Petronas layoffs driven by global challenges, not Petros issue
Deputy Prime Minister Datuk Seri Fadillah Yusof said the restructuring process is necessary amid the decline in crude oil prices.
He also plans to meet with Petronas to get more details on the restructuring process.
'That is why Petronas has to relook its entire operation. I'm planning a meeting with them to get a briefing on the matter and to ensure that the number of layoffs can be reduced, if not avoided,' he told reporters attending the Aidiladha sacrificial event at Taman Hussein Mosque here today.
On June 5, Petronas president and chief executive officer Tan Sri Tengku Muhammad Taufik Tengku Aziz reportedly said the national oil firm is cutting 10 per cent of its workforce to cope with challenging operating conditions, particularly due to falling crude prices.
Tengku Muhammad Taufik said the number of staff involved in the downsizing process currently stands at around 5,000, and those affected will be notified in stages next year.
On May 21, the federal and state governments reached an understanding on matters involving Petronas and Petros.
According to the joint declaration, Petronas will continue its functions, activities, responsibilities and obligations entrusted to the company in Malaysia, under the Petroleum Development Act 1974 (PDA 1974) and its regulations.
Any agreements and arrangements between Petronas and its subsidiaries with third parties for the purpose of liquefied natural gas (LNG) sales from upstream operations through to LNG exports to foreign parties remain unaffected.
A media statement by the Prime Minister's Office following the joint declaration said all relevant federal and state laws relating to gas distribution in Sarawak are to co-exist and be respected by all parties.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Borneo Post
7 hours ago
- Borneo Post
Premier: Early signs point to promising gas potential at Miri's Adong Kechil West onshore field
Abang Johari (seated centre) speaks to reporters after the groundbreaking ceremony of Miri Marina Bridge project today. MIRI (July 22): Sarawak Premier Datuk Patinggi Abang Johari Tun Openg is optimistic about the commercial potential of the SK433 Adong Kechil West (AKW) onshore gas field here, citing encouraging early signs from ongoing exploration work. Speaking to reporters after launching the RM450 million Miri Marina Bridge project today, he said the use of advanced technology had strengthened confidence in the field's viability. 'Early indication is good,' he said, though he declined to disclose reserve estimates or a production timeline. His remarks come after feasibility studies by state oil and gas company Petros – Sarawak's sole gas aggregator – suggested the presence of significant gas reserves at the onshore site. Drilling at the AKW field began in October 2023, marking Sarawak's return to onshore exploration after a 50-year break. Located within Block SK433, a 3,100 sq km area awarded to Petros in July 2021, the project is a joint effort with Petra Energy Bhd. Abang Johari said the gas from AKW will supply a 400-megawatt power plant being built in Lutong, which is set to start operations in 2027. Earlier this year, Petros updated Deputy Premier Datuk Amar Awang Tengah Ali Hasan on plans to accelerate the AKW drilling project by 2025. Petros Senior Vice President Datuk Abang Arabi Abang Narudin outlined supporting infrastructure plans including road access, oil transfer terminals, and the gas power plant – all aimed at benefiting nearby communities. Onshore data gathering using Enhanced Full Tensor Gravity Gradiometer (eFTG) technology is scheduled to begin in the second quarter of 2025. Back in 2013, Petronas had announced a major discovery at the Adong Kecil West-1 well in Block SK333, about 20 km northeast of Miri. The well, drilled to a depth of 3,170 metres by JX Nippon Oil & Gas Exploration and Petronas Carigali, found around 349 metres of net hydrocarbon deposits. Abang Johari Adong Kechil West miri oil and gas
The Sun
9 hours ago
- The Sun
Integrated water management crucial for growth, climate resilience: Fadillah
PUTRAJAYA: Malaysia's ability to support its fast-growing digital economy including the rapid expansion of water-intensive data centres hinges on strengthening the country's water infrastructure and implementing long-term, integrated water resource planning, says Deputy Prime Minister and Energy Transition and Water Transformation Minister Datuk Seri Fadillah Yusof. 'Water is now considered the new oil. It's a strategic resource,' he said, stressing the need for a stable and sufficient water supply not only for the public but also to attract high-impact investments like data centres. These facilities rely heavily on water to cool their systems, and demand is expected to rise as global firms increasingly choose Malaysia as a regional hub. Fadillah warned that growing pressure from climate change and industrial demand could strain existing water infrastructure if a coordinated approach is not adopted. 