PETRONAS Integrated Report 2020 Agility How we continue to deliver energy and solutions Resilience Deliberate steps taken to strengthen the foundation for sustainable progress Sustainability Enriching lives through the transformative power of energy Moving Forward with You Passionate about Progress Our Response to ExternalCover Challenges Rationale Having weathered the twin shocks of 2020, we have learnt a thing or two about fighting the good fight. Being passionate about progress, we are ready to move forward with you. Together, we will PETRONAS Lubricants Students and staff of Unprecedented Challenging Environment paint a better future amidst the unknown; together, we will bring a beautiful smile to someone’s International (PLI) converted Universiti Teknologi PETRONAS remained resilient and agile amidst the unprecedented twin face. Despite the onslaught of challenges, we will put our best foot forward. Even when our steps its coolant production lines to PETRONAS, through the shocks. We turned in a commendable performance in FY2020, through manufacture ethanol-based Engineering, Prototyping swift implementation of several tactical interventions, as well as decisive are constrained, we will move forward relentlessly, tenaciously. It takes courage to act, passion sanitisers for hospitals and the and Innovation Centre and prudent measures. to progress; it takes a purpose greater than ourselves to keep moving. That is the strength of the local communities in Italy and Brazil. repurposed their 3D human spirit and human ingenuity – to collectively rise to the occasion for each other, with each printing and laser cut PLI also ventured into new technology to produce 120 PAT excluding other. Yes, we will rise together once more – this time, to paint a sustainable future for all. Positive Strong net impairment product lines by enhancing its face shields daily with the CFFO EBITDA losses existing Fulcron formulation to target of producing 10,800 FY2020 RM40.7 RM55.3 RM10.5 billion billion bring to market specially designed shields in three months for billion disinfectant products through the hospitals and clinics in Perak. Inside this Report Arexons operation in Milan. About this Report 1 The framework, boundaries and principles that guide us in our integrated reporting journey. Reporting Framework, 4 Scope and Boundaries PETRONAS in 2020 2 Our purpose, mandate, aspirations, structure and presence. We are PETRONAS 8 Business Snapshots 14 Corporate Structure 18 Sustainability Agenda 10 The Group Overview 16 Strategic Progress 3 Leadership perspectives and insights into how we are executing strategy to create value. Letter from the Chairman 32 The World in 2020 48 Upstream 72 with You Letter from the President and 38 Engaging with Stakeholders 54 Gas + New Energy 82 Group Chief Executive Officer Material Topics 58 Downstream 92 Letter from the Executive Vice President 44 Value Creation Model 60 Project Delivery and Technology 102 and Group Chief Financial Officer Risks Linked to Creating Value 64 Creating Sustainable Value 4 Our progress to date on the sustainability front. Five-Year Sustainability Key 112 Safeguard the Environment 116 Positive Social Impact 136 Performance Data Commitment to Governance 5 The PETRONAS leadership team and our commitment to good governance practices. Board Composition 192 Profile of Company Secretaries 197 Corporate Governance at PETRONAS 202 Profile of Board of Directors 193 Profile of Executive Leadership Team 198 Sustainability Governance 214 Project Delivery and Technology Financial Review and Other Information Introduction of PDB’s “Love Local” campaign Launched Implementation The PETRONAS Introduction of to intensify support for local entrepreneurs by the Advanced of the Integrated Integrated Vision robotic technologies 6 An overview of our financial performance and other relevant details. leveraging PETRONAS’ network of Kedai Mesra Diagnostic and Pipeline Integrating for Operation (ANYmal and BIKE) stations to market their goods. Prognostics Management System Excellence to enable remote (ADaPT) (i-PIMS) enabling Technology (PIVOT) and autonomous technology data harvesting from tool is a descriptive operations, and in Group Financial Results and Position 217 Appendix 228 PDB launched Deliver2Me, a new feature under which provides various platforms and predictive turn to minimise the Setel banner, which allows retail customers to early warning which helps to analytics tool that HSSE issues as well as • Analysis of Financial Results Glossary of Terms 230 and intervention further enhance the helps improve improve efficiencies Scan this QR code to purchase items from Kedai Mesra and have them • Analysis of Financial Position delivered directly to their vehicles while refuelling. to prevent