Malaysia’s Petronas to cut more jobs

Like most of the world’s oil companies, Malaysia’s state-owned oil and gas company, Petronas, is feeling the pinch of the prolonged downturn in the price of crude oil. A report in the Wall Street Journal that quoted ‘sources familiar with the company’ claims that even more jobs would go, after the earlier announcement in March, during which more than 1,000 jobs were lost.

The new losses would come from across all of Petronas's business units, in an attempt to ensure the company remains profitable in the years to come, although there was no details on who, where and why the jobs would be lost. On top of the cuts, the company is trying to cut expenditure by as much as US$11.4 billion over four years, so we can expect any project that hasn’t started yet to be delayed.

One of the delayed projects may well be the Canadian Liquefied Natural Gas project in British Columbia. The project, which was supposed to liquefy natural gas for exports to Asian markets, has thus far been dogged by delays and legal wrangles, not least by the local aboriginal people.

The project, which still does not have final approval from the Canadian government, is a consortium of companies that includes Brunei National Petroleum Company, China Petroleum, Indian Oil Corp and Japan Petroleum Exploration Co., and was expected to start shipping LPG by 2019. The recent oversupply of LNG and low cost of competing fuels now makes this date unlikely. To date, Petronas is believed to have put up a third of the US$27.5 billion cost of the project, but now may not see a return on this money in the foreseeable future.

According to Petronas’s 2015 annual report, the company employs some 53,000 staff worldwide, but of course most of them are in Malaysia. The company is fairly secretive with its accounts, with most of the information not being made public despite the company being a state-owned business. However, in the past quarter, the company’s profit has slumped a massive 68%, from RM36.1 billion to just RM10 billion, comparing the second quarter of 2016 with the same period in 2015