sdn. Bhd. 25.7 25.7 Malaysia Purchases propylene and INEOS PCG Acetyls Sdn. Bhd. (formerly 19.3 19.3 Malaysia Manufacture, sell and
n-butane feedstock from known as BP PETRONAS Acetyls Sdn. distribute acetic acid
the Group for production, Bhd.)
marketing and sale of
Trans Thai-Malaysia (Thailand) Ltd. 50 50 Thailand Gas pipeline transportation
acrylic, oxo and
and gas separation
butanediol products
services
Bintulu Port Holdings Berhad 28.5 28.5 Malaysia Port management
Trans Thai-Malaysia (Malaysia) Sdn. Bhd. 50 50 Malaysia Transporting and delivering
Cameroon Oil Transportation Company 29.8 29.8 Republic of Pipeline operations gas products
S.A. Chad
Indianoil PETRONAS Private Limited 50 50 India Manufacture and bottling
El Behera Natural Gas Liquefaction 35.5 35.5 Egypt Manufacturing and services of Liquid
Company S.A.E. production of LNG for Petroleum Gas
the purpose of export
Kimanis Power Sdn. Bhd. 30.6 30.6 Malaysia Generation and sale of
#
Gas Malaysia Berhad 7.5 7.5 Malaysia Selling, marketing, electricity
distribution and
Taninthayi Pipeline Co. LLC – 40.9 Cayman Islands Transportation of gas
promotion of natural gas
(Disposed during the
IDKU Natural Gas Liquefaction Company 38 38 Egypt Manufacturing and year)
S.A.E. production of LNG for
∞ Malaysia Deepwater Floating Terminal 26 26 Malaysia Floating production
the purpose of export
(Kikeh) Ltd. storage and off-loading
Tchad Oil Transportation Company S.A. 30.2 30.2 Republic of Pipeline operations (“FPSO”) owner
Chad
Guangxi Beihai Yuchai High Quality Lube 50 50 China Manufacturing and
The Egyptian LNG Company S.A.E. 35.5 35.5 Egypt Owning, managing and Co., Ltd. marketing of lubricant
developing the land and products
the common facilities
Pengerang Terminals (Two) Sdn. Bhd. 40 40 Malaysia Undertake activities related
related to the Egyptian
to terminal storage
LNG facility
facilities for petroleum
South Caucasus Pipeline Holding Company – 15.5 Cayman Islands Investment holding and petrochemical
(Disposed during the products
year)
Pengerang Refining Company Sdn. Bhd. 50 50 Malaysia Undertake blending,
South Caucasus Pipeline Company – 15.5 Cayman Islands Pipeline operations processing or cracking of
(Disposed during the crude, condensates,
year) feedstock or intermediate
feedstock
Azerbaijan Gas Supply Company Ltd. – 12.4 Cayman Islands Marketing and selling of
natural gas (Disposed Pengerang Petrochemical Company Sdn. 32 32 Malaysia Sales of products within
during the year) Bhd. ethane and propane
chains and ethane
# Although the Group has less than 20% of the ownership in the equity interest of these associates, the Group has derivatives to the joint
determined that it has significant influence over the financial and operating policy of the associate through operators
representation on the said associate’s Board of Directors.
∞ Company incorporated under the Labuan Companies Act 1990.

178 179
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued) 31 December 2022 (continued)

46. IMPACT OF THE ADOPTION OF PRONOUNCEMENTS 46. IMPACT OF THE ADOPTION OF PRONOUNCEMENTS (continued)
The following tables summarise the impacts of the Group’s adoption of Amendments to MFRS 116 on the Group’s ii. Condensed consolidated statement of financial position as at 31 December 2021.
financial statements.
As Effect of
i. Condensed consolidated statement of profit or loss for year ended 31 December 2021. Group previously Amendments
In RM Mil reported to MFRS 116 As restated
As Effect of
ASSETS
Group previously Amendments
Property, plant and equipment 282,898 1,715 284,613
In RM Mil reported to MFRS 116 As restated
Investments in joint ventures 7,126 (1,768) 5,358
Continuing operations Other assets 92,353 (1,511) 90,842
Revenue 223,321 1 223,322
TOTAL NON-CURRENT ASSETS 382,377 (1,564) 380,813
Cost of revenue (137,778) (53) (137,831)
TOTAL CURRENT ASSETS 252,627 1,511 254,138
Gross profit 85,543 (52) 85,491
TOTAL ASSETS 635,004 (53) 634,951
Net impairment reversals 2,333 2,378 4,711
Other items (17,313) – (17,313) EQUITY
Share capital 100 – 100
Operating profit 70,563 2,326 72,889
Reserves 350,756 (53) 350,703
Financing costs (4,841) – (4,841) Non-controlling interests 53,484 – 53,484
Share of profit after tax and non-controlling interests of TOTAL EQUITY 404,340 (53) 404,287
equity accounted associates and joint ventures 1,875 (57) 1,818
TOTAL LIABILITIES 230,664 – 230,664
Profit before taxation from continuing operations 67,597 2,269 69,866
TOTAL EQUITY AND LIABILITIES 635,004 (53) 634,951
Tax expense (20,211) – (20,211)

Profit for the year from continuing operations 47,386 2,269 49,655 iii. Condensed consolidated statement of financial position as at 1 January 2021.

