Malaysia's oil firm to cut 1K jobs amid low oil prices
(MENAFN- The Journal Of Turkish Weekly) Malaysia's national oil firm announced Tuesday that it would be cutting around 1000 jobs as Petroliam Nasional Bhd (Petronas) faces financial challenges amid a downturn in global crude oil prices.
In a statement the company said the retrenchment will be carried out in phases over the next six months but assured that it is expected to contribute some $3.86 billion to the federal government's coffer this year.
“Exhaustive efforts are on-going to re-deploy affected employees” the statement said. "Petronas will further embark on a separation exercise for these employees as needed which is expected to be completed over the next six months."
The announcement comes at a time when Petronas has been posting losses with global crude oil prices dropping from a peak of $126.65 per barrel in 2012 to $36.91 per barrel today -- after hitting a low of $27.88 per barrel on Jan. 20.
Tuesday’s statement also said that Petronas had introduced an internal cost-saving transformation plan to deal with the current downturn.
"We remain committed to contribute 16 billion Ringgit to the government as dividend this year. No disruptions will be seen in dividend payment” it added. “Petronas however will have to raise debt or cash by selling foreign assets to mitigate dividend commitments.”
Besides Petronas other oil- and gas-related companies in Malaysia were reportedly also undertaking cost-reduction measures including layoffs.
Petronas’ net profit for 2015 more than halved to 20.8 billion Ringgit (over $5 billion) compared to 47.6 billion Ringgit in 2014 after taking into account around 19 billion Ringgit in impairments on its assets.
The company posted 3 billion Ringgit in net losses for the final quarter of 2015 its third loss in five quarters with revenue slashed by 24 percent to 60.1 billion Ringgit.
It has also planned to cut up to 50 billion Ringgit in operational and capital expenditure over four years and expects crude oil prices to average $30 per barrel this year.
Last month the government of oil revenue-reliant Malaysia had said that the country’s economy slowed its expansion to 5 percent last year from 6 percent in 2014.
In January Prime Minister Razak announced a cut of up to $2.13 billion in the 2016 budget which had been tabled last October when crude oil prices were assumed at $48 per barrel.
Malaysia is ranked among the top four oil-producing countries in the Asia-Pacific region and Petronas is one of the biggest oil firms in the world.
Dividends from Petronas had accounted for up to 40 percent of the revenue of the government which introduced last year a broad-based consumption tax of six percent.
The goods and services tax reduced Petronas' contribution to the government revenue from 40 percent to 17 percent.
By P Prem Kumar
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