A Peek at Petronas Pertaining to our Peculiar Position

By Emmanuel Narokobi

Promise is perhaps the biggest plank that we will have to walk on to realise the gravity of our peculiar position in history today. Many articles have been written of late regarding the potential, the promise and the pittfalls that we face if we blow this second resource boom. The Final Investment Decision on the PNG LNG project is in its last signings now and our InterOil LNG project is also coming along nicely so the question on everyones minds is, can we really manage all the money we are to potentailly make in the next 10 – 20 years?

A good malaysian friend has suggested we take a look at what Petronas did for their country in the space of 30 years. So he emailed a very interesting analysis on Petronas development which I would suggest would be a useful roadmap for us at this early stage of our billion dollar projects. The paper is a 2007 report by the The James A. Baker III Institute for Public Policy, Rice University. The first paragraph reads:

“This is an analysis of the Malaysian national oil company, Petroliam Nasional, or as it is popularly called, Petronas. While the company has been in existence  for only about 30 years, it has transformed itself radically during this period. In the first half of its life, it was learning the ropes of the petroleum business and concentrating primarily upon upstream operations with limited downstream activities. In the following 15 plus years it expanded its domestic activities into downstream operations including retail business and petrochemicals, entered into overseas operations in some 35 countries, developed its role as a dominant player in oil and gas shipping, and helped finance a series of mega projects in Malaysia.

This analysis assesses how this development took place, how the company organised this expansion and what Petronas’ political and economic role has been in Malaysia and the world. To gain an insight into these questions, we will focus on 5 major points:

  1. it’s history over the past approximately thirty years since its formation in 1974 and changes in policies and strategies;
  2. the organizational and administrative capacities of the company;
  3. an assessment of its domestic and international upstream and downstream operations as well as its business strategy;
  4. the relation of Petronas and the Malaysian economy; and
  5. geopolitical considerations.”

Read The Report Here

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