Petroliam Nasional Berhad (PETRONAS)

Integrated
Report
2021

197401002911 (20076-K)
www.petronas.com

Integrated Report 2021

Recharge
Petroliam Nasional Berhad (PETRONAS)
197401002911 (20076-K)
the Future
Tower 1, PETRONAS Twin Towers, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia Passionate
about Progress
 We Aspire to Deliver
on Our Purpose:
A Progressive
Energy and
Co v e r R a ti o n a le Solutions Partner
The sheer pace and magnitude of energy transition are rapidly shifting
how the world consumes energy. Society is demanding for a lower-
carbon future, demonstrating a critical movement for sustainability goals
Enriching Lives
for a Sustainable
to become even more central for governments and corporations.

In fulfilling our responsibility as a progressive energy and solutions

Future
partner, PETRONAS is committed to providing energy that is affordable,
secure and sustainable for Malaysia and our customers across the globe.

By working closely with our stakeholders, we ensure that the oil and gas
as well as the cleaner energy solutions we produce along our integrated

Welcome to
value chain, are delivered with sustainability at the heart of our efforts.

Anchored to our purpose of enriching lives for a sustainable future,

let’s progress forward together and recharge the future for a better
tomorrow.
the PETRONAS Integrated Report 2021
 Our
Three- Maximising Cash Expanding Core Stepping Out
Pronged Generators Business

Growth
Strategy

Cash generators are existing assets which It is essential to expand the core business Global trends brought on by the Energy
provide strong and stable cash flows. with a lower carbon footprint as it matures Transition are reshaping the energy
Protecting and maximising these assets are into becoming PETRONAS’ new cash landscape, consumption patterns and
paramount to provide a solid base for generator. consumer preferences. PETRONAS
profitability and a foundation for growth. continues to build capabilities and allocate
The strategies are as follows: resources to step-out beyond its current
core business.

Deliver Material Monetise

Malaysia Integrated
Resources Unconventional
Value Chain
Resources
Specialty Customer-Centric
Chemicals Solutions

Grow the Integrated Business

International Asset
Model and Expand Adjacencies New Energy
 04 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 05

Our Sustainability Agenda Our Sustainability Agenda

Sustainability is deeply rooted in our Statement of Purpose, “A progressive energy and solutions partner enriching lives for The delivery of our NZCE 2050 aspiration will build resilience and better prepare the organisation and Malaysian value
a sustainable future”. As a purpose-driven organisation, sustainability considerations contribute directly to what we do as a chain for a sustainable future. As we decarbonise, we must also create social value and enable progress for society that
business, how we operate and how we engage with employees, customers, suppliers, service providers, local will offer better prospects for more people, with the notion of leaving no one behind, thus promoting a Just Transition.
communities, regulators, investors and other stakeholders.
In pursuing our NZCE 2050 aspiration, we remain steadfast in achieving three short-term targets
Scientific findings on climate change are accelerating the pace of the energy transition which demands tangible and that were set in 2019:
urgent actions to reduce greenhouse gas (GHG) emissions to the atmosphere. Recognising the signs early on, PETRONAS’
leadership has taken progressive steps to position the organisation forward. The leadership team, together with a strong
mandate from the Board, has announced our net zero carbon emissions by 2050 (NZCE 2050) aspiration, the first from
an oil and gas company in Southeast Asia. We are making this pledge to make a positive change, not only to pursue new
opportunities in the energy transition, but because a fundamental shift is needed, and the organisation wants to be part
Our Short-Term Targets
of the solution towards a more sustainable future.
Greenhouse Gas Emissions Renewable Energy Education Beneficiaries
In stepping up our sustainability efforts, PETRONAS is shaping our approach to net zero carbon emissions and deliver on Cap GHG emissions at 49.5 Increase renewable energy Reach over 24,000 beneficiaries
our aspiration. In the process of developing our Paris Agreement-aligned pathways, we will be conducting a systematic million tonnes of carbon dioxide capacity to 3,000 MW by 2024. through education programmes
climate risk evaluation and quantification, as well as reviewing our emissions baseline and strengthening our carbon equivalent (MtCO₂e) for our cumulatively between 2020 and
management capabilities. In doing so, we aim to shape our wider ecosystem and catalyse national and regional green Malaysia operations by 2024. 2024.
growth. We are continuously guided by our four sustainability lenses and seven prioritised United Nations’ Sustainable
Development Goals (SDGs).
Lens
As part of our broader efforts to achieve our NZCE 2050 social and governance (ESG) frameworks and principles, as
1 Continued Value Creation
aspiration, we are collaborating with various global well as support the progress of a globally accepted
organisations. In November 2021, we endorsed the World solution for common ESG metrics. We have published the
Drive long-term business value Bank’s Zero Routine Flaring by 2030 Initiative and the first PETRONAS disclosure on World Economic Forum
creation through responsible recommendations of the Task Force on Climate-related Stakeholder Capitalism Metrics in our corporate website.
investments.
Continued Financial Disclosures (TCFD) to deliver greater transparency
Value Creation Lens around actions on climate change. Meanwhile our membership in the World Business Council
for Sustainable Development (WBCSD) helps us further
2 Safeguard the Environment The Zero Routine Flaring Initiative aims to end flaring of align our efforts with global best practices, strengthen
associated gas from oil production. We have pledged to capacity and capability as well as raise awareness among
Collaboratively reduce environmental avoid routine flaring in new field developments and end leadership on sustainability. Our President and Group Chief
PETRONAS’ routine flaring at existing oil production sites by 2030. This Executive Officer, and Vice President and Chief
impact by transitioning to lower-
Safeguard
the
Four Positive
Social
carbon energy solutions and
deploying innovative operations and
is applicable to our upstream operations within operational
control and excludes flaring sources due to safety and
Sustainability Officer are actively involved as Council
Member and Liaison Delegate respectively. Additionally, our
Sustainability
Environment technologies. non-routine flaring. We will publicly report our flaring data Executive Vice President and Chief Financial Officer is part
Lenses Impact
on an annual basis, with our first disclosure targeted in of the WBCSD Chief Financial Officer (CFO) Network, and
Lens 2023. our Senior Vice President Group Human Resource
Management is a member of the WBCSD Business
3 Positive Social Impact We have also announced our support towards the Commission to Tackle Inequality.
recommendations of the TCFD and will work to adopt the
Responsible Create positive alliances with the disclosure framework from 2023 onwards. We intend to Our President and Group Chief Executive Officer also
Governance communities in which we operate proactively strengthen our reporting while shaping chairs the CEO Action Network, a coalition of leaders of
by protecting and adding value to Malaysia’s national climate-related risk disclosures. major Malaysian businesses that focus on sustainability
the well-being of employees, advocacy, capacity building, action, and performance
partners and society. In April 2021, we joined other oil and gas companies in improvements.
submitting a letter of commitment to the World Economic
Lens Forum’s Stakeholder Capitalism Metrics. We agreed to
adopt the Stakeholder Capitalism Metrics in our reporting,
4 Responsible Governance
promote the further convergence of existing environmental,

