February 27, 2026 [Reuters]- Malaysian state energy firm Petroliam Nasional Bhd <IPO-PETO.KL>, on Friday warned of eroding margins amid persistent geopolitical and economic risks, as subdued oil prices saw its profits decline for the third straight year.

Petroliam Nasional, or Petronas, reported a profit after tax of 45.4 billion ringgit ($11.68 billion) in 2025 compared to 55.1 billion ringgit in 2024, while revenue fell to 266.1 billion ringgit ($68.44 billion) from 320 billion ringgit over the same period.

Chief Executive Officer Tengku Muhammad Taufik Tengku Aziz said the decline was in line with industry peers, with oil prices falling amid oversupply concerns and macroeconomic challenges.

“We have seen margin erosion manifest in our results, but we will see this come under more pressure as cost inflation converges with prices softening,” he told a press conference.

PETRONAS TO FOCUS ON RESILIENCE

The firm would focus on building resilience by strengthening its core hydrocarbons portfolio, as well as grow new businesses and manage emissions moving forward, he said.

Petronas is a significant source of revenue for Malaysia’s government, its sole shareholder, contributing billions to public coffers annually.

The company paid the government 32 billion ringgit in dividends last year. Muhammad Taufik said Petronas expects to pay 20 billion ringgit this year – the lowest since 2017 – reflecting a need for the firm to ensure sufficient cash flow.

“(The dividend) is always going to be governed by our affordability,” he said.

Petronas last year embarked on a “right-sizing” exercise, aiming to cut about 5,000 employees to ensure its long-term survival. Muhammad Taufik said on Friday the process was expected to conclude by August.

Crude oil prices were expected to trade rangebound between $65-$70 per barrel over the next five years, with the firm allocating 2 billion ringgit annually for exploration in the same period, Petronas said.

Capital investments slipped to 41.6 billion ringgit in 2025 compared to 54.2 billion ringgit in 2024, the company said.

Petronas’ upstream business saw a decline in post-tax profit to 26.2 billion ringgit in 2025. Its gas and maritime business saw profit rise to 20.9 billion ringgit, while its downstream segment posted a loss after tax of 1.9 billion ringgit.

Petronas reported a 2.2% increase in carbon emissions in 2025 to 56.95 million tons of carbon dioxide equivalent emissions, attributed mainly to the transfer of operations for two production sharing contracts.

The firm also reported a 72% reduction in methane emissions, exceeding its target of 50%.