Thank you for standing by. Welcome to the PETRONAS Chemicals Group Berhad 3Q 2022 analyst briefing. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Ms. Alia. Please go ahead.
Thank you, Rachel. Hello. Assalamualaikum, ladies and gentlemen. Welcome to PETRONAS Chemicals Group Berhad, and this briefing for the third quarter financial year 2022. I'm Alia, Head of Investor Relations. Thank you for joining our call this evening. We apologize for the late start, but we wanted to make sure we accommodate all the latecomers. Ladies and gentlemen, we are pleased to have in attendance today our senior management, led by our Managing Director and CEO, Mr. Mohamed Yusri, our Chief Financial Officer, Mr. Azli, Chief Manufacturing Officer, Mr. Zamri, Chief Commercial Officer, Mr. Shakeel, as well as the Head of Strategic Planning and Ventures, Mr. Yaacob. You should by now be able to access and download the financial results from Bursa Malaysia website, as well as the presentation materials from our corporate website, all in the links provided in the invitation.
As mentioned by the moderator, at the end of the briefing, we shall open the line for questions and answer session. Without further ado, I shall now hand you over to Mr. Yusri for performance highlights. Thank you.
Thank you, Alia. Good evening, ladies and gentlemen. Thank you for joining us today. Before we get into the review of the third quarter, I'm sure you have noticed a new name during the earlier introduction and also new, you know, on the photo. Please allow me a few minutes to introduce our new Chief of Manufacturing, Mr. Zamri Japar. Zamri is actually no stranger to us and also to the petrochemical business. You know, he began his journey with PETRONAS in 1992 with one of our PETRONAS Chemicals Ethylene Sdn. Bhd.. He spent a good number of years with the then Optimal group of companies. Now, you all know them as PETRONAS Chemicals Olefins, Glycols & Derivatives.
You know where, for some period he gained international exposure as an operations manager in our JV partner, Dow Chemical Ethylene facilities in Netherlands. He returned, and after that headed a number of our OPUs, namely PCMTBE, PCOGD. Before he went off to be the CEO of our joint venture at refinery and cracker and petrochemical at PRPC or PRefChem. Now he joined us as chief of manufacturing. I would like to welcome Zamri and introduce Zamri to all of you. I also would like to thank Kabir, who was playing the role before, for his contribution while he was our head of manufacturing.
Kabir will be moving on to a new challenge, supporting us, yeah, lending his experience and knowledge on some of, especially, design roles and projects to ensure our operational excellence is continued. All the best to both Zamri and Kabir in their new roles. Now back to the matter at hand, to the third quarter of 2022 review. Next slide. When we start the year, we saw inflationary pressures creeping up, you know, as market continues to be volatile and commodity prices increasing. Nine months on into 2022, this has continued. Now, also coupled with also some other events, especially ongoing geopolitical tensions. The central banks have been tightening monetary policies to rein in inflation amidst slowing economic growth. The month.
Nine months average global GDP was recorded lower at 1.85% compared to 2.14% over the same period last year. Global PMI contracted to 49.8 in the ninth month of this year as compared to 54.1 the same period last year, with continued lockdown in China to fight against COVID-19, soften demand for finished goods, lower new orders and overall decline in the manufacturing sector. Nonetheless, the benchmark Brent crude oil price averaged 56% higher.
Ladies and gentlemen, we have temporarily lost connection with the speaker line. Please continue to hold and the conference will recommence shortly. Pardon me, ladies and gentlemen, we have the speakers back on the line. Please go ahead.
Yusri here back again. Sorry for the disruption. As I was saying, Brent for the first nine months of this year, averaged $106 per barrel, basically stemming from supply limitation and ongoing Russia-Ukraine conflict and overall improved demand post COVID-19 recovery. Following the higher energy prices, most petrochemical product prices average higher this year against same quarter, same period last year. That brings me to our performance highlight for the ninth month period this year. Next, ladies and gentlemen, in the nine-month period this year, we have undertaken major turnaround activities for our plant. you know, quarter one, basically Olefins & Derivatives segment, quarter two, basically Ethylene and Fertilizers and Methanol segments. All in all, we completed five turnarounds this year as compared to three last year.
