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PETRONAS OIL & GAS INDUSTRY CASE STUDY IN PETRONAS

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PETRONAS OIL & GAS INDUSTRY


CASE STUDY IN PETRONAS

Adam Adha Bin Kamarul Zaman1*


Muhammad Syahmi Bin Khairul Khana 2*
Abdul Rauf Bin Abdul Saleem3*

1234 Faculty of Information Science and Technology

Universiti Kebangsaan Malaysia , UKM 43600, Bangi, Selangor , Malaysia.

*Adam Adha Bin Kamarul Zaman1a181612@siswa.ukm.edu.my


*Muhammad Syahmi Bin Khairul Khana2 a182822@siswa.ukm.edu.my
*Abdul Rauf Bin Abdul Saleem3 a182427@siswa.ukm.edu.my

ABSTRACT
PETRONAS is a totally included oil and gas company, totally owned via way of means of the Malaysian
government. It is the biggest agency in Malaysia. with general belongings of RM 139 billion at March
31, 2001. It became integrated in August 1974 and derives its powers from the Petroleum Development
Act. which vests in it the possession and powers of exploring and acquiring petroleum onshore and
offshore Malaysia.
Over the years. PETRONAS has grown from strength to strength to grow to be a totally included
petroleum agency, concerned in a huge spectrum of petroleum sports. Currently its enterprise sports
variety from upstream exploration and manufacturing of oil and gas to downstream oil relining;
advertising and distribution of petroleum products; trading; gas processing and liquefaction: gas
transmission pipeline operation; advertising of liquefied, natural gas and different operations, each
domestically and internationally.
During our research, we've diagnosed that Petronas has bought the subsequent programs: Cisco IronPort
Cloud Email Security for Secure Email Gateways (SEGs) in 2020, Microsoft Azure SQL Database for
Database Management in 2020, SAP S/4 HANA - Materials Management (MM) for Inventory
Management in 2018 and the associated IT decision-makers and key stakeholders.
Our database presents client perception and contextual data on which agency programs and software
program structures Petronas is running and its propensity to make investments greater and deepen its
courting with Cisco Systems, Microsoft, SAP or discover new providers as a part of their normal Digital
and IT transformation initiatives to live competitive, fend off threats from disruptive forces, or follow
inner mandates to enhance normal agency efficiency.
We had been studying Petronas’s revenues, that have grown to $28. billion in 2019, plus its IT price
range and roadmap, cloud software program purchases, aggregating huge quantities of facts factors
that shape the premise of our forecast assumptions for Petronas’s goal to invest on rising technology
along with AI, Machine Learning, IoT, Blockchain, Autonomous Database or in cloud-primarily based
totally ERP, HCM, CRM, EPM, Procurement or Treasury programs.

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This observe is aimed to discover how PETRONAS has managed to acquire and develop its
technological skills withinside the upstream zone of the petroleum industry. In its 28 years of operation.
PETRONAS has grown right into a success oil agency with business interest in greater than 20 nations
and is likewise indexed withinside the Fortune Global 500 as one in all the largest agency in the world.
Its transition from being a technological beginner to a well-reputable worldwide participant did now no
longer show up via way of means of chance. This observe is aimed to discover how this transition took
place, specifically in PETRONAS' middle enterprise. that is the upstream zone wherein oil
manufacturing is concerned.
The findings of this observe display that PETRONAS have followed planned and sustained efforts to
acquire and increase technological skills. Many strategies of era functionality improvement
mechanisms have been used, which include clever partnerships. acquisition of companies, using
expatriates and different mechanisms to gather skills, which caused its success.
Keywords: [enterprise, SAP, investment, fend off threats, cloud software program, ERP,
technological skills, expatriates]

INTRODUCTION
PETRONAS is the acronym for Petroliam National Berhad. PETRONAS now no longer
simplest targeted on oil and gas and offer education. PETRONAS is an integrated public
business enterprise and has it separate felony entity. PETRONAS turned into integrated at the
seventeenth of August 1974 and turned into owned and managed via way of means of the
authorities of Malaysia. PETRONAS has a fixed of vision, assignment and values.