'This situation places added pressure on water systems, which are not yet fully equipped to handle extreme and unpredictable weather events. Without a comprehensive and integrated approach, the risk of clean water supply disruptions will continue to rise, ultimately affecting public well-being and national development,' he said at the Malaysia Water Forum 2025 today. He outlined three key approaches to accelerate Integrated Water Resource Management (IWRM): comprehensive, inclusive, and evidence-based. A comprehensive approach means managing all aspects of water—from supply and quality to irrigation, flooding, and ecosystem conservation—holistically. Inclusivity involves participation from all stakeholders: government, private sector, academia, civil society, and grassroots communities. He cited the 2025 National-level World Water Day celebration as an example of inclusive advocacy that brought together students, religious leaders, civil servants and industry players on a shared platform. The evidence-based approach, he added, requires decisions and programmes to be guided by scientific data, impact assessments, and clear performance indicators. While Malaysia has made strides with policies such as the National Water Resources Policy 2012 and the National Water Policy 2024, Fadillah acknowledged persistent gaps in implementation. He pointed to fragmented agency roles, limited enforcement capacity, underfunded infrastructure, and a general lack of public awareness and technical expertise as barriers to meaningful reform. Among key past efforts, he highlighted the formation of the Malaysian Water Partnership (MyWP) in 1993 to promote stakeholder collaboration, and the establishment of the Lembaga Urus Air Selangor (LUAS) in 1999 as a model for state-level water governance. Malaysia's commitment also extends to the global level, with Fadillah reaffirming the country's support for the United Nations' Sustainable Development Goals (SDG), especially SDG 6 on clean water access and SDG 17 on cross-sector partnerships. 'More than two billion people globally still lack access to clean and safe water,' he said, underlining the urgency of building a resilient governance model that balances economic growth with environmental sustainability and public welfare. - Bernama
Free Malaysia Today
10 hours ago
- Free Malaysia Today
Embracing change: Petronas steps boldly into the future
PETRONAS has risen to new challenges such as environmental concerns and price fluctuations caused by armed conflicts on both the local and global fronts. (Reuters pic) PETALING JAYA : On June 5, 2025, national oil corporation Petroliam Nasional Bhd (Petronas) announced that it would focus on a company-wide transformation effort aimed at adapting to difficult market conditions. The move is part of the company's strategic shift towards what it calls 'Petronas 2.0', which will involve changes in structure, organisation, and work processes to pave the way for greater agility and success, empowering the company to thrive in an ever-evolving landscape. On the same day, the Brent crude opened at US$64.91 per barrel before reaching an intra-day high of US$65.86. Less than two years ago, in September 2023, the commodity was averaging US$93.72 per barrel. But that was not solely the reason for Petronas' decision to downsize — or 'rightsize' as it is referred to now. To understand why Petronas and other O&G players around the world are reviewing or restructuring their operations, FMT takes a look at the many new challenges that the industry has come to face. Global challenge Apart from Petronas, other oil companies such as Chevron and Shell are also reducing their respective workforce as part of a restructuring exercise. Early this year, Chevron announced a 20% cut in its workforce, a move that will see 9,000 employees leave the company by the end of 2026. Bloomberg reported that the job cuts were 'intended to streamline operations, reduce costs by US$2 billion to US$3 billion by 2026, and to improve efficiency'. Just a few months earlier, Shell announced that it would embark on a similar track that will see its workforce shrink 20% and cut costs also by US$2 billion to US$3 billion come end of 2025. The pain points The restructuring exercise, which includes job cuts, is unavoidable given the market volatility, coupled with environmental concerns, regulatory hurdles, and technological progress. Geopolitical events, including armed conflicts in the Middle East and Ukraine, have caused havoc in demand and supply, creating uncertainties and leading to a drop in prices. For instance, the Iran-Israel conflict has resulted in sharp swings in oil prices, with the Brent crude hitting a five-month high of US$81.40 a barrel after the US