Petroliam Nasional Berhad (PETRONAS), established in August 1974 and wholly owned by the Malaysian Government, is an integrated oil and gas multinational with operations spanning the entire hydrocarbon value chain. Headquartered in Kuala Lumpur, PETRONAS manages upstream exploration and production activities that average over 2.4 million barrels of oil equivalent per day, operates one of the world’s largest LNG complexes in Bintulu and oversees a domestic refining and petrochemicals network exceeding 700,000 barrels per day of capacity. Through its Project Delivery & Technology division, PETRONAS advances engineering, digitalisation and low‑carbon solutions across Malaysia, while its Gas & New Energy arm spearheads natural gas commercialisation and decarbonisation initiatives. As Malaysia’s national oil company and a Fortune Global 500 entity, PETRONAS plays a pivotal role in national energy security, economic development and the country’s transition towards a lower‑carbon future.

Organisation & Business Segments

PETRONAS’s Malaysian operations are organised into four core business divisions (Upstream, Gas & Energy, Downstream, Project Delivery & Technology), reflecting its official taxonomy.

The Upstream Operations division manages Malaysia’s exploration and production (E&P). In 2023 PETRONAS averaged 2,431 thousand barrels of oil equivalent per day (mboe/d) of oil and gas production, almost all from Malaysia. The company approved 16 major upstream projects in Malaysia in 2023 (including large gas developments like the Kasawari field in Sarawak) and continues aggressive exploration (e.g. new seismic surveys in the Straits of Malacca). The Upstream division focuses on sustaining Malaysia’s energy supply while optimising costs and reducing emissions.

The Gas & Energy Division (also called Gas & New Energy) covers natural gas commercialisation and related low-carbon projects. PETRONAS operates the Petronas LNG Complex in Bintulu, which delivered 403 LNG cargoes globally in 2023, and supplies about 2,214 MMscfd of sales gas to Peninsular Malaysia. This division also oversees domestic gas transmission, distribution and the burgeoning lower-carbon portfolio. In 2023 it strengthened its role as a “one-stop centre for lower carbon energy solutions”, supplying reliable natural gas while investing in decarbonisation (for example, initiating the Kasawari CO₂ sequestration project).

The Downstream Operations division runs Malaysia’s refining, petrochemical and marketing assets. PETRONAS’s three domestic refineries (Melaka, Pengerang and Kertih) have a combined capacity of over 700,000 barrels per day, feeding domestic and export markets. In 2023 the downstream arm maintained stable plant operations: for example, Petronas Chemicals Group (PCG) achieved 10.4 million tonnes of chemicals production. Marketing and retail fuels are also part of Downstream; Petronas Dagangan (the retail subsidiary) sold 26.3 billion litres of fuel in 2023, a 5.6% rise year-on-year. The division has recently expanded into clean fuels – for example a planned biorefinery in Pengerang for sustainable aviation fuel, and demonstrations of hydrogenated vegetable oil (HVO) bio-diesel production. In all, PETRONAS Downstream transforms domestic hydrocarbons into value‑added products, while gradually incorporating greener processes and products.

The Project Delivery & Technology (PD&T) division underpins all Malaysian operations with engineering, innovation and digitalisation. Headquartered in Malaysia, PD&T provides engineering services, project management and new technology development groupwide. PETRONAS highlights PD&T as “integral to the energy landscape amid accelerated global energy transition”, driving companywide sustainability ambitions. For example, PD&T co‑sponsors Malaysia’s first private 5G innovation lab (the “PETRONAS-UTP 5G Lab” in Perak, established with TM One) to prototype 5G-powered solutions. PD&T also houses the Innovation Gateway and R&D functions, which support digital transformation (AI, IoT, advanced analytics) and engineering research (e.g. advanced materials, pipeline monitoring) across PETRONAS’s Malaysian operations. In practice, PD&T’s mandate is to ensure PETRONAS’s domestic projects incorporate cutting-edge technology (such as the use of 5G/IoT to optimise LNG and oil facilities) and that engineering projects are delivered safely, efficiently and cost-effectively.

Overarching Strategic Framework: “Transforming Today for a Sustainable Tomorrow”

PETRONAS’s overarching strategy for 2025 and the years that follow is defined as a comprehensive “transformation strategy.” This strategic imperative is explicitly aimed at strengthening the company’s ability to deliver multifaceted value: value to its shareholders, energy to its customers, and positive impacts to the communities it serves.This ambitious vision is encapsulated by the theme “Transforming Today for a Sustainable Tomorrow,” highlighting a forward-looking commitment to adapting and thriving in a changing world.