PETRONAS is a widely known international organization that has ventured into 32 nations
together with Argentina, Russia and Egypt. PETRONAS practices a subculture that stresses
specially on being environmental pleasant and those orientated. It presently employs over 30,
000 personnel of 38 nationalities.

PETRONAS with the completely included oil and gas multinational, it has concerned the
complete petroleum sports. From handling the sharing contractors of the overseas
manufacturing, we had been extrude into growing our very own abilities withinside the
upstream sector – permit us to take the lead withinside the exploration and manufacturing of
the nation’s oil and gas resources.

Besides that, we additionally ventured into downstream sports. We are searching for to
maximise fee introduction and beef up of our operations all of the manner down the fee chain.
The variety of our downstream sports consists of oil refining, gas processing and liquefaction,
gas transmission pipeline operations, petrochemical production and advertising, belongings
investment, shipping, advertising of liquefied herbal gas, advertising and distribution of
petroleum products, and trading.

Furthermore, PETRONAS has operated carrier station in Malaysia, South Africa, Sudan,
Thailand and Indonesia. It has distribution of car and business lubricants globally, together
with the PETRONAS Syntium and Sprinta top rate grade engine oil.

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METHODOLOGY

Petronas, as a reliable organization known globally, have released dozens of official


writings and documents regarding from how they operate and interact with their key partners
to details revenue that has been successfully gained by the organization. As we conduct the
research about this marvelous organization, we have undergoes several methods to gain our
knowledges regarding to the research, thus providing this research with trustable data and
resourceful findings. Most of the methods were conducted by searching the internet from a
very trustable sources. We have undergoes Petronas’ official website to primarily learn about
the visions and missions of the organization. This can lead us to further understand what the
organization aim to achieve. Then to understand Petronas’ business model and how they
interact with their key partners, we have analyzed Petronas’ Annual Report. This lead us to a
remarkable understanding on how Petronas scale themselves to expand their operation
throughout the world and how they planned on to achieve their corporation’s goal. Lastly, we
also did some literature review a on a few articles about Petronas from a trustable sources such
as Google Scholar. This method can help us in broaden our view and understanding towards
Petronas, thus provide us with extra informations for the research that did not included in the
official writings. By combining all the methods above, we can fully understand how Enterprise
Resource Planning (ERP) software can help a big company such as Petronas in scaling their
operation.

Key to understand Petronas business model is by fully understand first what this mega
corporation aim for. So firstly, we have review important information directly from Petronas’
Official Website. There are a few reasons for choosing this methodology in conducting our
research. Firstly, Petronas’ Official Website is written directly by the organization, provide a
very reliable platform for us to find some information that we need in this research. However
there are one downside of this methodology that push us to facilitate this method with other
methods. Downside of this method is coverage of information in the official website is limited
just to certain informations.

Other than official website review, to fill the gap left from the previous method in term
of information coverage, we also have implement Annual Report Analysis methodology into
our research. Key points were taken from Petronas Annual Report to understand each
functionality of the organization and its key partners in order to achieve their goals. We also
use this methodology because this method give use deeper insights about Petronas key
operations that did not included in their official website. Furthermore, as the official website,
this annual report also written by Petronas, provide us with deeper information with high
reliability. Apart from the operations, we also discover what Petronas has achieved by
implementing their business model and the usage of ERP in their success. This method act as
complement to the Official Website Review method that fill gaps and holes to completing the
research.

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A complete research consists of different sources to provide broader and deeper


findings. Other than rely on only official sources of Petronas, we also did a few literature
reviews on several writings and articles related to the aim of this research. This method was
added to give wider perspective related to the topic. We do not rely much on this methodology
as the sources are not officially released but written by public. To keep reliable data and
findings, we only use articles from trustable sources such as Google Scholar.

