PETROLIAM NASIONAL BERHAD (PETRONAS)
PETROLIAM NASIONAL BERHAD (PETRONAS) (20076-K) Tower 1, PETRONAS Twin Towers, Kuala Lumpur City Centre 50088 Kuala Lumpur, Malaysia Tel: +603 2051 5000 www.petronas.com
www.petronasofficial.com Petroliam Nasional Berhad (PETRONAS)
PETRONASOfficial PETRONAS
@petronasofficial @petronas ANNUAL REPORT 2015 THRIVING IN TOUGH TIMES ANNUAL REPORT 2015 OVERVIEW OUR ACHIEVEMENTS About This Report 002 Corporate Milestones 088 PETRONAS at a Glance 002 Awards and Recognition in 2015 098 Key Highlights 004 Past Awards 101 Vision, Mission and Shared Values 006 Significant Events in 2015 106 Media Highlights 112
KEY MESSAGE Message from the President & Group CEO 008 OUR LEADERSHIP Board of Directors 116 Executive Leadership Team 126 CORPORATE REVIEW Our Profile 016 Our Global Presence 024 GOVERNANCE REVIEW Our Business 026 Statement of Corporate Governance 134 Strategic Business Units 028 Statement on Risk Management and Internal Control 144 Group Organisational Structure 030 INSIDE Glossary 150 THIS REPORT Group Corporate Structure 032 FINANCIAL STATEMENTS STRATEGIC REVIEW Directors‘ Report 158 Strategic Directions 036 Statement by Directors 163 Key Priority Areas 037 Statutory Declaration 164 Sustaining Industry Competitiveness 038 Consolidated Statement of Financial Position 165 Technologies and Innovations 040 Consolidated Statement of Profit or Loss and Our Market in 2015 & Outlook 048 Other Comprehensive Income 166 Consolidated Statement of Changes in Equity 167 PERFORMANCE REVIEW Consolidated Statement of Cash Flows 171 Group Financial Performance 054 Statement of Financial Position 172 It has been a challenging year for PETRONAS, Upstream Performance 064 Statement of Profit or Loss and Other and will likely continue to be so for the Downstream Performance 068 Comprehensive Income 173 foreseeable future. Leveraging on the strength of Statement of Changes in Equity 174 our most valuable asset, our people, we are rising Statement of Cash Flows 175 up to the challenges before us. Collectively, we ENGAGING WITH STAKEHOLDERS Notes to the Financial Statements 176 strive to stay ahead by continuing to push Investing in Our People 074 boundaries in the industry’s new realities and Empowering Communities Where We Operate 078 achieve real, sustainable and long-term growth. Upholding Health, Safety & Environment, and Sustainable Development 082 002 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 003
ABOUT THIS REPORT 91 We are pleased to present our Annual Report 2015. This year, PETRONAS has partners adopted a more comprehensive reporting approach that captures both our performance in the previous year as well as our current achievements, as we worldwide strive to emulate best practices in corporate reporting. We hope to provide a more holistic view of our collective efforts to achieve our immediate and long- term business targets across the entire PETRONAS Group. This is also in line with PETRONAS’ transformation initiative to ensure our resilience in the current challenging industry environment and our continued business sustainability. 53% 28% of total of PETRONAS workforce workforce are below PETRONAS AT A are women 35 years old
GLANCE More than
Petroliam Nasional Berhad (PETRONAS), established in 1974, is Malaysia’s fully integrated oil and gas multinational ranked among the largest corporations on ® 78 250 FORTUNE Global 500 . As the custodian of Malaysia’s oil and gas resources, we Upstream platforms explore, produce and deliver energy to meet society’s growing needs. development worldwide projects Started business in 1974: 41 years of proven track record major LNG 1974 1989 1996 2001 2015 facilities 1979 1991 1999 2009 5 004 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 005
KEY KEY HIGHLIGHTS HIGHLIGHTS
PETRONAS provided the winning formula to the Formula One 17 new oil and gas world champions discoveries were recorded of 2014 & 2015 with reserves totalling 1 billion boe 2014 & 2015 F1 World Constructor’s 11 Championship projects delivered first hydrocarbons for the title for MERCEDES AMG year, including five PETRONAS Formula One™ Team international assets Total assets increased to Nine RM591.9 billion new Production Sharing from RM537.5 billion in 2014 Contracts (PSCs) were signed in Malaysia and abroad Downstream business recorded 56% increase in Profit After Tax in 2015
Recorded 15 million man-hours without Lost Time Injury for the PETRONAS Floating LNG Satu project 006 PETRONAS PETRONAS 007
OUR MISSION We are a business entity
Oil and Gas is our core business OUR We add value to this resource We contribute to the wellbeing VISION of society A Leading Oil and Gas OUR Multinational of Choice VALUES Loyalty Loyal to corporation
Integrity Honest and upright
Professionalism Strive for excellence
Cohesiveness United, trust and respect for each other 008 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 009
KEY MESSAGE
