No matter how big the personality, Petronas is not about one man. It is not about Hassan Marican, Azizan Zainul Abidin, Basir Ismail, Raja Mohar Raja Badiozaman, Abdullah Salleh, Rastam Hadi, Tengku Razaleigh Hamzah et al.
Throughout its corporate history, Petronas has been led by a group of people who are willing to learn, work hard, make sacrifices and are bold enough to make tough decisions even though it may go against the directive of its shareholder — the government. Nevertheless, they are still a dedicated and patriotic lot. Most of all, for them, it is about having integrity, upholding good corporate values and adhering to the needs of the nation.
If not for this, how else — if I may repeat it, as I have done many times in this column — could they have grown Petronas from a company with a paid-up capital of RM10 million in 1974 to one with assets of RM403 billion as of September last year? This has been achieved without going back to the government for even one ringgit more in capital.
Last December, when news emerged that the contract of Hassan — who has been president and CEO of Petronas since February 1995 — would not be extended, The Edge, in an interview with him, had remarked that “Petronas is not all about Hassan Marican, after all…”
He commented: “That is correct. The success of Petronas is because we have a very good team that works together, and that is very aligned with the growth and expansion strategy of the company. It is not about Hassan Marican. It is about a group of dedicated people who are willing to sacrifice and build an organisation based on strong values and believe that they are in the position of trust [of managing a government company] and they have delivered the trust.”
The interview took place the week after Petronas, along with its partners, won four out of five bids it submitted for exploration and production blocks in Iraq. In Majnoon, one of the world’s largest oilfields with potential reserves of 24 billion barrels, it is partnering Shell — the world’s largest corporation. Iraq has pushed Petronas into the big league of international exploration and production.
On Feb 3, Prime Minister Datuk Seri Najib Razak announced the appointment of Datuk Shamsul Azhar Abbas as Petronas’ new president and CEO as well as acting chairman. Shamsul retired from Petronas last year as president and CEO of MISC Bhd. At 57, he is the same age as Hassan. Officially, the staff retirement age at Petronas is 55.
Petronas is where it is today because the government got it right from the beginning. It was the brainchild of Malaysia’s second prime minister Tun Abdul Razak, who chose his political protégé Tengku Razaleigh Hamzah to head the organisation as chairman, with the executive powers of a Cabinet minister. Razaleigh then brought in Wan Ismail Wan Mohd Salleh from the Attorney General’s chambers as one of its two executive directors, while Razak assigned Rastam, who was then the deputy governor of Bank Negara, to be the other executive director. The three recruited a mixed group of professionals from the private sector and the civil service to form the core management team.
Razak’s main concern then was finding better ways to manage the country’s commodity resources. To him, as long as the nation’s wealth, oil and gas included, were still owned by foreigners, independence was meaningless and national pride was still being held to ransom. Nationalism did not just refer to politics but economic independence as well.
The Petronas pioneers, inexperienced as they were, fought tooth and nail with oil majors Shell and Exxon to secure better terms for the country through the introduction of the production-sharing contract (PSC), which replaced the concessionaire system of long-term leases, often with higher returns to the oil majors. The country gained through tax and job creation but learnt nothing much from the transfer of technology know-how.
The management, notably led by Rastam, taught the pioneers to “fight like bulldogs”. The much-feared Rastam drilled into the organisation the necessary management and financial discipline, turning it into one that is cautious about spending and where accountability ranks high. So much so, an employee lamented that “we are a very rich organisation but sometimes, it feels like being an orphan working here”.
For the pioneering senior management, integrity was part of their culture, and to those coming from the civil service, concern about reckless expenditure was already imbued in them. The groundwork was solid and Petronas thrived on the strong foundations. Other serving senior civil servants, notably Raja Mohar and Abdullah Salleh, provided the much needed administrative balance to strong characters like Rastam.
For the first 14 years, the concentration was on expanding domestic upstream and downstream activities. A comfort zone then crept in and those with a “silo” and “bunker” mentality emerged — the “mine” attitude overtook the “us” in the organisation.