According to ambidexterity theory, a company's exploitation and exploration efforts


should be balanced, as this dual strategy leads to better commercial outcomes. Business Process
Management Tree, also known as BPM Tree was introduced and managed in a contingent
approach in order to produce positive performance outcomes inside the BPM ecosystem with
the implementation of ERP. The "tree" represents BPM ambidexterity, which must be properly
balanced in order to achieve corporate objectives and balance in society contribution. The
“root” represents business environment in which the business operates. In this case, Petronas
works between government of Malaysia, product users which resolve from local customers to
global consumers and various global and local shareholders. The “branches” symbolize the
behaviors required for the common groups as the success factor for the organization. Petronas
has initiate a lot of different initiatives such as innovation related to their products, development
of their corporate structure, business expansion around the globe and create diversity in their
products. The “leaves” symbolizes their intermediate outcomes from the key behavior factor
of the branches. Side outcomes from the initiatives taken by Petronas are what giving positive
impact to the society. For example, Petronas initiate New Energy Initiative and Zero Carbon
Plan that giving balance to the company’s exploitation and exploration effort. Lastly, all this
process will produce outcomes symbolized by “fruit”. Petronas harvest the fruits in terms of
solid networking, strong capital reserve and human capital resource.

FINDINGS & DISCUSSION


SCHEDULE / DIAGRAM/ FIGURES
PETRONAS, Malaysia's integrated multinational petroleum corporation, has a presence in
more than 30 countries around the world and over 30 years of experience in oil and gas

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operations. Its business activities range from upstream oil and gas exploration and production
to downstream oil refining, the marketing and distribution of petroleum products, trading, gas
processing and liquefaction, gas transmission pipeline operations, the marketing of liquefied
natural gas, petrochemical manufacturing and marketing, shipping and property investment.

UPSTREAM
Maximising Resources
Our proven capability and track record of successful onshore and offshore developments in oil
and gas have earned us reputable operatorship in many ventures across the world. Our
Upstream presence extends across 22 countries globally, with 216 producing fields, 383
offshore platforms and 25 floating facilities. We also promote sustainable and orderly
development of Malaysia’s petroleum resources through 97 active Petroleum Arrangement
Contracts.

Exploration
Exploration is the growth engine for PETRONAS comprising a consolidation of exploration
functions from Upstream Malaysia, Upstream International (PETRONAS Carigali Sdn Bhd)
and Malaysia Petroleum Management which explores, acquires, extracts and delivers new
resources to sustain long-term production. Core activities are block acquisitions, growth
strategies, basin evaluations, play generation, prospect maturation and exploration drilling. An
Exploration Centre of Excellence (CoE) delivers new resource addition by providing the
pipeline for hydrocarbon reserves to be developed, leading to sustained and long-term
hydrocarbon production. The CoE comprises Basin and Petroleum System Analysis, Geology
Solutions, Reservoir Geoscience and Geophysics Solutions

Development And Production


Development and Production (D&P) comprises a consolidation of development and production
functions of Malaysia Assets, International Assets, LNG Assets and a CoE, which provides
valuedriven, world-class operational delivery, with utmost priority on Health, Safety, Security

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and Environment (HSSE) and Asset Integrity. PETRONAS has successfully commissioned the
world’s first coal bed methane-to-LNG project in Gladstone, Australia, Train 9 at the
PETRONAS LNG Complex in Bintulu, Sarawak and the PETRONAS Floating LNG SATU
(PFLNG SATU). The completion and commissioning of the PFLNG SATU, the first of its kind
in the world, positions us to be at the forefront of technology and innovation in carrying out
our strategies to monetise gas. A portfolio of inventive technology and engineering solutions
complement our existing capabilities across the integrated gas value chain, providing
PETRONAS a competitive edge and flexibility to meet buyers’ energy needs.

LNG Business
Our LNG capabilities capture the best value across the LNG value chain by offering the most
competitive value propositions to PETRONAS’ LNG customers. Our total LNG solutions
allow us to deliver abundant gas resources in a way that is reliable, flexible, sustainable and
affordable. This enables us to deliver the energy to meet the needs of emerging markets whilst
driving towards a low-carbon future. Operating in a manner that is commercially,
environmentally and socially sustainable, PETRONAS strives to invest and build capabilities
in communities where we operate. This commitment drives us to innovate and consistently
deliver value to our partners, stakeholders and investors in the upstream business.

