PETRONAS to cut 10% of workforce on profit slump

The Star

3 days ago

PETRONAS president and group CEO Tan Sri Tengku Muhammad Taufik Tengku Kamadjaja Aziz.
PETALING JAYA: Petroliam Nasional Bhd (PETRONAS) will be cutting about 10% of its workforce in a firm-wide restructuring as it looks to reduce costs due to falling crude prices.
Bloomberg reported that the Malaysian state-owned oil and gas company will reduce headcount by more than 5,000 people, and all those affected will be informed by the end of the year.
President and group chief executive officer Tan Sri Tengku Muhammad Taufik Tengku Kamadjaja Aziz said at a briefing yesterday that it will also freeze hiring until December 2026.
'The margins are shrinking, the fields are getting smaller.
'It will be challenging to meet dividend targets with current oil prices,' Bloomberg reported, citing Tengku Muhammad Taufik.
'The oil price slump – coupled with declining output from its older assets – will pose a challenge for Malaysia's government, which derived 10% of its revenue from PETRONAS in 2024.'
The energy producer not only anchors the nation's energy sector, but also plays a key role in funding infrastructure, education and social programmes through dividends and taxes.
PETRONAS sets its budget based on Brent oil at around US$75 to US$80 per barrel, Tengku Muhammad Taufik said.
Meanwhile, Bernama in a report said PETRONAS had reiterated its stance of not exiting Canada.
'Canada is not on our exit radar. We're not exiting Canada.
'We are constantly entertaining overtures and proposals.
'That is going to be the natural course of business and it (Canada) is a very resource-endowed geography,' Tengku Muhammad Taufik said.
He said liquefied natural gas (LNG) is coming on stream from Canada, with the first cargo in a couple of weeks.
Tengku Muhammad Taufik said there will be regular shipping out of LNG from Canada, which is at 25%.
'We have 53 trillion cubic feet (TCF) of reserves.
'It is strategically positioned between that coast of Canada and Japan, South Korea, Taiwan and even China.
'Some other LNG routes are compromised by geopolitical hostility...that is another advantage.
'That was the rationale to do this. We built that node.
'We wanted to make sure it's strategically positioned, having locational advantage.
'PETRONAS hopes to have more engagements and constructive dialogues for the national oil firm to activate additional LNG leverage in Canada.
'We hope that the Canadian (new) government will be more appreciative and supportive of it becoming a new, cleaner energy source for the rest of the developing world,' Tengku Muhammad Taufik added.
He stressed that it was crucial for PETRONAS to preserve its position in market share in the LNG space in Canada while also looking at how to build its upstream portfolio effectively.
Responding to a question whether PETRONAS will look to liquidate some assets or diversify, Tengku Muhammad Taufik said PETRONAS would continue its asset rationalisation to keep its operations lean.
He noted that the divestment exercise was done in Argentina, as PETRONAS could not make its assets work in the country and found an interested party to acquire them.
In April this year, Buenos Aires-based Vista Energy had reportedly acquired PETRONAS' 50% stake in the La Amarga Chica oil field in Argentina's Vaca Muerta shale basin for about US$1.5bil (RM7.1bil).
The second-biggest crude oil producer in the area will pay US$900mil upfront for the stake, with one-third of that sum financed through a loan from Banco Santander SA, while the remainder will be paid in two instalments in 2029 and 2030.