This transformation is underpinned by a robust framework that guides investment decisions, centered on three key pillars: a clear energy transition strategy, disciplined capital allocation, and a more robust investment framework that integrates carbon-related metrics alongside traditional financial returns.This signifies a substantial shift towards more holistic evaluation criteria, where environmental, social, and governance (ESG) factors are not merely compliance considerations but fundamental drivers of investment and strategic direction. The explicit inclusion of “carbon-related metrics” suggests the use of internal carbon pricing or similar mechanisms to evaluate project viability, indicating a proactive stance on future carbon regulations and market shifts. This implies that PETRONAS is embedding sustainability deeply into its core business model, recognizing it as a source of long-term value creation and competitive advantage.

To achieve its strategic objectives, PETRONAS aims to become more value-centric, globally competitive, and agile in its market responses. This will be accomplished through firm discipline in capital allocation, continuous cost rationalization, strengthened collaborations, the adoption of new partnership models, and a relentless pursuit of operational and commercial excellence across all segments.Furthermore, the company has been actively reviewing and refining its portfolio, having exited ventures such as its refineries in South Africa and upstream assets in South Sudan to focus on assets with a stronger strategic fit and value potential.This strategic rationalization of its global asset base is a critical step in freeing up capital and management attention for higher-priority initiatives, particularly those related to the energy transition and new growth areas like specialty chemicals, hydrogen, and CCS. This implies a disciplined approach to capital allocation, ensuring that investments are directed towards building a robust and resilient portfolio for the future, even if pure short-term returns might suggest otherwise.

A core tenet of this framework is the pursuit of a “dual challenge”: continuing to produce more energy to meet the growing demand, particularly in Asia, but doing so with significantly fewer emissions. Simultaneously, the company is actively expanding into new growth areas that align with a lower-carbon future.This approach acknowledges the ongoing global energy demand while committing to a sustainable transition.

Strategic Priorities

Upstream: Enhancing Core Production and Global Footprint

For 2025, PETRONAS’s Upstream segment is focused on maximizing the potential of its existing assets and improving productivity and efficiency to maintain its status as a high-performing organization.The PETRONAS Activity Outlook 2025-2027 indicates a steady increase in upstream development wells, projecting a rise from 56 in 2024 to 69 in 2025. This is complemented by plans for approximately 367 Facilities Improvement Plans (FIPs) annually over the next three years to ensure optimal production from existing fields.This reveals a pragmatic and multi-faceted approach to the energy transition. Rather than an immediate and complete divestment from fossil fuel production, PETRONAS is focused on maximizing value from existing assets and ensuring energy security for Malaysia and the region.

As Malaysia’s National Oil Company, PETRONAS is dedicated to supporting the nation’s energy security and economic growth. This commitment is demonstrated by the ongoing progress of the Kasawari Gas Field Development and PETRONAS Floating LNG 3 projects, as well as the successful completion of Integrated Bekok Oil projects.Notably, the Kasawari project is also strategically positioning Carbon Capture and Storage (CCS) as a pivotal business, aligning with broader decarbonization efforts.This indicates a commitment to reducing the environmental footprint of its core business, implying a strategic recognition that traditional energy sources will remain crucial for a significant period, but their environmental impact must be actively managed and mitigated.

To future-proof its portfolio and expand its global footprint, PETRONAS is pursuing strategic investments internationally. These include the ongoing development of an LNG plant in Canada and upstream ventures in Angola and Indonesia.These investments contribute to portfolio diversification and long-term resource replenishment.

