PM: Petronas layoffs partly due to AI, GLCs to take in axed employees

Summary

• PM Anwar Ibrahim says layoffs in Petronas were partly due to redundancies brought on by new technologies.

• Anwar says GLCs and GLICs will take in the affected employees.

PARLIAMENT | Prime Minister Anwar Ibrahim today said that layoffs in Petronas were partly due to “redundancies” brought on by new technologies, including AI.

Speaking in the Dewan Rakyat, Anwar said the restructuring exercise will also see affected workers offered positions in other government-linked companies (GLCs) and government-linked investment companies (GLICs).

“The question is - Petronas is still making a profit, so why lay off workers?

“The reason is, firstly, the transition towards more effective use of new technology, including AI, which has led to overlapping and redundant positions,” said Anwar during Prime Minister’s Question Time today.

He said this in response to Isam Isa (PN-Tampin), who requested justification on Petronas’ restructuring exercise and the government’s move to assist impacted workers.

Anwar further cited the Social Security Organisation’s role to offer training, as well as Petronas’ reassurance of salaries to be paid to the affected workers.

“So this (restructuring) is unlike the ‘usual’ way of conducting layoffs," he said.

In June, Deputy Prime Minister Fadillah Yusof said Petronas’ move to trim its workforce stems from global challenges and is not connected to the national oil firm’s issues with Petroleum Sarawak Bhd (Petros).

This follows a June 5 announcement from Petronas president and chief executive officer Tengku Taufik Tengku Aziz that the national oil firm is cutting 10 percent of its workforce to cope with challenging operating conditions, particularly due to falling crude prices.

Assets in South Sudan sold

When discussing Petronas’ restructuring plans, Anwar also stated that the company had recently sold its assets in South Sudan for safety reasons, due to the ongoing war.

However, Machang MP Wan Ahmad Fayhsal Wan Ahmad Kamal addressed the issue at a press conference in Parliament later, arguing that Anwar failed to provide transparency in the reason why the assets were sold.

“After South Sudan was established as a new country, separate from Sudan, they took over our oil assets and planned to sell them to a British company, Savannah Energy, for a very low price of only RM5.4 billion.

“But the South Sudan government did not do this transparently.... eventually, Savannah Energy also decided to withdraw from this deal, leading Petronas to also withdraw its assets in August 2024, after the deal was not approved by the South Sudan government.

“So what happened is that the South Sudan government has taken over all of Petronas’ original assets without any compensation.

“If Petronas were to take action, they could only do it through the international tribunal... ICSID (International Centre for Settlement of Investment Disputes), with very slim odds of winning the case and retrieving our assets,” he said.

The Bersatu MP emphasised that this arrangement has led to Malaysia’s losses of RM16 billion annually from the South Sudan oil fields, and that this money could have been used to fund the initiatives under the 13th Malaysia Plan.

He also questioned if these losses in South Sudan also contributed to Petronas’ decision to lay off thousands of its workers in the recent restructuring plan, and urged the Malaysian government to negotiate with South Sudan to retrieve Petronas’ original assets, and for financial compensation.

Reuters reported in August 2024 that Petronas had initiated proceedings against the South Sudan government over this issue.

Wan Fayhsal further questioned if the government was not being transparent about the ongoing “crisis” between Petronas and Petros, and if the losses from this crisis had led to the company’s decision to lay off thousands of its workers.

He described Anwar’s response in Parliament today as unsatisfactory, and reminded that many Petronas staff still had to worry about providing for their families.

Reporting by Alyaa Alhadjri, Dania Kamal Aryf, Haspaizi Zain

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