Because of that, our plant utilization rate for the nine months of this year came at 85% as compared to 94% last year. Production volume then was lower year-on-year by 9.2% at 7.14 million tons against 7.86 million tons last year. In line with the lower production, our sales volume was also lower at 5.6 million tons against 6.04 million tons same period last year. On the market front, prices are higher year-on-year across almost all products in tandem with higher crude oil prices, except Ethylene and MEG, as the lockdown in China saw demand reduction from Chinese market.
Against this backdrop, we recorded MYR 20.25 billion in revenue, 36.2% higher than corresponding period, driven mainly by higher product prices and favorable foreign exchange impact. EBITDA and PAT are both higher at MYR 6.35 billion and MYR 5.84 billion respectively on widened spreads. EBITDA margin remains healthy at 31.4%. I'll have Azli to take you through the detail of the financial performance. Azli.
Thank you, Encik Yusri. Ladies and gentlemen, good evening, thank you for joining us. We will start with the group performance on slide four by comparing the third quarter 2022 against third quarter 2021. In the third quarter this year, as what Yusri has mentioned, we saw GDP decelerated as economic growth slowed down on recession concern and inflationary pressure rise amid the ongoing Russia-Ukraine conflict. Further to that, the strict policy by the Chinese government on their fight against COVID-19 has disrupted supply chain, which added to the cost pressures. Crude oil prices were higher during the quarter, mainly due to the supply limitation stemming from the Russia-Ukraine conflict and OPEC's struggle to meet the output targets amidst improved demand, as most market has recovered from COVID-19 pandemic-related slowdown.
We saw product prices were mixed as supply limitation and higher crude oil prices pushed up product prices such as ammonia, urea, and MTBE, while ethylene and its derivatives were lower on weaker demand. On our operational front, we recorded 97% plant utilization rate compared to 94% in the third quarter of last year. This is based on the lower turnaround days. As you may recall, we undergone a turnaround for our urea plant, ABF, in Bintulu in the third quarter last year. The group production and sales volume improved 2.8% and 4.8% to 2.7 million tons and 2.07 million tons respectively.
Consequently, group revenue grew 32% from MYR 5.8 billion in third quarter last year to MYR 7 billion in third quarter this year, mainly driven by higher product prices, coupled with favorable forex impact. EBITDA was lower by 7.2% at MYR 2 billion due to higher fuel, energy, and utilities costs, as well as higher freight costs. Correspondingly, EBITDA margin declined to 27.9%. Group PAT declined by 3.3% to MYR 1.9 billion against MYR 2 billion last year with lower EBITDA, following lower product spread and lower share of profit from our JV and associated companies, mainly from our JV with BASF, as well as our JV with INEOS for the acetic acid business. Moving on to the group's financial performance against the preceding quarter, that is against quarter two this year.
During the quarter, petrochemical product prices were assessed lower across the board compared to the preceding quarter on weaker demand and new supply additions, namely paraxylene, benzene, and MEG. With the completion of our plant turnaround early in the quarter and our third quarter plant utilization improved to 97% from 72%. As such, our production and sales volume also increased by 36.8% and 29.4% respectively. This resulted in a 6.8% increase in group revenue compared to previous quarter, also coupled with more favorable forex movement. EBITDA was comparable at MYR 2 billion, although EBITDA margin declined slightly from 30% to 28%. PAT saw marginal improvement of 1.4% at MYR 1.9 billion. Now let's look at our performance for the nine months of 2022.
We recorded lower plant utilization this year as compared to last year on heavier turnaround activities and subsequently lower production and sales volume. As you may recall, we undergone plant turnaround on our olefins plant, derivatives plant, aromatics plant in Kerteh, as well as methanol Plant 2 in Labuan, and lastly, urea plant in Sabah. Group revenue improved 26% to MYR 20.2 billion on higher product prices. At MYR 6.4 billion, EBITDA was 6.5% higher against the same period last year. EBITDA margin declined to 31.4% as a result of lower sales volume for ethane-based product. PAT was higher at MYR 5.8 billion against MYR 5.3 billion last year on the back of higher unrealized forex gain on revaluation of shareholders' loan.
