PUTRAJAYA, Aug 17 (Bernama) — 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, Datuk 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 Wednesday.
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 cost-conscious mindset across Upstream Malaysia.
Wan Zulkifli said the transformation kicked it when oil and gas companies, including Petronas, were hit by tumbling prices since 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, cut budgets and optimise the manpower and Petronas was no different,” he said.
He said Petronas had cut its capital expenditure and operating expenses by RM15 billion this year and had earmarked about RM50 billion over four years.
Malaysia’s only Fortune 500 company, Petronas is also focusing on cash generation, simplification of process, project delivery, as well as talent management.
However, he said as such measures and mere cost cutting alone was not sustainable, Petronas needed a total overhaul even in terms of its culture.
“I think over time as the organisation grew bigger, we became more bureaucratic and many units become more silo as time went by. So, we wanted to eliminate the believe of our staff that Petronas was bureaucratic and silo,” he said.
Hence, to attain the results, it is important for Petronas to fix the day-to-day experience of its 50,000 employees.