Discontinued operations
Profit for the year from discontinued operations, net of tax 1,214 – 1,214 As Effect of
Group previously Amendments
Profit for the year 48,600 2,269 50,869 In RM Mil reported to MFRS 116 As restated

ASSETS
Property, plant and equipment 291,717 (197) 291,520
Investments in joint ventures 6,844 (2,125) 4,719
Other assets 82,116 – 82,116

TOTAL NON-CURRENT ASSETS 380,677 (2,322) 378,355

TOTAL CURRENT ASSETS 193,394 – 193,394

TOTAL ASSETS 574,071 (2,322) 571,749

EQUITY
Share capital 100 – 100
Reserves 330,521 (2,322) 328,199
Non-controlling interests 50,413 – 50,413

TOTAL EQUITY 381,034 (2,322) 378,712

TOTAL LIABILITIES 193,037 – 193,037

TOTAL EQUITY AND LIABILITIES 574,071 (2,322) 571,749

180 181
 PETRONAS Audited Financial Statements 2022

NOTES TO THE FINANCIAL STATEMENTS

31 December 2022 (continued)
INDEPENDENT AUDITORS' REPORT
To the Members of PETROLIAM Nasional Berhad

46. IMPACT OF THE ADOPTION OF PRONOUNCEMENTS (continued) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
iv. Condensed consolidated statement of cash flows for year ended 31 December 2021. Opinion
We have audited the financial statements of Petroliam Nasional Berhad, which comprise the statements of financial position
As Effect of as at 31 December 2022 of the Group and of the Company, and the statements of profit or loss and other comprehensive
Group previously Amendments income, statements of changes in equity and statements of cash flows of the Group and of the Company for the year
In RM Mil reported to MFRS 116 As restated then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on
pages 6 to 182.
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation from:
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Group and
– continuing operations 67,597 2,269 69,866
of the Company as at 31 December 2022, and of their financial performance and cash flows for the year then ended in
– discontinued operations 1,648 – 1,648
accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements
Profit before taxation 69,245 2,269 71,514 of the Companies Act 2016 in Malaysia.
Adjustments for:
Net impairment losses/(reversals) on: Basis for Opinion
– investment in a joint venture 414 (414) – We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on
– property, plant and equipment and investment properties (3,172) (1,964) (5,136) Auditing. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of
Share of profit after tax and non–controlling interests of the Financial Statements section of our auditors’ report. We believe that the audit evidence we have obtained is sufficient
equity accounted associates and joint ventures (1,882) 57 (1,825) and appropriate to provide a basis for our opinion.
Other non-cash items 37,295 – 37,295

Operating profit before changes in working capital 101,900 (52) 101,848 Independence and Other Ethical Responsibilities
Net changes in working capital (8,813) – (8,813) We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct
and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for
Cash generated from operations 93,087 (52) 93,035
Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards)
Interest income received 2,998 – 2,998
(“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.
Interest expenses paid (3,584) – (3,584)
Taxation paid (13,904) – (13,904)

Net cash generated from operating activities 78,597 (52) 78,545

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment, investment
properties, intangible assets and land held for development (30,165) 52 (30,113)
Others 661 – 661

Net cash used in investing activities (29,504) 52 (29,452)

CASH FLOWS FROM FINANCING ACTIVITIES

Net cash used in financing activities (16,056) – (16,056)

Net increase in cash and cash equivalents 33,037 – 33,037

Decrease in cash and cash equivalents restricted 304 – 304
Net foreign exchange differences 2,076 – 2,076
Cash and cash equivalents at beginning of the year 128,141 – 128,141

Cash and cash equivalents at end of the year 163,558 – 163,558

182 183
 PETRONAS Audited Financial Statements 2022

INDEPENDENT AUDITORS’ REPORT INDEPENDENT AUDITORS’ REPORT

To the Members of PETROLIAM Nasional Berhad (continued) To the Members of PETROLIAM Nasional Berhad (continued)

Key Audit Matters Key Audit Matters (continued)

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
Measurement of provision for decommissioning, dismantling, removal and restoration (“DDRR”)
financial statements of the Group and of the Company for the current year. These matters were addressed in the context
of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, Refer to Note 23 – Other Long-term Liabilities and Provisions.
and we do not provide a separate opinion on these matters.
The key audit matter How the matter was addressed in our audit

