Reports indicate that Petronas to Cut Spending, defer projects in response to low oil prices

The Malaysia energy giant Petronas has reportedly revealed a wide ranging cost cutting plan for the next four years, as it tries to deal with the ongoing troubles in the global oil industry.

Earlier today, in an internal memo obtained by a number of financial news sites, the Malaysian State Oil company announced that it would be reviewing both its Capital expenditures and Operating expenditures in 2016 with an eye on making what could be up to 11.4 billion dollars in cuts to those areas.

Also to be addressed will be changes to the organization's structure, with further information on how they will re-organize the company to come in March.

It's anticipated that a number of current investment projects will be scaled back or deferred, while the company addresses their financial plan moving forward. Though it should be noted, that there was no direct mention of the Pacific NorthWest LNG proposal for Lelu Island, or any of the other global projects currently on the drawing board for the company as part of today's news items.

The price of crude oil has dropped to a 12 year low on the world markets, currently sitting at 28 dollars a barrel, something which has given many of the major oil and gas companies cause to consider their future planning as the world oil markets look to find some stability.

Indications that reporters have gleaned from the memo suggest that the company is expecting at least two to three tough years ahead, with company officials looking for savings from operations, while they continue to keep their obligations to the Malaysian government.

The current troubles in the oil industry and their impact on Petronas have seen revenue declines for the Malaysian government, which recently saw its international credit rating lowered to stable, from its previous status of positive.

There is no mention at the moment on the Pacific NorthWest LNG website of the current financial plans from the parent company, or what the impact of them may be for the North Coast project.

Petronas, which has not made an official statement as of yet, is expected to deliver an update over the next day or so.

Update: A short updated was posted to the Petronas website today  ( see here )

You can review some of the background on today's news out of Malaysia below:

Petronas to slash spending by RM50b over four years, says WSJ
Malaysia's Petronas to Slash $11.4 Billion in Capital, Operating Expenses
Petronas to Cut Spending by 11.4 Billion over 4 years, WSJ Says
Petronas to slash capex, open by massive RM50b
Petronas plans cuts and review to counter oil price slump

You can review our notes on the proposed project for Lelu Island from our Pacific NorthWest LNG archive page.