PUTRAJAYA: Malaysia’s oil giant, Petronas, has saved RM3.4 billion since embarking on cost-cutting measures in 2015 and this effort will continue even if oil prices recover.
“Through the Cost Reduction Alliance programme, we have managed to cut RM3.4 billion in terms of our costs since we started till the middle of this year,” its president and group chief executive officer, Wan Zulkifli Wan Ariffin, said.
He said this at the International Conference of Blue Ocean Strategy’s plenary session themed “Delivering High Value at Low Cost” here today.
The Cost Reduction Alliance, or Coral 2.0, is a five-year industry-wide programme from 2015 to 2019, driven by Petronas, with the aim to inculcate a cost-conscious mindset across Malaysia.
Wan Zulkifli said the transformation kicked in when oil and gas companies, including Petronas, were hit by tumbling prices from 2014.
“In 2014, oil prices were more than US$100 per barrel. At lunch time today, it was US$48.
“Oil companies had to do strategic responses, worried about cash flows. They cut budgets and optimised the manpower and Petronas was no different.”
He said Petronas had cut its capital expenditure and operating expenses by RM15 billion this year and had earmarked cutting another RM50 billion over four years.
Malaysia’s only Fortune 500 company, Petronas, is also focusing on cash generation, simplification of processes, project delivery as well as talent management.
However, he said such mere cost-cutting measures alone were not sustainable. Petronas needed a total overhaul, even in terms of its culture. Petronas has 50,000 staff.
“I think over time, as the organisation grew bigger, we became more bureaucratic and many units become more silo as time went by.”top news