Welcoming Remarks at PETRONAS BOD Development Series

Bismillahirrahmanirrahim,

Assalamu’alaikum Warahmatullahi Wabarakatuh,

Salam Sejahtera

dan Salam 1Malaysia

YBhg Datuk Wan Zul, President & CEO of PETRONAS, members of the Board of Directors of PETRONAS and PETRONAS Group of Companies,

2. Thank you for making the time to be here today – as Directors as well as eager learners– to commit to improve ourselves in carrying our amanah. To ourself. To PETRONAS. Indeed, for the Nation.

Ladies and Gentlemen,

3. The state of the industry today is truly worrying, to put it mildly. There was a time, seems eons ago, that whenever prices touched 80 US dollars, we were worried it was too low. Today, we cheer at 35 dollars. This is our new reality.

4. When Brent prices dipped below 30 dollars a barrel earlier this year, we were forced to review our internal planning numbers to be based on 30 dollars a barrel.

5. With Brent hovering just above 30 dollars for the past two weeks, we feel that we have a bit more breathing space, but overall, the severe impact to our financial performance has already hit us hard.

6. On Monday, we will announce PETRONAS’ 2015 Financial Results Performance to the media. We will be announcing that both our revenue and Profit After Tax have fallen by double digits. Though it may not be a total surprise, the message will finally hit home. The fact that PETRONAS, a formidable anchor in Corporate Malaysia has been hit this much, is a hard pill to swallow – not just for us in PETRONAS, but also for our stakeholders. Our shareholders. And the Rakyat. Despite the steady decline in Oil & Gas’ contribution towards the Nation’s coffers, the impact of our financial results to the Nation is still significant.

7. Moving forward, we are bracing for a tougher year in 2016. But our destiny cannot be solely determined by the market forces which are not in our control. We need to be our own masters. We must provide stewardship to factors under our control. Datuk Wan Zul had initiated a project to focus our organisation on exactly this – to take decisive actions on cash generation, cost, project management, technology, talent and culture.

8. In navigating through these turbulent times, surely Directors of Boards have a critical role to play. How do we ‘DIRECT’ our ships to emerge out of this turbulence stronger and wiser?

9. I believe it is the most opportune time to embark on this Directors’ learning journey. In these precarious times, even the smallest missteps could have profound effect on our organisation. The ripple effect of our every decision will be more amplified. We need to set the tone at the top, in the clearest possibly way. The gumption to be decisive and the urgency to act must be demonstrated for all to see. And emulate. There should be no shred of doubt among our stakeholders on our ability to deliver on this amanah in these toughest of times. And for that we need each of us to collaborate and engage in candid discourse to strengthen our collective proficiencies.

Ladies and Gentlemen,

10. When I was approached early in the process of developing this series, my key concern was about making learning a continuous and an iterative process. It is also important for us to create a platform for our directors – at all levels- to engage with the wider community of directors both inside and outside PETRONAS. We must actively promote cross-learning between our directors. The main Board sets the policies and the tone for the Group. But for this to be emulated effectively across the Group of Companies, we need meaningful interaction between members of the various Boards. PLC must assume a key role, THE LEADERSHIP ROLE in realising this. Our sheer advantage of size and heritage also positions us to be the trailblazer in raising the standards of Board performance in Corporate Malaysia. “A rising tide lift all boats”.

11. The PETRONAS Board of Directors Development Series will focus on four key development areas, namely: Board Effectiveness, Regulation and Outside Scrutiny, Oversight of Risk Taking, and Strategy and Growth. Collectively it will address governance, performance, strategy, non-financial metrics, risk, top management succession planning, regulatory landscape and reputation, among others.

12. This series will consist of two types of programmes. The first are foundational programmes for newly-appointed Directors to sharpen necessary skills in Legal, Governance and Policies, Financial Literacy, Roles & Responsibilities, and Ethics. This is an investment in our future leaders. An investment that we shall never compromise on even in most challenging of times, to ensure that succession planning and the sustainability of a strong leadership bench is preserved.

13. The second type of programmes are Advanced programmes which includes today’s session. This will comprise topics such as Best Practices on Board Effectiveness, Stakeholder Management, Innovations, Sustainability, CSR and Groups’ specific needs such as those of Audit and Remuneration Committees.

14. At this juncture, I would like to share my observations and learnings in establishing and sustaining an effective Board.

15. First is equality. There are no golden votes or golden voices in a Board. Every member must be heard. We have a duty to give our views. Hear everyone out, encourage the quiet ones to speak. Educate those who are not so learned in the industry. Only when we provide equality, can we have ‘Shared Success’.

16. Second is professionalism – striving for excellence. I am always amazed with the precision and punctuality of the Germans, the Swiss and the Japanese.  The Japanese is so sure of their quality that for example if the bullet train is late they would refund the fare. I wish we can do that for our buses, our MRT and our tax refund.  Nearest home, I wish we can do that for all PETRONAS business, including in our corporate Governance.  That must be PETRONAS TONE.  That must be the tone from PETRONAS’ TOP!

17. This is the same message when we start our sessions with HSE moments. For our industry, safety is paramount. And that culture starts in the office. At every meeting. In the context of Board, striving for excellence is also about providing opportunity for Directors to be fully educated on the expectation of their role and knowledge of the business. This includes making the Board Papers available to all members on time. Only members who have reviewed the papers thoroughly can contribute to the discussion in a meaningful way.

18. Third is integrity and trust. We must nurture trust amongst the members to allow for candid conversations. There shall be no withholding of information or opinions. Each member, especially the Chairperson, has an obligation to create an environment that is safe to be candid. And it is a two way street. It must be given, and earned. Between members, with the secretariat, with the executive, with the non-executive. It’s multi-polar. Trust is the basic fuel for the Board. Without it, the Board becomes non-functional!

Ladies and Gentlemen,

19. I look forward to having constructive discussions with everyone as we progress through the day. And, more importantly, beyond today.

20. I would like to also urge all of us to actively seek and give feedback on each other as well as on the program. With your feedback, we can ensure this series of trainings improves with every new session. This is also about living our Cultural Belief of ‘Tell Me’.

21. By now you would have noticed my message being peppered with our Cultural Beliefs and Shared Values. That is also the role of the Board. To propagate what we have endorsed and approved at every opportunity we get. That is setting the tone from the top.  Leading by example.

22. It is my sincere hope with today’s inception, each of us commits to continuous learning to deliver on the amanah as a board member to the best of our ability. Together, we must ‘Own It’ and in the spirit of ‘Tell Me’ provide constructive feedback to continuously improve the PETRONAS Board Development Series.

Thank you.