THE national oil corporation, Petroliam Nasional Bhd (Petronas), celebrated its 50th year anniversary on Aug 17, marking half a century of success and shared wealth across the nation.
Reflecting on when the Malaysian government set up Petronas in 1974, its first chairman Tengku Razaleigh Hamzah shared how the national oil company was always to be owned by the people.
"It is the people's company," Tengku Razaleigh told Free Malaysia Today, pointing out that Petronas has always served as the custodian of Malaysia's — and its people's — oil and gas wealth.
This principle laid the foundation for Petronas' approach to corporate governance and integrity.
Coupled with a history of good management, Petronas has achieved a measure of success, being the only Malaysian company to make the Global Fortune 500 list.
A STRONG FOUNDATION
Tengku Razaleigh was tasked with setting up the national oil corporation by then prime minister Tun Abdul Razak Hussein, and his priority was to recruit individuals with the expertise to manage the company effectively.
"We'd heard of national oil companies going down the tube thanks to incompetence, ignorance of market forces or because of greed and corruption," he said.
The potential pitfalls were clear. Countries like Nigeria, Venezuela and Angola have struggled with the 'resource curse', where oil wealth has been squandered due to corruption and poor governance. Aware of these dangers, Razaleigh focused on building a strong foundation for Petronas.
"I needed good people to start with," he said, sharing how he turned to Razak, who had also assigned him the task of drafting the Petroleum Development Act.
A MALAYSIAN COMPANY
In the 1960s, then Sarawak chief minister Abdul Rahman Ya'kub proposed the idea of assuming control of Malaysia's oil and gas resources through a statutory body, and later on, a national oil company.
With the global oil crisis of the 1970s and rising oil prices, the federal government recognised the value of this proposal.
By managing these resources on behalf of the people, the government was able to move forward in its national development agenda, while ensuring that wealth was distributed equitably, particularly benefiting states without natural resources.
Certain resource-poor states like Penang could depend on commerce, but other states such as Perlis were entirely dependent on the national government.
Sarawak's unique position as Malaysia's first oil-producing territory played a key role in funding national development.
This approach marked a significant shift from the early days when oil was first discovered in Miri in 1910. While the resource belonged to the state, the Sarawak government had no control or say over how it was to be exploited by Royal Dutch Shell, now renamed Shell plc.
SUSTAINING SUCCESS
To this day, Petronas continues to generate a massive amount of revenue for Malaysia — it brought in over RM343.6 billion for the 2023 financial year, surpassing that of the largest corporations on Bursa Malaysia.
For the same year, it turned in a profit after tax of RM80.7 billion and contributed RM40 billion in dividends to the government.
Remarking on this, Tengku Razaleigh posed the question, "How do we manage success?"
The answer, he said, is in the calibre of Petronas' leadership and staff.
He pointed out the need for people who are knowledgeable, sufficiently equipped and adequately competent to run an oil company.
"Petronas is not just any oil company. It is the national oil company," he said, adding that the right expertise and integrity are crucial in extending the company's success.
Beyond oil exploration, Petronas has made an impact in the creation of new industries within its supply chain, generating thousands of jobs and uniting the three regions of Malaysia – Sabah, Sarawak, and Peninsular Malaysia.
"The potential of oil wealth as a contributor to national unity and development cannot be denied," he added.
The company's global footprint now spans more than 100 countries, with significant operations in Indonesia, Suriname, the Gulf of Mexico, Canada, Brazil, the UK, and Asia.
FORGING AHEAD
As sustainability becomes a global priority, Petronas is adapting to the changing landscape.
For instance, Petronas targets to cap its greenhouse gas emissions in Malaysia to the equivalent of 49.5 million tonnes of carbon dioxide in 2024, down from 54.03 million tonnes in 2022.
It also aims to raise its renewable energy capacity to 3,000MW this year, which includes stepping up investments in hydrogen.
The national oil company will enhance its standards in areas such as production and employee welfare, meeting the demand for transparency and accountability on local and global levels.
In all this, Petronas remains steadfast in its commitment to equitable distribution of the nation's oil and gas resources.
As it embarks on its next 50 years, Petronas will bank on strategic investments to ensure long-term growth and stability, while it continues to uphold its pillars of excellent management and corporate governance.