creep pipeline integrity machinery reliability in view of less human access our Financial failure. system at multiple via early detection of intervention. • Analysis of Cash Flow locations across mechanical failure. Report 2020 Peninsular Malaysia. • Five-Year Key Financial Indicators Having faced 2020’s highly volatile operating environment in a resilient Our Response to External Challenges manner, PETRONAS has emerged today a stronger, more agile and PETRONAS’ companies, operations, Yayasan PETRONAS Yayasan PETRONAS Upstream business PETRONAS Lubricants Students and staff of Unprecedented Challenging Environment relevant energy and solutions partner. associations and staff globally contributed contributed an additional operations committed International (PLI) converted Universiti Teknologi PETRONAS remained resilient and agile amidst the unprecedented twin banded together and contributed some its coolant production lines to PETRONAS, through the shocks. We turned in a commendable performance in FY2020, through a total of RM20.1 RM2.5 manufacture ethanol-based Engineering, Prototyping swift implementation of several tactical interventions, as well as decisive Resiliently Moving Forward RM3.5 sanitisers for hospitals and the and Innovation Centre and prudent measures. The year 2020 was one of the most challenging years for the oil and gas industry as the twin shocks of the COVID-19 pandemic and the unprecedented RM50.6 million million local communities in Italy and Brazil. repurposed their 3D plunge in oil prices dealt a drastic blow to all. PETRONAS too was not spared from the onslaught and this was reflected in our challenging operational and worth of medical equipment worth of medical equipment million to printing and laser cut weaker financial performance for the year in review. As we worked swiftly to ensure the resilience of our business, value chain and the energy supply needs and supplies to the Ministry of to the MOH and NADMA to eight host countries PLI also ventured into new technology to produce 120 PAT excluding million Positive Strong net impairment of national and global customers, the health, safety and well-being of people remained our topmost priority. in cash and kind to help Health (MOH) and National Disaster combat the second wave comprising funds product lines by enhancing its face shields daily with the CFFO EBITDA losses flatten the pandemic’s curve Management Agency (NADMA) of COVID-19 in the state of and aid for personal existing Fulcron formulation to target of producing 10,800 FY2020 RM40.7 RM55.3 RM10.5 billion billion While we did not emerge from 2020 unscathed, we have learnt hard lessons and gained solid insights into what we need to do next to remain relevant as a to help hospitals and healthcare Sabah, Malaysia. protective equipment bring to market specially designed shields in three months for billion progressive energy and solutions partner in the new normal. As we steadfastly put the building blocks in place from which we will move forward from, we worldwide. frontliners mitigate the spread of the (PPE) as well as medical disinfectant products through the hospitals and clinics in Perak. are confident that we will continue to chart resilient, sustainable progress. COVID-19 pandemic in Malaysia. equipment. Arexons operation in Milan. Moving Forward with You The Year in Review PETRONAS Upstream Gas + New Energy Downstream Project Delivery and Technology PETRONAS joined the The PETRONAS Group A total of 10 discoveries were made Achieved first Made 62 Signed a long-term deal Established the Hydrogen PETRONAS Floating Introduction of the new PETRONAS Primax Introduction of PDB’s “Love Local” campaign Launched Implementation The PETRONAS Introduction of World Business Council for announced its net zero in 2020 comprising seven discoveries, hydrocarbon for 17 Liquefied with Tiger Clean Energy business and entered a LNG DUA set sail and 97 with Pro-Race by PETRONAS Dagangan to intensify support for local entrepreneurs by the Advanced of the Integrated Integrated Vision robotic technologies Sustainable Development carbon emissions which contributed to our resource projects: 14 in Malaysia, Natural Gas Limited (TCEL) for the partnership with Sarawak achieved its Ready Berhad (PDB), engineered to meet the leveraging PETRONAS’ network of Kedai Mesra Diagnostic and Pipeline Integrating for Operation (ANYmal and BIKE) (WBCSD), which provides aspiration by 2050 (NZCE addition namely in Malaysia, Suriname as two in Indonesia and one (LNG) deliveries supply of LNG to TCEL’s Energy Berhad (SEB) to explore for Start-Up (RFSU) demands of advanced technology engines as stations to market their goods. Prognostics Management System Excellence to enable remote access to a like-minded 2050), as part