MESSAGE FROM THE DATUK WAN ZULKIFLEE WAN ARIFFIN PRESIDENT President & Group Chief Executive Officer & GROUP CEO In my first PETRONAS Annual Report message as President and Group Chief Executive Officer (CEO), I wish to first and foremost thank my predecessor, Tan Sri Dato’ Seri Shamsul Azhar Abbas for his leadership and guidance leading up to the beginning of my tenure. I would also like to express my sincere appreciation to the Board of Directors as well as my leadership team, for their confidence and trust in me, and their continuous support as we collectively take on the duty of steering PETRONAS through an undeniably difficult period. 010 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 011
Message from the President & Group CEO Message from the President & Group CEO
While 2014 started and ended with oil prices Revenue for the year was, as expected, hit hard by low oil prices, and A progressive step taken in the area of Sustainable Development saw Six focus areas were targeted. The first three at opposing ends of the price continuum, was recorded at RM248 billion, a 25 per cent drop from 2014. the roll-out of PETRONAS’ Human Rights Commitment across the were to ensure PETRONAS’ immediate 2015 marked the start of a “new normal” in Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) Group, to ensure that our activities are governed by human rights survival in the onslaught of falling oil prices low oil prices, with Brent averaging at USD52 decreased by 40 per cent to RM75.5 billion, while Profit After Tax principles, regulations, laws, best industry practices and standards. by remaining competitive, and the other dollars a barrel for the year, weighed down suffered a 56 per cent drop to RM21 billion. The staggering decrease three were geared towards the organisation’s by ceaseless production against declining is largely attributed to net impairment on assets taken as prudent Operationally, PETRONAS continued to perform strongly despite the long-term sustainability. global demand. measures in light of significantly reduced oil price forecasts. severe impact of low oil prices on our financial performance for the year. We achieved significant operational milestones which are Under the first three focus areas, we delved PETRONAS pulled through a very difficult PETRONAS paid RM26 billion in dividends to the Malaysian detailed out by the respective Executive Vice Presidents and CEOs of into cash management and generation, cost year in 2015 to emerge still profitable, but Government, and continued to be the sole contributor to the National the Upstream and Downstream Businesses in this Annual Report. efficiency and process simplification, and severely weathered by the downturn. Trust Fund with a contribution of RM100 million for the year. focused execution of our projects. I am This is a true testament of the dedication and commitment pleased to report that these efforts have led The PETRONAS Group closed the Financial PETRONAS’ Health, Safety and Environment (HSE) performance for demonstrated by the employees of PETRONAS who have rallied to tangible cash generation and cost savings Year 2015 with Total Assets of RM591.9 2015 recorded a reduction in Fatal Accident Rate (FAR) compared to behind the organisation during this challenging period. of up to RM1.4 billion, cushioning further billion, up from RM537.5 billion in 2014, 2014. However, we are disappointed to have recorded four fatalities impact to our bottom line. In the coming mainly due to additional capital investments during the year, and a slight increase in major incidents as compared On the part of the organisation, a concerted effort to counter the impact three years, we expect these initiatives to during the year, as we continue to see to 2014. Immediate intervention measures have been introduced to of low oil prices on PETRONAS’ financial performance was launched in generate an additional RM6 billion to RM7 through commitments to our growth tighten controls and enforce safety behaviours that meet stringent April, when signs of a prolonged downturn began to emerge. billion. strategy. internal standards. 012 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 013
Message from the President & Group CEO Message from the President & Group CEO
In driving cost efficiency and process simplification further, three Agenda instated as our guiding principle, we critical Group-wide processes – the hire-to-retire, procure-to-pay and introduced a set of six PETRONAS Cultural the planning and budgeting processes have been radically simplified, Beliefs to sustain the transformation initiatives recouping value and resources from across the value chain. From the under this concerted response to the industry simplification of the planning and budgeting process alone, more than downturn. The PETRONAS Cultural Beliefs are 400,000 man-hours are expected to be recovered, which can be expected to create the desired experiences reallocated to more productive and value-generating activities. These for employees that will influence their beliefs efforts spearhead ongoing Group-wide efforts to simplify work and actions to achieve our shared targets. processes to return more value back to the businesses. Together, these efforts have effected a wave For the three focus areas for PETRONAS’ long-term sustainability, of