Petronas
Encyclopedia
PETRONAS, short for Petroliam Nasional Berhad, is a Malaysian oil and gas
company that was founded on August 17, 1974. Wholly owned by the Government of Malaysia, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and adding value to these resources. Petronas is ranked among Fortune Global 500
's largest corporations in the world. Fortune ranks Petronas as the 95th largest company in the world in 2008 and 80th largest in 2009. It also ranks Petronas as the 13th most profitable company in the world and the most profitable in Asia.
Since its incorporation, Petronas has grown to be an integrated international oil and gas company with business interests in 35 countries. As of the end of March 2005, the Petronas Group comprised 103 wholly owned subsidiaries, 19 partly owned outfits and 57 associated companies. Together, these companies make the Petronas Group, which is involved in various oil and gas based activities. The Financial Times
has identified Petronas as one of the "new seven sisters
": the most influential and mainly state-owned national oil and gas companies from countries outside the OECD.
The Group is engaged in a wide spectrum of petroleum
activities, including upstream
exploration
and production of oil and gas to downstream
oil refining; marketing and distribution of petroleum product
s; trading; gas processing and liquefaction
; gas transmission pipeline
network operations; marketing of liquefied natural gas
; petrochemical
manufacturing and marketing; shipping; automotive engineering
; and property investment.
The Petronas Twin Towers
were officially opened on Malaysia's 42nd National Day, August 31, 1998 - in the Corporation's 24th Anniversary year.
that began the oil exploration in Sarawak, then under the White Rajahs
, at the end of the 19th century. In 1910, the first oil well was drilled in Miri, Sarawak. This became the first oil producing well known as the Grand Old Lady. Shell was still the only oil company in the area in 1963, when the Federation of Malaya
, having achieved independence from Britain six years before, united with Sarawak and Sabah, both on the island of Borneo, and became Malaysia. The authorities in the two new states retained their links with Royal Dutch Shell, which brought Malaysia's first offshore oil field onstream in 1968.
Meanwhile, the federal government turned to Esso, Continental Oil
, and Mobil, licensing exploration off the state of Terengganu
, in the Malay Peninsula, the most populous region and the focus of federal power. By 1974, however, only Esso
was still in the area. It made its first discoveries of natural gas in that year and then rapidly made Terengganu
a bigger producer of oil than either Sarawak
or Sabah
. By 1974, Malaysia's output of crude oil stood at about 81000 oilbbl/d.
), as well as a proliferation of new private and state companies joining in the search for reserves. By 1985, the majors, reduced in number from seven to five, were producing less than 20% of the world total. It seemed that Malaysia would either have to join the trend or continue to leave its oil and gas entirely to Royal Dutch/Shell and Esso, multinational corporations necessarily attuned to the requirements of their directors and shareholders, rather than to the priorities the government of a developing country might seek to realize.
Further, an agreement between Malaysia and Indonesia
, signed in 1969, had settled doubts and disputes about each country's claims over territorial waters and offshore resources at a time when both were heavily indebted to Organization for Economic Co-operation and Development (OECD) governments and banks as well as to the International Monetary Fund
(IMF) and the World Bank
. Setting up a state oil and gas company, through which the government could get international capital but avoid tangling with foreign oil companies or governments, had worked for Indonesia: why not for Malaysia as well? The oil crisis of 1973–74 made the government even more aware of Malaysia's dependence on foreign oil and foreign capital in general.
Another factor in the decision was that the technology had recently been developed for extensive exploration and drilling offshore. The local geography included a combination of broad basins of sedimentary rock with calm and shallow waters around the Sunda Shelf, making exploration for gas and oil relatively easier and more successful than in most areas of the world. Malaysian crude turned out to be mostly high quality with low sulfur content.
A final and crucial factor in the creation of Petronas, and its continuation in much the same form since, has been the political stability of Malaysia. Since the restoration of parliament in 1971, the country has been ruled by the National Front (Barisan Nasional
), the heirs to the Alliance Party which had been dominant from 1957 to 1969 and the originators in 1971 of the New Economic Policy
, which was designed to improve the economic position of Bumiputras—native Malays and other natives in Sabah and Sarawak—relative to Chinese and Indian Malaysians and to foreign corporations. The difficulties this policy has caused for foreign companies and investors are outweighed by the benefits they believe they gain from Malaysia's political stability.
The Malaysian government chose to create a state company, rather than using taxes, production limits, leasing, or other familiar instruments of supervision. The government wanted, and needed, the cooperation of the majors but also sought to assert national rights over the use of the country's resources. A state company, having both supervisory powers over the majors and production activities of its own, was a workable compromise between allowing the majors full rein and excluding them, along with their capital and expertise, altogether.
Petronas was established in August 1974 and operates under the terms of the Petroleum Development Act passed in October 1974. It was modeled on Pertamina
, the Indonesian state oil and gas company founded in 1971 in succession to Permina, which had been set up in 1958. According to the 1971 plan, Petronas's goals would be to safeguard national sovereignty over oil and gas reserves, to plan for both present and future national need for oil and gas, to take part in distributing and marketing petroleum and petrochemical products at reasonable prices, to encourage provision of plant, equipment, and services by Malaysian companies, to produce nitrogenous fertilizers, and to spread the benefits of the petroleum industry throughout the nation.
On 6 September 1974, Malaysia's then prime minister, Tun Abdul Razak, announced the appointment of Tengku Razaleigh Hamzah
as Chairman and Chief Executive of Petronas. Tun Razak said: "From among the new blood, I intended to bring Tengku Razaleigh into the Cabinet. However, I have an important job for him, a job as important as that of a Cabinet Minister. I have decided to appoint him as Chairman and Chief Executive of Petronas, which is equivalent to being a Cabinet Minister." . Subsequently, Razaleigh had to relinquish his job as Chairman of PERNAS which he held from 1970, but retained the chairmanship of Bank Bumiputra.
Having created Petronas, the government had to choose what forms its dealings with private oil companies would take. Starting with its legal monopoly on oil and gas activities and resources, it had several options: it could simply award concessions without taking part in production, management, or profits; it could try offering services at the supply end; or it could make contracts to cover profit-sharing, production-sharing, joint ventures—sharing both profits and costs—or all stages of the process, under "carried-interest" contracts. Petronas's first move was to negotiate the replacement of the leases granted to Royal Dutch/Shell on Borneo and to Esso in the Peninsula with production-sharing contracts, which have been the favored instrument, alongside joint ventures, ever since. These first contracts came into effect in 1976. Allowing for royalties to both federal and state governments, and for cost recovery arrangements, they laid down that the remainder would go 70% to Petronas and 30% to the foreign company. Esso began oil production in two offshore fields in 1978, exporting its share of the supply, unlike Petronas, whose share was consumed within the country.
Petronas went downstream for the first time in 1976, when it was chosen by the Association of South East Asian Nations (ASEAN) to begin construction on the second ASEAN joint industrial project, a urea plant. The subsidiary, Asean Bintulu Fertilizer (ABF), is based in Sarawak
and now exports ammonia
and urea
all over the world.
Also in 1976, Malaysia became a net exporter of oil, but exports were at such a low level as to make the country ineligible to join OPEC
. This situation benefited Malaysia, and Petronas, by allowing the company a degree of commercial and political flexibility and reinforcing Petronas's chief purpose, Malaysian self-reliance.
Petronas supervised its foreign partners' oil activities, taking no direct role in production until 1978, when the government saw to the creation of a subsidiary for oil exploration and production, Petronas Carigali. It began its work in an oil field off the Peninsula. Petronas retained its supervisory powers over all oil and gas ventures, particularly on issues of health and safety and environmental control.
BV, the Royal Dutch/Shell subsidiary that was building the LNG plant off Sarawak with Japanese and Asian Development Bank aid, accepted production sharing with Petronas but baulked at sharing equity, transport management, or refining. Negotiations went on, pushing commencement further and further back, until 1977, when Petronas and the government, faced with the costs of maintaining the tankers between delivery and first use, surrendered management rights—leading to a repeal of part of the Petroleum Development Act—and settled for Petronas's taking 60% of equity in the new company Malaysia LNG
. The Sarawak state government took 5%, and the other 35% was divided equally between Shell BV and the Mitsubishi Corporation
. Production of LNG in Sarawak at last began in 1983.
After negotiations lasting from 1977 to 1982, Petronas had concluded contracts with Tokyo Electric Power and Tokyo Gas
for the sale and delivery of LNG through to the year 2003. Malaysia LNG was to send almost the entire output of its Bintulu gas fields to Japan, under these contracts and another one, signed in 1990, to supply Saibu Gas of Fukuoka, in southwestern Japan, for 20 years from 1993.
When in 1982 Petronas Carigali formed an exploration and production company with Société National Elf Aquitaine
of France, it allowed Elf better terms for recovering costs than it had offered in earlier ventures. This development came against the background of the government's imposition of a depletion policy on Petronas, Royal Dutch Shell
, and Esso
in an attempt to postpone the exhaustion of oil reserves. These were then estimated to be about 2.84 Goilbbl, and it was officially predicted that by the late 1980s Malaysia would be a net oil importer once again. By 1980, oil and gas already represented 24% of Malaysian exports, and the government decided to impose a tax on these exports at a 25% rate. The new policy and the new tax combined to cause Malaysia's output and exports of crude oil to fall in 1981 for the first time since Petronas was established. Output rose again, beyond its 1980 level, in the following year, but exports took until 1984 to surpass their 1980 level.
However, the depletion policy was being undermined by external circumstances. Through the early 1980s, a worldwide oil glut, which OPEC proved unable to control, forced the Malaysian government to increase production to offset deterioration in its balance of increased payments to a deficit of $1 billion. It became clear that this could only be sustained by relaxing the conditions for joint ventures between Petronas and the major oil companies. In 1982, the Petronas–government share, which had risen to 80%, was cut to 70%, and taxes on company income were also cut.
