PETRONAS is the largest producer in southeast Asia, accounting for 26% of regional output. Cost cutting enabled the company to weather the downturn, though at the expense of growth. Malaysia is facing structural production declines and future developments are becoming increasingly challenging. There are signs that PETRONAS is changing tack. Its recent entries into deepwater Mexico and Shell's LNG Canada project highlight its ambition to grow. But Malaysia's new political reality is testing the company's regulatory role, adding uncertainty to its strategic direction.