Petronas expands globally in bid to cut oil production costs to US$50 per barrel amid uncertain energy outlook

KUALA LUMPUR, June 16 — Malaysia’s state-owned energy giant Petronas is stepping up its international investments as part of a strategy to lower production costs and maintain profitability amid ongoing volatility in global oil markets.

Petroliam Nasional Bhd (Petronas) is targeting a reduction in its oil production break-even cost to US$50 (RM212) per barrel — a significant drop from the US$60 to US$70 range recorded over the past five years, according to Mohd Jukris Abdul Wahab, CEO of the company’s upstream division. His remarks were published in a Bloomberg report today.

“We want to reshape the entire portfolio,” Jukris said in a June 13 interview, noting that Petronas is preparing for an increasingly unpredictable energy landscape.

The company plans to prioritise investments in countries where it already has a presence — including Canada, Suriname, Brazil, Turkmenistan, and several Southeast Asian nations — but remains open to exploring new markets with strong growth potential.

This expansion comes as weaker crude oil prices have impacted the company’s earnings, prompting a planned 10 per cent reduction in its workforce to help manage costs. Geopolitical tensions, particularly in the Middle East, continue to contribute to market instability.

“Any capital deployed into our international assets must deliver strong returns,” Jukris said, highlighting the increasing risks in some of the company’s current markets. “We are dealing with a lot more risk in some of the geographies that we are present.”

Petronas, a crucial contributor to Malaysia’s economy, has pledged RM32 billion in dividends to the government this year — down from RM50 billion in 2022. Since its establishment in 1974, the company has contributed RM1.4 trillion to the nation’s coffers.

Looking ahead, Petronas aims to boost the net present value of its international upstream portfolio to 60 per cent within the next five to 10 years, up from the current 40 to 50 per cent.

The company currently produces around 2 million barrels of oil equivalent per day domestically and 700,000 barrels abroad. New oil fields will be essential to compensate for declining output from ageing assets.

Despite its global push, Jukris remains optimistic about Malaysia’s energy future, pointing to sustained interest from foreign exploration firms, particularly in offshore Peninsular Malaysia.

“For the last 10, 15 years, we’ve been saying our reserves will only last 15 years,” he said. “And today, we’re still saying they’ll last another 15 to 20 years.”