Reports say that Malaysia's Petronas will cut jobs in order to survive.
Local media reported that Malaysia's Petronas, the state-owned energy company, will reduce its staff to ensure its survival in the face of increasing challenges within the global operating environment. The Petronas CEO was quoted as saying this.
The rationale behind this move is to ensure Petronas' survival in the next decades. According to The Edge, the president and CEO Tengku Taufik TengkuAziz said that if we didn't act now, Petronas would be gone in 10 years. He did not specify how many jobs could be affected.
Bernama, the state news agency, carried a similar report from what they said was an editor's briefing. The CEO was quoted as saying that the move was made to ensure Petronas could "continuously contribute" to nation-building. According to its website, Petronas employs nearly 50,000 people. Petronas responded to the media reports by email and confirmed that the number of employees affected was not disclosed during the briefing.
Muhammad Taufik claimed that the "right-sizing exercise" was not the result of an agreement between Petronas, the Sarawak government and local gas distributors.
The negotiations between Petronas Sarawak and Sarawak Petros in the last year raised concern over the impact of Petronas on federal coffers as well as its operations in Sarawak which contains more than 60% Malaysia's natural gas reserves.
According to The Edge, Muhammad Taufik stated that oil and gas projects would have thinner margins as well as greater technical challenges.
A government report says Malaysia expects a lower crude oil and natural gas output in 2025, due to planned maintenance shutdowns and the easing of demand on some export markets.
Muhammad Taufik stated that the production-sharing contract composition is expected to change. This will lead to a decrease in Petronas share of earnings. He also added that the margins currently enjoyed by the company, which are above 20%, will be reduced to the low double digits over the next few years.
He was quoted as saying that Petronas should not just be a provider of oil and natural gas, but also offer other products, such as the blue ammonia gas, which is a hydrocarbon-based clean gas.
(source: Reuters)