Now let's proceed on the balance sheet and cash flow statement. We will first look at the balance sheet on page five. Year to date, our total assets increased from MYR 46.5 billion to MYR 51.8 billion, primarily due to higher cash and cash equivalent and higher property, plant, and equipment. Now let's turn out to our cash flow at page six. Cash generated from operating activities was higher at MYR 6.3 billion, mainly due to higher net cash generated from operation in line with higher EBITDA. During the period, net cash used in investing activities was higher by MYR 105 million at MYR 1.2 billion, mainly due to higher purchase of property, plant, and equipment, mainly to cater for our plant utilization.
Net cash used in financing activity was higher by MYR 1.4 billion, mainly due to higher dividend paid to our shareholders amounting to MYR 1.4 billion. At the end of the period, our cash balance remained robust at about MYR 19.1 billion. That is all on financial performance for third quarter of 2022. I'm handing over the session to our newly minted Chief Manufacturing Officer, Mr. Zamri, on the manufacturing highlights. Over to you, Zamri.
Thank you, Azli. Good evening, everyone. Zamri here. As an overall overview of the plant performance, the quarter three 2022, we recorded higher plant utilization in quarter three at 97% in view of stable operation of our olefins and derivatives and fertilizer and methanol facilities in line with good plant reliability. The olefins and derivatives segment strengthened with improved plant performance of downstream units of ethylene chain as most facilities able to run continuously as per intended capacity. Meanwhile, our production in fertilizer and methanol segments continue to be stable, translated into highest quarterly urea production for the group since quarter two 2019. With stable operations of both PCG segments, it has resulted in higher production volume, both against the preceding quarter and corresponding quarter. Next.
For Olefins & Derivatives, the quarter three plant utilization for Olefins & Derivatives segment was higher than previous quarter at 101% as we concluded all major turnarounds and shutdown activities during the first half of 2022, with most plant maintenance jobs were rectified. We observed slightly lower ethane feedstock to our crackers during the quarter due to turnaround activities at suppliers' facilities, we managed to secure higher feedstock of propane and butane to support our production at downstream facilities, namely at butanol, LDPE, MTBE.
Ladies and gentlemen, we have lost connection with the speaker line. Please continue to hold and we will recommence shortly. Ladies and gentlemen, thank you for holding. We have the speakers back on the line. Please go ahead.
All right, we are back. I'd like to apologize to everyone for any disruption on our line. Let me repeat again the situation that we had on the feedstock. Even though we observed slightly lower ethane feedstock to our crackers during the quarter due to turnaround activities at suppliers' facilities, we managed to secure higher feedstock of propane and butane to support our production at downstream facilities, namely butanol, LDPE, MTBE, and aromatics, which contributed to higher Olefins & Derivative volume against preceding and corresponding quarter, supported by smooth operations of the downstream facilities. We are expecting to run our operation at optimum level for this segment for the remaining months of 2022. Next.
For the fertilizer and methanol segment, we achieved higher plant utilization rate in quarter three, 2022 at 94% as compared to preceding and corresponding quarters. We have seen notable performance at our urea facilities with reliable maintenance supply, which resulted in improved utilization following better plant reliability.
For methanol, we managed to complete turnaround activities in mid-July 2022, which translated into higher volume in quarter three compared to preceding quarter. Lower than corresponding quarter, which partially affected by water supply disruption from Jabatan Bekalan Air Labuan, coupled with some reactive maintenance activities in September 2022. Nevertheless, we are expecting for fertilizer and methanol segment to continue running at optimum rate for the remaining months of 2022. That sums up the operational review for the quarter. Moving on to the market review with Mr. Shakeel.
