This article first appeared in The Edge Financial Daily, on March 2, 2016.

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas), which slashed its 2016 capital spending by up to RM20 billion, yesterday announced that about 1,000 positions would be made redundant and is reshuffling some senior executives as part of a group-wide transformation plan.

In a statement yesterday, the unlisted national oil major said this group-wide transformation is expected to result in redundancies of under 1,000 positions, adding that it is a part of deliberate, sequential measures that it is undertaking to better navigate itself through a tough external environment.

“The new structure is designed for a flatter, leaner and more efficient business operating model,” it added.

Petronas said efforts are ongoing to redeploy affected employees, and expects the separation exercise for these employees to be completed over the next six months.

Petronas is one of the country’s biggest employers and had 50,949 staff as at Dec 31, 2014, which make the redundancies account for less than 2% of its workforce. As at the financial year ended March 31, 2009 (FY09), the number of staff stood at 39,236.

In FY08, Petronas’ staff cost amounted to only RM4.95 billion, but was up 94% to RM9.59 billion as at FY14. Its average cost per employee had risen by 37% to RM188,148 per year as at FY14 from FY08.

During FY08, Brent crude was trading at an average of US$81.95 a barrel, and hit an all-time high of US$107.55 in March 2008. Yesterday, the spot price of benchmark crude was hovering at US$36.80 (RM153.09) a barrel.

In 2011, Petronas changed its financial year end to Dec 31 from March 31.

The transformation plan also sees new appointments from within the organisation, taking effect from April 1, and the departure of some leaders whose service contracts have come to an end.

The new high-level group organisational structure was unveiled by Petronas president and group chief executive officer (CEO) Datuk Wan Zulkiflee Wan Ariffin at a gathering for the group’s employees yesterday.

It sees Wan Zulkiflee remaining at the helm, but its senior vice-president of upstream business Datuk Mohd Anuar Taib replacing Datuk Wee Yiaw Hin as executive vice-president and CEO of the upstream business.

The Edge weekly on Feb 8 reported that Mohd Anuar was to take over Wee’s position when the latter steps down in April.

Another key executive stepping down is Dr Colin Wong Hee Huing, senior vice-president of technology and engineering. The post has been renamed senior vice-president of project delivery and technology, with its vice-president of technical global for upstream business Mazuin Ismail taking the position.

On Monday, Petronas reported a smaller net loss of RM4.69 billion for the fourth quarter ended Dec 31, 2015, from RM9.87 billion a year ago, due to a decrease in production costs, a stronger US dollar and sharply lower impairment on assets caused by low oil prices.

Revenue for the quarter was down 24% to RM60.1 billion from RM79.37 billion.

For the full year FY15, Petronas saw its net loss plunge 64% to RM13.16 billion from RM47.04 billion in FY14, while revenue fell 25% to RM247.66 billion from RM329.15 billion.

At a press conference to announce the results, Wan Zulkiflee warned that 2016 and 2017 will continue to be challenging for Petronas.