PETRONAS Board Excellence: Essentials For Directorship

Kuala Lumpur Convention Centre
Wednesday, 29 November 2017

Bismillahirrahmanirrahim

Assalamualikum wa Rahmatullahi wa Barakatuh

Salam Sejahtera, Salam 1Malaysia and a very good morning,

Yang Berbahagia Datuk John Zinkin, Ladies and Gentlemen.

I feel so excited to address a group of PETRONAS executives, who are not only based in Malaysia but from all over our global operations. Welcome to the ‘Essentials for Directorship’ programme, which is the foundational programme of the PETRONAS Board Excellence suite.

2. You will learn throughout this 2-day programme on your role as a board member to understand your fiduciary roles and accountabilities as well as keeping abreast with the latest development in matters related to governance and policies. Skills and knowledge to prudently manage risks, champion governance, embrace diversity and investing in human capital effectively in our journey to push ourselves beyond what we are today. I am pleased to see your willingness to invest the time so that you are able to shoulder the ‘Amanah’ as directors more effectively. This, I am certain, will enable progressing our Organisation to much greater heights.

3. I am therefore, very delighted to be here today amongst you, to do the context setting on a learning that is very crucial for senior executives as well as board members across PETRONAS Group of Companies to be equipped with. It is also an opportunity for me to see so many good timber in our PETRONAS forest, some coming as far as South Africa, South Sudan, London; but also the local heads of Kertih and many more. This is also a great opportunity, for me to share my views to an important, responsible, and I trust, responsive audience, on a number of issues which I am passionate about and important for us to think ahead.

Ladies and Gentlemen,

4. We have just released our Quarter 3 financial result last week and I take great pride on the performance of PETRONAS. With the current modest oil price trajectory, I am confident with all our collective efforts working in concert and in harmony, we will be finishing 2017 strong. Taking a leaf out of the 1-2 finish of the Mercedes AMG PETRONAS team in Abu Dhabi.

5. With that in mind, we must always lead by example. Because as leaders, as members of various boards at various locations within the Group and as senior executive of our own outfit, we must first and foremost, live by the PETRONAS code and standard. We must set and drive the tone at the top for our organisation. And we must be conscious of these because our action or inaction in these areas will mean something to our people. Matters pertaining to INTEGRITY and HSSE we must strictly have Zero Tolerance for non-compliance. Correspondingly, we must also catch and appreciate those who demonstrated excellent values and behaviours of what I refer as The Ten Commandments. They are:
i. Customer Focus
ii. Sense of Urgency
iii. Complaint is a Gift
iv. Collaboration
v. Seeking Knowledge and Continuous Improvements
vi. Courage to Speak
vii. Engagement
viii. Integrity

6. In the past, decisions to shut down our plants due to HSSE concerns would have been brought up to the highest level of authority in PETRONAS, that is, the ELT, to make the call. Our front liners in the plant were worried how would shutting down the plant affect their respective production KPIs. More so towards the end of the performance review period, like now.

7. Less than 2 weeks ago, on Sunday, 19 November, the leaders at MLNG plant took the bold step forward to quickly act and decided to shut down the plant due to propane leakages in its heat exchanger for MLNG’s Module 1. This took place at a time when the raw gas supply is at its optimum level compounded with the high LNG cargo demand due to winter season in the northern hemisphere, with good selling prices. And it is end of the year where KPIs are being appraised. Leakages of propane is very high risk for the plant as late or inaction would have caused explosion at our PETRONAS LNG Complex.

8. Alhamdulillah, our leaders are beginning to be courageous in taking bold decision although the shut down could have a potential loss of 0.7 BCe (Big Cargo equivalent) which represents RM 67 million. I like to relate this. It clearly demonstrates that HSSE is our top priority. Even though it is better financially, at least in the short term for the operation to continue, in PETRONAS the safety of our people and our reputation, are more important. We want to ensure that all employees of PETRONAS, be it in the plants or at Twin Towers, get to go back see their loved ones. And this is an encouraging event.

9. The PETRONAS Board, which I have the privilege to chair, applauds decisions and actions such as this. Such as cross sectoral and interdisciplinary collaborations in addressing a major fire at Melaka Refinery in February this year. In the firm action on transgressors, including collaboration with SPRM! That is the tone from the Top. You all too, must embrace that.

10. Setting the right tone at the top goes a long way for our organisation. Externally, it becomes the benchmark for others to follow. That is why I really like our Trailblazing No Gift Policy. We were the first in Corporate Malaysia to do so and it has now set up the standard for others to follow. Not only in Corporate Malaysia in the likes of PNB and others but also in government ministries and departments, such as in the Ministry of Finance.

