Friday 09 Jun 2023
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Below are excerpts of Petroliam Nasional Bhd (Petronas) chairman Tan Sri Mohd Bakke Salleh's letter to stakeholders.

Excerpts of the letter were extracted from the Petronas Integrated Report 2021.

Dear stakeholders,

Two years have passed since the pandemic began, and our world continues to be challenged by volatility and uncertainty on an unprecedented scale in living memory. Even as countries and industries alike strive to recover from the brutal impact of Covid-19, they now face new-found challenges in the wake of the ongoing Russia-Ukraine conflict whose consequences may well long outlast the hostilities themselves and which are likely to reshape the industry landscape in fundamental and complex ways.

Notwithstanding the prevailing uncertainties, the role that Petronas plays as an energy company in the context of the wider society remains clear — namely, that it continues to serve as an effective engine that drives economic recovery for Malaysia and beyond by ensuring the safe, secure and reliable supply of energy, while taking vital steps that pave the way to gradually transition to a lower-carbon future in a just and equitable way.

In our efforts to fulfil this role, Petronas remains unwavering in the delivery of its amanah (trust), always striving to dutifully discharge its obligations and responsibilities despite the overwhelming odds and challenges. With prudent financial management and an unyielding commitment to upholding safety performance as well as delivery of commercial and operational excellence, Petronas registered a strong performance in 2021 after two years of extreme disruptions to the energy ecosystem. This achievement by the group is credited to the courage, dedication and tenacity of our people. In this opportunity, I  would also like to thank our stakeholders for their support and assistance that allowed us to continue operating safely and optimally throughout the lockdown periods.

Looking ahead, changes in the energy landscape will provide new challenges and growth opportunities that we must approach with a credo and mindset for progress and innovation. To this end, I am confident that with the right steer and support from the board, Petronas is well positioned to progress with pace and resilience to deliver profitable and sustainable growth aligned to our three-pronged growth strategy and net-zero carbon emissions by 2050 (NZCE 2050) aspiration.

Reflecting on 2021

Petronas’ performance for the year in review demonstrates its relentless focus on operational and commercial excellence across the group.

The organisation ensured the reliability of its operations to leverage the recovery in global energy demand seen in 2021 with the safety of our people and assets as its highest priority.

Although some degree of stabilisation was seen with the roll-out of vaccinations and economies recovering from easing of lockdowns and gradual removal of border restrictions, delivering the group’s performance did not come easily. During the year, the oil and gas industry continued to be very volatile and uncertain in the face of sudden shocks to the market, many of which were beyond our control. These included:

  1. The threat of new and highly infectious Covid-19 variants derailing economic recovery which proved to be of grave concern for the safety of our people and its impact on our supply chain.
  2. The oil and gas industry remaining fragile as the rebound in oil prices was driven by the multi-speed reopening of economies, steadfast active market management by OPEC+ and an unfolding global energy supply crisis.
  3. The increasing pace of the energy transition causing sustainability-driven structural changes to our industry with stakeholders demanding more visible, impactful results in our efforts to decarbonise.

Nevertheless, Petronas successfully demonstrated its ability to respond and become part of the solution. Together, the Petronas board and leadership team were able to not only preserve and enhance its core oil and gas portfolio but also grow in the new energy space for long-term business sustainability and resiliency.

As a result, Petronas was able to generate healthy financial returns and contribute to its stakeholders in the form of cash payments, tax, export duties, state sales tax and dividends. In 2021, we paid the scheduled RM25 billion dividend payments to the government of Malaysia. 

Moving forward with purpose

The year 2021 has proven that we need to constantly be prepared to pivot when faced with the unexpected. The unprecedented challenges of the past year offered Petronas an opportunity to reform strategies, expedite transformation and prioritise sustainability risks. It was imperative that Petronas emerged from this trying period more resilient, more agile, technologically stronger and financially more robust.

The achievements of 2021 demonstrate the dedication and strength of our people coupled with a robust integrated portfolio that provided Petronas with the strong foundation it needed to capitalise on price recovery. I am deeply grateful to the women and men who stood by Petronas amid the turbulence and offer my sincere thanks to each and every one of them.

As we progress to capitalise on this period, Petronas will continue in its efforts to safely deliver commercial and operational excellence. We remain focused on maintaining fiscal discipline and careful operational spending as well as preserving liquidity to ensure resiliency and high performance across the group. We are determined to seize new opportunities for sustainable, profitable growth as we uphold our commitment to our shareholder and lay the foundation for our future growth.

The Petronas of the future will still have hydrocarbons as a key part of its portfolio with products delivered safely, responsibly, cost optimised, and emissions abated. The new forays that we are making in step-outs today will complement our core portfolio to provide energy for a world that continues to progress and develop, while being in ever-greater need of solutions for emissions.

While the variety of our business offerings expands, the heart of the organisation, in its purpose and values are timeless and remain the same. Our purpose, cultural beliefs, and shared values of loyalty, integrity, professionalism and cohesiveness will continue to bind us together.

Looking ahead, the pressures on Petronas are only going to increase as we continue to bear the expectations and aspirations of Malaysia and the communities where we operate. We must make our move to navigate through the turbulence to find our position for the future. In our quest to create a sustainable legacy for the next generation, we must steer the business and shape an energy future that they deserve, one in which Petronas will continue to be their preferred energy and solutions partner.

Tan Sri Mohd Bakke Salleh

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