Petronas went into refining and distribution in 1983. It initiated the construction of refineries at Malacca
and at Kerteh
in order to reduce its dependence on Royal Dutch/Shell's two refineries at Port Dickson
and Esso's refinery in Sarawak. These two majors, and other foreign companies, already covered much of the domestic retail market, but the new subsidiary Petronas Dagangan was given the initial advantage of preference in the location of its stations. By 1990, 252 service stations carried the Petronas brand, all but 20 on a franchise basis, and another 50 were planned. Some were set up on grounds of social benefit rather than of strict commercial calculation.
As production from Royal Dutch/Shell and Esso's existing fields moved nearer depletion
, the companies sought new fields and new contracts. In 1985, the government and Petronas revised the standard production-sharing contract, increasing the rate of recovery of capital costs from 30% to 50% of gross production in the case of oil and from 35% to 60% in the case of natural gas, abolishing signature, discovery, and production bonus payments and increasing the foreign partners' share of the profits. At first the drastic fall in oil prices during 1986, which cut Malaysia's income from exported oil by more than a third even though the volume of exports rose by 16%, discouraged interest in the new arrangements, but by 1989 Petronas had signed 22 new contracts with 31 companies from 11 countries. However, the contract period was still restricted to five years—compared, for example, with the 35-year contracts available in neighboring Singapore
—and there was still a 25% levy on exported crude oil, a measure that was intended to promote the domestic refining industry. These conditions, cited as disincentives to foreign investment, were eventually relaxed over the next several years.
The government and Petronas aimed to encourage the replacement of fast-depleting oil within Malaysia itself and simultaneously to foster heavy industries which could help reduce the country's overwhelming dependence on exporting its natural resources. In 1980, petroleum products accounted for 88% of the country's commercial consumption of energy, the rest being provided from hydroelectric plants in Sarawak
, too far away from the main population centers to become a major alternative. Five years later, gas accounted for 17%, hydroelectricity
for 19%, coal for 2%, and petroleum
products for 62% of such consumption, and about half of each year's gas output was being consumed in Malaysia.
The Petronas venture responsible for this shift in fuel use, and—along with Malaysia LNG—for Malaysia's becoming the third largest producer of LNG in the world, was the Peninsular Gas Utilization Project (Projek Penggunaan Gas Semenanjung), the aim of which was to supply gas to every part of the Peninsula. Its first stage was completed in 1985, following the success of smaller gasification projects in the states of Sarawak and Sabah
, and involved the extraction of gas from three fields in the Natuna Sea, between the Peninsula and the island of Borneo
; its processing in a plant at Kertih on the Peninsula's east coast; and its distribution to the state of Terengganu
by pipeline and abroad via an export terminal.
Petronas's least happy venture was its ownership of the Bank Bumiputra
, the second-largest, but least-profitable, of the commercial banks incorporated in Malaysia. Petronas spent more than MYR
3.5 billion over five years trying to rescue the bank from the impact of the bad loans it had made, starting with its support of the Carrian property group
of Hong Kong
, which collapsed in 1985, taking the bank's share capital down with it. In 1991, Petronas sold the bank back to another state company, Minister of Finance Inc., and announced its intention to concentrate on oil, gas, and associated activities in future.
Just as Petronas was disposing of this liability, the crisis caused by the Iraqi regime's invasion of Kuwait
culminated in military action against Iraq
on behalf of the United Nations
. Petronas had already raised Malaysia's oil production rate from 605,000 to 650000 oilbbl/d in late 1990 as the crisis unfolded. This move only reinforced the company's awareness of the need to vary its policies, since, with known reserves of 2.94 Goilbbl, and assuming no new major finds of oil, Malaysia risked seeing output decline to 350000 oilbbl/d in 2000 and running down to depletion within another five years. This was exacerbated by the possibility that Southeast Asia
in general would enjoy rapid economic growth in the 1990s, so that demand for oil there would rise twice as fast as demand in the relatively more sluggish, more mature economies of North America and Europe. The Malaysian government, and its state oil and gas company, was forced to decide what mixture of policies to adopt in response.
Another way to postpone depletion was to develop sources of oil, and of its substitute, natural gas, outside Malaysia. Late in 1989, the governments of Vietnam
and Myanmar
(Burma) invited Petronas Carigali to take part in joint ventures to explore for oil in their coastal waters. In 1990, a new unit, Petronas Carigali Overseas Sdn Bhd, was created to take up a 15% interest in a field in Myanmar's waters being explored by Idemitsu Myanmar Oil Exploration Co. Ltd., a subsidiary of the Japanese firm Idemitsu Oil Development Co. Ltd.
, in a production sharing arrangement with Myanma Oil and Gas Enterprise
. Thus began Petronas's first oil exploration outside Malaysia. In May 1990, the governments of Malaysia and Thailand
settled a long-running dispute over their respective rights to an area of 7,300 square kilometers in the Gulf of Thailand
by setting up a joint administrative authority for the area and encouraging a joint oil exploration project by Petronas, the Petroleum Authority of Thailand
, and the U.S. company Triton Oil
. In a separate deal, in October 1990, the Petroleum Authority of Thailand arranged with Petronas to study the feasibility of transferring natural gas from this jointly administered area, through Malaysia to Thailand, by way of an extension of the pipelines laid for the third stage of the Peninsular Gas Utilization Project.
That project was on course to becoming a major element in the postponement of oil depletion. Contracts for line pipes for the second stage of the project were signed in 1989 with two consortia of Malaysian, Japanese, and Brazilian companies. This stage, completed in 1991, included the laying of 730 kilometers of pipeline through to the tip of the Peninsula, from where gas could be sold to Singapore
and Thailand
; the conversion of two power stations—Port Dickson
and Pasir Gudang
—from oil to gas; and the expansion of Petronas's output of methyl tertiary butyl ether (MTBE), propylene
, and polypropylene
, which were already being produced in joint ventures with Idemitsu Petrochemical Co. of Japan and Neste Oy of Finland. The third and final stage of the project was to lay pipelines along the northwest and northeast coastlines of the Peninsula and was completed in 1997.
Another new venture in 1990 was in ship-owning, since Petronas's existing arrangements with MISC
and with Nigeria's state oil company would be inadequate to transport the additional exports of LNG due to start in 1994, under the contract with Saibu Gas. Petronas did not lose sight of the government's commitment to Malaysian self-reliance, and the company's second refinery at Malacca
, completed in 1994, with a capacity of 100000 oilbbl/d, promoted the same policy. The fact that it was built in a joint venture with Samsung
of Korea, the Chinese Petroleum Corporation of Taiwan
, and Caltex
of the United States did not negate the policy, for the subsidiary company Petronas Penapisan (Melaka) had a decisive 45% of equity while sharing the enormous costs of and gaining advanced technology for the project. More to the point, a side effect of the refinery's completion was that Petronas was able to refine all of the crude oil it produced, instead of being partially dependent on refining facilities in Singapore.
Petronas, with its policies of promoting self-reliance, helping to develop associated industries, and varying the sources and uses of oil and gas, played an important role in the Malaysian economy as a whole. Under governments which—by current, if not historical, Western standards—were strongly interventionist, the contribution of oil taxes to the federal government's revenue hovered at around 12% to 16% until 1980, when it showed a marked increase to 23%, followed by another leap to 32% in 1981. From then until 1988 the proportion fluctuated between 29% and 36%. Petronas was not just another big oil company: it controlled a crucial sector of the economy and remained, for better or worse, an indispensable instrument of the state.
During the mid- to late 1990s, international exploration, development, and production remained key components in Petronas's strategy along with diversification. A key discovery was made in the Ruby field in Vietnam in 1994. That year, the firm also saw its first overseas production from the Dai Hung field in Vietnam
and established its first retail station outside of Malaysia in Cambodia
. In 1995, a subsidiary was created to import, store, and distribute liquefied petroleum gas (LPG). In addition, the company's polyethylene
plant in Kerteh
began operations. Petronas marked a significant milestone during this time period—two of its subsidiaries, Petronas Dagangan Bhd and Petronas Gas Bhd, went public on the Kuala Lumpur Stock Exchange
.
In 1996, Petronas entered the aromatics market by way of a joint venture that created Aromatics Malaysia Sdn Bhd. It also formed a contract with China National Offshore Oil Corporation
and Chevron
Overseas Petroleum Ltd. to begin exploration of block 02/31 of the Liaodong Bay area in China. While the Asian economy as a whole suffered from an economic crisis during 1997 and 1998, Malaysia was quick to bounce back due to successful government reforms. From its new headquarters in the Petronas Twin Towers
, the state-owned concern continued its development in the oil and gas industry.
During 1997, Petronas heightened its diversification efforts. The firm set plans in motion to build three petrochemical plants in Kuantan
as well as an acetic
facility in Kerteh
. Its first LPG joint venture in China was launched that year and the company acquired a 29.3% interest in Malaysia International Shipping Corporation Berhad (MISC). In 1998, Petronas's tanker-related subsidiary merged with MISC, increasing Petronas's stake in MISC to 62%. That year, Petronas introduced the Petronas E01, the country's first commercial prototype engine. The company also signed a total of five new production sharing contracts (PSCs) in 1998 and 1999, and began oil production in the Sirri
field in Iran.
Petronas entered the new century determined to expand its international efforts. The company forged deals for two new exploration plots in Pakistan and began construction on the Chad-Cameroon Integrated Oil Development and Pipeline Project. By 2002, Petronas had signed seven new PSCs and secured stakes in eight exploration blocks in eight countries, including Gabon
, Cameroon
, Niger
, Egypt
, Yemen
, Indonesia
, and Vietnam. The firm also made considerable progress in its petrochemicals strategy, opening new gas-based petrochemical facilities in Kerteh and Gebeng.
