Petronas Faces Third Year of Profit Decline: What’s Next for Malaysia’s Energy Giant?
Kuala Lumpur – Petronas, Malaysia’s state-owned energy conglomerate, reported a third consecutive year of declining net profit in 2025, a trend attributed to falling oil prices and challenging global economic conditions. The company’s financial report, released on Friday, signals a period of recalibration for the energy sector in Malaysia and beyond.
The Numbers: A Deep Dive into Petronas’ 2025 Performance
Petronas’ net profit for the financial year ending December 31, 2025, reached RM45.4 billion, a 17.6% decrease from the RM55.1 billion recorded in 2024. This decline mirrors a 16.8% drop in revenue, which fell to RM266.1 billion from RM320 billion the previous year. The decrease was influenced by lower oil and petrochemical prices, foreign exchange impacts and reduced sales volume.
Despite these headwinds, Petronas maintained a resilient profit margin of 17%, unchanged from the prior year. Capital expenditure for 2025 was RM41.6 billion, down from RM54.2 billion in 2024, with approximately 60% of that investment directed towards the Malaysian market.
Oil Price Volatility and its Impact
The global oil market experienced significant volatility in 2025, with oil prices falling 14% to US$69 per barrel from US$80 in 2024. This downturn, driven by oversupply concerns and a muted demand outlook, directly impacted Petronas’ earnings. Ethylene prices, a key petrochemical product, too decreased by 12% due to unfavorable supply-demand dynamics.
However, the demand for liquefied natural gas (LNG) remained steady, lifting prices by 7%. Petronas delivered 36.6 million metric tons of LNG across 563 cargoes last year, an increase from the 35.7 MMT and 548 cargoes delivered in 2024.
Strategic Shifts: Focusing on Core Business and Sustainability
In response to these challenges, Petronas is prioritizing a focus on its core business while actively managing emissions and strengthening its hydrocarbons portfolio. The company’s 2025-2027 Activity Outlook emphasizes collaboration within the Oil and Gas Services and Equipment (OGSE) ecosystem, innovation, sustainability, human capital development, and financial resilience.
The board approved a dividend of RM20 billion for 2026, aligning with government projections under Budget 2026, whereas This represents lower than the RM32 billion paid the previous year.
The Road Ahead: Navigating a Changing Energy Landscape
Petronas CEO Tan Sri Tengku Muhammad Taufik acknowledged that 2025 was a “testing year” for oil companies. Looking forward, the company is committed to growing new businesses, managing emissions across its value chain, and reinforcing its core hydrocarbons business.
The emphasis on sustainability aligns with Malaysia’s net-zero journey and reflects a broader industry trend towards cleaner energy solutions. Collaboration within the OGSE ecosystem will be crucial for driving innovation and ensuring a robust and resilient energy sector.
FAQ
Q: What caused Petronas’ profit decline in 2025?
A: Lower oil and petrochemical prices, coupled with foreign exchange impacts and reduced sales volume, contributed to the decline.
Q: What is Petronas doing to address these challenges?
A: Petronas is focusing on its core business, managing emissions, strengthening its hydrocarbons portfolio, and fostering collaboration within the OGSE ecosystem.
Q: What is the outlook for LNG demand?
A: Demand for gas and LNG is expected to remain resilient.
Q: What was the dividend payout for 2026?
A: The board approved a dividend of RM20 billion for 2026.
Did you know? Petronas allocated RM41.6 billion for capital expenditure in 2025, a decrease from RM54.2 billion in 2024.
Pro Tip: Keep an eye on LNG demand as a potential growth area for Petronas in the coming years.
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