This article first appeared in The Edge Malaysia Weekly on June 28, 2021 - July 4, 2021

THERE could be another change at the helm of Petroliam Nasional Bhd (Petronas) as industry players are saying that Tan Sri Mohd Bakke Salleh is going to be made chairman of the national oil company, replacing Tan Sri Ahmad Nizam Salleh.

Bakke is currently a non-executive director at Petronas as well as the chairman of its risk committee and a member of its audit committee. Meanwhile, he has been the chairman of Telekom Malaysia Bhd (TM) since May 11 last year.

Nizam was appointed as chairman of Petronas on Aug 1, 2018. While the tenure of his contract is not known, appointments to the top posts of government-linked companies (GLCs) are usually for three years.

If Nizam’s contract is for such a period, this would mean that his contract will end next month.

Nizam was one of the appointees of the Pakatan Harapan government to the top posts of GLCs after the coalition secured federal power in the 14th General Election. He replaced former chief secretary to the government Tan Sri Mohd Sidek Hassan, who was appointed as Petronas chairman on July 1, 2012.

When asked to comment about the change at the top, a Petronas spokesperson says the appointment of chairman of the national oil company is under the purview of the prime minister. Thus, Petronas is not able to offer any comment.

Nizam has almost 40 years’ of experience in the oil and gas industry. He has been with Petronas since 1981, holding many senior posts. Between 2010 and 2015, he was the managing director and CEO of South Africa-based Engen Ltd, which is an 80%-owned subsidiary of Petronas.

Meanwhile, Bakke has served as head of various GLCs, including Lembaga Tabung Haji, Bank Islam Malaysia Bhd, Felda Holdings Bhd and Felda Global Ventures Holdings Bhd, Sime Darby Bhd and Sime Darby Plantation Bhd.

The appointment of Bakke as chairman of Petronas, if it comes to fruition, might also see him resigning as chairman of TM. While a person can hold up to 15 directorships in non-listed companies and 10 directorships in listed companies, Petronas’ shareholders could require their chairman to provide the national oil company with his undivided attention.

Bakke was appointed as non-independent, non-executive chairman of TM on Nov 11, 2020. Prior to accepting the chairmanship at TM, he was chairman of the Federal Land Development Authority (FELDA) between July 1, 2019, and April 30, 2020.

He was also chairman of the Malaysian Palm Oil Board from July 31, 2018, to March 31, 2020.

If Bakke is made chairman of Petronas, his expertise and experience in heading GLCs in diverse industries should be a welcome addition to the top leadership of the organisation.

This is because the global oil and gas industry is facing the daunting challenge of staying profitable during the Covid-19 crisis. At the same time, it needs to produce environmentally cleaner energy that is sustainable and cost-competitive to power the world’s economy post-pandemic.

Petronas too is facing a myriad of challenges domestically, having to support the finances of the federal government while meeting the demand of a higher share of revenue from the oil-producing states of Sarawak, Sabah, Terengganu and Kelantan.

In the financial year ended Dec 31, 2020 (FY2020), Petronas registered its first ever net loss in its 40 years of existence, owing to the disruption in worldwide demand in March and the plunge in oil prices. The national oil company reported a net loss of RM21 billion, as its revenue had decreased by 26% to RM178.7 billion from RM240.3 billion in FY2019, on the back of plummeting oil prices between January and April as well as lower sales volumes of processed gas, petroleum products and liquefied natural gas.

Brent crude oil averaged US$42 per barrel in 2020 — the lowest since 2004 — compared with US$64.30 in 2019 while West Texas Intermediate crude oil fell into negative territory, at -US$37 per barrel, on April 20 last year. Petronas had taken a RM31.5 billion impairment charge on assets — its largest impairment to date — which resulted in its first ever net loss. Excluding the impairment, Petronas would have posted a net profit of RM10.5 billion, a 78% decline from RM48.8 billion in FY2019.

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