By 2003, Malaysia was set to usurp Algeria
as the world's second-largest producer of LNG with the completion of the Malaysia LNG Tiga Plant. Prime Minister Mahathir Mohamad commented on the achievement in a May 2003 Bernama
News Agency article, claiming that "the Petronas LNG complex now serves as another shining example of a vision realized of a national aspiration, transformed into reality by the same belief among Malaysians that 'we can do it.'" Indeed, Petronas had transformed itself into a global oil company over the previous decade, becoming a national symbol for success. The company realized, however, that it would have to continue its aggressive growth strategy in order to insure its survival in the years to come.
The Petronas overseas expansion drive continues with the acquisition of Woodside Energy Ltd Mauritania
assets for $418 million in 2007. The venture proved successful as they discovered oil in May 2008
In 2004, Minister in the Prime Minister's Department, Datuk Mustapa Mohamed, stated that Petronas contributed RM 25 Billion to the country's treasury accounting for 25% of revenue collected via dividends and other revenues. Petronas continuously provides the Malaysian government dividends from its profits. Since inception in 1974, Petronas have paid the government RM 403.3 billion, with RM 67.6 billion in 2008. The payment represents 44% of the 2008 federal government revenue. Petronas continues to focus on international exploration projects as 40% of revenue in 2008 was derived from international projects such as Iran
, Sudan
, Chad
and Mauritania
. The company's international reserves stood at 6.24 billion barrels oil equivalent in 2008.
.
Involved in the distribution and sale of finished petroleum products and operations of service stations for the domestic market. The company has over 800 petrol stations around Malaysia as of July 2007 and further increase to 870 stations in January 2008
The company has also teamed up with local food and beverage companies, banks and transportation companies to provide better services at their petrol stations. Companies include McDonald's
, Kentucky Fried Chicken, Dunkin Donuts, Konsortium Transnasional Berhad, Maybank
, and CIMB Bank
.
in Terengganu to Johor Bahru
in the South and Kangar
in the North of Peninsular Malaysia.
, Menara Exxon Mobil
and KLCC Park
. Other properties under its care include Dayabumi Complex which located near Dataran Merdeka
The business is the largest petrochemical producer and seller in South East Asia. Products include olefins, polymers, fertilisers, methanol
and other basic chemicals and derivative products
The business builds offshore structures for oil and gas applications, help repair large vessels and converts vessels into Floating production storage and offloading
and FSOs.
Others include Petronas Assets Sdn Bhd; Petronas Maritime Services Sdn Bhd; Petronas Trading Corp. Sdn Bhd; Petronas Argentina S.A.; Petronas Australia Pty Ltd.; Petronas Thailand Co. Ltd.; Petronas Energy Philippines Inc.; Petronas Cambodia Co. Ltd.; Petronas Technical Services Sdn Bhd; Petronas South Africa Pty Ltd.; Petronas India Holdings Company Pte Ltd.; Petronas China Co. Ltd.; Petronas International Corp. Ltd.; Petronas Marketing Thailand Co. Ltd.; Myanmar Petronas Trading Co. Ltd.; Petronas Marketing (Netherlands) B.V. and Indianoil Petronas
Petronas was one of the main sponsors of the BMW Sauber Formula One
team, and it supplies lubricant
s and fuel
to the team. It also owned 40% of Sauber Petronas Engineering
, the company that builds chassis which formerly utilized Ferrari
designed engines used by the Sauber team, until being bought out by German motor company BMW
. Petronas is also the main sponsor for Malaysian Grand Prix
, and co-sponsors the Chinese Grand Prix
. Petronas was the exclusive premium partner of the Sauber Petronas (1995–2005) and BMW Sauber F1 Team (2006–2009). BMW had acquired the controlling stake of the former Sauber Petronas Engineering, but left the sport after the 2009 season. On December 21, 2009, Petronas was confirmed as moving from BMW Sauber to the newly formed Mercedes Grand Prix team.
In terms of further Formula One involvement, every year Petronas took the BMW Sauber team to various parts of Malaysia for F1 demos so the public who are unable to go to the track itself get to experience a little bit of what F1 offers. Other promotional events are held in the run up to the race and the drivers play an integral part in this so much so that Nick Heidfeld
conceded that there were more fans for BMW Sauber in Malaysia than in most other countries.
As part of its corporate social responsibility programme, Petronas also brings underprivileged children to watch the race.
Petronas also sponsors the Malaysian Cub Prix
races. It also sponsors many other sporting events and teams, mostly motorsports. Some of these sponsorships includes the PERT (Petronas EON Rally Team), the now defunct Foggy Petronas Superbike team (in which Petronas debutes their own superbike, the FP1
), and also the Petronas Adventure Team, a 4X4 adventure team. More recently Petronas is also a major sponsor for PETRONAS TOYOTA TEAM TOM'S
which is currently participating in Super GT
series, which they won the team title in 2008 and driver title in 2009. The series also race in Malaysia every season at Sepang International Circuit
. Petronas signed a three-year sponsorship agreement with Fiat Yamaha motoGP team. The PETRONAS branding can be seen starting Qatar race
on the 10 to 12 April 2009.
Petronas awards education sponsorships in the form of convertible loans to Malaysian and international students to further their studies at local or foreign universities. The Petronas unit that is responsible for handling education matters is called the Education Sponsorship Unit (ESU). These sponsorships are awarded based on academic results, co-curricular activities, family background as well as an assessment of student personality (which is conducted throughout a program called EduCamp, which all prospective Petronas students are required to undergo). Students who are absorbed by Petronas at the end of their tertiary studies have their convertible loans converted into full scholarships. These students are under contract agreement to work for the company for two years for every one year they are sponsored.
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
company that was founded on August 17, 1974. Wholly owned by the Government of Malaysia, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and adding value to these resources. Petronas is ranked among Fortune Global 500
Fortune Global 500
The Fortune Global 500 is a ranking of the top 500 corporations worldwide as measured by revenue. The list is compiled and published annually by Fortune magazine....
's largest corporations in the world. Fortune ranks Petronas as the 95th largest company in the world in 2008 and 80th largest in 2009. It also ranks Petronas as the 13th most profitable company in the world and the most profitable in Asia.
Since its incorporation, Petronas has grown to be an integrated international oil and gas company with business interests in 35 countries. As of the end of March 2005, the Petronas Group comprised 103 wholly owned subsidiaries, 19 partly owned outfits and 57 associated companies. Together, these companies make the Petronas Group, which is involved in various oil and gas based activities. The Financial Times
Financial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....
has identified Petronas as one of the "new seven sisters
Seven Sisters (oil companies)
The "Seven Sisters" was a term coined in the 1950s by businessman Enrico Mattei, then-head of the Italian state oil company Eni, to describe the seven oil companies which formed the "Consortium for Iran" and dominated the global petroleum industry from the mid-1940s to the 1970s...
": the most influential and mainly state-owned national oil and gas companies from countries outside the OECD.
The Group is engaged in a wide spectrum of petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
activities, including upstream
Upstream (oil industry)
The oil and gas industry is usually divided into three major components: Upstream, midstream and downstream, though midstream operations are usually included in the downstream category....
exploration
Oil exploration
Hydrocarbon exploration is the search by petroleum geologists and geophysicists for hydrocarbon deposits beneath the Earth's surface, such as oil and natural gas...
and production of oil and gas to downstream
Downstream (oil industry)
The petroleum industry is usually divided into three major components: Upstream, midstream and downstream. Midstream operations are usually included in the downstream category....
oil refining; marketing and distribution of petroleum product
Petroleum product
Petroleum products are useful materials derived from crude oil as it is processed in oil refineries.According to crude oil composition and demand, refineries can produce different shares of petroleum products. The largest share of oil products is used as energy carriers: various grades of fuel...
s; trading; gas processing and liquefaction
Liquefaction of gases
Liquefaction of gases includes a number of phases used to convert a gas into a liquid state. The processes are used for scientific, industrial and commercial purposes. Many gases can be put into a liquid state at normal atmospheric pressure by simple cooling; a few, such as carbon dioxide, require...
; gas transmission pipeline
Pipeline transport
Pipeline transport is the transportation of goods through a pipe. Most commonly, liquids and gases are sent, but pneumatic tubes that transport solid capsules using compressed air are also used....
network operations; marketing of liquefied natural gas
Liquefied natural gas
Liquefied natural gas or LNG is natural gas that has been converted temporarily to liquid form for ease of storage or transport....
; petrochemical
Petrochemical
Petrochemicals are chemical products derived from petroleum. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sources such as corn or sugar cane....
manufacturing and marketing; shipping; automotive engineering
Automotive engineering
Modern automotive engineering, along with aerospace engineering and marine engineering, is a branch of vehicle engineering, incorporating elements of mechanical, electrical, electronic, software and safety engineering as applied to the design, manufacture and operation of motorcycles, automobiles,...
; and property investment.
The Petronas Twin Towers
Petronas Twin Towers
The Petronas Towers are skyscrapers and twin towers in Kuala Lumpur, Malaysia...
were officially opened on Malaysia's 42nd National Day, August 31, 1998 - in the Corporation's 24th Anniversary year.
History
PETRONAS was not the first company to extract oil or gas in Malaysia. It was Royal Dutch ShellRoyal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
that began the oil exploration in Sarawak, then under the White Rajahs
White Rajahs
White Rajahs refers to a dynasty that founded and ruled the Kingdom of Sarawak from 1841 to 1946, namely the Brookes, who came originally from England. A Rajah is a monarch in the Indian subcontinent and Southeast Asia.-Rulers:...
