President and group CEO of Petronas, Tengku Muhammad Taufik attends the Energy Asia conference in Kuala Lumpur, Malaysia June 26, 2023.

Malaysia's state energy firm Petronas will reduce its workforce to ensure its long-term survival amid increasing challenges in the global operating environment, local media reported on Friday, citing the Petronas chief.

"The rationale to do this is to ensure the survival of Petronas in the coming decades. If we don't do it now, there will be no Petronas in 10 years," president and chief executive officer Tengku Muhammad Taufik Tengku Aziz told media, according to outlet The Edge, without saying how many jobs might be affected.

State news agency Bernama carried a similar story from what it said was an editors briefing, quoting the CEO as saying the move was to ensure Petronas can "continuously contribute to nation-building".

Petronas has nearly 50,000 employees, according to its website. Petronas confirmed the media reports in an email response to Reuters, and said the number of affected employees was not mentioned during the briefing.

Muhammad Taufik said the "right-sizing" exercise was not a result of a deal between Petronas and the Sarawak state government on local gas distribution.

Negotiations between Petronas and Sarawak's Petros last year raised concerns over the impact on Petronas, which is a major contributor to federal coffers, and its operations in Sarawak, which holds more than 60% of Malaysia's gas reserves.

Muhammad Taufik said, according to The Edge, that there would be thinner margins and higher technical challenges in oil and gas development projects.

Malaysia expects lower natural gas and crude oil output in 2025 due to the planned shutdowns of some production facilities for maintenance and easing demand in some export markets, according to a government report.

Muhammad Taufik said the composition of production-sharing contracts was expected to change, leading to a reduction in Petronas' share of earnings, adding the lucrative margins enjoyed by the firm will shrink to low double digits in the years ahead, from above 20% currently.

Moving forward, Petronas must not only be a supplier of oil or natural gas but offer more products such as blue ammonia, a clean gas produced from hydrocarbon, he was quoted saying.