MALAYSIA

Petronas Slashes Jobs to Stay in the Game

By Charles Kennedy - Feb 11, 2025

Malaysia’s state energy major Petronas needs to slash thousands of jobs to survive beyond 2035.

The headcount in administrative functions is a target for reduction.

This year, the company has a schedule for drilling 69 new development wells, up from 56 in 2024.



Malaysia’s state energy major Petronas needs to slash thousands of jobs to survive beyond 2035. The striking message came from the company’s new chief executive, who called it “right-sizing.”

“The rationale to do 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,” Tengku Muhammad Taufik Tengku Aziz told media in Kuala Lumpur, as quoted by Reuters.

Naturally, the first thought of most hearing this message would be that the company is struggling—but that would only be partially right, if Muhammad Tufik is to be believed. According to him, the root of the problem is the company's oversized administrative personnel. In fact, he made a special point of emphasizing that Petronas was in no financial trouble—quite the opposite, and that fact made the time right to “right-size”.

The job cuts would target specifically “enablers”, Muhammad Tufik said, as quoted by Malaysia’s The Edge, or administrative employees. The number of these is higher at Petronas than the industry average, and this has apparently become a threat to the long-term survival for the company. In absolute numbers, Petronas employs a global total of some 52,000 to 53,000 people, of whom some 15,000-16,000 are so-called enablers or administrative personnel.

A good question to ask would be why cut jobs at all if Petronas was doing so well. The reason, per its chief executive, is that the global operating environment was becoming increasingly challenging, and the current good times may not last—and Petronas had to prepare for the lean days.

Muhammad Tufik noted that new oil and gas project development was going to become harder because of what The Edge reported as “geological factors”. These would eat into Petronas’ revenues generated from production-sharing agreements because it would need to offer fatter shares to its partners in these projects to motivate their participation and assumption of part of the risk. Currently, Petronas takes home over 20% of the revenues under PSAs. In the future, this would shrink to the lower double digits, according to the chief executive.

Muhammad Tufik did not go into detail about the nature of these challenges that stand in the way of continued strong performance, but they might be a local reflection on global trends in oil and gas exploration, namely a shrinking poll of considerable untapped deposits. More importantly, however, the chief executive of the state Malaysian firm may be referring to the transition push that has made energy investors consider oil and gas investment much more risky than it was before in case, at some point in the near future, oil demand does indeed peak.

Indeed, one analyst said as much in comments on the news. “Growing expectations from stakeholders such as the government, ESG investors, state governments require Petronas to adopt a more sustainable and diversified approach beyond the traditional oil and gas industry,” Global Asia Consulting senior consultant Samirul Ariff Othman told Malaysia’s Business Times.

There is no indication this is going to happen anytime soon outside of transition forecasts from advocacy outlets, but the prospect of peak oil demand has certainly made a lot of energy companies nervous and spurred them into action. Over the shorter term, however, Petronas is planning to continue business as usual and even boost oil production.

This year, the company has a schedule for drilling 69 new development wells, up palpably from 56 in 2024. In addition, Petronas expects to drill about 15 exploration wells each year over the next two years. The exploration efforts will focus on shallow-water and deepwater wells. Now seems like the best time to get leaner and meaner for the future.

By Charles Kennedy for Oilprice.com