, at the end of the 19th century. In 1910, the first oil well was drilled in Miri, Sarawak. This became the first oil producing well known as the Grand Old Lady. Shell was still the only oil company in the area in 1963, when the Federation of Malaya
Federation of Malaya
The Federation of Malaya is the name given to a federation of 11 states that existed from 31 January 1948 until 16 September 1963. The Federation became independent on 31 August 1957...
, having achieved independence from Britain six years before, united with Sarawak and Sabah, both on the island of Borneo, and became Malaysia. The authorities in the two new states retained their links with Royal Dutch Shell, which brought Malaysia's first offshore oil field onstream in 1968.
Meanwhile, the federal government turned to Esso, Continental Oil
ConocoPhillips
ConocoPhillips Company is an American multinational energy corporation with its headquarters located in the Energy Corridor district of Houston, Texas in the United States...
, and Mobil, licensing exploration off the state of Terengganu
Terengganu
Terengganu is a sultanate and constitutive state of federal Malaysia. The state is also known by its Arabic honorific, Darul Iman...
, in the Malay Peninsula, the most populous region and the focus of federal power. By 1974, however, only Esso
Esso
Esso is an international trade name for ExxonMobil and its related companies. Pronounced , it is derived from the initials of the pre-1911 Standard Oil, and as such became the focus of much litigation and regulatory restriction in the United States. In 1972, it was largely replaced in the U.S. by...
was still in the area. It made its first discoveries of natural gas in that year and then rapidly made Terengganu
Terengganu
Terengganu is a sultanate and constitutive state of federal Malaysia. The state is also known by its Arabic honorific, Darul Iman...
a bigger producer of oil than either Sarawak
Sarawak
Sarawak is one of two Malaysian states on the island of Borneo. Known as Bumi Kenyalang , Sarawak is situated on the north-west of the island. It is the largest state in Malaysia followed by Sabah, the second largest state located to the North- East.The administrative capital is Kuching, which...
or Sabah
Sabah
Sabah is one of 13 member states of Malaysia. It is located on the northern portion of the island of Borneo. It is the second largest state in the country after Sarawak, which it borders on its southwest. It also shares a border with the province of East Kalimantan of Indonesia in the south...
. By 1974, Malaysia's output of crude oil stood at about 81000 oilbbl/d.
Setting up a state oil and gas company: 1970s
Several factors converged in the early 1970s to prompt the Malaysian government into setting up a state oil and gas company, as first proposed in its Five Year Plan published in 1971. Former Chief Minister of Sarawak, Tun Abdul Rahman Ya'kub was one of the people who proposed the idea of Malaysia setting up their own oil company. These were years in which power in the world oil industry began to shift away from the majors, which then controlled more than 90% of the oil trade, toward the Organization of Petroleum Exporting Countries (OPECOPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...
), as well as a proliferation of new private and state companies joining in the search for reserves. By 1985, the majors, reduced in number from seven to five, were producing less than 20% of the world total. It seemed that Malaysia would either have to join the trend or continue to leave its oil and gas entirely to Royal Dutch/Shell and Esso, multinational corporations necessarily attuned to the requirements of their directors and shareholders, rather than to the priorities the government of a developing country might seek to realize.
Further, an agreement between Malaysia and Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
, signed in 1969, had settled doubts and disputes about each country's claims over territorial waters and offshore resources at a time when both were heavily indebted to Organization for Economic Co-operation and Development (OECD) governments and banks as well as to the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...
(IMF) and the World Bank
World Bank
The World Bank is an international financial institution that provides loans to developing countries for capital programmes.The World Bank's official goal is the reduction of poverty...
. Setting up a state oil and gas company, through which the government could get international capital but avoid tangling with foreign oil companies or governments, had worked for Indonesia: why not for Malaysia as well? The oil crisis of 1973–74 made the government even more aware of Malaysia's dependence on foreign oil and foreign capital in general.
Another factor in the decision was that the technology had recently been developed for extensive exploration and drilling offshore. The local geography included a combination of broad basins of sedimentary rock with calm and shallow waters around the Sunda Shelf, making exploration for gas and oil relatively easier and more successful than in most areas of the world. Malaysian crude turned out to be mostly high quality with low sulfur content.
A final and crucial factor in the creation of Petronas, and its continuation in much the same form since, has been the political stability of Malaysia. Since the restoration of parliament in 1971, the country has been ruled by the National Front (Barisan Nasional
Barisan Nasional
Barisan Nasional is a major political coalition in Malaysia, formed in 1973 as the successor to the Alliance . Along with its predecessor, it has been Malaysia's federal ruling political force since independence...
), the heirs to the Alliance Party which had been dominant from 1957 to 1969 and the originators in 1971 of the New Economic Policy
New Economic Policy
The New Economic Policy was an economic policy proposed by Vladimir Lenin, who called it state capitalism. Allowing some private ventures, the NEP allowed small animal businesses or smoke shops, for instance, to reopen for private profit while the state continued to control banks, foreign trade,...
, which was designed to improve the economic position of Bumiputras—native Malays and other natives in Sabah and Sarawak—relative to Chinese and Indian Malaysians and to foreign corporations. The difficulties this policy has caused for foreign companies and investors are outweighed by the benefits they believe they gain from Malaysia's political stability.
The Malaysian government chose to create a state company, rather than using taxes, production limits, leasing, or other familiar instruments of supervision. The government wanted, and needed, the cooperation of the majors but also sought to assert national rights over the use of the country's resources. A state company, having both supervisory powers over the majors and production activities of its own, was a workable compromise between allowing the majors full rein and excluding them, along with their capital and expertise, altogether.
Petronas was established in August 1974 and operates under the terms of the Petroleum Development Act passed in October 1974. It was modeled on Pertamina
Pertamina
Pertamina is an Indonesian government-owned corporation which extracts and refines the country's oil and gas reserves. It was created in August 1968 by the merger of Pertamin and Permina...
, the Indonesian state oil and gas company founded in 1971 in succession to Permina, which had been set up in 1958. According to the 1971 plan, Petronas's goals would be to safeguard national sovereignty over oil and gas reserves, to plan for both present and future national need for oil and gas, to take part in distributing and marketing petroleum and petrochemical products at reasonable prices, to encourage provision of plant, equipment, and services by Malaysian companies, to produce nitrogenous fertilizers, and to spread the benefits of the petroleum industry throughout the nation.
On 6 September 1974, Malaysia's then prime minister, Tun Abdul Razak, announced the appointment of Tengku Razaleigh Hamzah
Tengku Razaleigh Hamzah
Tan Sri Tengku Razaleigh bin Tengku Mohd Hamzah is a major Malaysian political figure from the state of Kelantan, and a former Finance Minister. He is an uncle of the current Raja Perempuan of Kelantan. Tengku is a Malay hereditary title usually translated as prince...
as Chairman and Chief Executive of Petronas. Tun Razak said: "From among the new blood, I intended to bring Tengku Razaleigh into the Cabinet. However, I have an important job for him, a job as important as that of a Cabinet Minister. I have decided to appoint him as Chairman and Chief Executive of Petronas, which is equivalent to being a Cabinet Minister." . Subsequently, Razaleigh had to relinquish his job as Chairman of PERNAS which he held from 1970, but retained the chairmanship of Bank Bumiputra.
Having created Petronas, the government had to choose what forms its dealings with private oil companies would take. Starting with its legal monopoly on oil and gas activities and resources, it had several options: it could simply award concessions without taking part in production, management, or profits; it could try offering services at the supply end; or it could make contracts to cover profit-sharing, production-sharing, joint ventures—sharing both profits and costs—or all stages of the process, under "carried-interest" contracts. Petronas's first move was to negotiate the replacement of the leases granted to Royal Dutch/Shell on Borneo and to Esso in the Peninsula with production-sharing contracts, which have been the favored instrument, alongside joint ventures, ever since. These first contracts came into effect in 1976. Allowing for royalties to both federal and state governments, and for cost recovery arrangements, they laid down that the remainder would go 70% to Petronas and 30% to the foreign company. Esso began oil production in two offshore fields in 1978, exporting its share of the supply, unlike Petronas, whose share was consumed within the country.
Petronas went downstream for the first time in 1976, when it was chosen by the Association of South East Asian Nations (ASEAN) to begin construction on the second ASEAN joint industrial project, a urea plant. The subsidiary, Asean Bintulu Fertilizer (ABF), is based in Sarawak
Sarawak
Sarawak is one of two Malaysian states on the island of Borneo. Known as Bumi Kenyalang , Sarawak is situated on the north-west of the island. It is the largest state in Malaysia followed by Sabah, the second largest state located to the North- East.The administrative capital is Kuching, which...
and now exports ammonia
Ammonia
Ammonia is a compound of nitrogen and hydrogen with the formula . It is a colourless gas with a characteristic pungent odour. Ammonia contributes significantly to the nutritional needs of terrestrial organisms by serving as a precursor to food and fertilizers. Ammonia, either directly or...
and urea
Urea
Urea or carbamide is an organic compound with the chemical formula CO2. The molecule has two —NH2 groups joined by a carbonyl functional group....
all over the world.
Also in 1976, Malaysia became a net exporter of oil, but exports were at such a low level as to make the country ineligible to join OPEC
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...
. This situation benefited Malaysia, and Petronas, by allowing the company a degree of commercial and political flexibility and reinforcing Petronas's chief purpose, Malaysian self-reliance.
Petronas supervised its foreign partners' oil activities, taking no direct role in production until 1978, when the government saw to the creation of a subsidiary for oil exploration and production, Petronas Carigali. It began its work in an oil field off the Peninsula. Petronas retained its supervisory powers over all oil and gas ventures, particularly on issues of health and safety and environmental control.