The measurement of the provisions for DDRR for the Group We performed the following audit procedures, among
Impairment or reversal of impairment consideration of property, plant and equipment (“PPE”) and intangible
and the Company require significant degree of judgments others:
assets (“IA”)
because of the inherent complexities in estimating future
i) Assessed the design and implementation of the controls
Refer to Note 3 – Property, Plant and Equipment and Note 9 – Intangible Assets. costs of DDRR activities. These costs are provided at the
present value of expected costs to settle the obligation over the DDRR provision estimation process.
The key audit matter How the matter was addressed in our audit
using estimated cash flows. The provisions for DDRR are ii) Assessed the appropriateness of data used in the
The Group operates in the oil and gas sector which has We performed the following audit procedures, among subject to the effects of changes in oil and gas reserves calculation of the DDRR provision to the originating
been affected by the continued fluctuation in the outlook others: profile, technology, regulations, expected approach to DDRR source.
for demand and prices of oil and gas products. This gives activities, inflation and discount rates, along with the effects
i) Considered the appropriateness of Group’s determination of changes in exchange rates. iii) Evaluated and challenged key assumptions used in the
rise to a risk that the carrying amounts of the Group’s PPE
and IA (consisting of goodwill, exploration expenditures and of CGUs based on our knowledge of the Group’s DDRR provision calculation, among others:
other intangible assets) might exceed their recoverable business and its internal reporting policy. These factors increase the degree of complexity in estimating • interest and inflation rates - compared to information
amounts, and therefore the carrying amounts may need to ii) Assessed the design and implementation of the controls the DDRR provision in accordance with MFRS 137, Provisions, from external sources; and
be impaired in accordance with MFRS 136, Impairment of Contingent Liabilities and Contingent Assets.
over impairment of assets process. • expected future costs - compared to costs incurred
Assets (“MFRS 136”). Similarly, an assessment on reversal of on recent similar transactions.
impairment needs to be conducted where there are iii) Evaluated and challenged possible indicators of We have identified the measurement of the provision
indicators supporting the reversal of impairment for previously impairment (or reversal of impairment) for relevant outstanding for DDRR of the Group and the Company iv) Performed consistency testing on the application of
impaired assets (except for goodwill). CGUs and individual assets. amounts of RM36,592 million (2021: RM39,173 million) and key assumptions to respective assets.
RM17,362 million (2021: RM17,078 million) (refer Note 23)
iv) Evaluated and challenged key assumptions used in the v) Re-performed the calculation of the DDRR provision
In assessing impairment or reversal of impairment, PPE and respectively as of 31 December 2022 as a key audit matter
estimation of recoverable amount, among others: because: for mathematical accuracy.
IA (together with other relevant assets) are grouped into
relevant cash generating units (“CGU”). • Oil and gas reserves production profile - assessed • the balance represents 23% (2021: 27%) and 17% (2021: vi) Assessed the adequacy of the disclosures in the financial
whether the production profile is within the field/ 18%) of the Group’s and Company’s non-current liabilities; statements.
The Group has estimated the recoverable amounts for each reserve lives; and
CGU based on either its value in use or at its fair value • long term outlook of prices - compared to • the estimation of DDRR provision involves significant
less cost to sell, whichever is higher. As a result, a net information published by external analysts; degree of judgments, complex calculations, and
reversal of impairment of RM830 million (2021: a net reversal estimation uncertainties.
• operational and capital expenditures - compared
of impairment of RM5,139 million) for PPE and a net
to information included in the Group’s approved
impairment losses of RM1,348 million (2021: a net reversal
of impairment of RM1,310 million) for IA (refer to Note 26)
budget and actual historical information; and Information Other than the Financial Statements and Auditors' Report Thereon
were recognised in the current financial year. • discount rate - challenged the appropriateness of The Directors of the Company are responsible for the other information. The other information comprises the information
the discount rate used. included in the Directors' Report, but does not include the financial statements of the Group and of the Company and
We have identified the evaluation of the carrying amount our auditors' report thereon, which are obtained prior to the date of this auditors' report, and the remaining parts of the
of the Group’s PPE and IA of RM301,218 million (2021: annual report, which are expected to be made available to us after that date.
RM284,613 million) (refer Note 3) and RM26,260 million v) Performed stress test over the projected oil and gas
(2021: RM19,394 million) (refer Note 9) respectively as of prices.
Our opinion on the financial statements of the Group and of the Company does not cover the Directors' Report and we
31 December 2022 as a key audit matter because: vi) Considered the adequacy of the Group’s disclosures do not express any form of assurance conclusion thereon.
• it is material in the consolidated financial statements about assumptions to which the outcome of the
and represents 46% (2021: 48%) of the Group’s total impairment assessment is most sensitive. In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read
assets; and the Directors' Report and, in doing so, consider whether the Directors' Report is materially inconsistent with the financial
statements of the Group and of the Company or our knowledge obtained in the audit, or otherwise appears to be materially
• the estimation of recoverable amounts involves a
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Directors'
significant degree of judgment exercised and assumptions
made by the Group. Key judgmental aspects include Report, we are required to report that fact. We have nothing to report in this regard.
assumptions of oil and gas prices, expenditures, oil and
gas reserves profile and the use of an appropriate When we read the remaining parts of the annual report, if we conclude that there is a material misstatement therein, we
discount rate. are required to communicate the matter to the Directors of the Company and take appropriate actions in accordance
with approved standards on auditing in Malaysia and International Standards on Auditing.

184 185
 PETRONAS Audited Financial Statements 2022

INDEPENDENT AUDITORS’ REPORT INDEPENDENT AUDITORS’ REPORT

To the Members of PETROLIAM Nasional Berhad (continued) To the Members of PETROLIAM Nasional Berhad (continued)

Responsibilities of the Directors for the Financial Statements Auditors’ Responsibilities for the Audit of the Financial Statements (continued)
The Directors of the Company are responsible for the preparation of financial statements of the Group and of the Company We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and
that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal
control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the From the matters communicated with the Directors, we determine those matters that were of most significance in the
Company that are free from material misstatement, whether due to fraud or error. audit of the financial statements of the Group and of the Company for the current year and are therefore the key audit
matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the
In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditors’
ability of the Group and of the Company to continue as a going concern, disclosing, as applicable, matters related to report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group benefits of such communication.
or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors' Responsibilities for the Audit of the Financial Statements Report on Other Legal and Regulatory Requirements
Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company In accordance with the requirements of the Companies Act 2016 in Malaysia, we report that the subsidiaries of which we
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that have not acted as auditors are disclosed in Appendix I.
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually Other Matter
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis
This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies
of these financial statements.
Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of
this report.
As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing,
we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional KPMG PLT Muhammad Azman Bin Che Ani
omissions, misrepresentations, or the override of internal control. (LLP0010081-LCA & AF 0758) Approval Number: 02922/04/2024 J
Chartered Accountants Chartered Accountant
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control of
Petaling Jaya, Malaysia
the Group and of the Company.
Date: 27 February 2023
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the Directors.
• Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the ability of the Group or of the Company to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial
statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events
or conditions may cause the Group or the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company,
including the disclosures, and whether the financial statements of the Group and of the Company represent the
underlying transactions and events in a manner that gives a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.

