MOSCOW (MRC) -- Petroliam Nasional Bhd (Petronas) plans to cut spending by up to 50 billion ringgit (USD11.4 billion) over the next four years and review its business structure in response to the profit-sapping slump in oil prices, reported Reuters.
The state-owned Malaysian company brings in nearly half of the Southeast Asian country's oil revenue and its woes are bound to add pressure to an economy already reeling from a slide in the ringgit and political uncertainty after a scandal surrounding state investor 1Malaysia Development Bhd (1MDB).
Petronas said in November that it would cut its 2016 dividend to the government by nearly 40% after a 91% drop in profit, with analysts suggesting the payout could be trimmed back again in future.
"We will go through another round of CAPEX (capital expenditure) and OPEX (operating expenditure) review to target cuts up to RM50 billion over the next four years. This means that we are going to have to defer some of our projects," CEO Wan Zulkiflee Wan Ariffin said in the memo dated Monday.
In February last year Petronas said it planned to cut capital spending by 10% and operating expenses by up to 30% in 2015. It also said at the time that it would cut 2016 capital spending by 15%. Its 2014 capital expenditure was about 65 billion ringgit.
"We have also made a strategic decision to begin a review of Petronas' business operating model for better efficiency in response to the external environment," Wan Zulkiflee said in the memo. The review will result in a change to the organization's structure, details of which will be disclosed in March.
As MRC informed earlier, in May 2015, Petronas reportedly postponed the start-up of its USD16bn Refinery and Petrochemical Integrated Development (RAPID) project in Johor to mid-2019, citing a drop in oil prices over the past year. The company intends to commission the refining and petrochemical complex during mid-2019. The RAPID project involves construction of a 300,000 barrels per day (bpd) refinery and petrochemical complex, which will produce various speciality chemical products.
Petronas, short for Petroliam Nasional Berhad, is a Malaysian oil and gas company wholly owned by the Government of Malaysia. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.
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