Thank you, Encik Zamri. Good evening, Shakeel here. Let's proceed with market highlights. In quarter three 2022, product prices were mostly lower compared to previous quarter, mainly impacted by the ongoing Russia-Ukraine war and decline in crude oil prices, mainly driven by increasing supply from U.S. and OPEC+, aggravated by fears of inflation. In general, demand was muted, impacted by lower margins and poor downstream demand and prolonged China lockdowns as a result of the zero COVID policy. Ethylene price is forecasted to be soft as buyers remain cautious amidst squeezed downstream margins. Pre-Lunar New Year restocking activities may provide a slight uptick, but poor demand is expected to persist across regions on economic uncertainty. Supply is balanced in view of ongoing cracker outages in Northeast Asia and Southeast Asia, and is expected to improve by December upon cracker restart. Moving on to polymers.
Price forecasted to be soft in view of slow demand approaching year-end. Despite slight seasonal demand pickup, it has failed to lend support in view of strong USD and fears of inflation. Supply is also anticipated to increase, with U.S. cargoes continuing to flow into sea market as an alternative home from the weak demand in China. Next for MEG. Price is forecasted to be stable, supported by a slight improvement in polyester downstream demand, mainly due to festive seasons in Q4 and upcoming Q1. Supply is also expected to be ample as new MEG capacities are scheduled to come on stream in the next quarter. China's decision to continue implementation of zero COVID policy will add to the already uncertain downstream market. For paraxylene, price is forecasted to be stable amidst sufficient supply, as most producers are running at optimal rate with minimum scheduled maintenance.
Upcoming festivals towards year-end and early 2023 will provide some support to downstream purified terephthalic acid, PTA, and polyester demand. Further demand will be hampered by uncertainty of China's lockdown. Let's proceed to fertilizer and methanol segment, starting with urea. Price is expected to be soft as more capacities are resuming operations, coupled with China's export volume. Demand is weak with no major planting seasons in Q4 except for India. This may put further pressure on prices as producers have limited outlet to channel their volumes. Moving on to ammonia. Market is forecasted to be stable with limited supply following plant outages and shutdown in sea market. Demand for downstream acrylonitrile, ACN, and caprolactam is stable, especially from global phosphate producers that used to rely heavily on Russian supply before the Russia-Ukraine crisis. Lastly, on methanol.
Price is forecasted to be stable, limited by slower demand, as buyers will be focusing on fulfilling term commitment towards the year-end instead of spot purchases. This is, however, balanced by potentially lower production, as most gas supply will be prioritized for residential use during the winter season. This will result in supply curtailment by year-end. That's all on the market review. Back to you, Encik Yusri.
Thanks, Shakeel. Moving on to our sustainability metrics. We note that sustainability activities has picked up a lot of interest of late. That has been key topics of interest in our investors' engagement. We at PCG are indeed committed to ensure that our business practices are in line with global ESG practices and will continue to uphold on our actions towards ESG practices and commitment. Starting with the review on the economy pillar, which focus on our business operations. This year, we saw series of major turnaround, as we discussed earlier, at our manufacturing facility. During this period, we ensure that all activities are done with strict adherence to HSE practices and also COVID-19 protocols.
We completed all our turnaround activities early in the third quarter, following which group plant utilization for the quarter improved to close to 97% from 72% in the preceding quarter. This has subsequently, as mentioned before, improved our sales volume as well. Moving on to the environmental pillar. We start by looking at our energy intensity year-to-date September. For the first nine months, our energy intensity at 17.29 GJ/ton of production, is higher than the corresponding period, mainly due to the lower production volume from the activities that we saw at the manufacturing facilities. However, for quarter three 2022, the energy intensity is lower compared to quarter two 2022, as we have more stable plant operations in the quarter post turnaround activities.
CO2 equivalent emission is at 5.22 million tons year-to-date, which is lower against the same period last year. This is partly due to major shutdowns we had earlier described, and also as a result of our continuous energy efficiency project implementation, such as upgrading of our catalyst, which gives us more yield and less emission, and also some equipment optimization efforts. GHG emission intensity is higher than corresponding period due to the same reason, which is lower production volume as experienced for the first nine months. We have previously shared our commitment to reduce our GHG emissions. As of September this year, we have implemented the projects identified to ensure we can contribute towards the reduction of these emissions.