186 187
 PETRONAS Audited Financial Statements 2022

Appendix I Appendix I (continued)

SUBSIDIARIES AUDITED BY OTHER FIRMS OF ACCOUNTANTS SUBSIDIARIES AUDITED BY OTHER FIRMS OF ACCOUNTANTS (continued)
KLCC (Holdings) Sdn. Bhd. and its subsidiaries: MISC Berhad and its subsidiaries:
• Putrajaya Homes Sdn. Bhd. • Rantau Land Sdn. Bhd. • AET Agencies Inc. • AET Lightering Services LLC
• Convex Malaysia Sdn. Bhd. • Gagasan Ria Sdn. Bhd. • AET Inc. Limited • AET Petroleum Tanker (M) Sdn. Bhd.
• Gas District Cooling (M) Sdn. Bhd. • Gas District Cooling (Putrajaya) Sdn. Bhd. • AET Offshore Services Inc. • Eaglestar Marine (Malaysia) Sdn. Bhd. (f.k.a AET
• Cititower Sdn. Bhd. • Rantau Properties Sdn. Bhd. (f.k.a. KLCC Real Estate • Eaglestar Marine B.V. Shipmanagement (Malaysia) Sdn. Bhd.)
• Midciti Resources Sdn. Bhd. Management Sdn. Bhd.) • Eaglestar Shipmanagement Ventures (S) Pte. Ltd. • AET Tankers India Pte. Ltd.
• Gilang Cendana Sdn. Bhd. • Heritage Lane Sdn. Bhd. • AET Tanker Holdings Sdn. Bhd. • AET UK Ltd.
• Hasrat lntisari (M) Sdn. Bhd. • llham Merpati Sdn. Bhd. • Asia LNG Transport Sdn. Bhd. • AET Tankers Pte. Ltd.
• Putrajaya Bina Sdn. Bhd. • ldaman Putrajaya Sdn. Bhd. • M.I.S.C. Nigeria Limited. • Atenea Services S.A.
• Midciti Sukuk Berhad • lmpian Moden Sdn. Bhd. • Asia LNG Transport Dua Sdn. Bhd. • Hendham Enterprises Ltd.
• Kenyalang Murni Sdn. Bhd. • Kelana Perkasa Sdn. Bhd. • Malaysian Maritime Academy Sdn. Bhd. • AET Azerbaijan Limited
• KLCC Projeks Sdn. Bhd. • Rantau Recreation Sdn. Bhd. • AET STS Limited Inc. • MISC Agencies Sdn. Bhd.
• KLCC Property Holdings Berhad(@) • KLCC Properties Sdn. Bhd. • MISC Offshore Floating Terminals Dua (L) Ltd. • AET MCV Beta L.L.C.
• KLCC Projeks Services Sdn. Bhd. • Komponen Abadi Sdn. Bhd. • MISC Berhad (UK) Limited • Malaysia Offshore Mobile Production (Labuan) Ltd.
• Kuala Lumpur City Park Berhad • Rantau Homes Sdn. Bhd. • MISC Capital (L) Ltd. • MISC Offshore Floating Terminals (L) Ltd.
• Layar lntan Sdn. Bhd. • Kuala Lumpur Convention Centre Sdn. Bhd. • AET Bermuda One Limited • MISC Tanker Holdings Sdn. Bhd.
• KLCC Real Estate Investment Trust(@) • KLCC REIT Management Sdn. Bhd. • MISC Ferry Services Sdn. Bhd. • MMHE LNG Sdn. Bhd.
• Menara Putrajaya Sdn. Bhd. • Lembah Putrajaya Sdn. Bhd. • MISC International (L) Ltd. • AET Sea Shuttle AS
• Purnama Sepi Sdn. Bhd. • Metro Kemasik Sdn. Bhd. • MISC Offshore Holdings (Brazil) Sdn. Bhd. • Oldson Ventures Ltd.
• Putrajaya Development Sdn. Bhd. • Pedoman Semarak Sdn. Bhd. • MISC Ship Management Sdn. Bhd. • Gas Asia Terminal (L) Pte. Ltd.
• Putrajaya Group Sdn. Bhd. • Putrajaya Holdings Sdn. Bhd. • Seri Cemara (L) Private Limited • MISC Tankers Sdn. Bhd.
