Petronas

by AKMAR ANNUAR

PETRONAS has embarked on a transformative restructuring exercise to streamline operations, enhance agility and future-proof its business against an increasingly unpredictable global energy market.

The “Petronas 2.0” transformation, announced on June 5 this year, outlines plans to optimise the workforce, restructure the organisation, and prioritise digitalisation and energy transition in pursuit of greater agility and long-term stability.

The decision came amid fluctuating oil prices, with Brent crude opening that day at US$64.91 per barrel and peaking at US$65.86 per barrel. 

This marked a significant drop from its September 2023 average of US$93.72, signalling that global economic pressures continue to challenge the viability of traditional oil and gas (O&G) models.

However, market volatility is only part of the story.

Petronas is not alone. Oil majors such as Chevron and Shell have also taken decisive steps to trim their workforce in response to cost pressures and structural inefficiencies.

Chevron, for example, announced a 20% cut earlier this year, impacting 9,000 employees by the end of 2026. Shell is pursuing similar reductions, targeting a 20% downsizing and cost savings of US$2 billion to US$3 billion by the close of 2025.

These developments reflect broader trends affecting the sector — from geopolitical instability and environmental pressures to costly technological upgrades.

Operational complexity and rising costs

Petronas operations span deepwater fields such as Gumusut-Kakap, Malikai, and Kikeh off the coast of Sabah, with ongoing development in Limbayong and the Kelidang Cluster. It has also expanded its exploration activities in Suriname.

Deepwater projects, typically conducted at depths of 1,200m to 2,100m, demand high levels of investment and advanced infrastructure. Such ventures are inherently cost-intensive, and the financial burden increases further in mature oil fields where extraction becomes geologically complex.

The cost of extracting a barrel of oil from older sites can reach up to US$50 — a figure that becomes untenable when market prices fall below breakeven levels.

In addition, Petronas faces technical hurdles in processing sour gas, particularly off Sarawak’s coast. 

High concentrations of hydrogen sulphide and carbon dioxide elevate the cost of treatment and purification, compounding the financial challenges.

Environmental mandate and strategic realignment

Environmental concerns now form a central pillar of corporate strategy for O&G firms worldwide. 

Fossil fuels, once the backbone of global growth, are now linked to air and water pollution, deforestation, and climate change.

As a government-owned company, Petronas is committed to support Malaysia’s clean energy ambitions under the National Energy Transition Roadmap (NETR). 

This involves significant investments in renewables to reduce the country’s carbon footprint and shift towards sustainable energy models.

Profit pressure and reinvention

Petronas financial performance reflects the sector’s broader contraction. Its net profit declined from RM101.6 billion in 2022 to RM80.7 billion in 2023, and further to RM55.1 billion in 2024.

Its President and Group CEO Tan Sri Tengku Muhammad Taufik Tengku Aziz said the situation demands decisive changes to the company’s business processes.

“We will be more technologically driven, leveraging artificial intelligence (AI) and the digital ecosystem to unlock value and raise productivity,” he said.

He noted that AI-powered analytics support data-driven decision-making, improve risk management, and enhance the company’s ability to anticipate market shifts.

He added that this would allow the organisation to maintain agility, remain competitive, and be better equipped to navigate the challenges of an evolving energy landscape.

The rightsizing exercise is intended to align the workforce with strategic priorities and reduce redundancies across the organisation. 

This will allow Petronas to grow further in segments, including liquefied natural gas (LNG), downstream operations like petrochemicals and lubricants, and future-ready solutions such as blue ammonia and carbon capture and storage (CCS).

A future-ready Petronas 

Ultimately, rightsizing is not about contraction — but evolution.

In an era defined by tightening margins, decarbonisation, and rapid technological shifts, standing still is no longer an option.

Petronas move to embrace structural reform while it remains financially sound is a pre-emptive step towards enduring relevance.

The transformation under Petronas 2.0 goes beyond operational adjustments, embodying a broader rethink of the company’s direction in an increasingly decarbonised global landscape.

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