Malaysia's Petronas to 'right-size' workforce for long-term viability

Malaysia's state energy company, Petronas, is set to adjust its workforce in a bid to ensure its long-term survival amid mounting global challenges, according to local media reports.

"This is not a retrenchment; it is a right-sizing workforce exercise," Petronas president and CEO Tengku Muhammad Taufik (pictured) was quoted as saying by The Edge. "This is to ensure the survival of Petronas in the coming decades. If we don't do it now, there will be no Petronas in 10 years."

However, Taufik did not specify how many employees would be affected. Petronas employs nearly 50,000 people, according to its website. Some employees will transition to new roles, while others may be let go, the report says.

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State news agency Bernama published a similar report, citing an editors' briefing where the CEO emphasised that the move was necessary for Petronas to "continuously contribute to nation-building."

Taufik stated that the restructuring was unrelated to the ongoing negotiations between Petronas and the Sarawak state government over local gas distribution. Talks with Sarawak's Petros last year had sparked concerns about potential impacts on Petronas, which is a key contributor to federal revenue, and its operations in Sarawak, home to over 60% of Malaysia's gas reserves.

He warned that future oil and gas development projects would face thinner margins and greater technical challenges. Malaysia expects a decline in natural gas and crude oil output in 2025 due to planned facility maintenance and weakening demand in some export markets, according to a government report.

The CEO also noted that shifts in production-sharing contracts would reduce Petronas' earnings share, with profit margins forecasted to shrink from above 20% to low double digits in the coming years.

Looking ahead, Petronas aims to diversify beyond oil and natural gas, expanding its portfolio to include alternative products such as blue ammonia, a clean fuel derived from hydrocarbons, Taufik stated. Petronas, now over 50 years old, last conducted a similar review in 2016 during a downturn, announcing 1,000 job cuts.

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