11. Tun Zaki Tun Azmi in his authorised biography “No Nonsense” stated inter alia that his best innings were on the Board of PETRONAS where he lasted 18 years and was cut because of his appointment to the Federal Court. He was a good official friend and is a close personal friend. He told me that his experiences as a PETRONAS Board member as well as Chairman of the Audit Committee assisted him in reforming Malaysia’s judiciary administrative processes when he was Chief Justice.

12. So as you can see, our impact goes beyond the borders of PETRONAS. We are the trailblazer in pushing the standards of Board performance! It is so very important that we in PETRONAS, in leadership positions particularly, must have those in our heart, more than emblazoned in the foyer of the Twin Towers.
Colleagues,

13. Less than 2 weeks ago, Elon Musk continued to mesmerise the world when he introduced the Tesla Semi Truck – their all-electric freight truck that can travel between 480 km to 800 km per charge. A distance that could easily displace the current fuel-based transportations with the black smokes chiming out of these heavy duty vehicles that connects Kuala Lumpur to anywhere. Bukit Kayu Hitam is 476 km away, JB – 329 km and Kota Bharu – 438 km. With just one additional charge, this truck can cover the distance between Kuching and Kota Kinabalu (1,044 km). Definitely a lot easier once the Pan Borneo Highway is ready in 2022. Add on all the expensive cost in maintenance of these fuel-burning engines, it makes a no brainer for logistics companies to queue up the reservation line. The world has yet to come to terms with the introduction of Tesla’s Model S, Model X, Model 3 and its latest Roadster, and here we are faced with another disruptive train – at full speed – coming our way.

14. Of course, we can argue that this has yet to come to production. The Tesla Semi Truck is scheduled to hit the road only by late 2019 or maybe later. Given production problem with Model 3, it could just have the same problem for Tesla Semi Truck. The key point is somebody, somewhere is working hard to get these EVs out. If not Tesla, it could be GM or other companies who have made big investments into EV production lines.

15. The key question for us – as leaders at the Board level – how do we steer our Company forward? What’s the future of oil production? Future of PETRONAS Dagangan retail stations – more so given the momentum around the world against new gasoline and diesel cars in their push for cleaner environment?

16. To me, that is why we must bring the 27th century mindset forward to today. We must make every effort to think deep and hard, for us to step up or step out for tomorrow, TODAY. I am comforted to see that we’re making inroads into the realms of unfamiliarity as highlighted by Tan Sri Wan Zul in his recent monthly message to “step out” into Renewables, truly the uncharted waters for a predominantly Oil and Gas company. And the PETRONAS Board is certainly behind this move. Correction: In front of this move. All of you must take heed, moving forward.

17. In tandem with these global developments, just over a week ago, we kicked off the TN50 Oil and Gas, Energy and Environment (OGEE) workshop with all relevant stakeholders. They include EPU, MOF, KeTTHA, MITI, NRE, MOSTI, Bank Negara Malaysia, Energy Commission, Akademi Sains Negara; as well as industries representatives from TNB, Sarawak Energy, Shell, Petron, Dialog, Sapura Energy, MOGSC, MIGHT as well as academicians from UKM, UTM, UTP; and many more. This is where all parties present are already thinking beyond their remit to see what’s best for the country. After all, all of us, even in this room today, certainly want what is best for our children and the generations to come. The Government designated PETRONAS to lead the OGEE sector for the TN50 Agenda. In this endeavour or for other endeavours, we must always think of what is the greater good. BEYOND OUR OWN.

18. In similar fashion, each one of you here represent different businesses – some from Corporate, others from Downstream or Upstream. To me, what is more important is that we are united in our greater purpose! Beyond the territories of our OPU or our business. And today, we have in this room a variety of leaders with diverse background and experience that would be beneficial when you share your experiences and ideas. Leverage on each other and I am sure there’s so much to learn. This to me, is one of the biggest value of attending such programme as it will further expand our horizons and thinking. For the GREATER GOOD of PETRONAS. AND, BEYOND – FOR THE GREATER GOOD OF OUR COUNTRY.