change initiatives to transform the there were teams put in place to study the way we manage and organisation and I am encouraged by the develop talents, our technology agenda and our internal work culture. strong show of support from our dedicated These studies have evolved into Group-wide initiatives to ensure that workforce to see them through. This despite the current challenges, PETRONAS continues to invest in transformation journey is led by the senior strategic levers – both tangible and intangible – for the organisation leadership team, and backed by a consistent to sustain growth well into the future. communication plan to ensure that employees remain informed and motivated about being A key achievement from the effort to drive work culture change in part of a movement to navigate PETRONAS PETRONAS was to realign the organisation to the Company’s Vision, through the current storm and emerge Mission, Strategic Directions and Shared Values, housed together stronger and more competitive from it. under the Corporate Agenda. A thorough review of the elements within the Corporate Agenda commenced under the guidance of the Towards the final quarter of 2015, it became Board of Directors, resulting in a refreshed Mission for PETRONAS, as clear that prices had yet to bottom out, and well as revised narratives for the Shared Values. These changes reflect that the next two years will likely remain the evolving dynamics of PETRONAS’ business on a global scale, and challenging for PETRONAS. Our resilience and acknowledge our increasingly diverse workforce. With the Corporate endurance will be severely tested as the
possibility of even lower crude oil prices loom Inaction will be irresponsible; it will be for 2016, and we will need to flex our financial imperative for us to push through with the muscles hard over a stretched period into transformation initiatives to survive this 2017. This calls for follow-through actions downturn, and retain sufficient strength and under the transformation journey in 2016, at a robustness to get back on a growth trajectory scale unprecedented in PETRONAS’ history. once the tide turns for the industry.
DATUK WAN ZULKIFLEE President & Group Chief Executive Officer CORPORATE REVIEW 016 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 017
OUR PROFILE OUR
MAXIMISING RESOURCES FOR GROWTH EXPLORATION
UPSTREAM PETRONAS’ Upstream business which encompasses Exploration is the ‘growth engine’ for Exploration, Development & Production, LNG Trading PETRONAS comprising a PROFILE & Marketing, LNG Assets and Malaysia Petroleum consolidation of exploration functions Management, is a fully integrated business covering a from Upstream Malaysia, Upstream Petroliam Nasional Berhad (PETRONAS) is Malaysia’s fully integrated oil and gas broad portfolio of resources and play types in more International (PETRONAS Carigali Sdn multinational wholly-owned by the Malaysian Government. Established in 1974, than 20 countries. As the custodian of Malaysia’s Bhd) and Malaysia Petroleum PETRONAS is now ranked amongst the largest companies in the world with a petroleum resources, PETRONAS is focused to pursue Management (MPM) which searches, sustainable value-driven production growth, monetise acquires, extracts and delivers new proven track record in integrated oil and gas operations spanning the entire gas resources, strengthen core capabilities and build resources to sustain long-term hydrocarbon value chain. niche competencies. Proven capability and track production. Core activities are block record of successful onshore and offshore acquisition, growth strategies, basin PETRONAS’ business activities include (i) the exploration, development and production of crude developments in oil and gas have earned PETRONAS evaluation, play generation, prospect oil and natural gas in Malaysia and overseas; (ii) the liquefaction, sale and transportation of reputable operatorship in many ventures across the maturation and exploration drilling. Liquefied Natural Gas (LNG); (iii) the processing and transmission of natural gas, and the sale of world. natural gas products; (iv) the refining and marketing of petroleum products; (v) the An Exploration Centre of Excellence manufacturing and selling of petrochemical products; (vi) the trading of crude oil, petroleum, In Malaysia, PETRONAS runs 198 producing fields and (COE) comprising Basin & Petroleum gas and LNG products and petrochemical products; and (vii) shipping and logistics relating to 355 offshore platforms while promoting sustainable System Analysis, Geology Solutions, LNG, crude oil and petroleum products. Committed to ensuring business sustainability, and orderly development of Malaysia’s petroleum Reservoir Geoscience and PETRONAS also strives to responsibly manage natural resources in a way that contributes resources through 101 active Production Sharing Geophysics Solutions collectively holistically to the wellbeing of society wherever it operates. Contracts. deliver new Resource Addition providing the pipeline for hydrocarbon reserves to be developed, leading to sustained and long-term hydrocarbon production.