A significant initiative for 2025 is the proposed regional upstream joint venture company with Eni. Following a Memorandum of Understanding signed in December 2024, PETRONAS entered a Joint Venture Framework Agreement (JVFA) with Eni on June 17, 2025. This 50:50 joint venture will oversee a combination of selected upstream interests in Malaysia and Indonesia.This partnership is more than a simple collaboration; it is a strategic move to consolidate regional influence and optimize asset portfolios. By combining strengths, PETRONAS and Eni can achieve economies of scale, share the substantial financial and technical risks associated with large-scale upstream developments, and accelerate growth in key gas-producing regions. The joint venture is expected to deliver up to 500 kboepd of sustainable production, approximately 3 billion boe of developed reserves, and an estimated 10 billion boe of exploration potential, supporting both organizations’ future gas and LNG aspirations. Definitive agreements are targeted to be finalized by the end of 2025.Wood Mackenzie, an industry analyst, views this collaboration as a move that would create a “new Southeast Asian ‘Major'”.The “financially self-sufficient” nature of the joint venture suggests a model designed for long-term sustainability and independent growth, allowing both parent companies to de-risk their balance sheets while still benefiting from the venture’s success. This implies a proactive strategy to adapt to evolving market structures and potentially set new benchmarks for regional energy collaborations, enhancing competitiveness and market leadership.

PETRONAS LNG, a subsidiary, has actively pursued diversification of its LNG portfolio. In February 2025, it signed a 20-year LNG Sale and Purchase Agreement (SPA) with the US company Commonwealth LNG for 1 Mt/year of LNG supply. This deal marks a crucial step in securing long-term supply from the United States. Commonwealth LNG anticipates making a final investment decision (FID) in September 2025, with first LNG production scheduled for 2029.

Downstream: Diversification and Customer-Centric Growth

The downstream business is actively pursuing growth in specialty chemicals, a key area for diversification. PETRONAS Chemicals Group Berhad (PCG) is on track to commission its Isononanol plant in Pengerang in 2025, with other chemical plants (Melamine, Maleic Anhydride) also progressing in construction.Furthermore, through strategic partnerships, PETRONAS will be producing biofuels at a biorefinery, which is projected to become operational by the second half of 2028., indicating a clear move towards sustainable products.

PETRONAS Dagangan Berhad (PDB) held its 43rd Annual General Meeting (AGM) in April 2025, where it reflected on a resilient FY2024 performance and reaffirmed its strategic direction under the theme “Thriving Forward”.PDB’s strategy is structured around three key pillars: “Value” (sustaining core businesses), “Growth” (diversification through convenience), and “Sustainability” (creating positive environmental, economic, and social impact).

PDB demonstrated strong operational performance in FY2024, achieving its highest-ever sales volume of 16.8 billion liters and robust financial results. This success was significantly driven by an enhanced focus on customer experience and safety across its network.Notable achievements include national recognition for station safety (25 Platinum and 408 Gold awards from the National Council for Occupational Safety and Health (NCOSH)) and its highest Net Promoter Score (NPS) to date for Retail.

PDB continues to expand its market reach and service offerings. The ROVR mobile refueling service expanded its footprint into new townships and regions.The Commercial business delivered strong growth, with a 9% increase in aviation volume and a 19% increase in diesel, further strengthened by the successful rollout of the SmartPay system under Sistem Kawalan Diesel Bersubsidi (SKDS) 2.0 for fleet customers.The LPG business reaffirmed its market leadership, achieving its highest volume since 2016.Mesra Retail and Café Sdn Bhd (MESRA) maintained momentum as a retail and lifestyle hub, with chargeable sales hitting a record high for the third consecutive year. MESRA onboarded over 50 complementary partners (international and local) and expanded Café Mesra to 89 outlets nationwide.

A key strategic objective for PDB is to transform fuel forecourts into comprehensive lifestyle destinations, offering a wide range of fuel and non-fuel services.This indicates that PETRONAS is not passively awaiting the full impact of the energy transition but is proactively adapting its downstream operations to future market realities. The investment in specialty chemicals and biofuels is a direct response to tightening climate targets and the anticipated shift towards bio-based substitutes in petrochemicals.Reflecting this, as of 2024, 75 EV charging points were installed across its network, and 184 PETRONAS stations were solarized.PDB also engaged in a collaboration with Blueshark to validate the electric motorcycle and battery swap business at its stations, anticipating future mobility trends.This focus on EV charging and electric motorcycle solutions directly addresses the forecasted erosion of diesel and gasoline sales due to electrified transportation.This implies a forward-looking vision to maintain market relevance and share by diversifying beyond traditional fuels and transforming its retail network into multi-energy, lifestyle hubs, thereby catering to changing consumer preferences and the long-term shift in transportation.