Ladies and Gentlemen,

19. Earlier this month, as the Chairman of MDEC, I had the opportunity join their Immersion Program in Silicon Valley, California together with a group of Malaysians, mostly young, start-ups and tech-entrepreneurs. I am convinced that the key take away from this trip is that Silicon Valley is not about the place or where it is located. Silicon Valley is all about the MINDSET. This was highlighted by countless personnel that I met in Silicon Valley. That is why Silicon Valley is hard to be replicated elsewhere. Hard, but not impossible. And I believe the mindset can be replicated in this room, in the Twin Towers and in Tronoh.

20. The Silicon Valley mindset is a mental make-up of wanting faster, better and newer way of solving problem – solving somebody’s pain points. They also acknowledge that they do not know everything and would collaborate with external companies who knows better, knows best. Despite its glorious technological advancement, with humility, they contextualise their solutions by using simple language when communicating with their stakeholders because they understand their market – that is – with the viral power of social media, their products and services can reach out to the market almost instantaneously. They are not bothered about being perfectionist. They build their products to the best of their ability and will refine along the way. This iterative process sets the pace of products and services coming out of Silicon Valley.

21. The citizens of Silicon Valley also portrays the thinking of possibilities where everything, anything is possible. For instance, at X – the moon shot factory of Google, they actively embrace failures because by making mistakes, they proved it can’t be done and they pivot elsewhere to make progress. In many ways, each idea they worked on either gets stronger or discarded for them to move on to new ones. That is a fresh perspective on how one should view failures. Rather than weaken, it actually made them stronger and bolder.

22. Another one that captured my attention is the ‘Pay It Forward’ thinking where success breeds more successes. The mentors and advisors are willingly spending time with budding start-ups and entrepreneurs, and became role-model to one another. In fact, they have the belief that wealth creation is to be emulated, not to be envious about. It is the spirit of “if he or she can do it, I can do it too!” These brought about the culture of risk-takers and strong collaborations. Companies that demonstrate resilience, resourcefulness and build network to learn from the best are the ones that will succeed. I hope and believe the more successful among us will mentor the up and coming startups among us in PETRONAS.

23. As a Fortune Global 500 company, these are attributes that we must emulate in PETRONAS to ensure our business sustainability and lasting presence. In addition, this Silicon Valley mindset will enable us to push ourselves out of our norms and comfort zone. To explore the world of possibilities in coming out with great innovations, we must be disruptive in our innovation process and be open for strategic collaborations with others, to stay ahead of the curve. In my mind, this is what PETRONAS Cultural Beliefs is all about in substance. It must be in our DNA to continuously challenge the status quo – for the benefit of PETRONAS in the long run. And, more importantly, beyond PETRONAS, for the country.

Ladies and Gentlemen,

24. I would like to now speak about gender diversity. Globally the trend is increasing over the last three years, with Malaysia setting its target of 30 percent women participation. PETRONAS must take the lead in this. Women participation at the Board level in the PETRONAS group has shown positive development. We have grown from 15.4% in 2016 to 31.4% as at November 2017 with 72 women directors out of total of 229 directors in PETRONAS Holding, Upstream and Downstream – both in the listed and non-listed companies. This must be sustained. It should not only be at Board levels. It must encompass all levels so that there will be ready women talent to be considered for future appointments to Management and later on pitch in to the funnel at Board level. Having said so, all these must be on the basis of merit as our true north.

25. Of course, diversity does not stop at gender alone. We must be have the diversity across age, ethnicity and certainly industry. I am sure as some of you who sits on the board of our joint ventures or overseas entities would certainly have experienced the benefits from the diversity and inclusivity of board deliberations and discussions. It is not always easy to hear differing opinions but herein lies the beauty of “hierarchy of ideas”. As leaders, we must ensure that it is safe for people to have differing views. In fact as leaders we must reward people who give views that differ for ours but makes more sense!

Ladies and Gentlemen,

26. All programmes under the PETRONAS Board Excellence suite are testaments to our continuous pursuit to be relevant. I was informed that we have started to infuse the case studies with real life situations as experienced by our own PETRONAS teams such as the one in South Sudan case in your pre-reading pack. This we ought to do more. Given our 43 years of existence, there are a lot of untold stories to be discovered and more importantly to be learnt, even at board levels.

27. I want to stress again the criticality of providing a safe environment for each one of us to openly and frankly discuss critical issues. Not only here, but as a way of life.

28. I am confident, with our feet firmly on the ground, we will be successful in our pursuit of Board Excellence through strong foundation and understanding of fiduciary responsibilities that will be learnt and discussed in the next 48 hours. Insya Allah, PETRONAS will continue to stand tall, sustainable and relevant, and may the learnings, and practice, enable each one of us to leave a lasting legacy for many generations to come.

Thank you.