DEVELOPMENT & PRODUCTION
Development & Production (D&P) comprises a consolidation of development and production functions of Upstream Malaysia and Upstream International, LNG Assets as well as a COE, which provides value-driven, world-class operational delivery, with utmost priority on Health, Safety, Security and Environment (HSSE), and Asset Integrity. 018 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 019
OUR PROFILE OUR PROFILE
Strategic expansion plans underway include MALAYSIA PETROLEUM MANAGEMENT Downstream Business is a made up of Currently, the Company has 570 kbpd of shale gas-to-LNG project in Canada and one DOWNSTREAM multiple businesses and plays the strategic refining capacity – 430 kbpd domestically of the world’s first coal bed methane-to-LNG Premised upon efficiency, profitability and value maximisation, role in enhancing value to molecules and the remaining in Durban, South Africa projects in Gladstone, Australia. The PETRONAS’ successes in its upstream efforts in Malaysia are realised through an integrated operation, on the and 10.8 million mtpa of petrochemical completion and commissioning of the through partnerships with oil and gas majors as well as international foundation of being operationally and production capacity within 16 PETRONAS Floating LNG Satu, the first-of-its- and domestic service providers. A distinctive resource owner and commercially excellent. The diverse activities manufacturing subsidiaries, joint ventures kind in the world, puts the Company at the regulator of Malaysia’s upstream industry, Malaysia Petroleum include refining, trading, and marketing of and associate companies. By 2020, once forefront of technology and innovation in Management (MPM) drives value creation and shapes Malaysia’s crude oil and petroleum products as well as completed and fully in operation, the carrying out its strategies to monetise gas. A petroleum industry whilst managing external stakeholders. manufacturing and marketing of Refinery and Petrochemical Integrated portfolio of inventive technology and petrochemical products for local and Development (RAPID) Project in engineering solutions complement its existing MPM focuses on building a competitive and conducive business international consumption. Pengerang, Johor (slated for start-up in capabilities across the integrated gas value environment to attract new investments via attractive commercial 2019), and Project SAMUR in Sipitang, chain, providing PETRONAS a competitive propositions to enable further growth in mature basins to maximise PETRONAS owns and operates gas Sabah (by 2016), will increase refinery edge and flexibility to meet buyers’ energy Malaysia’s resource recovery. In addition, MPM regulates and provides infrastructure and utilities, involving gas capacity by 300 kbpd and petrochemical needs. stewardship to Petroleum Arrangement Contractors (PACs) throughout processing and utilities, as well as gas capacity to 16 million mtpa. Set to be the the whole development and operations phase. transmission and regasification. Within largest integrated refinery and Meanwhile, the end-to-end capabilities across Peninsular Malaysia, PETRONAS processes petrochemical development in a single the integrated gas value chain has allowed natural gas piped from offshore fields and location, Project RAPID will diversify the PETRONAS to become a leading global LNG PACIFIC NORTH WEST LNG transports the processed gas via the feedstock from gas-based to naphtha and player and reliable LNG supplier (PETRONAS A joint venture company responsible for the development of the Peninsular Gas Utilisation (PGU) pipeline expand the portfolio of products to LNG Complex, Bintulu), having successfully Canada LNG project, together with partners Japan Petroleum network to customers in Malaysia and include specialty chemicals. delivered more than 9,000 LNG cargoes to Exploration Co Ltd (JAPEX), China Petroleum & Chemical Corporation Singapore. In addition, the Company supplies buyers across the globe for more than three (SINOPEC), Indian Oil Corporation Ltd, and Brunei National Petroleum steam and industrial gases for customers at PETRONAS Trading Corporation Sdn Bhd decades. With a current total of eight Company Sdn Bhd (PetroleumBRUNEI). Kertih Integrated Petrochemical Complex in (PETCO), a wholly-owned subsidiary of production trains and a combined capacity of Terengganu and Gebeng Industrial Area in PETRONAS, undertakes marketing and 25.7 mtpa, the complex is one of the world’s Pahang. trading activities of crude oil and largest LNG production facilities at a single LNG TRADING & MARKETING petroleum products. location. Train 9 will add another 3.6 mtpa of Across the diverse value chain, the challenge LNG. Capturing the best value across the LNG value chain by offering the for Downstream remains on managing the PETRONAS Dagangan Berhad (PDB) most competitive value propositions to PETRONAS’ LNG customers, margins. The brand is expected to be a manages all domestic marketing and The D&P COE which comprises Petroleum LNG Trading & Marketing determines immediate and long-term LNG high-performing business backed by world- retailing activities for a wide range of Engineering, Wells and Operations & volume requirements, marketing & trading strategies and deliveries, to class operations, infrastructure and petroleum products in Malaysia, while Maintenance, collectively looks at technical capture optimum value. manufacturing facilities. It is recognised as a Engen Petroleum Limited is responsible for solutions for Exploration, MPM and Project significant industry player with competitive handling of retail business in South Africa Delivery & Technology (PD&T) to support Operating in a manner that is commercially, environmentally and products, offerings and solutions delivered to and sub-Saharan Africa. upstream business growth. socially sustainable, PETRONAS strives to invest and build capabilities in customers with consistent quality and communities where it operates. This commitment continues to drive a reliability. As such, its operating model is Petrochemical products are distributed technical edge which allows PETRONAS to consistently deliver value to designed to enhance market competitiveness, through our marketing subsidiaries in its partners, stakeholders and investors in the upstream business. mitigate external and internal challenges as Malaysia, Thailand and China as well as well as maximise future growth potential. supported by representative offices in Indonesia, Vietnam and the Philippines. To date, 80 per cent of PETRONAS’ 020 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 021
OUR PROFILE OUR PROFILE
It comes as no surprise then, that all of the four-cylinder and eight-cylinder AMG models as well as a significant number of Mercedes-Benz units are factory-filled with PETRONAS Syntium with °CoolTech™, an innovative solution to fight excessive engine heat that also delivers optimum engine performance, whether on the race track or on the road. It is also the only engine oil approved as the first fill for all high-performance Mercedes-Benz AMG M133 engines, which is the world’s most powerful 4x-cylinder series production engine across all applications.
Moving forward, PETRONAS will further leverage on its proven track record in sustaining world-class operational excellence and competitive marketing capabilities, to capture opportunities domestically as well as key growth markets internationally, expanding our presence across the Downstream value chain. Stronger emphasis will also be placed on delivering key projects safely, on time and within cost.
Downstream Business Excellence will focus on operational strategy, planning & integration, Health, Safety, Security & Environment (HSSE) excellence, asset performance excellence, plant project, turnaround & shutdown excellence as well as culture excellence.
This will be reinforced by Downstream Commercial Excellence, where greater emphasis will be placed on customer experience and cost excellence, whilst leveraging on technology to be more competitive.
PRODUCT RANGE
PETRONAS Fuel
petrochemical revenues are generated from importantly, has grown to be a Technical Partner. The PETRONAS more than 1,000 active customers who have Total Fluid Solutions™ is a collaboration with the Mercedes AMG been in business with PETRONAS for over 10 engineers to co-develop not just the fuels, lubricants and functional years. Moving forward, the Asia Pacific market fluids, but also to co-design the new 1.6 litre turbocharged direct- will remain key to PETRONAS’ petrochemical injection V6 hybrid Formula One engine to exploit maximum synergy Convenience Store (C-Store) arm. between engine development and PETRONAS products. The same is now powering the Silver Arrows: the double consecutive World PETRONAS Lubricants International Sdn Bhd Constructor’s Champion in 2014 and 2015. (PLI) oversees the lubricants business globally through an extensive network that expands More importantly, given the 2014 FIA regulations intended to ensure over 30 marketing offices in 23 countries, that race car technology is well aligned to road car technology, the PETRONAS owns 11 lubricants blending plants switch to turbocharged 1.6 litre V6 hybrid formula strengthens the globally. focus on fuel efficiency to power engine performance. This valuable LPG experience along with the many successes from this intense sport Since 2009, PETRONAS has not only been enables PETRONAS to consistently transfer the knowledge and insights the Title Sponsor to the Mercedes AMG from extreme racing machines on the race tracks to everyday vehicles PETRONAS Formula One™ Team, but more on the roads. 022 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 023
OUR PROFILE OUR PROFILE
LUBRICANTS BUSINESS PETROCHEMICAL BUSINESS
PETRONAS Lubricants International Sdn Bhd (PLI) is PETRONAS’ global lubricants manufacturing and marketing arm. PETRONAS Chemicals Group Berhad (PCG) leads the growth of PETRONAS’ Petrochemical Business, an important With a strong presence in more than 80 countries and five continents, the PLI product range includes high-quality segment of the petroleum industry which supports the manufacturing and fast-moving consumer goods (FMCG) lubricants and functional fluids for both the automotive and industrial markets, as well as a range of car care products. sectors. The leading petrochemicals producer in Malaysia and one of the largest in Southeast Asia, PCG is involved Flagship brands include PETRONAS Syntium for passenger vehicles, PETRONAS Sprinta for motorcycles, and PETRONAS primarily in the manufacturing, marketing and selling of a diverse range of petrochemical products including olefins, polymers, fertilisers, methanol and other chemicals and derivative products. Today, its integrated petrochemical Urania for commercial vehicles. Headquartered in Kuala Lumpur, PLI has over 30 marketing offices in 23 countries, complexes in Kertih, Terengganu and Gebeng, Pahang as well as manufacturing complexes in Gurun, Kedah; Bintulu, managed through regional offices in Kuala Lumpur, Turin, Belo Horizonte, Chicago and Durban. Sarawak; and Labuan have a total production capacity of over 10 million mtpa.