Gas & Maritime: Infrastructure Development and Operational Excellence

PETRONAS Gas Berhad (PGB), as Malaysia’s leading gas infrastructure and centralized utilities company, is dedicated to striking a careful balance between upholding operational excellence, driving long-term value creation, and managing its business sustainably.Its commitment to sustainability is firmly anchored by the PGB Sustainability Blueprint, which incorporates ambitious targets across four key lenses: Positive Social Impact, Responsible Governance, Sustainable Value Creation, and Safeguarding The Environment.This indicates that PETRONAS views natural gas as a critical “bridge fuel” in the ongoing energy transition.

In 2024, PGB demonstrated robust operational excellence, achieving several key milestones that lay the groundwork for 2025. It maintained an impressive 100% Product Delivery Reliability (PDR) across its salesgas, ethane, and electricity segments.Furthermore, it achieved above world-class Overall Equipment Effectiveness (OEE) across its Gas Processing, Regasification, and Utilities segments.In terms of Health, Safety, Security, and Environment (HSSE), PGB recorded zero fatalities, major fires, major losses of primary containment, and major security incidents, reinforcing its commitment to safety through targeted programs.

PGB reached Final Investment Decision (FID) for significant infrastructure projects that will impact 2025 and beyond, including an additional 100 MW Kimanis Power Plant in Sabah and a new compressor station at Jeram, Selangor.It successfully completed a 42 km gas pipeline to the Pulau Indah Power Plant and received an Initial Letter of Notification for a 120 MW power plant in Labuan.By expanding gas infrastructure and ensuring high reliability, PETRONAS is securing energy supply for Malaysia and the region, thereby facilitating a gradual shift away from higher-carbon fuels like coal. The focus on optimizing gas processing and utilities for energy efficiency further reinforces this commitment to a cleaner energy mix. This implies a strategic approach to leverage gas as a stable, relatively cleaner energy source to meet growing demand, providing a necessary foundation for future renewable energy integration and supporting the overall decarbonization journey. Discussions for Regulatory Period 3 (RP3) are ongoing for both Gas Transportation and Regasification segments, aiming to secure mutually favorable terms for long-term operational stability and growth.This highlights PETRONAS’s proactive engagement with regulatory bodies, recognizing that a stable and predictable regulatory environment is crucial for long-term, capital-intensive infrastructure investments. By actively participating in RP3 discussions, they aim to shape policies that support their strategic growth, ensure fair returns on investment, and mitigate regulatory risks. This implies a sophisticated approach to managing external stakeholders and ensuring that their strategic initiatives are supported by a conducive operating framework.

Key achievements in the regasification segment include improving operational efficiency at the Regasification Terminal Pengerang through projects like the LNG Drain Spool and the Seawater Overboard Upgrading Project, enhancing safety and durability. The engineering phase of the floating LNG storage in Pengerang is complete, with construction in progress and a target Commercial Operation Date (COD) in the second half of 2025, indicating a significant growth initiative for the upcoming year.

Cleaner Energy and Sustainability: Accelerating the Energy Transition

PETRONAS is deeply committed to achieving Net Zero Carbon Emissions by 2050, a goal it aims to reach by embracing sustainable energy solutions and pioneering technologies. A tangible manifestation of this commitment for 2025 and beyond is the strategic decision to allocate a significant 20% of its total capital expenditure over the next five years specifically to low-carbon and decarbonization projects. This demonstrates a comprehensive and multi-pronged approach to sustainability that extends beyond merely reducing operational greenhouse gas emissions to encompass broader environmental stewardship.

As a pivotal business area for decarbonization, Upstream operations are actively positioning Carbon Capture and Storage (CCS). The Kasawari project is highlighted as a key initiative in this regard, demonstrating a practical application of CCS technology.

A major initiative launched on June 16, 2025, is the PETRONAS Energy Transition Academy (P-ETA). This academy is designed to proactively prepare the future workforce to meet the evolving demands, challenges, and opportunities within the lower carbon energy industry. P-ETA offers specialized programs in critical areas such as carbon management, hydrogen, renewable energy, energy efficiency, and circular economy practices, with an emphasis on experiential and hands-on training. During its launch, Memoranda of Understanding (MoUs) were exchanged with key training partners: Sustainable Energy Development Authority Malaysia (SEDA Malaysia), the UK-based Energy Institute (EI), and OPITO, ensuring alignment with international standards. This highlights a critical long-term strategic investment in human capital, recognizing that the energy transition will fundamentally alter skill requirements across the industry. By establishing P-ETA and collaborating with various training partners, PETRONAS is proactively addressing potential talent gaps and ensuring a smooth and equitable transition for its workforce and the broader Malaysian economy.

