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

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, according to Malaysia's Finance Ministry.

The company is projected to contribute RM20bn next year, a reduction from this year’s RM32bn.

This is said to be the state-owned company’s lowest payout since 2017.

According to the Finance Ministry's reports, released alongside Malaysia's 2026 budget plan, Brent crude oil prices are expected to average between $60 and $65 per barrel (bbl) in 2026.

This represents a decrease from the current year's estimated $70/bbl.

Malaysia is reducing its dependency on oil revenue, which accounted for more than 40% of its income in 2009. Its petroleum-related revenue is expected to decline to RM43bn, making up 12.5% of the total revenue, reported Bloomberg.

The government is also focusing on improving tax collection and reducing subsidies to decrease the budget deficit to 3.5% of gross domestic product by 2026 from 3.8% this year.

In a fiscal outlook report accompanying the budget, the government indicated a 9.9% drop in non-tax revenue to RM72.7bn, primarily due to lower dividends from Petronas.

In addition, non-petroleum revenue is expected to increase by 8.1% to RM300.1bn.

The natural gas sector is expected to face a downturn due to reduced production in Peninsular Malaysia and Sabah, as well as lower demand from major importers such as Japan, China and South Korea, reported Reuters.

In August, the company announced a strategic transformation to address operational challenges, following a 19% decline in after-tax profit to RM26.2bn for the first half of the year.

Last month, Petronas, through its subsidiary Petronas LNG, finalised an agreement with Woodside Energy Trading Singapore to procure one million tonnes per annum of liquefied natural gas.

"Malaysia’s Petronas to reduce dividend payment to government by 38% in 2026 " was originally created and published by Offshore Technology, a GlobalData owned brand.

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