21. PROVISION FOR DECOMMISSIONING COSTS Group 31.12.2023 RM’000 30.6.2022 RM’000 Non-current Provision for decommissioning costs 485,524 422,667 The movements in the provision for decommissioning costs of the Group are as follows: Group 31.12.2023 RM’000 30.6.2022 RM’000 At 1 July 422,667 438,813 Unwinding of discount 22,704 14,529 Foreign currency translation 40,153 (30,675) At 31 December/30 June 485,524 422,667 The Group makes full provision for the future costs of decommissioning its oil production facilities and pipelines with respect to the Anasuria Cluster on a discounted basis. The provision represents the present value of decommissioning costs which are expected to be incurred up to year 2035 assuming no further development of the Anasuria Cluster. The liability is discounted at a rate of 3.40% (30.6.2022: 3.40%) and includes an inflationary factor of 2.00% (30.6.2022: 2.00%). The unwinding of the discount is classified as finance costs. These provisions have been created based on internal and third–party estimates. Assumptions based on the current economic environment have been made which management believe are a reasonable basis upon which to estimate the future liability. These estimates are reviewed regularly to consider any material changes to the assumptions. However, actual decommissioning costs will ultimately depend upon future market prices for the necessary decommissioning works required which will reflect market conditions at the relevant time. Furthermore, the timing of decommissioning liabilities is likely to depend on the dates when the fields cease to be economically viable. This in turn depends on future oil prices which are inherently uncertain. The present value of decommissioning costs has been revalued at the financial period end rate. Integrated Report 2023 263
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