
Petronas-Petros clarity needed to stem investment outflow: Analysts
KUALA LUMPUR: Sarawak could be looking at a broader pattern of foreign direct investment outflow barring greater regulatory clarity, several analysts suggested.
Speaking to FMT, senior consultant Samirul Ariff Othman said a mix of local and international challenges motivated the recent ConocoPhilips exit from the Salam-Patawali project.
The US oil major's exit from Salam-Patawali comes months after another foreign oil and gas company, Thailand's PTTEP, shelved the Lang Lebah gas project until 2026.
Industry observers point to the ongoing regulatory uncertainty caused by the unresolved Petronas-Petros settlement as causing this two-year delay, as reported by Scoop.
While each project has unique challenges, the back-to-back cancellations suggest a potential emerging trend influenced by economic pressures and regulatory uncertainties," Samirul from Global Asia Consulting said.
In 2025, an ongoing trade war between the United States and various countries has triggered other economic risks. These include fears of inflation and recession, as well as falling oil prices.
"Fluctuating global energy prices and economic uncertainties can impact investment decisions in large-scale O&G projects.
"The combination of rising costs, global market volatility, and unresolved local disputes may lead other investors to reassess their commitments in the region," Samirul said.
Jamil Ghani, a former analyst with the Malaysia Petroleum Resources Corporation, told FMT that regulatory clarity is of utmost importance to stabilise Malaysia's business environment.
"Regulatory uncertainty - especially the unresolved role of Petros as the state's designated gas aggregator - risks amplifying investor anxiety.
Although Petronas has confirmed that discussions with Petros are ongoing, ambiguity around intermediary or middleman arrangements undermines confidence at a time when national cohesion is critical," Jamil said, referring to the federal government's insistence that Petronas' contracts remain untouched with no middleman involved.
Amid a challenging global environment, he stressed that Malaysia cannot afford the perception of internal disunity - least of all in its strategic energy sector.
"If Petronas is to remain a bulwark of national stability, policy cohesion and operational continuity must take precedence," Jamil added.
"That means Sarawak and the federal government must urgently stabilise the current dispute for the economic resilience of an entire nation."
Long-term regulatory clarity is crucial for attracting and retaining foreign partners in Malaysia's upstream sector.
"Clear and stable fiscal terms, along with consistent enforcement of production sharing contracts, are essential to maintain investor confidence," Samirul said.
Challenges ahead
According to Upstream, the Salam-Patawali was not a large project but a pivotal one considering Malaysia's ambitions to raise oil and gas production.
The standalone development, which involved a floating vessel capable of handling over 100 million cubic feet of gas, was well-supported by Petronas.
According to Upstream Online, Petronas is keen to continue the project but cannot take it forward alone for the time being due to lack of capacity.
Pritish Bhattacharya, a research officer at Singapore's ISEAS-Yusof Ishak Institute, told FMT Sarawak's push for oil and gas autonomy has put Petronas's monopoly at risk, with broader repercussions for the national economy and local industry.
Pritish said the implications for the overall Malaysian economy are still "very hard to quantify".
"(On the other hand), the potential loss of Petronas's resource access will create spillover challenges for international oil companies that are accustomed to centralised dealings," he said.
This will be a concern especially in terms of foreign investments. These investors have essentially dealt only with Petronas in their dealings in Malaysia, and it could complicate matters if they now have to work with Petros.
Jamil said the sector's domestic value chain is wide and vulnerable.