• Putrajaya Projects Sdn. Bhd. • Putrajaya Management Sdn. Bhd. • MISC Tanker Holdings (Bermuda) Ltd. • Puteri Delima Sdn. Bhd.
• Putrajaya Resources Sdn. Bhd. • Putrajaya Properties Sdn. Bhd. • Puteri Delima Satu (L) Private Limited • MISC do Brasil Servicos de Energia Ltd.
• Senandung Asli Sdn. Bhd. • Putrajaya Ventures Sdn. Bhd. • Puteri Firus Satu (L) Private Limited • Puteri Firus Sdn. Bhd.
• Tapak Senja Sdn. Bhd. • Serba Harapan (M) Sdn. Bhd. • Malaysia Marine and Heavy Engineering Holdings • Puteri lntan Sdn. Bhd.
• Gas District Cooling (KLIA) Sdn. Bhd. • Gas District Cooling (Holdings) Sdn. Bhd. Berhad(@) • Puteri Mutiara Satu (L) Private Limited
• Arah Moden Sdn. Bhd. • Gas District Cooling (UTP) Sdn. Bhd. • Puteri lntan Satu (L) Private Limited • Puteri Nilam Sdn. Bhd.
• Quantum Panorama Sdn. Bhd. • lndah Putrajaya Sdn. Bhd. • Puteri Nilam Satu (L) Private Limited • Techno lndah Sdn. Bhd.
• Arena Johan Sdn. Bhd. • Suria KLCC Sdn. Bhd. • Puteri Zamrud Satu (L) Private Limited • MISC PNG Shipping Limited
• Asas Klasik Sdn. Bhd. • Arena Merdu Sdn. Bhd. • Puteri Zamrud Sdn. Bhd. • AET MCV Delta Sdn. Bhd.
• KLCC Parking Management Sdn. Bhd. • lmpian Cemerlang Sdn. Bhd. • AET Tankers Kazakhstan LLP • AET Brasil Servicos STS Ltda.
• Kompleks Dayabumi Sdn. Bhd. • KLCC Urusharta Sdn. Bhd. • Eaglestar Shipmanagement (USA) LLC • Paramount Tankers Corp.
• AET Tankers (Suezmax) Pte. Ltd. • MISC Maritime Services Sdn. Bhd.
• AET Shuttle Tankers Sdn. Bhd. • Sungai Udang Port Sdn. Bhd.
Marmel Incorporated and its subsidiaries: • AET MCV Alpha L.L.C. • MISC Agencies (Netherlands) B.V.
• AET MCV Gamma L.L.C. • AET Singapore One Pte. Ltd.
• Darton Ltd. • WG Parcel B, LLC
• AET Brasil Servicos Maritamos Ltda. • Zangwill Business Corp.
• GCB Associates, LLC • Darton U.S. Holdings, Inc.
• AET Holdings (L) Pte. Ltd. • Odley Worldwide Inc.
• Sparknight, LLC • Grabhorn Properties, LLC
• Seri Camellia (L) Private Limited • AET Product Tankers Sdn. Bhd.
• Paterson Management, LLC • World Gateway Investments, Inc.
• Seri Cempaka (L) Private Limited • Twyford International Business Corp.
• Seri Cenderawasih (L) Private Limited • Eaglestar Shipmanagement (L) Pte. Ltd.
• Seri Camar (L) Private Limited • Eaglestar Marine (S) Pte. Ltd.
• MMHE International Sdn. Bhd. • AET Labuan One Pte. Ltd.
• MMHE EPIC Marine & Services Sdn. Bhd. • Eaglestar Shipmanagement GAS (S) Pte. Ltd.
• Gumusut-Kakap Semi-Floating Production System (L) • Portovenere and Lerici (Labuan) Private Limited
Limited • Portovenere and Lerici (Singapore) Pte. Ltd.
• Malaysia Marine and Heavy Engineering Saudi Limited • Malaysia Offshore Mobile Production Dua (Labuan) Ltd.
• Eaglestar Marine Holdings (L) Pte. Ltd.
• Mekar Bergading Offshore Floating (L) Limited
• AET Shuttle Tankers II Pte. Ltd.

188 189
 PETRONAS Audited Financial Statements 2022

Appendix I (continued) Appendix I (continued)

SUBSIDIARIES AUDITED BY OTHER FIRMS OF ACCOUNTANTS (continued) SUBSIDIARIES AUDITED BY OTHER FIRMS OF ACCOUNTANTS (continued)
MISC Berhad and its subsidiaries (continued): PETRONAS Lubricants International Sdn. Bhd.’s subsidiaries (continued):
• AET Labuan Pte. Ltd. • AET Private Limited • Viscosity Oil Co. • PETRONAS Lubricants International (China) Company
• AET Bermuda Holdings Limited • SOL-X Private Limited • PETRONAS Lubricants China Company Limited (a)
Limited (f.k.a. PETRONAS Lubricants (Shandong)
• AET Singapore Holding Private Limited • Spares CNX Pte. Ltd. • PLI (Netherlands) B.V. Company Limited) (a)
• Eaglestar Marine India Private Limited • Chord X Pte. Ltd. • PL NA Mexico S de RL de CV • PETRONAS International Marketing (Thailand) Company
• AET Sea Shuttle II AS • MISC Maritime Education Group Sdn. Bhd. (f.k.a. • PETRONAS Lubricants Africa Limited (a) Limited
• Malaysia Marine and Heavy Engineering Sdn. Bhd. Magellan X Holdings Sdn. Bhd.) • PLAL DMCC (a)
• Polaris LNG One Pte. Ltd. • Seri Emei (Singapore) Pte. Ltd.
• Polaris LNG Two Pte. Ltd. • Seri Emperor (Singapore) Pte. Ltd.
• Seri Everest (Singapore) Pte. Ltd. • AET Norway AS PETRONAS International Corporation Ltd. and its subsidiaries:
• Seri Elbert (Singapore) Pte. Ltd. • AET DP Shuttle Pte. Ltd.
• PETRONAS Carigali Brunei Ltd. • PETRONAS LNG Ltd.
• Seri Erlang (Singapore) Pte. Ltd. • AET DP Shuttle II Pte. Ltd.
• Labuan Energy Corporation Ltd. • MITCO Labuan Co. Limited
• Seri Emory (Singapore) Pte. Ltd. • AET Malaysia One Sdn. Bhd.
• PETRONAS Suriname E&P B.V. • LEC Ireland Employment Ltd.
• AET DP Shuttle Tankers Sdn. Bhd. • MISC Offshore (USA) LLC
• PAPL (Upstream) Pty. Ltd. • Nada Properties Company Ltd.
• AET Shuttle Tankers Ill Pte. Ltd. • MISC Offshore (Singapore) Pte. Ltd.
• PC North Madura II Limited • Natuna 1 B.V.
• AET Tankers VLCC Pte. Ltd. • MISC Servicos de Petrŏleo do Brasil Ltda.
• PC Muriah Ltd. • PC Gabon Upstream S.A
• AET Tankers VLCC II Sdn. Bhd. • MISC Capital Two (Labuan) Limited
• PC Myanmar (Hong Kong) Limited • PETRONAS LNG (UK) Limited
• MISC Offshore (Americas) Holdings Pte. Ltd. • Magellan X Pte. Ltd.
• PAPL Services Pty. Limited • PC Madura Ltd.
• MISC Offshore Services Pte. Ltd. • MHS Integrated Engineering Sdn. Bhd.
• PAPL (Upstream II) Pty. Limited • PAPL (Downstream) Pty. Limited
• Puteri Delima (L) Pte. Ltd. • Polaris LNG Three Pte. Ltd.
• PSE Kinsale Energy Limited • PC (Myanmar) Holdings Limited (ϒ)
• ES Marine Pte. Ltd. • Polaris LNG Four Pte. Ltd.
• PETRONAS Energy Trading Limited • PC Vietnam Limited
• Puteri lntan (L) Pte. Ltd. • Magellan X Holdings (L) Private Limited
• PETRONAS Carigali Myanmar Inc. • PETRONAS Angola E&P Ltd.
• Puteri Nilam (L) Pte. Ltd. • Eaglestar Shipmanagement Ventures (S) Pte. Ltd.
• PETRONAS Carigali Nile Ltd. • PETRONAS Carigali (Chad EP) Inc.
• Puteri Zamrud (L) Pte. Ltd. • ES Crewing Pte. Ltd.
• PC Carigali Mexico Oil and Gas Holding S.A. de C.V. • PETRONAS Australia Pty. Limited
• MISC Enterprises Holdings Sdn. Bhd.
• PETRONAS Carigali Myanmar Ill Inc. • PETRONAS Carigali (Jabung) Ltd.
• PETRONAS Philippines Inc. (a) (ϒ) • PETRONAS Carigali (Turkmenistan) Sdn. Bhd.
• Doba Pipeline Investment Inc. • PETRONAS Canada LNG Ltd
PETRONAS Carigali Sdn. Bhd. and its subsidiaries: • North Montney LNG Ltd. Partnership • PETRONAS Brasil E&P Limitada
• E&P Venture Solutions Co. Sdn. Bhd. • E&P Malaysia Venture Sdn. Bhd. • Argentinean Pipeline Holding Company S.A.(a) (ϒ) • PETRONAS (E&P) Overseas Ventures Sdn. Bhd.
• PC JDA Limited • PC Randugunting Ltd. • PETRONAS (Thailand) Co. Ltd. (a) • PC Kuala Kurun Ltd
• PETRONAS Carigali (Australia) Pty. Ltd. • PETRONAS Carigali Overseas Sdn. Bhd. • Japan Malaysia LNG Co. Ltd. • PC Senegal Ltd (f.k.a PC Sakakemang Ltd.)
• PETRONAS Carigali (Ketapang) Ltd. • PC Ketapang II Ltd. • PETRONAS LNG Sdn. Bhd. • PC Mauritania 1 Pty. Ltd. (a)
• PETRONAS Carigali (Surumana) Ltd. • PETRONAS Carigali Nigeria Limited • PETRONAS Carigali Canada B.V. • PETRONAS Energy Canada Ltd. (a)
• Vestigo Petroleum Sdn. Bhd. • PETRONAS Carigali (West Glagah Kambuna) Ltd. • PICL (Egypt) Corporation Ltd. • PETRONAS Azerbaijan Upstream Sdn. Bhd.
• PETRONAS Carigali White Nile (5B) Ltd. • PETRONAS Carigali International E&P B.V. • PETRONAS South Caucasus S.â r.l.
• PSE Seven Heads Limited • PETRONAS Azerbaijan (Shah Deniz) S.â r.l.
• PICL Marketing Thailand Ltd. • PETRONAS Carigali International Sdn. Bhd.
• PETRONAS Carigali Chad Exploration & Production • PETRONAS Andaman Ill Indonesia B.V.
PETRONAS Lubricants International Sdn. Bhd.’s subsidiaries: Inc. • Petroliam Manpower Support Service Mexico S.A. de C.V.
• PETRONAS Gebang Indonesia B.V. • PC Mauritania II B.V. (a)
• PETRONAS Lubricants Italy S.p.A (a) • PETRONAS Lubricants Poland Sp. Zo.o (a)
• Petroliam Manpower Services Mexico S.A. de C.V. • PC Carigali Mexico Operations S.A. de C.V.
• Arexons Srl. (a) • PETRONAS Lubricants Argentina S.A. (a)
• PETRONAS West Papua IV Indonesia B.V. • PETRONAS Aru Indonesia B.V.
• PETRONAS Lubrificantes Brasil S.A. (a) • PETRONAS Lubricants Great Britain Limited (a)
• LNG Investments Europe Limited • PC Sakakemang B.V.
• PETRONAS Lubricants France S.a.s. (a) • PETRONAS Lubricants Deutschland Gmbh (a)
• PC Oman Ventures Ltd. • PETRONAS Iraq (Garraf) Ltd.
• PT PLI Indonesia • PLAL Egypt LLC
• PETRONAS Petrŏleo Brasil Limitada
• PETRONAS Lubricants Spain S.L.U. (a) • PETRONAS Marketing China Company Limited (a)

• PETRONAS Lubricants Belgium N.V. (a) • PETRONAS Base Oil (M) Sdn Bhd
• PETRONAS Madeni Yaglar TIC Limited STI (a) • PLI Australia Pty. Limited (ϒ)
• PETRONAS Lubricants (India) Private Limited (a) (ϒ)

190 191
 PETRONAS Audited Financial Statements 2022

Appendix I (continued) Appendix I (continued)

SUBSIDIARIES AUDITED BY OTHER FIRMS OF ACCOUNTANTS (continued) SUBSIDIARIES AUDITED BY OTHER FIRMS OF ACCOUNTANTS (continued)
PETRONAS International Corporation Ltd. and its subsidiaries: (continued) Da Vinci Group B.V. and its subsidiaries:
• PETRONAS E&P Argentina S.A. • Garraf Technical Services Ltd. • BRB Central Eastern Europe Sp. z.o.o. • BRB Hong Kong Limited
• WDDM Energy Ltd. (f.k.a. PC Oman Ltd.) • PETRONAS Carigali Iraq Holding B.V. • BRB SIL Invest B.V. • BRB Real Estate Canada Inc.
• PC Gambia Ltd. • PETRONAS North Ketapang Sdn. Bhd. • BRB International B.V. • BRB Silicones South Africa Pty. Ltd.
• PETRONAS Chad Marketing Inc. • PSE Ireland Limited • BRB LAC Invest B.V. • BRB Singapore Pte. Ltd.
• PETRONAS Abu Dhabi Sdn Bhd • Progress Resources Gulf of Mexico LLC • BRB LAC Singapore Pte. Ltd. • BRB Malaysia Sdn. Bhd.
• Progress Resources USA Ltd. • PETRONAS Energy (India) Private Limited • BRB Lube Oil Additives & Chemicals B.V. • Qingdao BRB Trading Co. Ltd.
• BRB South America Representacao Commercial Ltda. • BRB Hong Kong Limited
• Viscotech Asia Pte. Ltd. • BRB ST Kimyasal Sanayi ve Ticaret A.S.
PETRONAS Marketing International Sdn. Bhd. and its subsidiaries: • BRB North America, Inc. • CSL Silicones Inc.

• Azania Petroleum (Pty.) Ltd. • Engen Company (Mauritius) Ltd.

• Citycat Properties (Pty.) Ltd. • Engen Botswana Ltd.(β)
• Petroleum Investment Holding Ltd. • Engen Holdings (Pty.) Ltd. Perstorp Holding AB and its subsidiaries:
• Engen Holdings (Ghana) Ltd. • Engen Limited • Perstorp Financial Services AB • Perstorp Industries India Private Ltd
• Engen Lesotho (Pty.) Ltd. • Engen Marketing Ltd. • Perstorp Services AB • Perstorp India Private Ltd
• Engen Marketing Botswana (Pty.) Ltd. • Engen Namibia (Pty.) Ltd. • Perstorp AB • Perstorp Equipment S.r.l.
• Engen (Nigeria) Ltd.(a) • Engen Producing (Nigeria) Ltd.(a) • Perstorp Quimica do Brasil Ltda • Shandong Fufeng Perstop Chemical Co.Ltd
• Engen Eswatini (Pty.) Ltd. (f.k.a Engen Swaziland (Pty.) • Engen Petroleum (DRC) Ltd. • Perstorp Sales France SA • Perstorp Holding B.V.
Ltd.) • Renaissance Petroleum (Pty.) Ltd. • Perstorp S.p.A. • Perstorp Specialty Chemicals Holding B.V.
• Enpet Insurance Ltd. • Enpet Africa Insurance Ltd. • Perstorp Japan Co Ltd • Perstorp Chemicals India Private Ltd
• lmtrasel (Pty.) Ltd. • Engen Oil Lesotho (Pty.) Ltd. • Perstorp Chemicals Asia Private Limited • Perstorp Chemicals Korea Co. Ltd
• Trek Petroleum (Pty.) Ltd. • Zenex Oil (Pty.) Ltd. • Perstorp lberica SL • Perstorp Specialty Chemicals B.V.
• Engen Petroleum (Mauritius) Ltd. • Engen Petroleum Ltd. • Perstorp Services UK Ltd • Perstorp Waspik B.V.
• Pakenzyl (Pty.) Ltd. • Engen DRC SARL • Perstorp Fastighets AB • Perstorp Holding GmbH
• Engen Investment Holdings • Perstorp Formulas AB • Perstorp Chemicals GmbH
• Perstorp Specialty Chemicals AB • Perstorp Service GmbH
• Perstorp Oxo AB • Perstorp Polyols Inc.
PETRONAS Assets Sdn. Bhd. and its subsidiaries: • Perstorp (Shanghai) Chemical Trading Co. Ltd • Perstorp Specialty Fluids AB
• Perstorp Holding (U.S.) Inc.
• PETRONAS Digital Sdn. Bhd. • Petrofibre Network (M) Sdn. Bhd.