As mentioned earlier, we have changed some catalyst to a better catalyst. We have started optimization on the operations equipment to ensure that we now, you know, contribute at least 23,000 tons of CO2 equivalent reduction. We expect to be able to reduce for this year equivalent to 100,000 tons of CO2 equivalent by the end of the year. Waste recycling for nine months of this year was at 77%, which is higher than the corresponding period as we send more waste for recovery in our activities. We have several plans in place and activities ongoing to increase the recycling rate towards our target of 80% by year-end. On our social outreach, we have recently started our corporate social responsibility program.
We will have more to share on this at the end of the year. With regards to social risk assessment, for target for 2022 is to close the gaps identified in the previous assessment. The main focus is to strengthen the human rights element within the supply chain management. Towards closing these gaps, we have conducted engagements on PETRONAS Contractors Code of Conduct on Human Rights with contract owners and contractors. We will ensure the inclusion of this code of conduct in our kickoff meetings and HSE plans and conduct the right assessment on our contractors. To date, I'm happy to share that 60% of the identified gaps has been closed.
Ladies and gentlemen, we have also marked a significant milestone on our sustainability reporting journey, when in September this year, we published our first Task Force on Climate-related Financial Disclosures report or TCFD report. This report can be found on our website under the Sustainability tab. I would encourage you to have a look at it for more details on our ESG related efforts. Do provide us feedback on any suggestions on how we can be better. Ladies and gentlemen, before I end the presentation, a brief recap of our 2022 focus areas and our expectations for the rest of 2022. On our growth commitment, we have completed the merger and acquisitions of Perstorp Holdings in October. Our way forward with Perstorp is to preserve and grow the business and to ensure the completion and deliveries of all ongoing projects as planned.
Next, an update on Pengerang Integrated Complex. I believe by now you know that we had a fire incident within the complex at the end of last month. This affected the utilities line under construction and is not within our facilities. However, when we did preliminary assessment, there is no damage on our petrochemical facilities, but the plant had to be shut down due to the integrated nature of the whole complex and to ensure that we manage the well-being of employees, workers and the surrounding communities. Admittedly, though, not within our facilities, this is quite a setback for us, but it is necessary that we shut down to properly investigate the extent of the incident.
Repair work is targeted to complete by end of the year, and we hope to restart the PetChem complex within first quarter 2023, once all safety measures and other considerations have been undertaken. Moving on to the progress of our other ongoing projects. The melamine plant in Gurun, the Nitrile Butadiene Latex plant in Pengerang and the specialty Ethoxylates some polyol plants in Kertih are all progressing well according to their respective schedule. Next, let's look at a bit on the business environment. After the two -year rebound from COVID-19-led recession, concerns are rising over slow economic growth and fears of recession amidst rising inflationary pressure. Cost of living has been on the rise, with high inflation pushing up prices of energy and food commodities. Banks have been tightening fiscal policies to keep inflation in check, though economic growth has been stifled and the slowdown is expected to continue.
The ongoing Russia-Ukraine is expected to continue, and it will cast uncertainties into the economy equation with no resolution yet to be in sight. Crude prices have come off from its May high of over $120 per barrel, and it is currently hovering around mid-80s dollars per barrel. In the near term, crude is expected to stabilize with OPEC+ commitment to cut production, though this will be balanced against demand that is expected to see some weakening on slower economic growth. As we progress in the year, we have seen slowdown of economic growth and the outlook has weakened. In the second half of the year, petrochemical product prices have come off quite a bit since the highs that we saw in the first half of the year.
With the weakening outlook, optimizing our operations and managing safe operations is critical for optimum productivity while maximizing the value of our sales, is key towards sustaining our business. It's a month away, If I may recap the year, we had major turnaround shutdowns in the first half of the year which saw our plant utilization rate drop. We have since came back and maintained stable operations and we are optimistic that we will meet our year-end target of at least 90% group PU. It's volume comparable, if not better than 2021. Product prices are weaker in the second half of the year compared to the first. As such we will be consolidating Perstorp's performance into PCG starting the fourth quarter of the year.