According to the statistics department, there were 2,894 establishments engaged in oil and gas services and equipment activities as of the latest census.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Daily Express
38 minutes ago
- Daily Express
Petronas commits to staff welfare amid job cuts, pledges competitive separation scheme
Published on: Tuesday, June 10, 2025 Published on: Tue, Jun 10, 2025 By: FMT Reporters Text Size: Last week, Petronas announced that the company would reduce its headcount by more than 5,000 people as it looks to cut costs due to falling crude prices. - FMT pic PETALING JAYA: Petronas has reaffirmed its commitment to safeguarding employee welfare amid a company-wide restructuring exercise that will cut about 10% of its workforce, including by offering competitive separation packages. The firm said that to support employees affected by this exercise, a comprehensive transition programme had been put in place, ensuring that every decision is made with fairness, respect, and professionalism. Advertisement 'Impacted employees will receive a market-competitive separation package – one that exceeds the minimum statutory requirement,' it said in a statement. The energy producer also said that beyond financial support, affected employees would also receive emotional support services, career coaching and job search assistance, financial planning guidance, as well as access to programmes for medical assistance, upskilling, and reskilling. 'The packages and benefits are structured based on employees' years of service and may vary depending on employee category and eligibility,' it added. Last Thursday, Petronas president and group CEO Tengku Muhammad Taufik Aziz announced that the company would reduce its headcount by more than 5,000 people as it looks to cut costs due to falling crude prices. He said those affected would be informed in stages through next year and that a hiring freeze would remain in place until December 2026. Petronas today said it had formed a transition council and people development committees to facilitate talent mapping and ensure that placement decisions are made collectively, guided by established platforms. 'This process also follows the necessary legal requirements and adopts the required industrial relations practices,' it said. The firm added that it had engaged with the relevant departments on labour and industrial relations under the human resources ministry to ensure compliance with statutory requirements. Petronas is also collaborating with the Social Security Organisation through MyFutureJobs to explore placement opportunities for eligible affected employees in other sectors. The potential placement of affected staff with various other GLCs, including oil and gas companies, is being explored, Petronas said. 'Additionally, the company's entrepreneurship programme run under the Petronas Innovation Garage offers a guided pathway into business ownership for those exploring alternative career paths.' * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia


Free Malaysia Today
2 hours ago
- Free Malaysia Today
Petronas commits to staff welfare amid job cuts, pledges competitive separation scheme
Last week, Petronas announced that the company would reduce its headcount by more than 5,000 people as it looks to cut costs due to falling crude prices. PETALING JAYA : Petronas has reaffirmed its commitment to safeguarding employee welfare amid a company-wide restructuring exercise that will cut about 10% of its workforce, including by offering competitive separation packages. The firm said that to support employees affected by this exercise, a comprehensive transition programme had been put in place, ensuring that every decision is made with fairness, respect, and professionalism. 'Impacted employees will receive a market-competitive separation package – one that exceeds the minimum statutory requirement,' it said in a statement. The energy producer also said that beyond financial support, affected employees would also receive emotional support services, career coaching and job search assistance, financial planning guidance, as well as access to programmes for medical assistance, upskilling, and reskilling. 'The packages and benefits are structured based on employees' years of service and may vary depending on employee category and eligibility,' it added. Last Thursday, Petronas president and group CEO Tengku Muhammad Taufik Aziz announced that the company would reduce its headcount by more than 5,000 people as it looks to cut costs due to falling crude prices. He said those affected would be informed in stages through next year and that a hiring freeze would remain in place until December 2026. Petronas today said it had formed a transition council and people development committees to facilitate talent mapping and ensure that placement decisions are made collectively, guided by established platforms. 'This process also follows the necessary legal requirements and adopts the required industrial relations practices,' it said. The firm added that it had engaged with the relevant departments on labour and industrial relations under the human resources ministry to ensure compliance with statutory requirements. Petronas is also collaborating with the Social Security Organisation through MyFutureJobs to explore placement opportunities for eligible affected employees in other sectors. The potential placement of affected staff with various other GLCs, including oil and gas companies, is being explored, Petronas said. 'Additionally, the company's entrepreneurship programme run under the Petronas Innovation Garage offers a guided pathway into business ownership for those exploring alternative career paths.'


Daily Express
4 hours ago
- Daily Express
Masiung urges govt intervention over Petronas job cuts
Published on: Tuesday, June 10, 2025 Published on: Tue, Jun 10, 2025 Text Size: SANDAKAN: Gagasan Rakyat vice-president Datuk Masiung Banah has urged the federal government to intervene over Petronas' move to retrench over 5,000 contract workers, mostly Bumiputera from Sabah and Sarawak. He called for an engagement session between the government, Petronas, and workers' unions to ensure decisions aren't made unilaterally. Advertisement 'This isn't a small issue, it affects thousands of families,' said Masiung after officiating the party's Karamunting division AGM. The Kuamut assemblyman questioned the rationale behind such large-scale cuts despite oil prices remaining stable at USD65 per barrel, noting that in 2016, when prices fell to USD44, only 1,000 workers were let go. 'If profits are still dropping, then something is clearly wrong with governance in Petronas,' he said, urging the Sabah and Sarawak governments to protect local workers who are key contributors to the national oil and gas sector. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia