Petronas 2024 profit decline of 34% highlights challenges in the oil and gas industry. (Photo: Petronas)
On Feb. 25, Malaysia's national oil company, Petronas, released its latest financial report, showing a 34% drop in annual profit. The company attributed this decline to falling international oil prices again and committed to continued investments in renewable energy and low-carbon initiatives to adapt to the global energy transition trend.
Petronas profit declined due to oil price volatility
Petronas' 2024 revenue stood at 320 billion ringgit (about 72 billion USD), a 7% decrease from the previous year. Despite an increase in overall sales volume, weak global energy prices impacted both revenue and profits.
In a statement, Petronas' President and CEO, Tengku Muhammad Taufik, mentioned that ongoing market volatility and global geopolitical shifts have intensified regulatory pressures. However, he emphasized that the company's performance remains resilient, and Petronas will continue focusing on sound financial management and a diversified investment portfolio.
Before the financial report was released, Petronas had already announced an organizational restructuring plan in early February, aiming to complete all personnel adjustments by the end of the year, though specific numbers affected were not disclosed.
Tengku Muhammad Taufik stressed that the company had no choice but to implement layoffs, or it risked disappearing from the market within the next decade, highlighting the challenges facing the oil and gas industry today.
Petronas recently announced a restructuring plan, highlighting the challenges facing the oil and gas industry. (Photo: Petronas)
Petronas shifts focus to low-carbon products amid profit falls
Tengku Muhammad Taufik mentioned that the upstream oil and gas exploration and production sector will face even tougher challenges due to geological conditions. Petronas must bear higher risks with its partners, and fluctuating oil prices, combined with global decarbonization trends, are pushing up operating and financing costs, thus impacting profits.
The company expects profit margins, currently above 20%, to gradually decrease to low double digits in the next few years.
The broader environment is forcing the oil and gas industry to adapt to decarbonization. Petronas plans to achieve net-zero emissions by 2050 and has outlined four major decarbonization goals:
- Zero Routine Flaring and Venting
- Energy Efficiency,
- Electrification
- Carbon Capture and Storage (CCS)
The target is to reduce absolute emissions by 25% before 2030. In its statement, Petronas noted that the company's greenhouse gas emissions in Malaysia for 2024 amounted to 46 million tons, lower than the short-term target of 49.5 million tons, demonstrating tangible results from its decarbonization strategy.
In addition to decarbonization, Petronas is developing diverse low-carbon products, such as converting hydrocarbons into blue ammonia using carbon capture technology. The company is also investing in renewable energy and exploring new partnership models to enhance its competitiveness and prepare for the transitioning market.
Source: Petronas(1), (2), Nikkei Asia, The Edge Malaysia