PETRONAS International Power Corporation BV’s subsidiaries:

PETRONAS Trading Corporation Sdn. Bhd.’s subsidiaries:
• Amplus Energy Solution Pte. Ltd. (Singapore) • Amplus Power Solutions Private Limited (a)
• PETCO Trading (UK) Limited (a) • PETCO Trading DMCC (a)
• Amplus Energy Solutions Private Limited. (India) (a)
• Amplus Superior Solar Private Limited (a)
• PT PETRONAS Niaga Indonesia
• Amplus Energy Solutions (Thailand) Co. Ltd. • Amplus Energy Solutions FZE
• Amplus Solar Power Private Limited (a) • Amplus KN Solar Private Limited (a)
• Amplus Solar Solutions Private Limited (a) • Amplus KN One Power Private Limited (a)
PETRONAS Technical Services Sdn. Bhd.’s subsidiaries: • Amplus Andhra Power Private Limited (a) • Amplus Management Services Private Limited (a)

• PTSSB DMCC • Piva Capital, Inc. (f.k.a. PTV International Ventures • Amplus Sun Solutions Private Limited (a) • Amplus Solar Power MH Private Limited (a)
• PIV Fund II, L.P. Americas, Inc.) • Amplus Coastal Power Private Limited (a) • Amplus RJ Solar Private Limited (a)
• Virtus IP Sdn. Bhd. • Amplus Green Power Private Limited (a) • Amplus Power Supply Private Limited (a)
• Solbridge Energy Private Limited (a) • Ananth Solar Power Maharashtra (a)
• Amplus Jyotimangal Energy Private Limited (a) • Amplus Sunshine Private Limited (a)
PETRONAS Chemicals Group Berhad’s subsidiaries: • Amplus Green One Power Private Limited (a) • Amplus Sunlight Private Limited (a)
• Wednesday Solar Private Limited (a) • Wattvolt Energy Private Limited (a)
• Da Vinci Group B.V • PETRONAS Chemicals International B.V.
• Fourvolt Solar Private Limited (a) • Sungaze Power Private Limited (a)
• PCM (Thailand) Company Limited (ϒ)
• PT PCM Kimia Indonesia
• Sunroot Energy Private Limited (a)
• PCM (China) Company Limited (a) • Perstop Holding AB

192 193
Appendix I (continued)

SUBSIDIARIES AUDITED BY OTHER FIRMS OF ACCOUNTANTS (continued)

PETRONAS International Power Corporation BV’s subsidiaries (continued):
• Onevolt Energy Private Limited (a) • Nay Energy Private Limited (a)
• Grian Energy Private Limited (a) • Amplus Venus Private Limited (a)
• Amplus Shams Private Limited (a) • Amplus Poorva Private Limited (a)
• Amplus Dakshin Private Limited (a) • Amplus Ages Private Limited (a)
• Amplus Tumkur Solar Energy One Private Limited • Amplus Pavagada Solar Energy Two Private Limited
(f.k.a. Acme Kurukshetra Solar Energy Private Limited) (f.k.a. Acme Rewari Solar Power Private Limited)
• Amplus Vidyut Power Private Limited (a) • Amplus Helios Private Limited (a)
• Amplus lru Private Limited (a) • Amplus Beat Energy Private Limited (a)
• Amplus EON Private Limited (a) • Amplus Athena Energy Private Limited (a)
• Amplus Active Private Limited (a) • Amplus Uttar Private Limited (a)
• Amplus Centaur Solar Private Limited (a) • Amplus Phoenix Energy Private Limited (a)
• Amplus IIFA Solar Private Limited (a) • Amplus Ampere Private Limited (a)
• Amplus Solar Shakti Private Limited (a) • Amplus Alpha Solar Private Limited (a)
• Sunterrace Energy One Private Limited (a)

Gentari Sdn Bhd (f.k.a. PETRONAS Gas & New Energy Sdn Bhd) and its subsidiaries:
• GENTARI Hydrogen Sdn. Bhd. • Gentari International Renewables Pte. Ltd.
(f.k.a. PETRONAS Hydrogen Sdn. Bhd.) • Gentari Renewables India Pte Limited
• GENTARI Green Mobility Sdn. Bhd. • Gentari Renewables Australia Pty Ltd
• Gentari Renewables Australia (Solar) Pty Ltd

Institute of Technology PETRONAS Sdn. Bhd. and its subsidiaries:

• UTP Futuretech Sdn. Bhd.

Subsidiaries held directly by the Company:

• Energas Insurance (L) Limited • PETRONAS Capital Limited
• PETRONAS NGV Sdn. Bhd. • PETRONAS Hartabina Sdn. Bhd.
• PETRONAS Management Training Sdn. Bhd. • PETRONAS Technical Training Sdn. Bhd.
• PETRONAS Global Sukuk Limited • Yayasan UTP

a Audited by affiliates of KPMG.

@ The shares of this subsidiary are quoted on the Main Market of Bursa Malaysia Securities Berhad.
ϒ Consolidated based on management financial statements.
β The shares of this subsidiary are quoted on the Botswana Stock Exchange.

194
 Petroliam Nasional Berhad (PETRONAS) 197401002911 (20076-K) 2022
Audited
Financial Statements

Resolutely
Progressive

Petroliam Nasional Berhad (PETRONAS)

197401002911 (20076-K)
Tower 1, PETRONAS Twin Towers, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia

www.petronas.com H
H

H
Audited Financial Statements 2022

PFLNG

Passionate about Progress

Driving Cleaner Energy Solutions Contributing to Sustainable Growth
Intensifying efforts to achieve Delivering our commitment to meet society's
net zero carbon emissions by 2050 growing energy needs and contributing to a
better tomorrow