The state-owned Malaysian company brings in nearly half of the Southeast Asian country's oil revenue and its woes are bound to add pressure to an economy already reeling from a slide in the ringgit and political uncertainty after a scandal surrounding state investor 1Malaysia Development Bhd (1MDB).

Petronas said in November that it would cut its 2016 dividend to the government by nearly 40 percent after a 91 percent drop in profit, with analysts suggesting the payout could be trimmed back again in future.

Petronas made its announcement on spending cuts in an internal memo, a copy of which was seen by Reuters.

"We will go through another round of CAPEX (capital expenditure) and OPEX (operating expenditure) review to target cuts up to RM50 billion over the next four years. This means that we are going to have to defer some of our projects," CEO Wan Zulkiflee Wan Ariffin said in the memo dated Monday.

In February last year Petronas said it planned to cut capital spending by 10 percent and operating expenses by up to 30 percent in 2015. It also said at the time that it would cut 2016 capital spending by 15 percent. Its 2014 capital expenditure was about 65 billion ringgit.

"We have also made a strategic decision to begin a review of Petronas' business operating model for better efficiency in response to the external environment," Wan Zulkiflee said in the memo. The review will result in a change to the organization's structure, details of which will be disclosed in March.

Contract jobs in the company's non-core businesses will be affected, he said.

In an emailed statement late on Tuesday, Petronas said it has circulated an internal communication on its efforts to cut costs to address the impact of the continuous fall in crude oil prices, but it did not provide details.

MORE DIVIDEND CUTS

Oil prices have dropped by more than 70 percent in the past 18 months as the world's crude producers have exceeded demand by more than a million barrels a day.

Oil and gas projects worth $380 billion have been postponed or canceled since 2014 as companies make drastic cost cuts to survive the oil downturn. The retreat has included the axing of $170 billion of projects planned for 2016 to 2020, energy consultancy Wood Mackenzie said last week.

Malaysian Prime Minister Najib Razak, facing lower revenue from the energy sector, is expected to make changes to the 2016 budget this month to adjust for falling oil prices..

The budget assumed oil at $48 a barrel. Global oil benchmark Brent crude is now trading near $29.

Moody's analyst Vikas Halan said that Petronas could be forced to reduce dividends further if it reported a loss or forecast more constraints on its cashflow.

"Given their track record on reducing their dividend substantially, we can assume some further reduction, given the extent of decline in oil prices," said Halan.

Petronas might not exit businesses after the review but it could lower investments in some operations, Halan added.

(Editing by Praveen Menon, Mark Potter and David Goodman)

By A. Ananthalakshmi and Rozanna Latiff