KUALA LUMPUR, June 16 — Malaysia’s state-owned oil company Petronas is ramping up overseas investments in a bid to lower production costs and sustain profitability amid volatile crude prices.
Petroliam Nasional Bhd, or Petronas, aims to cut its oil production break-even cost to US$50 (RM212) per barrel, down from US$60– US$70 over the past five years, according to its upstream business CEO Mohd Jukris Abdul Wahab, according to a report published in Bloomberg today.
“We want to reshape the entire portfolio,” Jukris said in an interview on June 13, adding that the company was preparing for a more uncertain energy environment.
Petronas will prioritise investments in countries where it already operates, such as Canada, Suriname, Brazil, Turkmenistan and several South-east Asian nations, though it remains open to entering new markets with growth potential.
The move comes as lower crude prices have hit the firm’s earnings and led to a planned 10 per cent cut in its workforce to manage costs, even as oil markets remain jittery due to geopolitical tensions in the Middle East.
“Any capital deployment for our international asset has got to provide healthy return,” said Jukris, noting the rising risks associated with global operations.
“We are dealing with a lot more risk in some of the geographies that we are present.”
The company, which has pledged RM32 billion in dividends to the government this year, down from RM50 billion in 2022, is vital to Malaysia’s economy, having contributed RM1.4 trillion since its founding in 1974.
Petronas aims to raise the net present value of its international upstream portfolio to 60 per cent within five to 10 years, up from the current 40 to 50 per cent.
The firm currently produces about 2 million barrels of oil equivalent per day domestically and 700,000 barrels abroad, with new fields needed to offset declining output from ageing assets.
Despite looking abroad, Jukris expressed confidence in Malaysia’s oil and gas prospects, citing continued interest from international explorers, especially off the coast of Peninsular Malaysia.
“For the last 10, 15 years, we’ve been saying that our reserves will last only 15 years,” he said. “So today, we will also last another 15, 20 years.”