1 Chemical Products 2 Business Segment 3 Petrochemical Complexes LUBRICANTS PCG comprises 22 2 business segments: 2 integrated petrochemical manufacturing companies • Olefins and Derivatives complexes: Passenger Car producing a wide range • Fertilisers and Methanol • Kertih, Terengganu Motor Oil of chemical products • Gebeng, Pahang
4 Manufacturing Complexes 5 Production Capacity 6 Market Leadership Motorcycle Oil • Largest producer of methanol in 3 manufacturing complexes that the world; Fourth largest producer produce fertilisers and methanol: 10.8 in Southeast Asia. • Gurun, Kedah million mtpa • Bintulu, Sarawak Automative • Second largest producer of urea in Functional Fluids • Federal Territory of Labuan Southeast Asia, with the Completion of the SAMUR Project.
7 Sole Producer 8 Joint Venture • Third largest producer of low- Agriculture & Construction Lubricants of methanol, urea, paraxylene, BASF Nederland BV, BP Holdings density polyethylene (LDPE) in methyl tertiary butyl ether (MTBE), International BV, Idemitsu Kosan Southeast Asia. ethanolamines, ethoxylates, Co Ltd, Dialog Equity Sdn Bhd, glycol ethers, butanol and VOPAK Terminal Penjuru Pte Ltd, Commercial butyl acetates in Malaysia MJPX Co Ltd, Sasol Holdings Vehicle Lubricants (Asia Pacific) Pty Ltd, and National Farmers Organisation (NAFAS)
PETRONAS continues to redefine the future of energy with innovative approaches to PROJECT technology and engineering in order to maximise and deliver sustainable energy for DELIVERY & tomorrow. Project Delivery and Technology (PD&T), PETRONAS’ Centre of Excellence with Base Oil TECHNOLOGY distinctive expertise, leading practices and innovative solutions as well as robust systems and Group III Group II processes is strategically positioned to support PETRONAS’ growth and future positioning Etro 4 & Etro 6 M500 strategies. PD&T leverages on the value integration between Project, Procurement, Technical and Technology to deliver top quartile projects and technology as a differentiator.
PD&T with its leaner, flatter and efficient structure allows PETRONAS to be more agile whilst continuing to remain competitive and robust enough to withstand challenges and grow, to meet desired targets. 024 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 025
OUR GLOBAL OUR GLOBAL PRESENCE PRESENCE
ASIA PACIFIC AFRICA EUROPE LATIN AMERICA
UPSTREAM • Ireland – Exploration, Production & Gas Storage • United Kingdom – LNG
DOWNSTREAM • Austria – Lubricants • Belgium – Lubricants Denmark – Lubricants • France – Lubricants • Germany UPSTREAM • Australia – Exploration, Development, Production UPSTREAM • Algeria – Development & Production • Angola – Lubricants • Italy – Lubricants & Project Delivery & UPSTREAM • Suriname – Exploration • Argentina – Exploration & LNG • Brunei – Exploration & Development, Project Delivery – Exploration • Cameroon – Development • Chad – Technology • Netherlands – Lubricants & Oil • Norway – Oil & Technology • China – Exploration • Indonesia – Exploration Development & Production • Egypt – Development, Production • Poland – Lubricants • Portugal –Lubricants • Russia – DOWNSTREAM • Argentina – Lubricants • Balboa – Lubricants & Development, Project Delivery & Technology • Malaysia & LNG • Gabon – Exploration • Mauritania – Production & Lubricants & Oil • Spain – Lubricants • Turkey – Lubricants & Oil • Brazil – Lubricants • Chile – Lubricants • Colombia – Exploration, Development, Production, LNG & Project Delivery Project Delivery & Technology • Mozambique – Exploration • United Kingdom – Lubricants & Oil – Lubricants • Peru – Lubricants & Technology • Malaysia-Thailand Joint Development Area • Republic of Sudan – Exploration, Development & Production – Exploration, Development • Myanmar – Exploration, • Republic of South Sudan – Exploration, Development & Development, Production & Project Delivery & Technology • Production MIDDLE EAST NORTH AMERICA CENTRAL ASIA Vietnam – Exploration, Development & Production & Project