Further demonstrating its commitment to nature-based solutions, on June 17, 2025, PETRONAS and the Mercedes-AMG Petronas F1 Team launched the “Blue Carbon Collective.” This South-South initiative focuses on studying carbon capture and storage (CCS) in mangrove ecosystems. This five-year collaboration aims to generate crucial research data to advance carbon emissions reduction strategies, contribute to mangrove conservation, and create local job and business opportunities. The “Blue Carbon Collective” initiative indicates an understanding of ecosystem services and nature’s vital role in carbon sequestration, which can complement and enhance technological solutions like industrial CCS. This implies a strategic recognition that achieving true sustainability and Net Zero requires addressing the entire environmental footprint, including biodiversity loss, water stress, and waste management.

PETRONAS has established clear targets for environmental stewardship. By 2030, it aims to have “Biodiversity Action Plans” in place for all “very high” and “high” risk areas that host sites under PETRONAS’ operational control. The company also aims to maintain habitat size for all sites within their operational control located in protected areas and/or key biodiversity areas from 2030, or establish comparable areas to substitute any loss. Furthermore, from 2030, PETRONAS’ decommissioning plans will include ecosystem rehabilitation measures for operations/projects in protected areas and/or key biodiversity areas. For new projects in these sensitive areas, PETRONAS pledges to demonstrate Net Positive Impact from 2024, targeting at least 30% rehabilitation of natural habitat by 2050.For resource efficiency, PETRONAS targets a 14% reduction in its freshwater withdrawal for domestic operations in existing water-stressed areas by 2030 (relative to 2021) and an 82% circularity rate for hazardous waste at its domestic operations by 2030.

The group’s commitment to robust ESG practices is reflected in its improved ESG performance. PETRONAS Gas Berhad (PGB) significantly improved its ESG ratings in 2024, with its FTSE4Good rating increasing from 4.1 in 2023 to 4.7 in 2024, and its Bloomberg ESG Score improving from 4.37 to 5.31. PETRONAS Dagangan Berhad (PDB) also saw an improved FTSE4Good score of 4.2.

PETRONAS: Key Industry Challenges

PETRONAS, as a national oil and gas giant, navigates a complex and rapidly evolving global energy landscape. The company faces multifaceted challenges spanning environmental, economic, regulatory, and operational domains.

Energy Transition and Decarbonization Pressures

The global energy sector is undergoing a profound transformation towards carbon neutrality, primarily driven by international commitments such as the 2015 Paris Agreement on Climate Change. This transition mandates a significant shift from a fossil fuel-based energy mix to one dominated by renewable energy sources, with the overarching goal of limiting global temperature increases.This fundamental shift directly impacts the demand for traditional hydrocarbons. Oil demand, for instance, is projected to decline significantly, falling to 72 million barrels per day by 2030 and further to 24 million barrels per day by 2050, representing an average annual decline of over 4%. Natural gas consumption is also expected to peak in the mid-2020s before beginning a decline as it is phased out in the power sector.The International Energy Agency (IEA) corroborates this trend, forecasting global oil demand to plateau around 105.5 million barrels a day by the end of the decade, with the proliferation of electric vehicles alone expected to displace 5.4 million barrels a day of global oil demand by 2030.

This global energy transition poses a fundamental economic threat to PETRONAS’s core business model, necessitating a rapid strategic pivot. The direct connection between the overarching energy transition and immediate financial consequences is evident in PETRONAS’s recent performance. The company’s revenue declined by 7% in 2024 due to weak global energy prices, leading to organizational restructuring and job cuts.This demonstrates that adapting to the energy transition is not a distant aspiration but an urgent, existential challenge requiring a fundamental re-evaluation of its business model to ensure survival.

In response, PETRONAS has set an ambitious target to achieve net-zero carbon emissions by 2050.Intermediate targets include a 20% reduction in Scope 1 and 2 emissions by 2030 and an 80% reduction by 2040.The company’s greenhouse gas emissions in Malaysia for 2024 amounted to 46 million tons, which was below its short-term target.However, the clarity and comprehensive nature of PETRONAS’s net-zero ambition, particularly concerning Scope 3 emissions (which often represent the largest portion of an oil and gas company’s carbon footprint from the use of sold products), remain undefined. The reported Scope 3 impact is noted as “very small (less than 50% of Scope 1 and 2),” which raises questions about the methodology and could lead to future regulatory or investor pressure.This suggests that while PETRONAS has set ambitious goals, the most challenging aspects of decarbonization may not yet be fully quantified or addressed, potentially exposing the company to increased scrutiny from environmental regulators, ESG-focused investors, and activist groups in the future.

