KUALA LUMPUR: Petroliam Nasional Bhd (PETRONAS) will continue to prioritise value over volume, as the national oil company focuses on capital discipline to navigate cost pressures amid a soft oil price environment following a weaker financial year ended Dec 31, 2025 (FY25).
In FY25, PETRONAS spent RM41.6bil on capital expenditure (capex), down from RM54.2bil a year earlier, with about 46% allocated to upstream activities.
Around 60% of total capex was deployed domestically, and nearly half of Malaysia’s capex was channelled into the upstream segment.
PETRONAS president and group chief executive officer (CEO) Tan Sri Tengku Muhammad Taufik Tengku Aziz said the RM41.7bil capex last year was “restrained and reined in”.
“We needed to make sure the projects could be delivered economically and the returns hurdles will be cleared,” he said at a media briefing last week.
“As we go forward, we need to make sure value accretion does manifest and does get realised.
“Meeting economic returns will be challenging,” he added, as “cost inflation meets head-on with softening prices”, with Brent crude range-bound between US$65 and US$72.
“There haven’t been any real shocks because fundamentally, there appears to be adequate supply to meet demand in the near term.”
PETRONAS executive vice-president and chief operating officer Mohd Jukris Abdul Wahab said there had been a slight reduction in domestic exploitation expenditure, with spending shifting more towards Peninsular Malaysia to explore new geological plays.
“In Sabah and Sarawak, it’s not a lack of productivity but a lack of geological prospectivity over the past three years.
“That doesn’t bode well for investor confidence,” Mohd Jukris, also the CEO of upstream operations, said.
“For PETRONAS, as far as upstream is concerned, overall, we set our sights on spending our international growth to about 60% over the next 10 years.”
Tengku Muhammad Taufik noted that the oil and gas sector still accounts for 18% to 20% of Malaysia’s revenue and that energy demand remains high.
“The world still consumes about 104 million barrels a day. We don’t see anything displacing a large slice of that soon.
“We will need to prepare for both the current needs and the growing demand.”
He added that this applies not just to Malaysia but across the region, including large economies such as China and India.
“For example, PETRONAS provides 16% to 17% of Japan’s liquefied natural gas (LNG),” he said.
“Our hypothesis is we still need to power economies as they grow.”
In FY25, PETRONAS’ revenue dropped 17% to RM266.14bil from RM319.96bil in FY24. Profit after tax dropped 18% to RM45.39bil from RM55.09bil in FY24.
Tengku Muhammad Taufik said lower average oil prices, foreign exchange impacts and reduced sales volumes, mainly from crude oil and condensates, weighed on revenue.
He said average Brent crude prices fell 14% year-on-year to US$69.10 per barrel from US$80.76 previously, due to oversupply concerns and persistent macroeconomic uncertainties.
But the average LNG spot price rose 7% year-on-year to above US$12.70 per million British thermal units, he said, reflecting stronger demand not only in Northeast Asia but also across Europe.
Meanwhile, in the middle of last year, PETRONAS announced a workforce reduction of around 10%, affecting roughly 5,000 employees, as part of a “right-sizing” exercise, with hiring to remain frozen until December 2026.
Tengku Muhammad Taufik said this process should conclude by August, with the next big wave in March and another one in July.