bombed nuclear sites in Iran, before dropping back to US$69 on news of a ceasefire. Margins have also begun to thin, not just as a result of falling prices but other factors as well. In mature fields, the sought-after product is often trapped in more complex geological formations, making extraction more complex and, therefore, costly. The cost of extracting a barrel of oil from older fields can be as high as US$50, making it unsustainable to keep these fields in production as market price comes down. Higher operating costs in mature fields are not the only reason that margins are thinning. Petronas is also heavily involved in deepwater projects. It already has fields in areas such as Gumusut-Kakap, Malikai, and Kikeh off the Sabah coast, and is developing new ones in Limbayong and the Kelidang Cluster, also off Sabah. Elsewhere, the national oil corporation has also expanded its involvement in deepwater projects in Suriname. Deepwater projects typically involve extraction from depths of 4,000 feet (1,219m) to 7,000 feet (2,134m) below sea level. The challenging conditions in deep and ultra-deep waters require specialised technology and infrastructure, pushing production costs higher. Petronas' active involvement in sour gas projects, particularly off the coast of Sarawak, presents another challenge. The high level of contaminants such as hydrogen sulfide and carbon dioxide makes it highly costly to process the gas. All these factors lead to higher operational costs, making it essential for the oil corporation to cut back in other areas to stay in business. The environmental factor The rising concern for Mother Nature is perhaps the biggest challenge for O&G companies. Oil, once the fuel that fired economic growth, is now regarded as the cause of all the ills of the environment. The cause of air and water pollution as well as deforestation that leads to global warming are attributable to the widespread use of fossil fuels. Oil producers around the world are being forced to make the transition to clean energy to meet more stringent green regulations. In Malaysia, Petronas is duty-bound to help the country migrate to clean energy under the National Energy Transition Roadmap (NETR). The NETR entails reducing the country's carbon footprint to take the economy on a more sustainable path. This involves investing billions of ringgit in renewables to secure the country's future energy needs. The need to reinvent It is time to stop looking at the O&G sector in general and Petronas in particular through rose-tinted glasses. Many oil companies, such as ExxonMobil, Shell, Chevron and TotalEnergies have all reported decline in profits since 2022. Petronas is no exception. Its profit has been on a steady decline, from RM101.6 billion in 2022 to RM80.7 billion in 2023 and then to RM55.1 billion in 2024. CEO Tengku Muhammad Taufik Tengku Aziz envisions a new path going forward and, among others, work processes will change. 'We will be more technologically driven, leveraging artificial intelligence (AI) and the digital ecosystem to unlock value and raise productivity,' he said. He pointed out that digital transformation could help businesses uncover new opportunities for value creation and productivity gains, while streamlining operations and reducing inefficiencies. 'AI-driven analytics enable data-driven decision-making, better risk management, and enhanced the ability to predict and respond to market shifts,' Tengku Muhammad Taufik said. 'This enables the organisation to remain agile, competitive, and well-positioned for the challenges of the evolving energy landscape,' he added. The rightsizing exercise will improve operational resilience and agility, where the workforce matches the company's strategic needs. Turning leaner and more cost-efficient will ensure that Petronas continues to pay dividends to the government to help Malaysia narrow its budget deficit and reduce reliance on broad-based subsidiaries. By trimming the non-essential roles, Petronas can also reinvest resources in sectors that are poised for growth, such as liquefied natural gas (LNG), downstream value chains including petrochemicals and lubricants, and low-carbon solutions like blue ammonia and carbon capture and storage (CCS). Looking ahead In the final analysis, the rightsizing exercise is unavoidable. In an environment of narrowing profit margins and a fast-shifting global energy market, strengthening the national oil company will bring long-term benefits for Malaysians. It must be pointed out that Petronas's financial position remains solid. Nonetheless, the rational thing to do is to act now, while the company is still profitable, rather than wait until painful steps such as pay cuts and retrenchment have to be taken. In addition, the company needs to streamline processes and reduce the number of layers to make it more agile. Rightsizing is the right thing to do.