To adapt to these pressures, PETRONAS is committed to continued investments in renewable energy and low-carbon initiatives.This includes developing various low-carbon products, such as converting hydrocarbons into blue ammonia using carbon capture technology.The company views Carbon Capture and Storage (CCS) as a potential future revenue stream, supported by the Malaysian government’s pledge for a competitive levy rate for CCUS.Furthermore, as part of Malaysia’s National Energy Transition Roadmap (NETR), PETRONAS is actively pursuing hydrogen and biofuel hubs, with potential investments amounting to billions of dollars.

Market Dynamics and Competition

The global oil and gas sector is characterized by inherent volatility and intensifying competition, significantly impacting PETRONAS’s financial performance. The US oil and gas sector, a bellwether for global trends, is navigating a complex landscape marked by declining day rates and persistent commodity price pressures.The global oil market is projected to remain well-supplied through the end of the decade, with production capacity forecast to significantly outpace demand.This oversupply environment contributes to price suppression, with West Texas Intermediate (WTI) prices in the high $60s to low $70s limiting significant increases in drilling activity and compelling companies to prioritize operational efficiency.

PETRONAS’s profitability has directly suffered from these market conditions, with falling international oil prices leading to a reduction in dividends paid to the Malaysian government.The company’s upstream business aims to achieve a break-even level of $50 per barrel, a notable decrease from the $60-$70 range observed in the past five years.The combination of persistent low commodity prices and global oversupply creates a financial squeeze on PETRONAS’s profitability. This makes aggressive cost reduction and strategic asset divestment not merely options but crucial imperatives for the company’s survival and sustained financial health. This situation necessitates rigorous internal measures, including workforce adjustments and a sharp focus on efficiency, to maintain its target break-even point.

The competitive landscape is also intensifying. The industry has witnessed significant mergers and acquisitions, concentrating drilling rigs under fewer operators, which presents considerable challenges for smaller contractors.In Malaysia, while PETRONAS holds a dominant position as the national oil company, it operates alongside major international players such as Shell Malaysia, ExxonMobil Malaysia, BP Plc, Chevron Corporation, and TotalEnergies.Notable local players like Dialog Group Berhad and Hibiscus Petroleum Berhad also contribute to the competitive environment.TotalEnergies, for example, is actively expanding its portfolio and strategic partnership with PETRONAS in offshore blocks in both Malaysia and Indonesia, indicating continued foreign interest and competition within the region.

Amidst these market pressures, there is a strong imperative for PETRONAS to focus on operational efficiency and stringent cost management.The company is strategically looking to expand output from more affordable assets abroad to further reduce production costs.Concurrently, PETRONAS is divesting marginal upstream fields to streamline its business and better align with the energy transition.This dual strategy of expanding in lower-cost international geographies while shedding less efficient domestic assets represents a strategic geographic portfolio rebalancing. The objective is to lower the overall cost of production and mitigate domestic regulatory and geopolitical risks, thereby optimizing the portfolio for a more volatile future environment.

Regulatory and Geopolitical Landscape

PETRONAS operates within a complex regulatory and geopolitical framework that presents distinct challenges. Domestically, the company’s operations are governed by the Petroleum Development Act 1974 (PDA 1974), which vests PETRONAS with exclusive ownership and rights over Malaysia’s petroleum resources.However, this federal authority is increasingly challenged by state-level demands, particularly from Sarawak. The state seeks to assume the aggregator role for gas, a move that could fragment Malaysia’s oil and gas industry, potentially weakening the PDA 1974 and destabilizing PETRONAS’s financial footing. Such a shift could significantly impact PETRONAS’s ability to contribute its annual dividends, estimated at RM30 billion to RM50 billion, to the federal government.

The legal ambiguity surrounding Sarawak’s authority over downstream regulation versus the federal position has led to potential legal stand-offs, further complicating PETRONAS’s operating environment.Companies in Malaysia are also required to comply with local regulations from agencies such as the Department of Occupational Safety and Health (DOSH) and the Malaysian Energy Commission, in addition to international standards.The legal ambiguity and jurisdictional conflict with Sarawak represent a significant internal political risk for PETRONAS. This situation could destabilize its crucial financial contributions to the federal government and potentially undermine its long-standing role as the national oil company.