Delivery & Technology DOWNSTREAM • Angola – Lubricants • Botswana – Lubricants & Oil • Burkina Faso – Lubricants • Burundi – Lubricants & Oil DOWNSTREAM • Australia – Oil & Petrochemical • Cameroon – Lubricants • Congo – Lubricants • Democratic • Bangladesh – Oil • China – Lubricants, Oil & Petrochemical Republic of the Congo – Oil & Lubricants • Gabon – Lubricants • Hong Kong – Oil • India – Lubricants, Oil & Petrochemical & Oil • Ghana – Lubricants & Oil • Kenya – Lubricants & Oil • Indonesia – Lubricants, Oil & Petrochemical • Lesotho – Lubricants & Oil • Madagascar – Lubricants • Japan – Oil & Petrochemical, Project Delivery & Technology • Malawi – Lubricants & Oil • Mauritius – Lubricants & Oil • Malaysia – Lubricants, Oil & Petrochemical, Project Delivery & • Mozambique – Lubricants & Oil • Namibia – Oil Technology • Myanmar – Lubricants & Oil • New Zealand • Niger – Lubricants • Réunion – Lubricants & Oil • Republic of – Petrochemical • Pakistan – Lubricants & Oil • Philippines Sudan – Lubricants & Oil • Rwanda – Lubricants & Oil – Oil & Petrochemical, Project Delivery & Technology • Senegal – Lubricants • South Africa – Lubricants & Oil • Singapore – Oil & Petrochemical • South Korea – Oil & • Swaziland – Lubricants & Oil • Tanzania – Lubricants & Oil Petrochemical, Project Delivery & Technology • Sri Lanka – Oil • Togo – Lubricants • Zambia – Lubricants & Oil • Zimbabwe • Taiwan – Oil & Petrochemical • Thailand – Lubricants, Oil & – Lubricants & Oil Petrochemical, Project Delivery & Technology • Vietnam – Oil & Petrochemical
* Includes Engen subsidiaries and marketing and trading offices. UPSTREAM • Iraq – Development, UPSTREAM • Canada – Exploration, UPSTREAM • Turkmenistan – Exploration, Production & Project Delivery & Technology Development, Production, LNG Development, Production & Project ©2016 PETROLIAM NASIONAL BERHAD (PETRONAS) Delivery & Technology All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means (electronic, DOWNSTREAM • Egypt – Lubricants DOWNSTREAM • Mexico – Lubricants • Azerbaijan – Development & Production mechanical, photocopying, recording or otherwise) without the permission of the copyright owner. PETRONAS makes no representation or warranty, whether expressed or implied, as to the accuracy or completeness of the facts presented. PETRONAS disclaims responsibility from any liability arising out • Kuwait – Oil • Qatar – Oil • United • United States of America – Lubricants of reliance on the contents of this publication. Arab Emirates – Lubricants & Oil DOWNSTREAM • Georgia – Oil 026 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 027
OUR OUR BUSINESS BUSINESS
Liquefied Natural Gas (LNG) • Export
Liquefied Natural Gas (LNG)
Regasification Terminal
Liquefaction Natural Gas • Power Sector • Industrial Sector Processed Gas/Peninsular Gas Utilisation (PGU) System
Processed Gas • Residential Sector • Commercial Sector
Liquefied Petroleum Gas (LPG)
• Industrial & Agricultural Sector – Processing Ethylene, Methanol, MTBE, Polyethylene, Propylene, Urea and Ammonia Petrochemical Plant
Crude Oil
Petroleum Products
Commercial • Transportation Sector – Diesel, Gasoline, Jet Fuel Refining and Lubricants
Retail 028 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 029
STRATEGIC BUSINESS STRATEGIC BUSiness UnitS UNITS
UPSTREAM DOWNSTREAM
PETRONAS Upstream Business is a fully-integrated business across the oil and gas value chain, with a broad portfolio PETRONAS Downstream Business is a made up of multiple businesses and is focused on adding value to the molecules, of resources and play types around the globe. PETRONAS’ focus is to pursue sustainable value-driven production on the foundation of being operationally and commercially excellent. PETRONAS’ focus is to enhance market growth domestically and internationally, monetising gas while strengthening core and building niche capabilities. competitiveness, mitigate external and internal challenges as well as maximise its future growth potential.
