Petronas to cut spending by $11.4 billion over 4 years

Petroliam Nasional Bhd. plans to cut expenses by as much as 50 billion ringgit ($11.4 billion) over the next four years and defer some projects, the Wall Street Journal reported.

The Malaysian state oil company will go through another round of cuts to capital and operating expenditure, the paper said, citing an internal memo. A company spokesman confirmed the contents of the memo. Petronas faces two to three tough years and crude prices could average $30 a barrel in 2016, Chief Executive Officer Wan Zulkiflee Wan Ariffin said in a Bloomberg interview on Jan. 11.

Brent crude has sunk to a 12-year low amid a global oversupply,delaying $380 billion worth of investment on 68 major upstream projects, according to industry consultant Wood Mackenzie Ltd. The price plunge has forced companies and governments to reduce costs as revenues from hydrocarbon sales drop. Petronas needs to juggle investing in long-term projects for future growth and meeting dividend obligations to the government.

Wan Zulkiflee said in the interview last week that Petronas remains committed to its multi-billion dollar projects as the company sticks to its capital expenditure plan of as much as 350 billion ringgit over the next five years.