Developing natural gas: the late 1970s to the mid-1980s
The government was determined to develop Malaysia's natural gas as well as its oil Shipping Company (MISC), of which it owned 61%. These were to take LNG exports out of Malaysia, save the cost of hiring foreign tankers, and expand the country's fleet under its own control—in contrast to cargo shipping, which was controlled by international conferences. ShellRoyal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
BV, the Royal Dutch/Shell subsidiary that was building the LNG plant off Sarawak with Japanese and Asian Development Bank aid, accepted production sharing with Petronas but baulked at sharing equity, transport management, or refining. Negotiations went on, pushing commencement further and further back, until 1977, when Petronas and the government, faced with the costs of maintaining the tankers between delivery and first use, surrendered management rights—leading to a repeal of part of the Petroleum Development Act—and settled for Petronas's taking 60% of equity in the new company Malaysia LNG
Malaysia LNG
Malaysia LNG Sdn. Bhd. is a liquefied natural gas manufacturer in Malaysia. In 2007, it was the largest LNG manufacturing complex.-History:Malaysia LNG was incorporated on 4 June 1978 and the first liquefied natural gas was delivered in 1983....
. The Sarawak state government took 5%, and the other 35% was divided equally between Shell BV and the Mitsubishi Corporation
Mitsubishi Corporation
is Japan's largest trading company , a member of the Mitsubishi keiretsu. Mitsubishi Corporation employs over 50,000 people and has seven business segments including finance, banking, energy, machinery, chemicals, food and more....
. Production of LNG in Sarawak at last began in 1983.
After negotiations lasting from 1977 to 1982, Petronas had concluded contracts with Tokyo Electric Power and Tokyo Gas
Tokyo Gas
Tokyo Gas Company , founded in 1885, is the primary provider of natural gas to the main cities of Tokyo, Kanagawa, Saitama, Chiba, Ibaraki, Tochigi, Gunma, Yamanashi, and Nagano. , Tokyo Gas is the largest natural gas utility in Japan.- External links :...
for the sale and delivery of LNG through to the year 2003. Malaysia LNG was to send almost the entire output of its Bintulu gas fields to Japan, under these contracts and another one, signed in 1990, to supply Saibu Gas of Fukuoka, in southwestern Japan, for 20 years from 1993.
When in 1982 Petronas Carigali formed an exploration and production company with Société National Elf Aquitaine
Elf Aquitaine
Elf Aquitaine was a French oil company which merged with TotalFina to form TotalFinaElf. The new company changed its name to Total in 2003...
of France, it allowed Elf better terms for recovering costs than it had offered in earlier ventures. This development came against the background of the government's imposition of a depletion policy on Petronas, Royal Dutch Shell
Royal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
, and Esso
Esso
Esso is an international trade name for ExxonMobil and its related companies. Pronounced , it is derived from the initials of the pre-1911 Standard Oil, and as such became the focus of much litigation and regulatory restriction in the United States. In 1972, it was largely replaced in the U.S. by...
in an attempt to postpone the exhaustion of oil reserves. These were then estimated to be about 2.84 Goilbbl, and it was officially predicted that by the late 1980s Malaysia would be a net oil importer once again. By 1980, oil and gas already represented 24% of Malaysian exports, and the government decided to impose a tax on these exports at a 25% rate. The new policy and the new tax combined to cause Malaysia's output and exports of crude oil to fall in 1981 for the first time since Petronas was established. Output rose again, beyond its 1980 level, in the following year, but exports took until 1984 to surpass their 1980 level.
However, the depletion policy was being undermined by external circumstances. Through the early 1980s, a worldwide oil glut, which OPEC proved unable to control, forced the Malaysian government to increase production to offset deterioration in its balance of increased payments to a deficit of $1 billion. It became clear that this could only be sustained by relaxing the conditions for joint ventures between Petronas and the major oil companies. In 1982, the Petronas–government share, which had risen to 80%, was cut to 70%, and taxes on company income were also cut.
Petronas went into refining and distribution in 1983. It initiated the construction of refineries at Malacca
Malacca
Malacca , dubbed The Historic State or Negeri Bersejarah among locals) is the third smallest Malaysian state, after Perlis and Penang. It is located in the southern region of the Malay Peninsula, on the Straits of Malacca. It borders Negeri Sembilan to the north and the state of Johor to the south...
and at Kerteh
Kerteh
Kerteh is a town in the district of Kemaman in southern Terengganu, Malaysia, about 30 km or 20 minutes' drive north of Chukai. Kerteh is the base of operations for Petronas in Terengganu, overseeing the oil platform operations off the state's coast as well as petrochemicals production and...
in order to reduce its dependence on Royal Dutch/Shell's two refineries at Port Dickson
Port Dickson
Port Dickson or PD to locals is a beach and holiday destination situated about 32 km from Seremban and 90 km from Kuala Lumpur. It is located in the state of Negeri Sembilan in Peninsular Malaysia...
and Esso's refinery in Sarawak. These two majors, and other foreign companies, already covered much of the domestic retail market, but the new subsidiary Petronas Dagangan was given the initial advantage of preference in the location of its stations. By 1990, 252 service stations carried the Petronas brand, all but 20 on a franchise basis, and another 50 were planned. Some were set up on grounds of social benefit rather than of strict commercial calculation.
As production from Royal Dutch/Shell and Esso's existing fields moved nearer depletion
Oil depletion
Oil depletion occurs in the second half of the production curve of an oil well, oil field, or the average of total world oil production. The Hubbert peak theory makes predictions of production rates based on prior discovery rates and anticipated production rates. Hubbert curves predict that the...
, the companies sought new fields and new contracts. In 1985, the government and Petronas revised the standard production-sharing contract, increasing the rate of recovery of capital costs from 30% to 50% of gross production in the case of oil and from 35% to 60% in the case of natural gas, abolishing signature, discovery, and production bonus payments and increasing the foreign partners' share of the profits. At first the drastic fall in oil prices during 1986, which cut Malaysia's income from exported oil by more than a third even though the volume of exports rose by 16%, discouraged interest in the new arrangements, but by 1989 Petronas had signed 22 new contracts with 31 companies from 11 countries. However, the contract period was still restricted to five years—compared, for example, with the 35-year contracts available in neighboring Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
—and there was still a 25% levy on exported crude oil, a measure that was intended to promote the domestic refining industry. These conditions, cited as disincentives to foreign investment, were eventually relaxed over the next several years.
The government and Petronas aimed to encourage the replacement of fast-depleting oil within Malaysia itself and simultaneously to foster heavy industries which could help reduce the country's overwhelming dependence on exporting its natural resources. In 1980, petroleum products accounted for 88% of the country's commercial consumption of energy, the rest being provided from hydroelectric plants in Sarawak
Sarawak
Sarawak is one of two Malaysian states on the island of Borneo. Known as Bumi Kenyalang , Sarawak is situated on the north-west of the island. It is the largest state in Malaysia followed by Sabah, the second largest state located to the North- East.The administrative capital is Kuching, which...
, too far away from the main population centers to become a major alternative. Five years later, gas accounted for 17%, hydroelectricity
Hydroelectricity
Hydroelectricity is the term referring to electricity generated by hydropower; the production of electrical power through the use of the gravitational force of falling or flowing water. It is the most widely used form of renewable energy...
for 19%, coal for 2%, and petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...
products for 62% of such consumption, and about half of each year's gas output was being consumed in Malaysia.
The Petronas venture responsible for this shift in fuel use, and—along with Malaysia LNG—for Malaysia's becoming the third largest producer of LNG in the world, was the Peninsular Gas Utilization Project (Projek Penggunaan Gas Semenanjung), the aim of which was to supply gas to every part of the Peninsula. Its first stage was completed in 1985, following the success of smaller gasification projects in the states of Sarawak and Sabah
Sabah
Sabah is one of 13 member states of Malaysia. It is located on the northern portion of the island of Borneo. It is the second largest state in the country after Sarawak, which it borders on its southwest. It also shares a border with the province of East Kalimantan of Indonesia in the south...
, and involved the extraction of gas from three fields in the Natuna Sea, between the Peninsula and the island of Borneo
Borneo
Borneo is the third largest island in the world and is located north of Java Island, Indonesia, at the geographic centre of Maritime Southeast Asia....
; its processing in a plant at Kertih on the Peninsula's east coast; and its distribution to the state of Terengganu
Terengganu
Terengganu is a sultanate and constitutive state of federal Malaysia. The state is also known by its Arabic honorific, Darul Iman...
by pipeline and abroad via an export terminal.
Petronas's least happy venture was its ownership of the Bank Bumiputra
CIMB
CIMB Group CIMB Group is a regional universal bank operating in high growth economies in ASEAN. CIMB Group has the widest retail branch network across the region and is an indigenous ASEAN investment bank....
, the second-largest, but least-profitable, of the commercial banks incorporated in Malaysia. Petronas spent more than MYR
Malaysian ringgit
The Malaysian ringgit is the currency of Malaysia. It is divided into 100 sen...
3.5 billion over five years trying to rescue the bank from the impact of the bad loans it had made, starting with its support of the Carrian property group
Carrian Group
The Carrian Group was a Hong Kong conglomerate founded by George Tan, a Singaporean Civil Engineer working in Hong Kong as a project manager for a land development company. The Group's principal holding company Carrian Holdings, Ltd...
of Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
, which collapsed in 1985, taking the bank's share capital down with it. In 1991, Petronas sold the bank back to another state company, Minister of Finance Inc., and announced its intention to concentrate on oil, gas, and associated activities in future.
Just as Petronas was disposing of this liability, the crisis caused by the Iraqi regime's invasion of Kuwait
Kuwait
The State of Kuwait is a sovereign Arab state situated in the north-east of the Arabian Peninsula in Western Asia. It is bordered by Saudi Arabia to the south at Khafji, and Iraq to the north at Basra. It lies on the north-western shore of the Persian Gulf. The name Kuwait is derived from the...
culminated in military action against Iraq
Iraq
Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....
on behalf of the United Nations
United Nations
The United Nations is an international organization whose stated aims are facilitating cooperation in international law, international security, economic development, social progress, human rights, and achievement of world peace...
