Petronas
Malaysia's state-owned oil and gas company, controlling the country's petroleum under a 1974 law.
On the record
Checkpoint: Federal Court ruling on Sarawak/PETROS jurisdictional case over the Petroleum Development Act
The call
Petronas keeps its legal grip on Malaysian oil and gas while profits shrink for a third straight year and Sarawak presses to carve out its own control.
Petronas is Malaysia's oil and gas company, owned and controlled by the government through a 1974 law that gives it exclusive rights to explore and produce in Malaysian waters. It makes enormous profits and has a very strong balance sheet, so on paper it looks untouchable, but its actual earnings have dropped sharply for three years in a row, it is cutting 5,000 jobs and freezing hiring until at least the end of 2026, and it cut the money it pays to the government by more than one third. The real threat is not a rival company but a legal fight with Sarawak state over whether that same 1974 law even applies there, which could shrink Petronas's territory and power; if that goes against Petronas and oil prices stay low, the job cuts and budget squeezes may not be temporary.
Why
01
AI pressure: None apparent. AI mostly feeds Petronas here: data center power demand lifts LNG sales, it doesn't disrupt drilling or trading directly. Could AI do the core job? Unlikely.
02
Bigger players: Sarawak state government and its energy firm PETROS. Sarawak is fighting in Federal Court to claim jurisdiction over gas within its borders, a direct challenge to Petronas's legal control. Could a giant copy it? No, they are blocked.
03
What protects it. A 1974 law gives Petronas sole legal vesting over Malaysian oil and gas, plus RM774.95bn in assets and 20.7% gearing.
What would change this call
Federal Court ruling on whether the 1974 Petroleum Development Act applies in Sarawak. Would show whether Petronas keeps sole federal control over Sarawak gas assets.
Whether Petronas lifts its hiring freeze on schedule in December 2026. Shows if the 2025 cutback was temporary or the start of sustained downsizing.
A second workforce reduction announced in 2026 or 2027 beyond the June 2025 cut. Would indicate deepening financial strain rather than a one-time reset.
Whether Petronas lifts its hiring freeze on schedule in December 2026. Shows if the 2025 cutback was temporary or the start of sustained downsizing.
A second workforce reduction announced in 2026 or 2027 beyond the June 2025 cut. Would indicate deepening financial strain rather than a one-time reset.
Key numbers
- Profit after tax fell to RM45.4bn from RM55.1bn
- Workforce cut about 10%, roughly 5,000 jobs
- Government dividend cut 38%, to RM20bn
Named risks
- Sarawak/PETROS jurisdictional dispute could strip Petronas of regulatory control over Sarawak gas assets.
- Oil price trading below Petronas's $75-80/bbl budget assumption pressures earnings and dividends.
- Sulu Sultanate arbitration exposure of $14.9-15 billion across multiple jurisdictions.
- Hiring freeze through Dec 2026 and prior layoffs risk talent attrition and morale erosion.
- Dividend cuts to government create political and fiscal-policy scrutiny of Petronas governance.
Rivals, as read in July 2026
| Rival | Direction | Evidence |
|---|---|---|
| Sarawak/PETROS | contesting | Federal Court dismissed Petronas leave application 2026-06-22, core jurisdiction unresolved |
| Saudi Aramco | losing to | Petronas CEO benchmarks against supermajors; Aramco market cap ~$1.68-1.8tn vs Petronas as of 2026-07-07 |
| Shell, ExxonMobil, Chevron, TotalEnergies | contesting | Cited by Petronas's own leadership as its relevant peer set as of 2026-06-18 |
| QatarEnergy | contesting | Competing LNG exporter with much larger capacity build-out (77-126 mtpa) vs Petronas's 36.6 million tonnes FY2025 |
Questions people ask
- Is Petronas profitable in 2025?
- Yes but declining. Petronas posted RM45.4 billion profit after tax for FY2025, down from RM55.1 billion in 2024, marking a third straight year of decline (-21% in 2023, -32% in 2024, -18% in 2025), as reported 2026-02-27.
- Is Petronas doing layoffs?
- Yes. Petronas announced a roughly 10% workforce reduction, over 5,000 jobs, on 2025-06-10 calling it 'strategic workforce rightsizing,' alongside a hiring freeze and promotion restrictions extending through December 2026.
- Who owns Petronas?
- Petronas is 100% owned by the Government of Malaysia, established 1974-08-17 under the Petroleum Development Act, which vests it with legal ownership of all Malaysian oil and gas resources. It is not publicly listed, though some subsidiaries trade on Bursa Malaysia.
- Could AI replace Petronas?
- No. Petronas's moat is sovereign legal ownership and physical infrastructure (fields, pipelines, LNG terminals) that AI cannot substitute. AI is deployed internally via the '007' agent programme (about 40 agents, launched 2025-06) and TriCipta AI geoscience tools (JDA signed 2026-07-08).
- Who is Petronas's biggest competitor?
- Petronas has no legal competitor inside Malaysia under the 1974 Petroleum Development Act. Its live contest is jurisdictional, not commercial: the Sarawak state government via Petros, with Malaysia's Federal Court dismissing Petronas's leave application on 2026-06-22, leaving the core dispute unresolved.
- Is it safe to take a job at Petronas right now?
- Caution warranted. Petronas cut about 10% of its workforce in June 2025 and imposed a hiring freeze through December 2026, following three straight years of profit decline. The balance sheet remains strong (20.7% gearing, RM774.95 billion assets as of 2025-12-31), but near-term hiring is frozen.
Timeline
- 2026-07-08Petronas Carigali signs JDA with IBM and Tridiagonal.AI for TriCipta AI geoscience tools
- 2026-06-22Federal Court dismisses Petronas leave application in Sarawak/PETROS dispute
- 2026-05-25Petronas takes full ownership of PRefChem after Aramco exits joint venture
- 2026-03-26Petronas fights litigation funder over unraveling $15bn Sulu arbitration award
- 2026-03-21Terengganu state government withdraws long-running oil royalty lawsuit
- 2026-02-27Petronas reports FY2025 profit of RM45.4 billion, down from RM55.1 billion
- 2025-06-10Petronas announces ~10% workforce cut and hiring freeze through Dec 2026
- 2025-06-03Petronas reportedly weighs $6-7 billion sale of Canadian shale-gas unit
- 2024-05-01Petronas divests majority stake in South African retailer Engen/Vivo Energy
- 1974-08-17Petronas established under Malaysia's Petroleum Development Act
Revision history
26 July 2026
First assessed. Defensible for now. The text above is fixed as of this date and is not edited afterwards.
In the same band
Sources
- PETRONAS Posts Lower Profit Amid Market Headwinds (2026-02-27)
- Financial Performance section
- Petronas to Cut 10% of Workforce on Profit Slump (2025-06-05)
- PETRONAS Group FRA FY2025 Financial Operational Report
- Petronas dividend only 6% of govt revenue in 2026, says PM
- PETRONAS Prioritises Employees' Welfare Amid Strategic Workforce Rightsizing (2025-06-10)
- The National Oil Company Fighting a War on Three Fronts (2026-06-18)
- PETRONAS and Aramco Announce Transfer of Full Ownership of PRefChem to PETRONAS (2026-05-25)
- Petronas Mulls $7 Billion Divestment of Canadian Energy Business (2025-06-03)
- Petronas
- PETRONAS recognised at Asian Innovation Excellence Awards 2025 (2025-11-23)
- PETRONAS Advances TriCipta AI (2026-07-08)