Petronas Dagangan Bhd’s (PDB) journey as Malaysia’s leading fuel retailer has long been anchored on the critical need of ensuring energy supply security in the country.

As it celebrates its 40th anniversary this year, PDB is embracing its next chapter, where it will play a bigger role in supporting the nation’s growth amid the net-zero carbon revolution.

In a recent interview, PDB managing director and CEO Azrul Osman Rani recalled Petronas’ humble beginnings in the retail space in 1981 as a response to the fuel supply shortage crisis in the late 1970s.

“That was when Petronas moved to the downstream segment with the setting up of our first petrol station in Taman Tun Dr Ismail,” Azrul says. “We realised the need for consistent supply under whatever market scenario to ensure the nation’s energy security.”

A year later, PDB was formed. It has not looked back since, growing from strength to strength as the industry leader with the largest network of fuel stations, fuel terminals and bunker terminals nationwide.

“PDB has its own extension of business strategy. On top of supply security, emphasis is now being put on sustainability, improving accessibility for more Malaysians, and providing greater offerings for our customers in the non-fuel space,” Azrul adds.

It will endeavour to do this as it strikes a balance as a listed subsidiary of the national energy company that offers the best value to stakeholders, he says.

In a nutshell, PDB operates four core businesses: the retail segment with more than 1,000 stations; the commercial segment serving multiple industries from aviation to shipping and even the country’s military; the liquefied petroleum gas (LPG) business; and a domestic lubricant business.

“What excites me the most are Setel (mobile app) and Mesra (non-fuel division). Setel also operates beyond the Petronas ecosystem, serving to improve the motorists’ journey with innovative mobility solutions such as purchasing motor insurance, auto assistance, automated parking payments, street parking payments (currently available in Subang Jaya, Kuala Langat, Teluk Intan, Petaling Jaya and Klang), payment at retail and online merchants and more,” says Azrul, who has had an illustrious career in the marketing and commercial segment of Petronas, when asked about the years ahead for PDB.

“I see a lot of potential [with the two offerings]. We are relatively early in that journey, and it provides an opportunity to shape the future of PDB.”

This year, the group has seen a favourable response to its F&B and café segment through Cafe Mesra, with 40 to 50 outlets planned by end-2022 from 17 currently. It is also exploring franchising opportunities, Azrul says.

Petronas’ Kedai Mesra, which number more than 800, have long served as a well-known platform for aspiring small businesses, having showcased the products of well over 1,700 local entrepreneurs.

“What I like about this is that it gives us the opportunity to support the surrounding entrepreneurs, which is one of our core sustainability pillars.

“When you have conversations with [the suppliers], and they express their gratitude for giving them a chance for a better livelihood, you realise the meaning of these opportunities to them. It gives more purpose [to our efforts],” Azrul says.

Together with government agencies, PDB also brings fish and chicken from local fishermen and poultry farmers to more than 50 stations under the Segar@Mesra brand, currently concentrated in the Klang Valley, southern region and parts of Sarawak.

Meanwhile, Setel has secured near five-star ratings in the mobile app space from its more than four million users. Outside of the Petronas ecosystem, the app serves as a payment gateway for certain services, such as Smart Selangor state parking tickets.

“There is an increase of stickiness through this at our stations, and it helps cost optimisation for targeted advertising, for example,” Azrul says.

“We also see Setel playing a role to activate EV (electric vehicle) charging [on top of existing fuel and Mesra offerings] to make life simpler and better for our customers.”

Instead of regarding the changing energy sector landscape as a threat, PDB envisions new opportunities for collaborations. This includes the provision of EV charging facilities, and recycling of used lubricants as part of a circular economy practice that is being adopted across the industry.

Reaching EV critical mass is not a question of if, but when, Azrul says. To date, PDB has 60 EV charging points, including a handful of fast-charging facilities at its stations.

Being a customer-facing business serving the transport sector provides PDB with an edge as it integrates the fast-emerging EV ecosystem. In relation to that, Azrul sees the possibilities of scaling Cafe Mesra as a destination point for EV owners to charge their vehicles while dining at the cafe.

“We have ambitions further down the road of [opening Cafe Mesra outside of the fuelling stations]. A few could come out this year … That can be leveraged with the strategy of expanding our charging network,” he says.

PDB also holds talks with fleet operators that plan to embrace EV adoption, and strives to be an enabler by providing the necessary charging infrastructure or related e-mobility solutions.

PDB’s efforts in the ESG, or environmental, social and governance, area is just as prominent on the commercial front, where it has an extensive network with 17 fuel terminals and 13 aviation terminals nationwide to support its business-to-business (B2B) operations.

On the ground, PDB contributes to the transition towards a low-carbon future by enabling the use of liquefied natural gas (LNG) for a wider market.

Two years after its launch, PDB this year completed its 1,000th LNG delivery through the virtual pipeline system (VPS) offering on the ground — essentially providing industry or commercial clients off-grid with gas, together with the necessary regasification infrastructure on-site to utilise the molecules.

In the sea, the group is growing its ship-to-ship LNG bunkering solutions to meet the emerging demand across the marine segment.

“LNG provides an opportunity for people to transition to low-carbon fuel. We are also looking at assisting Malaysia to become an LNG bunkering hub,” Azrul says.

Steps are also being taken to help transform the aviation industry through sustainable aviation fuel (SAF) — dubbed as the most feasible option to reduce aviation emissions in the near term.

In less than one year, PDB has contributed to the success of three flights using SAF, a biofuel made from renewable waste and residue raw material to reduce the carbon footprint.

“The intent is for PDB to then leverage our extensive network to supply to our customers,” Azrul says.

“In the meantime, we are working with our partners globally to source SAF, and we’ve already tested our systems and operation, so we know we are able to deliver the requirements of our customers.”

There are numerous other initiatives being taken by PDB beyond its commercial role of providing solutions and peace of mind to its customers and the wider community.

A clear example is the setting up of its mobile fuelling fleet ROVR, which played a crucial role in providing supply security during nationwide flood disasters in December 2021, and for the rural folks in East Malaysia where fuel station development is not yet feasible.

Despite having a small fleet of 77 mobile and non-mobile tanks, PDB’s ROVR experience reflects the strong spirit of national service that is embedded in its major shareholder Petronas.

“While generating income is important to us, addressing our stakeholders’ pain points also takes centre stage in our business,” Azrul affirms. “I think we have found purpose in doing this.”

Similarly, Petronas’ digital journey also trickles down to PDB. Among its meaningful digitalisation efforts is the incorporation of data-based assessment at its terminal business to manage the movement of its road tankers more efficiently and in real time.

The modernisation of its fuel station terminals, meanwhile, helps ensure cybersecurity, whereas the digitalisation of ROVR operations allows remote monitoring by PDB for better user experience.

Most importantly, Azrul explains that PDB will continue to grow its existing operations without compromising its transition into the future. “With 40 years in the business, our core operations are well run and will continue to grow.

“The core will provide us with the necessary resources that we need to meet our strategic objectives,” he concludes.