Exclusive report by Azman Ujang
KUALA LUMPUR, Oct 23 -- Petronas President and Chief Executive Officer Tan Sri Wan Zulkiflee Wan Ariffin takes a journey down memory lane on the evolution of the national oil corporation into a world brand and Malaysia's sole company listed on the Fortune 500.
And in doing so, he paid a glowing tribute to several of his predecessors whom he described as "great personalities that Petronas has been blessed with" for turning the 45-year old entity from the regulator for the oil and gas industry into what it is today -- a full-fledged integrated company from upstream right until the end of the supply chain into retail and everything in between.
In an interview with Bernama, Wan Zulkiflee said it was the wisdom of the previous craftsmanship of Petronas that placed the corporation under the Companies Act for an organisation established under the Petroleum Development Act 1974 (PDA74).
" We have been blessed by great personalities in the past among them Tengku Razaleigh Hamzah, Datuk Rastam Hadi, M.B. Hashim, Tan Sri Abdullah Salleh, Tun Azizan Zainal Abidin and Tan Sri Hassan Merican.
" There has also been a pipeline of leaders in Petronas that have really shaped the organisation and so, as a result, we have evolved from a regulator into a full-fledged oil and gas company including refining, gas processing, pipeline, LNG and also the lubricants," he said.
He said before PDA 1974 came into being, there were only concession agreements in the industry but after the introduction of the game-changer production sharing contract (PSC), Petronas was able to shape the eco-system for the oil and gas industry.
"It has been a vibrant industry and a fairly resilient industry in good and bad times. And also we have put a lot of emphasis on Bumiputera participation in this industry".
Asked what made the industry so vibrant and resilient, Wan Zulkiflee said it was so because of the eco-system being provided.
"To be honest, I don't think that we are at an ideal point yet. I have been on record saying that we need further consolidation for the oil and gas industry. Today we got around 3,700 companies registered with Petronas to provide services. If you contrast with Norway, a smaller country but with oil production similar if not more than us, they have got 700 or so registered companies.
"So I think this fragmentation is not the most efficient structure but we are encouraging consolidation to the extent that it is possible for us to do but a lot has to come from the industry itself," he added.
He pointed out that in this industry, efficiency and competitiveness were crucial in order to survive the oil price circle during the high time and the not so good time.
On the outlook for the industry in the second half of 2019 up to early 2020, Wan Zulkiflee said despite so many things happening, Petronas remained very conservative as well as being prudent in its financial planning because it expected a volatile outlook.
"Because if you look at the supply side, there are different trends on different fronts, now the US-Iran sanction which means a lot of Iranian volume will not be coming to the market. And today we got Venezuela issues affecting the production coming into the market.
"On the hand, in North America, shale oil is really a booming business, in the past, this business was done by small players but now the big companies are already in that space and they are financially strong.
Now we have got ExxonMobil, Total and the big boys playing shale, so that's why I think on the supply side there will be in abundance in spite of what happens in Iran, Iraq and the attacks on Saudi petroleum facilities", said Wan Zulkiflee.
On the demand side, the US-China trade war will hit the global economic growth and so, too, the demand growth for oil.
"So with this, looking at the fundamental supply and demand, that is why we are saying that it will be volatile and lower this year for our planning purposes," he said.