Petronas One of the New `Seven Sisters’
By Saw Choo Boon
WHEN I first came to work some 40 years ago, my father advised me to join an international company. He told me that it would offer a bright career, respect in the community and a comfortable life.
Much has changed 40 years later. While my father was right and the international company I joined did provide me all of the above, the benefits he described are no longer exclusive to international companies.
International companies and their people are in no way special. In my opinion, they all adopt the same ingredients, which they are able to excel at.
It starts with the right leadership – visionary to continually set challenging objectives to drive the company forward, commercially astute to make the right business decisions, willing to take calculated risks, courageous to continually undertake difficult transformations to cope with the changing environment, and motivational to bring out the best in their people to achieve stretched goals.
Of equal importance is adopting and inculcating the right set of values and principles into the culture of the company so that it would always operate with high integrity, ethics and professionalism.
Throughout my career, I have always wished that Malaysian companies could grow into successful global companies.
I have followed the progress of Malaysian companies with interest and I am always delighted to read of their successes, especially when they expand beyond the boundaries of Malaysia on their way to achieve international status.
There are now many Malaysian companies with the necessary ingredients for international success but one particular company stands out. I have had the good fortune to work closely with that company in my career in the oil and gas industry.
Every Malaysian knows of Petronas, but what you may not know is that every one in the oil and gas fraternity internationally knows and, more importantly, thinks very highly of our national oil company.
Petronas is now regarded as one of the new Seven Sisters of the oil and gas industry. The phrase was coined by an angry Enrico Mattei, founder of Italy’s energy group Eni, after World War 2.
The original “Seven Sisters” were: Standard Oil of New Jersey, Royal Dutch Shell, Anglo Persian Oil Company, Standard Oil of New York, Standard Oil of California, Gulf Oil and Texaco.
Mattei needed to secure oil for Italy and was frustrated at being left out of the huge concessions the Seven Sisters controlled in countries such as Saudi Arabia and Iran.
Today, a new group of oil and gas companies has emerged with control over most of the world’s resources. They are aggressive resource holders and seekers. They dictate the rules and have pushed the multinationals, which emerged out of the original seven sisters – ExxonMobil and Chevron of the US and Europe’s BP and Royal Dutch Shell – to the sidelines.
In an informal survey of the industry’s most knowledgeable analysts, bankers, national oil company officials and international oil company executives about the most powerful players in the oil and gas industry today, the Financial Times names the new Seven Sisters as Saudi Aramco (Saudi Arabia), Gazprom (Russia), CNPC (China), NIOC (Iran), Pdvsa (Venezuela), Petrobras (Brazil) and Petronas.
The other six have very large resources but Petronas was chosen because – I quote the Financial Times – “Petronas, Malaysia’s national oil company, has been described as the role model others would like to follow”.
What Petronas has achieved in a mere 34 years is astounding. It must have been daunting for the small group of government secondees, with no experience in the energy industry, to have been given the onerous task of managing the country’s energy resources, developing a national oil and gas business and facing the multinationals that have operated in the country for decades.
They had to be courageous and visionary, qualities that have been perpetuated in the Petronas leadership since then.
Equally daunting was the decision to venture overseas, to countries with environments that even multinationals find very difficult. This happened when Petronas set itself the target of achieving 30 per cent of its earnings from international operations in the early 1990s.
Recognising that Malaysia’s oil and gas reserves are relatively small and would run out one day, Petronas knew that to continue to exist and grow, it had to take its operations overseas.
Petronas’ growth was accelerated as its leaders set out to achieve this target, and achieve it they did. About 40 per cent of its revenue is now generated overseas.
The national oil company now explores in more countries than Shell does. More than one-third of its production now comes from international operations, from over 60 ventures in more than 20 countries, and this will continue to increase into the future.
In the gas business, Petronas owns and operates the largest integrated liquefied natural gas (LNG) complex in the world and is a major supplier to key LNG markets in North East Asia.
Overseas, it is a partner in a LNG plant in Egypt and will be participating in LNG plants in Australia in the near future.
Petronas is the overall market leader in the downstream market in Malaysia, with the largest manufacturing position.
It also operates in several countries overseas, including Thailand, Philippines, China and Vietnam. It has a large presence in the southern African continent and is set to expand further.
Petronas has helped to develop a very proficient local oil and gas service industry capable of operating around the world.
Standards are high, competition for limited energy resources is intense and only the best companies can survive.
Petronas has not only survived but also thrived in the face of these challenges. So one can understand the pride that the national oil company’s employees feel.
There is a high level of dedication and commitment but, more importantly, there is a very high level of integrity, with the Petronas senior management setting the example. It operates transparently and above board. It has a very stringent tendering process, equal to that of any international company.
Professionalism is highly valued in Petronas and translates to high skill levels, both technically and commercially, and safe, efficient operations.
There has been no major incident in its years of operations. In terms of reliability, Malaysia LNG has not missed a single cargo delivery in its 25 years of operations, making Petronas the preferred supplier for their customers.
I have worked closely with senior Petronas management. I know many of them would be highly desired by international oil companies but I also know it would be hard to entice them because of their dedication and commitment to the company.
Commercially, they are sharp and tough but fair – an opinion shared by many international companies.
This was echoed by a colleague in another multinational company who told me that negotiating with Petronas was tough going and he expected to be pushed to the limit, but he would prefer dealing with them than many others.
It may strike you as odd that I, a leader of a multinational oil company, would speak so glowingly of a “competitor”.
But I am a Malaysian and I am so proud of the success of our national oil company.
I am also moved to share what I know of the company because I fear that my fellow Malaysians are unaware of the great success Petronas is. “Malaysia Boleh” is perhaps an overused, much mocked phrase, but the spirit is real, and it is demonstrated by Petronas.
As our 51st anniversary of Merdeka approaches, I think it is time that we recognise our worth and our ability as Malaysians, and give Malaysian companies the credit they deserve.
Are there other Malaysian companies poised to become world-class companies? I believe there are and I will be watching their achievements with pride as a Malaysian.
* Datuk Saw Choo Boon joined Shell soon after graduating from the University of Malaya in 1970. He is now the chairman of Shell Malaysia
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