All in, we are looking to close the year comparable to how we did in 2021. This brings me to the end of our presentation and let's open for Q&A.
Thank you [audio distortion] , ladies and gentlemen. We apologize again for all the technical glitches. Rachel, I shall now hand over to you for the Q&A. Thank you.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. We will pause momentarily for any questioners to enter the queue. Your first question comes from Raymond Yap from CGS. Please go ahead.
Hello. Evening, everyone, and thanks for the call. Okay. I have a question on finance income which is MYR 276 million. Could you give me a bit of a background as to why the trade payables was deferred, leading to this gain? Is this entirely due to the Pengerang plants and doesn't involve the F&M side? Second question is on the sharp drop in associate profits compared to the second quarter. Well, I think it was a small loss. Could you give us a bit of background as well as to why this is happening? Finally on Perstorp, I know that you're going to consolidate the numbers in the fourth quarter.
Perstorp didn't pre-release the third quarter numbers. I think it would really help if you could give us some estimate as to what kind of numbers are you expecting to consolidate in the fourth quarter for Perstorp. Thank you.
All right. Thank you, Raymond. I'll try to answer all three question and then maybe [audio distortion] can chip in. On the first part, the finance income gain is basically, yes, you're right, it's related to the Pengerang. This is where, you know, we get support from all parties, regard to the deferment which is a benefit to our back end facility. That is basically, you know, because the deferment of our payables is a long term and we need to be fair valued, and that's basically the gain on the deferral.
On the PAT drop, that's basically, I mentioned earlier, in my section, that's basically due to two main contributor, our JV with BASF. BASF PETRONAS Chemicals Sdn. Bhd. . The main reason is basically one, is due to a softening spread for acrylic acid as well as oxo product, coupled with the undergoing turnaround during the quarter three. That basically the explanation of a lower contribution from BPC. The second reason is basically also due to lower contribution from our JV with INEOS, IPASB, due to the softer spread on acetic acid. That basically the main reason why the share, the drop in the profit from JV and Perstorp.
On the third question for Perstorp, yes, like what Encik Yusri mentioned, we will consolidate Perstorp's results in quarter four for PCG group. The reason why Perstorp ceased to publish their quarterly result because they don't have any reasons to do so. Previously, one of the requirement for them to publish their results mainly to the lenders' requirement. Currently, there's no such requirement since we already prepaid and settled most of their external loans. Without giving too much detail in terms of how they have to declare because they're only one month into our book.
Suffice to say that, as you will notice, Raymond, the specialty chemicals, globally, as well as, no, especially the, in the Europe, has experiencing a downturn, due to weaker demand coupled with higher feedstock costs and utilities costs. We have seen, most of Perstorp's peers who are listed, recorded a lower quarter three results. Without giving too much details and too specific, we believe Perstorp's performance for quarter four will be in line with their peers. I hope, Raymond, that answers your three questions.
Yeah. Thank you very much, Azli.
Thank you. The next question is from Sumedh Samant from JP Morgan. Please go ahead.
Hi. This is Sumedh from JP Morgan. Thanks for the presentation. I have a few questions. Firstly, I recall you said that there were some maintenances on gas side for some of your olefin assets. Can you please let us know or can you please tell us why exactly was that the case? Do your assets have anything to do with the Sabah-Sarawak gas pipeline, which had some issues recently? I just want to understand whether that is going to be any issue for the company. Secondly, if you could give us any guidance on the gas contract renewals for some of your crackers. I mean, your cracker in 2023.
The third question I have is I just want to understand, on your unit cost basis, you did say that there was increase in energy costs, utilities costs, et cetera. What was exactly the reason? Again, if you could give us guidance on the unit cost as percentage of total cost, that would be really useful. Thank you.