. Petronas had already raised Malaysia's oil production rate from 605,000 to 650000 oilbbl/d in late 1990 as the crisis unfolded. This move only reinforced the company's awareness of the need to vary its policies, since, with known reserves of 2.94 Goilbbl, and assuming no new major finds of oil, Malaysia risked seeing output decline to 350000 oilbbl/d in 2000 and running down to depletion within another five years. This was exacerbated by the possibility that Southeast Asia
Southeast Asia
Southeast Asia, South-East Asia, South East Asia or Southeastern Asia is a subregion of Asia, consisting of the countries that are geographically south of China, east of India, west of New Guinea and north of Australia. The region lies on the intersection of geological plates, with heavy seismic...
in general would enjoy rapid economic growth in the 1990s, so that demand for oil there would rise twice as fast as demand in the relatively more sluggish, more mature economies of North America and Europe. The Malaysian government, and its state oil and gas company, was forced to decide what mixture of policies to adopt in response.
Battling oil depletion: the late 1980s
Fortunately for Malaysia, exploration was by no means at an end and could yet produce more reserves. The Seligi field, which came onstream at the end of 1988 and was developed by Esso Production Malaysia, was one of the richest oilfields so far found in Malaysia waters, and further concessions to the majors would encourage exploration of the deeper waters around Malaysia, where unknown reserves could be discovered. Meanwhile, computerized seismography made it both feasible and commercially justifiable to re-explore fields which had been abandoned, or were assumed to be unproductive, over the past century. In 1990, Petronas invited foreign companies to re-explore parts of the sea off Sabah and Sarawak on the basis of new surveys using up-to-date techniques.Another way to postpone depletion was to develop sources of oil, and of its substitute, natural gas, outside Malaysia. Late in 1989, the governments of Vietnam
Vietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...
and Myanmar
Myanmar
Burma , officially the Republic of the Union of Myanmar , is a country in Southeast Asia. Burma is bordered by China on the northeast, Laos on the east, Thailand on the southeast, Bangladesh on the west, India on the northwest, the Bay of Bengal to the southwest, and the Andaman Sea on the south....
(Burma) invited Petronas Carigali to take part in joint ventures to explore for oil in their coastal waters. In 1990, a new unit, Petronas Carigali Overseas Sdn Bhd, was created to take up a 15% interest in a field in Myanmar's waters being explored by Idemitsu Myanmar Oil Exploration Co. Ltd., a subsidiary of the Japanese firm Idemitsu Oil Development Co. Ltd.
Idemitsu Kosan
is a Japanese petroleum company. It owns and operates oil platforms, refineries and produces and sells petroleum, oils and petrochemical products products....
, in a production sharing arrangement with Myanma Oil and Gas Enterprise
Myanma Oil and Gas Enterprise
Myanma Oil and Gas Enterprise is a national oil and gas company of Burma. The company is a sole operator of oil and gas exploration and production, as well as domestic gas transmission through a onshore pipeline grid....
. Thus began Petronas's first oil exploration outside Malaysia. In May 1990, the governments of Malaysia and Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
settled a long-running dispute over their respective rights to an area of 7,300 square kilometers in the Gulf of Thailand
Gulf of Thailand
The Gulf of Thailand , also known in to Malays as Teluk Siam literally meant Gulf of Siam, is a shallow arm of the South China Sea.-Geography:...
by setting up a joint administrative authority for the area and encouraging a joint oil exploration project by Petronas, the Petroleum Authority of Thailand
PTT Public Company Limited
PTT Public Company Limited, PTT PCL, or simply PTT is a Thai state-owned SET-listed oil and gas company. Formerly known as the Petroleum Authority of Thailand, it owns extensive submarine gas pipelines in the Gulf of Thailand, a network of LPG terminals throughout the Kingdom, and is involved in...
, and the U.S. company Triton Oil
Triton Energy Limited
Triton Energy Limited was founded in Dallas, Texas by E.R. Wiley in 1962...
. In a separate deal, in October 1990, the Petroleum Authority of Thailand arranged with Petronas to study the feasibility of transferring natural gas from this jointly administered area, through Malaysia to Thailand, by way of an extension of the pipelines laid for the third stage of the Peninsular Gas Utilization Project.
That project was on course to becoming a major element in the postponement of oil depletion. Contracts for line pipes for the second stage of the project were signed in 1989 with two consortia of Malaysian, Japanese, and Brazilian companies. This stage, completed in 1991, included the laying of 730 kilometers of pipeline through to the tip of the Peninsula, from where gas could be sold to Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
and Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
; the conversion of two power stations—Port Dickson
Port Dickson
Port Dickson or PD to locals is a beach and holiday destination situated about 32 km from Seremban and 90 km from Kuala Lumpur. It is located in the state of Negeri Sembilan in Peninsular Malaysia...
and Pasir Gudang
Pasir Gudang
Pasir Gudang is an industrial town located 35 km east of Johor Bahru in Malaysia . It is the eastern end of the Johor Bahru metropolitan area. The population is around 100,000. It is connected by the 4 lane Pasir Gudang Highway, a trunk road, and a railway line to Johor Bahru...
—from oil to gas; and the expansion of Petronas's output of methyl tertiary butyl ether (MTBE), propylene
Propylene
Propene, also known as propylene or methylethylene, is an unsaturated organic compound having the chemical formula C3H6. It has one double bond, and is the second simplest member of the alkene class of hydrocarbons, and it is also second in natural abundance.-Properties:At room temperature and...
, and polypropylene
Polypropylene
Polypropylene , also known as polypropene, is a thermoplastic polymer used in a wide variety of applications including packaging, textiles , stationery, plastic parts and reusable containers of various types, laboratory equipment, loudspeakers, automotive components, and polymer banknotes...
, which were already being produced in joint ventures with Idemitsu Petrochemical Co. of Japan and Neste Oy of Finland. The third and final stage of the project was to lay pipelines along the northwest and northeast coastlines of the Peninsula and was completed in 1997.
Another new venture in 1990 was in ship-owning, since Petronas's existing arrangements with MISC
Misc
Misc or MISC may refer to:* miscellaneous* Minimal instruction set computer* MISC Berhad, Malaysia International Shipping Corporation Berhad* Moi International Sports Centre, in Nairobi, Kenya...
and with Nigeria's state oil company would be inadequate to transport the additional exports of LNG due to start in 1994, under the contract with Saibu Gas. Petronas did not lose sight of the government's commitment to Malaysian self-reliance, and the company's second refinery at Malacca
Malacca
Malacca , dubbed The Historic State or Negeri Bersejarah among locals) is the third smallest Malaysian state, after Perlis and Penang. It is located in the southern region of the Malay Peninsula, on the Straits of Malacca. It borders Negeri Sembilan to the north and the state of Johor to the south...
, completed in 1994, with a capacity of 100000 oilbbl/d, promoted the same policy. The fact that it was built in a joint venture with Samsung
Samsung
The Samsung Group is a South Korean multinational conglomerate corporation headquartered in Samsung Town, Seoul, South Korea...
of Korea, the Chinese Petroleum Corporation of Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
, and Caltex
Caltex
Caltex is a petroleum brand name of Chevron Corporation used in more than 60 countries in the Asia-Pacific region, the Middle East, and southern Africa.-History:...
of the United States did not negate the policy, for the subsidiary company Petronas Penapisan (Melaka) had a decisive 45% of equity while sharing the enormous costs of and gaining advanced technology for the project. More to the point, a side effect of the refinery's completion was that Petronas was able to refine all of the crude oil it produced, instead of being partially dependent on refining facilities in Singapore.
Petronas, with its policies of promoting self-reliance, helping to develop associated industries, and varying the sources and uses of oil and gas, played an important role in the Malaysian economy as a whole. Under governments which—by current, if not historical, Western standards—were strongly interventionist, the contribution of oil taxes to the federal government's revenue hovered at around 12% to 16% until 1980, when it showed a marked increase to 23%, followed by another leap to 32% in 1981. From then until 1988 the proportion fluctuated between 29% and 36%. Petronas was not just another big oil company: it controlled a crucial sector of the economy and remained, for better or worse, an indispensable instrument of the state.
Expanding globally: the 1990s and beyond
Vietnam
Vietnam – sometimes spelled Viet Nam , officially the Socialist Republic of Vietnam – is the easternmost country on the Indochina Peninsula in Southeast Asia. It is bordered by China to the north, Laos to the northwest, Cambodia to the southwest, and the South China Sea –...
and established its first retail station outside of Malaysia in Cambodia
Cambodia
Cambodia , officially known as the Kingdom of Cambodia, is a country located in the southern portion of the Indochina Peninsula in Southeast Asia...
. In 1995, a subsidiary was created to import, store, and distribute liquefied petroleum gas (LPG). In addition, the company's polyethylene
Polyethylene
Polyethylene or polythene is the most widely used plastic, with an annual production of approximately 80 million metric tons...
plant in Kerteh
Kerteh
Kerteh is a town in the district of Kemaman in southern Terengganu, Malaysia, about 30 km or 20 minutes' drive north of Chukai. Kerteh is the base of operations for Petronas in Terengganu, overseeing the oil platform operations off the state's coast as well as petrochemicals production and...
began operations. Petronas marked a significant milestone during this time period—two of its subsidiaries, Petronas Dagangan Bhd and Petronas Gas Bhd, went public on the Kuala Lumpur Stock Exchange
Kuala Lumpur Stock Exchange
The Kuala Lumpur Stock Exchange dates back to 1930 when the Singapore Stockbrokers' Association was set up as a formal organisation dealing in securities in Malaya...
.
