Malaysia’s Petronas to reduce dividend payment to government by 38% in 2026

Core Insights - Petronas, Malaysia's state-owned oil and gas company, will reduce its dividend payment to the government by 38% in 2026 due to declining oil prices, marking the lowest payout since 2017 [1] - The average Brent crude oil prices are projected to decrease to between $60 and $65 per barrel in 2026, down from an estimated $70 per barrel this year [2] - The Malaysian government is aiming to decrease its budget deficit to 3.5% of GDP by 2026, with a focus on improving tax collection and reducing subsidies [3] Company Performance - Petronas is expected to contribute RM20 billion in dividends next year, a significant reduction from RM32 billion this year [1] - The company reported a 19% decline in after-tax profit to RM26.2 billion for the first half of the year [4] - A strategic transformation was announced by Petronas to address operational challenges [4] Revenue Outlook - Malaysia's petroleum-related revenue is anticipated to decline to RM43 billion, constituting 12.5% of total revenue [2] - Non-tax revenue is projected to drop by 9.9% to RM72.7 billion, primarily due to lower dividends from Petronas [3] - Non-petroleum revenue is expected to increase by 8.1% to RM300.1 billion [3] Market Dynamics - The natural gas sector is facing a downturn due to reduced production and lower demand from major importers like Japan, China, and South Korea [4] - Petronas LNG has finalized an agreement with Woodside Energy Trading Singapore to procure one million tonnes per annum of liquefied natural gas [5]