Azizan and Basir came in as CEO and chairman respectively in 1988 and embarked on a mindset change in the organisation. They recruited professionals like Hassan and groomed potential leaders from within. Together, they dismantled the “mini-empires” in the company and emphasised the importance of teamwork and the group.
Azizan then institutionalised Petronas’ DNA by launching the company’s shared values which comprise loyalty (to the nation and corporation), professionalism (committed, innovative and proactive and always striving for excellence), integrity (honest and upright) and cohesiveness (united in purpose and fellowship). It cites its mission statement as a business entity whose main objective is to add value to the country’s oil and gas resources and contribute to the well-being of the nation.
With the spirit of oneness and unity intact in the organisation, Azizan spearheaded and mapped Petronas’ globalisation route beginning 1990. When Hassan took over as CEO, with Azizan supporting him as chairman, Petronas global business grew exponentially. As Hassan ends his term as CEO and acting chairman, Petronas is an established integrated oil and gas multinational operating in more than 30 countries and is reputedly one of the best managed national oil corporations in the world.
Perhaps the company’s journey, thus far, can be summed up by the four pioneers who have retired since — Muri Muhammad, Anwarrudin Ahmad Othman, Idris Mansor and Hamzah Bakar. These quotes are taken from my book — The Quintessential Man — a biography of Azizan.
Great team spirit, according to Muri, was one of the major factors that contributed to the success. “It’s all about teamwork. It’s about following our credo, keeping our national objectives clearly in view and ensuring our business’ sustainability. It’s about building respect throughout the oil and gas environment. So, as my case, there’s nothing that I can credit myself with because in reality, it’s all about teamwork. You can lead the team and you tackle the issue collectively. And you also make mistakes collectively.”
Anwarrudin adds: “Nobody dragged Petronas down. All of them have contributed something. The pioneers built up the company followed by others who strengthened it further. The next level to aim [at] is to become an oil major like ExxonMobil, Shell or BP… but at the end of the day, it is the skill and dedication of the staff — from the president right down to the office boy — that will determine the direction and future of the company.”
Idris gives this view: “Under Azizan, it was always the ‘we’ in the company that was emphasised. During the early days, some strong individualistic attitudes were developed, where plans were considered ‘my’ project instead of it being ‘ours’. He always wanted us to reflect team effort.”
On the other hand, Hamzah sees it as: “Perhaps today, Petronas is in fifth gear… You have to acknowledge the fact that despite the criticisms levelled at it, Petronas under different leadership was able to grow from a small company into a global player. If all we did was to pump oil in the country and collect payments and get our share of crude or gas from our PSC partners, then we would still be in that little office in Jalan Pudu.”
The appointment of Shamsul comes as a surprise as he has retired and is as old as Hassan — an indication that this could be an interim appointment. But Shamsul, who joined Petronas in 1974, when the staff strength was below 200, has the Petronas DNA in him.
The challenge for him, like his predecessors, is to grow the company further and manage its interests so that they are in line with national interests and not those of politicians. Shamsul should know this as he had served for three years as executive assistant to Azizan — a person he very much admired.
This is how Shamsul described Azizan in The Quintessential Man: “He put himself in such a position that he could leave any time if he felt that his services were not needed, without any fear of losing anything. No agenda or self-interest to make him stay longer than necessary. So he dared to go and face his political masters. On matters of principle, if he said it could not be done, it would not be done… be it to Mahathir or anyone. He was not afraid to tell what was not right. Everything was done above board, nothing was hidden — it’s all part of integrity. We needed that kind of character to lead the organisation.”
It seems that under Mahathir’s and Abdullah’s premiership, the gentleman’s agreement Petronas managed to make with the leadership was that as long as integrity and profits remained strong, Petronas should be trusted to operate independently.
Shamsul remembers very well what Azizan had to say about this delicate relationship: “Petronas cannot afford to make this mistake of breaching the trust that the government has in us. The minute the integrity of this company is compromised… this trust could be taken away. No matter what we do, we have to do it above board. The day we compromise on integrity will be the day we see Petronas destroyed.”
For the new office bearers, nothing less is expected.
Azam Aris is executive editor at The Edge. Comments: [email protected]
This article appeared in Forum page of The Edge Malaysia, Issue 792, Feb 8-14, 2010.