In 1996, Petronas entered the aromatics market by way of a joint venture that created Aromatics Malaysia Sdn Bhd. It also formed a contract with China National Offshore Oil Corporation
China National Offshore Oil Corporation
China National Offshore Oil Corporation is one of the three major national oil companies of China....
and Chevron
Chevron Corporation
Chevron Corporation is an American multinational energy corporation headquartered in San Ramon, California, United States and active in more than 180 countries. It is engaged in every aspect of the oil, gas, and geothermal energy industries, including exploration and production; refining,...
Overseas Petroleum Ltd. to begin exploration of block 02/31 of the Liaodong Bay area in China. While the Asian economy as a whole suffered from an economic crisis during 1997 and 1998, Malaysia was quick to bounce back due to successful government reforms. From its new headquarters in the Petronas Twin Towers
Petronas Twin Towers
The Petronas Towers are skyscrapers and twin towers in Kuala Lumpur, Malaysia...
, the state-owned concern continued its development in the oil and gas industry.
During 1997, Petronas heightened its diversification efforts. The firm set plans in motion to build three petrochemical plants in Kuantan
Kuantan
Kuantan is the state capital of Pahang, the 3rd largest state in Malaysia. It is situated near the mouth of the Kuantan River and faces the South China Sea. If one measures the distance along the east coast of Peninsular Malaysia, it is located roughly halfway between Singapore and Kota Bharu...
as well as an acetic
Acetic acid
Acetic acid is an organic compound with the chemical formula CH3CO2H . It is a colourless liquid that when undiluted is also called glacial acetic acid. Acetic acid is the main component of vinegar , and has a distinctive sour taste and pungent smell...
facility in Kerteh
Kerteh
Kerteh is a town in the district of Kemaman in southern Terengganu, Malaysia, about 30 km or 20 minutes' drive north of Chukai. Kerteh is the base of operations for Petronas in Terengganu, overseeing the oil platform operations off the state's coast as well as petrochemicals production and...
. Its first LPG joint venture in China was launched that year and the company acquired a 29.3% interest in Malaysia International Shipping Corporation Berhad (MISC). In 1998, Petronas's tanker-related subsidiary merged with MISC, increasing Petronas's stake in MISC to 62%. That year, Petronas introduced the Petronas E01, the country's first commercial prototype engine. The company also signed a total of five new production sharing contracts (PSCs) in 1998 and 1999, and began oil production in the Sirri
Sirri Island
Sirri Island , is an island in the Persian Gulf belonging to Iran.Sirri island is situated 76 km from Bandar-e Lengeh and 50 km east of Abu Musa island. The island is one of six in the Abu Musâ Island Group ....
field in Iran.
Petronas entered the new century determined to expand its international efforts. The company forged deals for two new exploration plots in Pakistan and began construction on the Chad-Cameroon Integrated Oil Development and Pipeline Project. By 2002, Petronas had signed seven new PSCs and secured stakes in eight exploration blocks in eight countries, including Gabon
Gabon
Gabon , officially the Gabonese Republic is a state in west central Africa sharing borders with Equatorial Guinea to the northwest, Cameroon to the north, and with the Republic of the Congo curving around the east and south. The Gulf of Guinea, an arm of the Atlantic Ocean is to the west...
, Cameroon
Cameroon
Cameroon, officially the Republic of Cameroon , is a country in west Central Africa. It is bordered by Nigeria to the west; Chad to the northeast; the Central African Republic to the east; and Equatorial Guinea, Gabon, and the Republic of the Congo to the south. Cameroon's coastline lies on the...
, Niger
Niger
Niger , officially named the Republic of Niger, is a landlocked country in Western Africa, named after the Niger River. It borders Nigeria and Benin to the south, Burkina Faso and Mali to the west, Algeria and Libya to the north and Chad to the east...
, Egypt
Egypt
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
, Yemen
Yemen
The Republic of Yemen , commonly known as Yemen , is a country located in the Middle East, occupying the southwestern to southern end of the Arabian Peninsula. It is bordered by Saudi Arabia to the north, the Red Sea to the west, and Oman to the east....
, Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
, and Vietnam. The firm also made considerable progress in its petrochemicals strategy, opening new gas-based petrochemical facilities in Kerteh and Gebeng.
By 2003, Malaysia was set to usurp Algeria
Algeria
Algeria , officially the People's Democratic Republic of Algeria , also formally referred to as the Democratic and Popular Republic of Algeria, is a country in the Maghreb region of Northwest Africa with Algiers as its capital.In terms of land area, it is the largest country in Africa and the Arab...
as the world's second-largest producer of LNG with the completion of the Malaysia LNG Tiga Plant. Prime Minister Mahathir Mohamad commented on the achievement in a May 2003 Bernama
BERNAMA
BERNAMA is a news agency of the government of Malaysia. It is an autonomous body placed under the Information, Culture and Communications Ministry. It was set up by an Act of Parliament in 1967 and started work on 26 May 1968....
News Agency article, claiming that "the Petronas LNG complex now serves as another shining example of a vision realized of a national aspiration, transformed into reality by the same belief among Malaysians that 'we can do it.'" Indeed, Petronas had transformed itself into a global oil company over the previous decade, becoming a national symbol for success. The company realized, however, that it would have to continue its aggressive growth strategy in order to insure its survival in the years to come.
The Petronas overseas expansion drive continues with the acquisition of Woodside Energy Ltd Mauritania
Mauritania
Mauritania is a country in the Maghreb and West Africa. It is bordered by the Atlantic Ocean in the west, by Western Sahara in the north, by Algeria in the northeast, by Mali in the east and southeast, and by Senegal in the southwest...
assets for $418 million in 2007. The venture proved successful as they discovered oil in May 2008
In 2004, Minister in the Prime Minister's Department, Datuk Mustapa Mohamed, stated that Petronas contributed RM 25 Billion to the country's treasury accounting for 25% of revenue collected via dividends and other revenues. Petronas continuously provides the Malaysian government dividends from its profits. Since inception in 1974, Petronas have paid the government RM 403.3 billion, with RM 67.6 billion in 2008. The payment represents 44% of the 2008 federal government revenue. Petronas continues to focus on international exploration projects as 40% of revenue in 2008 was derived from international projects such as Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...
, Sudan
Sudan
Sudan , officially the Republic of the Sudan , is a country in North Africa, sometimes considered part of the Middle East politically. It is bordered by Egypt to the north, the Red Sea to the northeast, Eritrea and Ethiopia to the east, South Sudan to the south, the Central African Republic to the...
, Chad
Chad
Chad , officially known as the Republic of Chad, is a landlocked country in Central Africa. It is bordered by Libya to the north, Sudan to the east, the Central African Republic to the south, Cameroon and Nigeria to the southwest, and Niger to the west...
and Mauritania
Mauritania
Mauritania is a country in the Maghreb and West Africa. It is bordered by the Atlantic Ocean in the west, by Western Sahara in the north, by Algeria in the northeast, by Mali in the east and southeast, and by Senegal in the southwest...
. The company's international reserves stood at 6.24 billion barrels oil equivalent in 2008.
Subsidiaries
Petronas has more than 100 subsidiaries and around 40 Joint Venture companies in which Petronas has at least 50% stake in the company. Although Petronas is considering to listing more of its subsidiaries, so far the company has listed at least 3 of its subsidiaries in the Bursa MalaysiaBursa Malaysia
Bursa Malaysia is an exchange holding company approved under Section 15 of the Capital Markets and Services Act 2007. It operates a fully integrated exchange, offering the complete range of exchange-related services including trading, clearing, settlement and depository services.- History :Bursa...
.
Petronas Dagangan Berhad
The company has also teamed up with local food and beverage companies, banks and transportation companies to provide better services at their petrol stations. Companies include McDonald's
McDonald's
McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 64 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by the eponymous Richard and Maurice McDonald; in 1948...
, Kentucky Fried Chicken, Dunkin Donuts, Konsortium Transnasional Berhad, Maybank
Maybank
Maybank , a trade name for Malayan Banking Berhad is the largest bank and financial group in Malaysia, with significant banking operations in Singapore, Indonesia and the Philippines. The bank also has large interests in Islamic banking through Maybank Islamic Berhad and insurance via its Etiqa...
, and CIMB Bank
CIMB
CIMB Group CIMB Group is a regional universal bank operating in high growth economies in ASEAN. CIMB Group has the widest retail branch network across the region and is an indigenous ASEAN investment bank....
.
Petronas Gas Berhad
Involved in the provision of gas processing and transmission services to Petronas and its customers as a throughput company. Owns and operates the Peninsular Gas Pipeline which is 2,550 kilometres in length and runs from KertehKerteh
Kerteh is a town in the district of Kemaman in southern Terengganu, Malaysia, about 30 km or 20 minutes' drive north of Chukai. Kerteh is the base of operations for Petronas in Terengganu, overseeing the oil platform operations off the state's coast as well as petrochemicals production and...
in Terengganu to Johor Bahru
Johor Bahru
Johor Bahru is the capital city of Johor in southern Malaysia. Johor Bahru is the southernmost city of the Eurasian mainland...
in the South and Kangar
Kangar
Kangar is the state capital of Perlis, Malaysia. It has a population of 48,898 and an area of 2,619.4 ha. It is located in the northern most point of Peninsular Malaysia and is situated by the Perlis River. The center of Kangar is Sena Province, which is referred to by few locals as 'Uptown Sena'...
in the North of Peninsular Malaysia.
MISC Berhad
Involved in ship-owning, ship-operating and other logistics and maritime transportation services and activities. Currently has the largest fleet of LNG transport vesselsKLCC Properties Berhad
Involved in the development and the management of the Kuala Lumpur City Centre project which includes the Petronas Twin TowersPetronas Twin Towers
The Petronas Towers are skyscrapers and twin towers in Kuala Lumpur, Malaysia...
