KUALA LUMPUR (REUTERS) - Petroliam Nasional Bhd (Petronas) is planning to slash spending by as much as 50 billion ringgit (S$16.44 billion) over the next four years, as a slump in oil prices to multi-year lows pinches profits of the Malaysian state firm.
Petronas, which brings in nearly half of Malaysia's oil revenue, made the announcement on the cuts in an internal memo to its staff, a source in the company told Reuters.
Malaysia is already reeling from a slide in the ringgit and political uncertainty stemming from the scandal surrounding heavily indebted state investor 1Malaysia Development Bhd.
Petronas is the government's single largest revenue source. The company said in November it will slash its 2016 dividend to the government by nearly 40 per cent, after reporting a 91 per cent drop in profit due to sliding oil prices.
Prime Minister Najib Razak said in October that oil and gas revenues will make up 14.1 per cent of the 2016 budget, down from 19.7 per cent in 2015.
Mr Najib is expected to make changes to the 2016 budget to adjust for falling oil prices. The budget assumed oil at US$48 per barrel. Global oil benchmark Brent is now trading near US$29.
Oil has dropped by over 70 per cent in the past 18 months as exporters around the world pump out over a million barrels of crude every day in excess of demand.
Petronas plans to cut capital and operating expenditures as well as defer some projects, the Wall Street Journal reported earlier on Tuesday.
Petronas was not immediately available for a comment.
In February last year, Petronas said it planned to cut capital expenditure by 10 per cent and operating expenses by up to 30 per cent in 2015. It also said at the time that it would cut 2016 capital spending by 15 per cent.