Malaysia Petroleum LNG Marketing & PETRONAS Refinery Exploration Development & Production Management Trading Marketing Refining & Trading & Petrochemical PETRONAS Gas Berhad (MPM) Corporation
• The Growth • Provide value-driven, world- • Strategic resource • Capturing the best Spearhead Commercial Excellence to • Owns and operates • A subsidiary of • Listed on Bursa Engine for class operational delivery, with owner and value across the LNG realise best value for the business refining assets with a PETRONAS dedicated Malaysia, it has one PETRONAS to utmost priority on HSSE and regulator, an value chain by through: total nomination to developing its of the largest shares offering the most capacity of 570 kbpd refinery and in market capital. Its search, extract Asset Integrity. industry-shaper • PETRONAS Dagangan Berhad, a Bursa competitive value through PETRONAS petrochemical portfolio includes the and deliver new that enables Malaysia-listed company with over propositions to our Penapisan (Melaka) capabilities through development of gas resources. LNG ASSETS effective external 1,000 retail stations and more than LNG customers. Sdn Bhd at 300 the Refinery & infrastructure and 760 Kedai Mesra convenience stores • Responsible for overall LNG stakeholder kbpd, PETRONAS Petrochemical utilities (GPU) and across Malaysia. project delivery and growing management. Penapisan Integrated Gas Transmission & asset value for shareholders. • PETRONAS Lubricants International (Terengganu) Sdn Development (RAPID) Regasification (GTR), Sdn Bhd (PLI) with over 30 marketing Bhd at 124 kbpd and complex located processing of natural Pacific North offices in 23 countries, with regional Engen Refinery within the Pengerang gas piped from West LNG offices located in Kuala Lumpur, Turin, (Durban, South Integrated Complex PETRONAS’ offshore PETRONAS Carigali Sdn Bhd (PCSB) Belo Horizonte, Chicago and Durban. Africa) at 135 kbpd. (PIC) in Johor, fields, and • A hands-on operator with an established track record, PLI’s product range and the PETRONAS PETRONAS’ largest transporting of • A joint venture • PETRONAS Trading working alongside local and global majors. brand reaches over 80 countries in five single downstream processed gas via company responsible Corporation Sdn continents. investment to date. the Peninsular Gas for the development Bhd (PETCO) acts as Utilisation (PGU) of the Canada LNG • Engen Petroleum Limited with PETRONAS’ global Centre of Excellence pipeline network as project, together with presence in over 20 countries and over trading arm for well as steam and To provide integrated exploration expertise and solutions. partners; JAPEX of 1,450 service stations across sub- crude oil and industrial gases. Japan, SINOPEC of Saharan Africa and the Indian Ocean petroleum products, China, IOC of India islands, with products exported to over with trading and PB of Brunei. 30 countries. operations in London, Jakarta and Dubai. Group Functions include: Focuses on • Treasury, Tax, Finance & • Procurement Centre of Excellence delivering Account Services • Corporate Strategy To drive commercial excellence in PETRONAS Chemicals Group Berhad fit-for-purpose, • Risk Management • Human Resource realising best value for the business. GROUP supportive and • ICT Services Management enabling • Project Delivery • Legal Services • Listed on Bursa Malaysia, it is one of Southeast Asia’s largest integrated chemical FUNCTIONS producers, operating in numerous fully integrated (feedstock to downstream business • Technology (Research & • Health, Safety, Security & end-products) world-class production sites, and is involved primarily in the services and Technology, and Technical Environment manufacturing, marketing and selling of a diversified range of chemical products, solutions Solutions, Technical Data, • Strategic Communications including olefins, polymers, fertilisers, methanol and other basic chemicals and Technical Capability • Internal Audit derivative products. Management) 030 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 031
GROUP ORGANISATIONAL GROUP organisational STRUCTURE STRUCTURE
BOARD (refer pages 116-125)
President & Group Chief Executive Officer Executive Vice President & Executive Vice President & Chief Integrity Officer Executive Vice President & Datuk Wan Zulkiflee Wan Ariffin* Chief Executive Officer Chief Executive Officer Group Chief Financial Officer Dato‘ Samsiah Abu Bakar Upstream Business Downstream Business Datuk Mohd Anuar Taib* Md Arif Mahmood* Datuk Manharlal Ratilal*
Senior Vice President Senior Vice President Project Delivery & Technology Corporate Strategy
Mazuin Ismail* Adif Zulkifli*
Vice President Senior Vice President Head Group Strategic Head Group Senior Vice President & Group Health, Safety, Group Human Resource Communications Internal Audit Group General Counsel Security & Environment Management
Sharbini Suhaili Zahariah (Liza) Abdul Rahman Syed Sheikh Syed Idrus Alhabshi Dato‘ Raiha Azni Abd Rahman* Mohamad Rauff Nabi Bax*
* Members of the Executive Leadership Team. 032 PETRONAS ANNUAL REPORT 2015 ANNUAL REPORT 2015 PETRONAS 033
GROUP CORPORATE GROUP corporate STRUCTURE
STRUCTURE PETRONAS RO P O O PAN ES