, Menara Exxon Mobil
Menara Exxon Mobil
Menara ExxonMobil is a skyscraper located in the Kuala Lumpur City Centre of Kuala Lumpur, Malaysia. The building currently is the headquarters of Exxon Mobil Malaysia....
and KLCC Park
KLCC Park
KLCC Park is a public park located in the vicinity of Suria KLCC, Kuala Lumpur, Malaysia. The park has been designed to provide greenery to Petronas Twin Towers and the areas surrounding it.-Design:...
. Other properties under its care include Dayabumi Complex which located near Dataran Merdeka
Dataran Merdeka
Merdeka Square is located in Kuala Lumpur, Malaysia. It is situated in front of the Sultan Abdul Samad Building. It was here the Union Flag was lowered and the Malayan flag hoisted for the first time at midnight on August 31, 1957...
Petronas Chemicals
The Petronas Chemicals is the latest company to be publicly listed. The IPO was done on 26 November 2010 with investor rise around USD 4.40 billion, effectively become one of the largest IPO exercise in South East Asia.The business is the largest petrochemical producer and seller in South East Asia. Products include olefins, polymers, fertilisers, methanol
Methanol
Methanol, also known as methyl alcohol, wood alcohol, wood naphtha or wood spirits, is a chemical with the formula CH3OH . It is the simplest alcohol, and is a light, volatile, colorless, flammable liquid with a distinctive odor very similar to, but slightly sweeter than, ethanol...
and other basic chemicals and derivative products
Malaysian Marine and Heavy Engineering
MMHE was listing on 29 October 2010 with MYR 1 billion raised on its IPO exercise.The business builds offshore structures for oil and gas applications, help repair large vessels and converts vessels into Floating production storage and offloading
Floating Production Storage and Offloading
A floating production, storage and offloading unit is a floating vessel used by the offshore industry for the processing of hydrocarbons and for storage of oil. A FPSO vessel is designed to receive hydrocarbons produced from nearby platforms or subsea template, process them, and store oil until it...
and FSOs.
Other principal subsidiaries
Some of the key subsidiaries are:-- Petronas Carigali Sdn Bhd - Main Hydrocarbon exploration arm
- Petronas Carigali Overseas Sdn Bhd - Hydrocarbon exploration arm aimed at finding new blocks in international areas
- Petronas Research Sdn Bhd - Conducting research and development
- MITCO Sdn Bhd - International Trading of non-oil assets
- Petronas Fertilizer KedahPetronas Fertilizer KedahPetronas Fertilizer Kedah Sdn Bhd is a Malaysian urea production company and a wholly owned subsidiary of Petronas. Located near the town of Gurun in the northern state of Kedah Darul Aman in Malaysia, the company is involved in petrochemical manufacturing, mainly producing granular urea for use...
- Creating ureaUreaUrea or carbamide is an organic compound with the chemical formula CO2. The molecule has two —NH2 groups joined by a carbonyl functional group....
fertilizer - Petronas Methanol (Labuan) Sdn. Bhd. (PMLSB)Petronas Methanol (Labuan)Petronas Methanol Sdn. Bhd. is a subsidiary of Petronas. It was formed in 1992 when Petronas bought the Methanol plant from Sabah Gas Industries. The plant was commissioned under Sabah Gas Industries in 1984 to produce Grade AA Methanol using Lurgi's Low Pressure Combined Technology...
- Methanol plant
Others include Petronas Assets Sdn Bhd; Petronas Maritime Services Sdn Bhd; Petronas Trading Corp. Sdn Bhd; Petronas Argentina S.A.; Petronas Australia Pty Ltd.; Petronas Thailand Co. Ltd.; Petronas Energy Philippines Inc.; Petronas Cambodia Co. Ltd.; Petronas Technical Services Sdn Bhd; Petronas South Africa Pty Ltd.; Petronas India Holdings Company Pte Ltd.; Petronas China Co. Ltd.; Petronas International Corp. Ltd.; Petronas Marketing Thailand Co. Ltd.; Myanmar Petronas Trading Co. Ltd.; Petronas Marketing (Netherlands) B.V. and Indianoil Petronas
Motorsport
Formula One
Formula One, also known as Formula 1 or F1 and referred to officially as the FIA Formula One World Championship, is the highest class of single seater auto racing sanctioned by the Fédération Internationale de l'Automobile . The "formula" designation in the name refers to a set of rules with which...
team, and it supplies lubricant
Lubricant
A lubricant is a substance introduced to reduce friction between moving surfaces. It may also have the function of transporting foreign particles and of distributing heat...
s and fuel
Fuel
Fuel is any material that stores energy that can later be extracted to perform mechanical work in a controlled manner. Most fuels used by humans undergo combustion, a redox reaction in which a combustible substance releases energy after it ignites and reacts with the oxygen in the air...
to the team. It also owned 40% of Sauber Petronas Engineering
Sauber Petronas Engineering
Sauber Petronas Engineering AG was a company owned jointly by the Swiss racing car manufacturer Sauber and the Malaysian oil company Petronas . The company was founded for the sole purpose of building engines to the Sauber formula one team....
, the company that builds chassis which formerly utilized Ferrari
Scuderia Ferrari
Scuderia Ferrari is the racing team division of the Ferrari automobile marque. The team currently only races in Formula One but has competed in numerous classes of motorsport since its formation in 1929, including sportscar racing....
designed engines used by the Sauber team, until being bought out by German motor company BMW
BMW
Bayerische Motoren Werke AG is a German automobile, motorcycle and engine manufacturing company founded in 1916. It also owns and produces the Mini marque, and is the parent company of Rolls-Royce Motor Cars. BMW produces motorcycles under BMW Motorrad and Husqvarna brands...
. Petronas is also the main sponsor for Malaysian Grand Prix
Malaysian Grand Prix
First included in the Formula One World Championship in 1999, the current Malaysian Grand Prix is held at the Sepang International Circuit at Sepang, Malaysia. FIA-sanctioned racing in Malaysia has existed since the 1960s...
, and co-sponsors the Chinese Grand Prix
Chinese Grand Prix
The Chinese Grand Prix is a round of the Formula One World Championship. It is currently held at the Shanghai International Circuit, Shanghai, designed by Hermann Tilke. When completed in 2004, it was the most expensive Formula One circuit facility, costing $240 million...
. Petronas was the exclusive premium partner of the Sauber Petronas (1995–2005) and BMW Sauber F1 Team (2006–2009). BMW had acquired the controlling stake of the former Sauber Petronas Engineering, but left the sport after the 2009 season. On December 21, 2009, Petronas was confirmed as moving from BMW Sauber to the newly formed Mercedes Grand Prix team.
In terms of further Formula One involvement, every year Petronas took the BMW Sauber team to various parts of Malaysia for F1 demos so the public who are unable to go to the track itself get to experience a little bit of what F1 offers. Other promotional events are held in the run up to the race and the drivers play an integral part in this so much so that Nick Heidfeld
Nick Heidfeld
Nick Lars Heidfeld is a German racing driver.Despite scoring regular podium finishes in and , Heidfeld has yet to win a race since entering Formula One in . This means that amongst the current drivers, he has had the most GP starts without standing at the top spot on the podium...
conceded that there were more fans for BMW Sauber in Malaysia than in most other countries.
As part of its corporate social responsibility programme, Petronas also brings underprivileged children to watch the race.
Petronas also sponsors the Malaysian Cub Prix
Malaysian Cub Prix
Malaysian Cub Prix is a motorcycle tournament held in Malaysia for Supercub compatible mopeds a.k.a. kapchai with displacements between 110 cc to 125 cc. The tournament is aimed to encourage young riders to unleash their talents in motorcycle racing by taking part in legal race tournaments and to...
races. It also sponsors many other sporting events and teams, mostly motorsports. Some of these sponsorships includes the PERT (Petronas EON Rally Team), the now defunct Foggy Petronas Superbike team (in which Petronas debutes their own superbike, the FP1
Petronas FP1
The Petronas FP1 is a liquid-cooled inline three-cylinder homologation special sport bike that was produced in 2003 by Petronas.Originally developed jointly by Petronas and Sauber Petronas Engineering as the Petronas GP1 989cc prototype to compete in MotoGP, Petronas decided to race the motorcycle...
), and also the Petronas Adventure Team, a 4X4 adventure team. More recently Petronas is also a major sponsor for PETRONAS TOYOTA TEAM TOM'S
TOM'S
is a factory supported racing team and tuner of Toyota and Lexus vehicles. The name stands for Tachi Oiwa Motor Sport. Their head office is located in Tokyo, Japan. They are currently heavily involved with Super GT racing and Formula 3 racing...
which is currently participating in Super GT
Super GT
The Super GT series, formerly known as the All-Japan Grand Touring Car Championship or JGTC , is a grand touring car race series promoted by the GT-Association...
series, which they won the team title in 2008 and driver title in 2009. The series also race in Malaysia every season at Sepang International Circuit
Sepang International Circuit
The Sepang International Circuit is a racing circuit in Sepang, Selangor, Malaysia. It is located near Kuala Lumpur International Airport, approximately 60 km south of the capital city Kuala Lumpur. It is the venue used for the Formula One Malaysian Grand Prix, A1 Grand Prix as well as the...
. Petronas signed a three-year sponsorship agreement with Fiat Yamaha motoGP team. The PETRONAS branding can be seen starting Qatar race
2009 Qatar motorcycle Grand Prix
The 2009 Qatar motorcycle Grand Prix was the opening round of the 2009 MotoGP championship. It had originally been due to place on the weekend of April 10–12, 2009 at the Losail International Circuit located in Doha, Qatar. However, the meeting was extended to April 13, as the MotoGP race was...
on the 10 to 12 April 2009.
Education