Furthermore, the tension between federal and state control over petroleum resources could deter future foreign and domestic investment in Malaysia’s oil and gas sector. Investors typically seek regulatory certainty and stable operating environments for long-term, capital-intensive projects. If there is ongoing uncertainty about which authority governs resource exploitation, licensing, and revenue sharing, potential investors may perceive Malaysia as a higher-risk jurisdiction. This could lead to a reduction in new exploration and development capital, impacting the country’s long-term energy security and PETRONAS’s ability to maintain production levels.

On the international front, the global oil market outlook is shadowed by rising geopolitical risks, particularly in the Middle East, and unresolved trade tensions.These geopolitical and economic uncertainties affect both oil producers and consumers, keeping oil supply security high on the international energy policy agenda.Such external factors introduce an unpredictable element into PETRONAS’s strategic planning and operations.

Operational and Workforce Challenges

PETRONAS faces significant operational and workforce challenges, particularly concerning its aging infrastructure and the evolving demands for new skills in the energy sector. Globally, the energy industry contends with approximately 12,000 aging platforms, where traditional decommissioning methods are often costly and complex.PETRONAS has proactively addressed this by implementing its “Rigs-to-Reef” program, which involves converting decommissioned offshore structures into artificial reefs to restore marine biodiversity. This initiative demonstrates a commitment to sustainable practices while managing end-of-life assets.However, while environmentally positive, this highlights the significant financial and logistical burden of decommissioning legacy infrastructure, a challenge that will only grow as more assets mature and environmental regulations tighten. The sheer scale of aging global infrastructure implies that decommissioning remains a pervasive and substantial financial and operational challenge for PETRONAS.

The fast-evolving energy industry, particularly with the global shift towards lower carbon solutions, demands a significant transformation in workforce skillsets. Recognizing this, PETRONAS and its partners launched the PETRONAS Energy Transition Academy (P-ETA) in June 2025. This academy is designed to prepare the future workforce for the demands and opportunities of the lower carbon energy industry, offering specialized programs in areas such as carbon management, hydrogen, renewable energy, and energy efficiency.Malaysia’s National Energy Transition Roadmap (NETR) estimates that a successful energy transition could generate up to 310,000 jobs in Malaysia by 2050, underscoring the immense scale of workforce transformation required.

The workforce reduction, combined with the establishment of P-ETA, suggests a strategic, albeit painful, re-skilling and re-deployment effort by PETRONAS to align its human capital with the demands of the energy transition, rather than solely a cost-cutting measure. Due to challenging operating conditions and falling crude prices, PETRONAS announced a 10% workforce reduction, affecting approximately 5,000 staff, with notifications being issued in stages.This restructuring is considered necessary to maintain competitiveness and adapt to the current industry landscape, emphasizing a strategic human capital reallocation to ensure long-term relevance in a decarbonizing world.

Cybersecurity Risks

The energy sector’s increasing reliance on complex, interconnected digital systems for generation, transmission, and distribution makes it a prime target for cyberattacks.Critical infrastructure within the energy sector is a primary target for state-sponsored hackers and cybercriminals, posing a significant and escalating risk to operational continuity and data integrity.

The threat landscape is becoming increasingly sophisticated. Energy firms are frequently targeted by advanced phishing campaigns, ransomware, malware, and AI-driven attacks.Ransomware, for example, can encrypt an organization’s data, demanding a ransom and leading to operational halts, while Distributed Denial of Service (DDoS) attacks can cause system failures and downtime.Data leakage due to weak security practices or insider threats also poses a substantial risk.The increasing sophistication of cyber threats, including AI-driven attacks, necessitates continuous, proactive investment in advanced cybersecurity measures for PETRONAS. This indicates that cybersecurity is not a static defense but an evolving arms race, requiring significant and ongoing operational expenditure and strategic focus to stay ahead of emerging threats.

