Petroliam Nasional Bhd (Petronas) is considering retrenchments for some of its 51,000 staff as one of the options as the national oil company confronts the realities of low oil prices.
According to a source with knowledge of the matter, a voluntary separation scheme (VSS) for permanent staff is being considered by the Petronas management.
Restructuring of various divisions, including plans to merge its trade and finance departments with its accounts receivable department, is also on the table for consideration, the source told The Malaysian Reserve (TMR).
A reduction to Petronas’ 51,000-strong workforce will come as the firm tries to slash RM50 billion from its operating and capital expenditure (capex) over the next four years.
Petronas, when contacted, declined to comment on the VSS options and the internal rationalisation exercise as it would not be able to discuss the details of its efforts with external parties.
“As previously reported, Petronas has circulated an internal communication to its employees on parts of its ongoing efforts to optimise costs to address the impact of the continuous slump in crude oil prices,” Petronas said in a reply to TMR.
“As a matter of practice, we also do not respond to speculations,” Petronas said. Speculation on Petronas’ financial status heightened following the circulation of a memo by president and CEO Datuk Wan Zulkiflee Wan Ariffin who said that the national oil company plans to cut spending by up to RM50 billion over the next four years and review its business structure.
“We will go through another round of capex 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,” said Wan Zulkiflee in the memo dated Monday.
“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, adding that the change in the organisation’s structure will be disclosed in March.
However, he assured the staff that the management is studying all possible options to ensure the firm strikes “the right balance between the welfare of our employees and the best interest of the business”.
“In the meantime, we have started a review of contract positions, which is expected to affect contract positions currently not critical to Petronas’ core business activities,” he said in the memo.
In November, Petronas said it would cut its 2016 dividend to the government by nearly 40% after a 91% drop in profit.
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On Jan 7, TMR reported that Petronas would need to slash its workforce by a significant figure if it intends to remain profitable.
“With oil prices like this, Petronas needs to prepare for the worst. There is no likelihood the company can survive with the current number of staff,” said Prof Dr Hoo Ke Ping, a prominent investment advisor and economist.
A cut of up to 15,000 workers would place the firm in a much more comfortable position to weather the storm, Hoo was reported as saying.
Petronas’ profits tumbled 91% in the third-quarter (3Q) of 2015 to RM1.4 billion, down from RM15.1 billion in the previous corresponding quarter.
The company is expected to release its 4Q results next month.
“The results will likely show the national oil company barely breaking even on the basis of the lower crude prices,” an analyst told TMR.
Oil firms around the world had responded to the crude price crash by laying off over 250,000 workers following a US$100 billion (RM439 billion) capex cut, industry consultant Graves and Co said last November.
Original article from http://themalaysianreserve.com/new/story/petronas-staff-%E2%80%98may-be-retrenched%E2%80%99