DOWNSTREAM
Petrochemicals Petronas
Chemicals Group Berhad (PCG) is the leading petrochemical producer in Malaysia and the
largest gas-based chemical producer in Southeast Asia. PCG is involved primarily in the
manufacturing, marketing and selling of a diverse range of petrochemical products including
olefins, polymers, fertilisers, methanol and other chemicals and derivative products. Today,
our integrated petrochemical complexes in Kertih, Terengganu and Gebeng, Pahang as well as
manufacturing complexes in Gurun, Kedah; Bintulu, Sarawak; and Labuan have a total
production capacity of 12.7 mtpa. PCG has marketing subsidiaries in Malaysia, Thailand and
China as well as representative offices in Indonesia, Vietnam and the Philippines. PCG

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currently has more than 1,000 active customers around the world; with more than 80 per cent
of our business coming from customers who have been with us for more than 10 years.

Gas Processing And Utilities Petronas


owns and operates gas infrastructure and utilities, involving gas processing and utilities, as well
as gas transmission and regasification. Within Peninsular Malaysia, PETRONAS processes
natural gas piped from offshore fields and transports the processed gas via the Peninsular Gas
Utilisation (PGU) pipeline network to customers in Malaysia and Singapore. In addition, we
supply steam and industrial gases for customers at Kertih Integrated Petrochemical Complex
in Terengganu and Gebeng Industrial Area in Pahang.

Marketing And Trading Petronas


Trading Corporation Sdn Bhd (PETCO), a wholly-owned subsidiary of PETRONAS,
undertakes marketing and trading activities for crude oil and petroleum products. PETRONAS
Dagangan Berhad (PDB) manages all domestic marketing and retailing activities for a wide
range of petroleum products in Malaysia, while Engen Petroleum Limited is responsible for
handling our retail business in South Africa and sub-Saharan Africa.

REVENUE BY PRODUCT
The Group remains steadfastly committed to financial prudence as outlined in the PETRONAS
Group Corporate Financial Policy. The Group’s capital structure consists of consolidated
equity plus debt, defined as the current and long-term portions of the Group’s debt. The
objective of the Group’s capital management is to always maintain an optimal capital structure
and ensure the availability of funds to meet financial obligations, support business growth and
maximise shareholders’ value. To this end, the Group continuously monitors and maintains a

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prudent level of total debt to total assets to ensure compliance with all covenants. There were
no changes in the Group’s approach to capital management during the year

Revenue from exports remained as our biggest contributor, at 36 per cent of Group revenue or
RM85.8 billion. Exports revenue was down by 13 per cent from FY2018, primarily attributed
to lower prices for major products coupled with lower sales volumes. Revenue from domestic
operations recorded a consistent increase over the years primarily contributed by higher
regulated prices for processed gas and higher term contracts for petroleum products, further
supported by higher sales volume. International operations revenue, which accounted for 31
per cent of total revenue, was down 6 per cent from FY2018, mainly due to lower sales volume
and product prices

RECOMMENDATION
We would give recommendation for PETRONAS in terms of three major scope in their
ERP (Enterprise Resource Planning) which is in terms of Marketing, Talent Recruit and
Research Planning. For marketing, we recommend PETRONAS to actively participate more in
sponsorship in sporting events. PETRONAS has been the main sponsor for the AMG Mercedes
Team in Formula 1 for over a decade. This was a vital move in getting the PETRONAS name
well recognized worldwide especially since the Petronas Mercedes F1 Team Won 7 World
Championship Titles with iconic drivers that are Lewis Hamilton & Nico Rosberg. In early
December 2021, PETRONAS announced their ending of partnership with AMG Mercedes due
to some political reasons. In motorsports, PETRONAS have always been a major brand in
circuit & small team sponsorships ever since the early 2000’s. By 2019, PETRONAS finally
partnered up with Yamaha Motorsports as the main sponsor for the second Factory Yamaha
MotoGP team in the main MotoGP premier class. This was such a big deal because the MotoGP
sport has one of the biggest fan bases in Southeast Asia where motorbikes are a common and
ergonomic form of transportation due to cheaper fuel and maintenance fees, hence promotes
PETRONAS motor-based products to such a wide range of audience. This proved to be such a
major success as both sales for PETRONAS based motor products went up.
In 2020 PETRONAS Yamaha made one of the biggest deals in sporting history by
signing a deal with MotoGP legend Valentino Rossi for the 2020 MotoGP season which was
his last season before his retirement after 26 years in the premier class. After the signing of the
MotoGP legend, PETRONAS merchandise sales skyrocketed to an all-time high due to
Valentino having such a big fanbase worldwide, especially during his retirement where fans
wanted to have a collection of his famous memorabilia. Unfortunately, 2020 was the last season