The consequences of a successful attack can be devastating, ranging from disrupting power grids to crippling supply chains.The average cost of a data breach to a business in 2024 was over $4.8 million, representing a 10% increase from the previous year.Beyond direct financial losses, energy firms face severe regulatory scrutiny and reputational damage following successful attacks.Given PETRONAS’s global operations across over 10 countries and its numerous joint ventures and strategic alliances worldwide, a cybersecurity breach in one part of its interconnected digital ecosystem could have ripple effects across its international and domestic assets. Such an event could impact supply chains, disrupt collaborations, and lead to broader operational and financial consequences for the entire PETRONAS Group, extending beyond the immediate point of attack. This emphasizes the critical need for a comprehensive, enterprise-wide cybersecurity strategy that extends to its entire ecosystem.

Strategic Opportunities for CelcomDigi

Given PETRONAS’s Malaysian spending priorities, CelcomDigi (as a connectivity and digital solutions provider) could partner in several areas:

• 5G-Enabled Remote Operations: PETRONAS is already deploying private 5G networks to digitise its plants – for instance, a 5G private network at the Sungai Udang LNG regasification terminal improved operational efficiency and safety. CelcomDigi can offer enterprise 5G solutions for other PETRONAS facilities (offshore platforms, refineries, gas plants) to enable real-time monitoring, high-definition video inspections, and remote-control applications. Such 5G connectivity would support extended-reach drilling operations or autonomous inspection drones at offshore rigs, aligning with PETRONAS’s push for IoT/automation. Collaborating on 5G coverage and low-latency networks thus directly addresses PETRONAS’s desire to “put open PETRONAS among the leaders in the global technological race”.
• AI-Powered Predictive Maintenance: With hundreds of upstream platforms and processing units in Malaysia (maintained under annual Facilities Improvement Plans), PETRONAS needs advanced analytics to minimise downtime. CelcomDigi could provide IoT sensor networks, edge computing and AI services to predict equipment failures in refineries, pipelines or gas compressors. For example, vibration and flow sensors on an offshore platform, connected via CelcomDigi’s network, could feed machine-learning models that forecast when a pump or turbine is likely to degrade. This anticipatory approach helps PETRONAS reduce unplanned shutdowns and maintenance costs, supporting its capital discipline. Our industry research (and PETRONAS’s own statements) underscore that combining IoT, AI and automation boosts reliability. Thus CelcomDigi’s expertise in IoT platforms and data analytics can create value in PETRONAS’s Facilities Maintenance agenda.
• Secure Data Infrastructure for Decarbonisation: Large carbon capture and hydrogen projects (e.g. Kasawari CCS, future hydrogen pipeline) will generate vast data streams that must be securely managed. CelcomDigi can offer secure cloud connectivity and specialized network solutions (VPNs, private APN, low-latency links) to support these projects. For instance, real-time monitoring of CO₂ injection wells and storage sites requires high-integrity data links; CelcomDigi could provide resilient networks (4G/5G/SD-WAN) to Malaysian offshore fields, reducing cyber risk. PETRONAS has highlighted “reliable, cost-optimised and emission-abated energy solutions” as its goal; partnering with CelcomDigi to fortify data links for CCS and renewables would directly advance that. Furthermore, as PETRONAS expands EV charging networks and digital power systems, CelcomDigi’s secure connectivity will be key to managing these grids and integrating renewables.
• IoT & Edge Computing Platforms: Beyond 5G, CelcomDigi can offer complete IoT platforms (sensors, gateways, analytics) tailored to oil & gas. For example, gas flow meters, temperature sensors and energy meters at pipelines and terminals could connect via CelcomDigi’s IoT SIMs, with edge servers processing data onsite. This supports PETRONAS’s decarbonisation by optimising energy use and identifying emissions hotspots. While PETRONAS’s own R&D centers (like iG@P) incubate tech, a partner that delivers proven IIoT solutions can help scale these innovations quickly.
• Digital Training & Collaboration: Finally, CelcomDigi could collaborate on workforce digitalisation. PETRONAS invests in talent and labs (e.g. the PER5ONA 5G innovation lab). CelcomDigi might offer co‐development programs or digital training platforms (online AR/VR training for field technicians, for instance) to upskill local engineers in IoT and 5G technology. This aligns with PETRONAS’s emphasis on Malaysian innovation capacity and would further cement CelcomDigi as a strategic digital partner.

Each of these opportunities ties directly to PETRONAS’s Malaysian priorities: high‑speed connectivity and data analytics for upstream/downstream operations, and secure infrastructure for new energy projects. By leveraging CelcomDigi’s 5G, IoT and AI capabilities, PETRONAS can enhance efficiency and support its energy‑transition goals, making such partnerships win-win.