Thank you, Sumedh. I think I'll try to attempt to answer the first question. As you know, it's been widely published in the media that the incident, fire explosion at the Sabah-Sarawak gas pipeline occurred in Lawas, so the Sarawak part. Nonetheless, it does not affect the feeds gas that goes to our urea plant in Sabah. There's no such implication or adverse impact to our plant. I think just to make clear on that. Second is regards to the gas contract renewal. It is ongoing because the contract renewal contract expiry will be in the middle of next year.
Again, we took a proactive approach to start negotiation with PETRONAS as the first gas supplier earlier so that this can be done much expeditiously. Of course, similar to other gas price renewal, we will negotiate hard to ensure that we, PCG will get the best competitive terms as per the previous terms. Regards to unit cash costs, maybe I probably want to pose a question back to you. Is there any specific cost details that you prefer?
Sorry. Just perhaps some number on the percentage of total COGS or total cash costs that you could give us on the energy utilities, cost side? I recall your team specifically mentioned that the energy costs increased, which is again why the EBITDA margins came down. I just wanted to get some color on that.
Okay. That's clear to me. Thank you for the clarification. If 100% is the cost of revenue, of course, feedstock, feed gas contribute majority of it. The utilities cost essentially around about 10%-15% of total cost of revenue.
Understand. You are saying that this is including the depreciation, correct? This is total cost or this is excluding the depreciation?
Total cost. Yeah, yes, including the depreciation cost of revenue.
Okay. Understand. Apologies, let me just ask quick follow-up on the first question. I recall you also said that there were some maintenances on ethane supply and which is why the LPG utilization, propane, butane utilization increased. That also is just the supplier maintenance and has nothing to do with any issues with respect to the gas pipelines. Correct?
No, no. That was in Kerteh. The gas pipeline was in Sabah, Sarawak. It was a normal.
Right.
One of the GP gas processing plant underwent their normal shutdown.
Okay.
It's already planned.
Okay. Okay. Yeah, just wanted to make sure that this was planned and not had like an unplanned issue. And maybe one last thing. Okay. On the second question, right, which you told us about that you have some competitive discussions ongoing. If you could give us some guidance on what you are expecting on the gas cost increase, that would be useful if you could give us some numbers. Thank you.
Well, Sumedh, of course, as a buyer, I would like to, if possible, we get the same terms as what we are enjoying currently. If you notice, you know, in 2016 when the first ethane contract was renewed, the new term was somewhat similar to the previous terms. That's where our starting position is. We cannot tell you more because we are still in the midst of early part of our negotiation with PETRONAS.
I appreciate that. Thank you so much.
Thank you, Sumedh.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question is from Ho Meng from UOB. Please go ahead.
Hi, guys. Thanks for the call. It's a long weekend coming, so I will keep it short. I just have one question. I hope you can comment because looking through the news flow, actually, it was reported in October that according to the Sabah Minister Hajiji, PETRONAS has kind of agreed in principle to sell 25% stake of your SAMUR plant and some of the assets in SOGIP to the Sabah State. He stated that the timeline-wise is latest to be completed by this month. Hopefully you can comment on that. If it's true, what should we expect just on the financial impact?
Okay. Thank you, Ho Meng. Basically, PCG and Sabah State, together with, you know, as part of PETRONAS group, we are in discussion with Sabah State Government on this. Nothing has been materialized as of now. We will make the proper announcement if it's required.
Just to borrow an example quickly. You know, when PETRONAS Dagangan, when they sold their part of their stake of their LPG business to in Sarawak to Petros, they actually recorded a gain on disposal. Should we, you know, realistically expect the same things in your potential negotiations?
I cannot comment more on that, Ho Meng, because we have not, like I mentioned earlier, finalized or agree, on this yet. We will do so and we'll make the proper announcement, when we are required to do so.
Okay. Got it. Okay. Thank you so much. That's all I have.
Thank you, Ho Meng. Have a great long weekend.
Thank you. There are no further questions at this time. I'll now hand back to Miss Alia for closing remarks.
Thank you, Rachel. Thank you, ladies and gentlemen, for your participation this evening. If you have any further questions, please reach us through email or phone.
Thank you.
Thank you.
Thank you.
Thanks, everyone. Great weekend.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.