Petronas to cut costs by $11.4 billion
KUALA LUMPUR, January 19, 2016 – Petronas announced plans to cut costs and operating expenditures over the next four years to the value of USD 11.4 billion in an internal staff memo from its chief financial officer on Monday. The reduction will likely cause delays to several of the state-run oil company’s ongoing and future projects.
Although no projects were named in the memo, they could include the USD 16-billion refining and petrochemical complex in the southern Johor state, a USD 28-billion natural gas export project that will sell gas to Canada, and the construction of two floating LNG projects in South Korea.
Oil prices fell to the lowest they have been since 2003 on Monday to USD 27.67 per barrel. Petronas brings in almost half of Malaysia’s oil revenue of USD 100.6 billion per year. The company had already cut spending, delayed contracts and restructured cost-efficiency to survive falling oil prices in 2015.
“We have come to the point where these actions are not enough to counter the impact brought on by rapidly declining oil prices,” Petronas’ CEO Wan Zulkiflee said in the memo.