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for Petronas as sponsors for the Yamaha factory Team after their announcement at the end of
season. Due to Petronas losing grip in major sponsorship in both top sports, we would
recommend them to continue sponsoring small teams or even circuits for where the race is to
be held. This is because Petronas has made itself a very well-known brand where their products
are high quality and premium, hence they should continue their branding in those sports as they
play a major role in the marketing of PETRONAS vehicle-based products such as engine oil. I
would also recommend Petronas to start exploring new sport scenes which are relevant such as
the esports scene. It is a known fact that esports has seen the rise in popularity among
individuals across 20 to 40 years old the past decade. Signing a partnership deal with the top
Esports Team will play a vital role in their marketing. Esports is not a sport they should neglect,
especially because Prize pools per tournament have set a record at 30 million USD.
In terms of research, we believe PETRONAS should diversify in order to develop green
technologies. PETRONAS should not become overly reliant on natural resources such as oil
and gas in the future to keep the firm afloat. Through diversification, they should concentrate
on acquiring a new market with a new product line. The preservation of the environment and
actions to minimise pollution are major concerns across the world, thus the corporation should
concentrate on green technology research. They should create alternative fuels, such as turning
non-biodegradable trash into fuels and wastewater into fuels, that are cost-effective for
customers while also decreasing pollution and environmental harm. Malaysia should place a
strong emphasis on recycling energy supply technologies, such as converting waste into
electricity. This is due to the fact that Malaysians generate 23000 tonnes of waste every day.
PETRONAS might develop a cooperation with local power producer Tenaga Nasional Berhad
(TNB) using this technology to promote energy sector diversification and improve Malaysia's
environmental status while competing with other oil and gas companies.
Finally, we would advise PETRONAS to use appealing incentive schemes to identify,
acquire, and retain personnel. PETRONAS should continue to provide high-quality education
in ASEAN nations in order to attract talent from both domestic and international graduates.
Aside from that, PETRONAS should do all possible to keep its current employees because they
are the company's most valuable asset because of their tacit knowledge that cannot be readily
transmitted to the knowledge system or new recruits. They should implement unique incentive
programmes to motivate employees, such as incentives, business vacations, and other
advantages. Staff will feel valued and will be more inclined to serve the firm with loyalty in
the long term if this is done.

CONCLUSION

In their commitment to ensure a reliable supply of energy to support the daily requirements of
communities, businesses and governments, PETRONAS’ priority is to ensure their business
operations continue to run safely and efficiently across the value chain. They are working
closely with relevant Enterprise Resource Planning (ERP) on the necessary requirements
especially during these MCO periods for the best standards and best practices.

Furthermore, their initiative, innovation and development in compliance with the ambidexterity
theory of BPM Tree where their exploitation and exploration initiatives were kept balanced.
This bring the result of continuity of their operations, while producing positive outcomes to the
society, in this case, environment.

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REFERENCES

[1] Official Petronas Website, 2020. Retrieved from https://www.petronas.com/

[2] Petronas Annual Report, 2019. Retrieved from


https://www.petronas.com/sites/default/files/Media/PETRONAS-
Annual%20Report-2019-v2.pdf

[3] Petronas Activity Outlook 2021 - 2023, 2020. Retrieved from


https://www.petronas.com/sites/default/files/PAO/PETRONAS-Activity-Outlook-
2021-2023.pdf

[4] Pant, D. (2020). Petronas on the power of collaboration. Retrieved


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