Safeguard the organisation’s

commitment through strong
governance mechanisms and ethical
business practices.
 02 Our Three-Pronged Growth
Value We Create

What’s
Strategy 76 Our Integrated Approach to
04 Our Sustainability Agenda Value Creation
08 About This Report 78 Our Key Capitals

Inside
80 Value Creation Model
PETRONAS in 2021
82 Performance by Capital
88 Engaging with Stakeholders
We are pleased 96 Because We Care
to present our

2021
Integrated Report
14 Our Shared Values |
Our Sustainability Journey
170 Sustainability Governance
174 Safeguard the Environment
186 Positive Social Impact
PETRONAS Cultural Beliefs 218 Five-Year Sustainability Key
15 Competitive Advantage Performance Data
16 Key Highlights
16 Financial Highlights
16 Business Highlights
18 Sustainability Highlights
20 Awards and Recognitions
Commitment to Governance
24 Event and Conference
Highlights 228 Board Composition
Strategic Progress
26 Business Snapshots 229 Profile of Board of Directors
102 The World in 2021
30 Our Integrated Value Chain 239 Profile of Company Secretaries
108 Material Topics
32 PETRONAS Around the World 241 Profile of Executive Leadership
117 Risks Linked to Creating Value Team
34 Corporate Structure 132 Strategic Performance Review 245 Corporate Governance at
PETRONAS

Financial Review and

Other Information
262 Group Financial Results and
Position
262 Analysis of Financial
Results
Key Messages
Business Review 269 Analysis of Financial
48 Letter from the Chairman Position
56 Letter from the President and 136 Upstream
271 Analysis of Cash Flow
Group Chief Executive Officer 144 Gas + New Energy
274 Five-Year Key Financial
62 Letter from the Executive Vice 152 Downstream
Indicators
President and Group 160 Project Delivery and
Chief Financial Officer 276 Appendix
Technology
68 Letter from the Vice President 279 Glossary of Terms
and Chief Sustainability Officer
 08 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 09

About This Report About This Report

Point of Contact Approval by the Board

Dear Stakeholders,
As part of our efforts to continuously The PETRONAS Board of Directors acknowledges its responsibility in
We are pleased to present the PETRONAS Integrated Report 2021, which showcases our performance in creating ensuring the integrity of this Integrated Report which in the Board’s
improve our integrated reporting journey,
financial and non-financial values for our stakeholders during the year. The report aims to offer a balanced we welcome all suggestions and inquiries opinion, addresses the Group’s ability to create value and fairly presents
assessment of our performance, progress and future direction. We continue to make great strides as a progressive from our stakeholders and readers. Please the Group’s integrated performance.
energy and solutions partner; developing meaningful relationships with our stakeholders to create sustainable value send your feedback to: We believe that this report has been materially prepared in accordance
and Recharge the Future. with the International Integrated Reporting Council <IR> Framework.
Group Strategic Communications
Level 70, Tower 1, PETRONAS Twin Towers Approved by the Board of Directors and signed on behalf of the Board.
While we are not a public listed company, we are committed to this process as a means of adding value for our
Kuala Lumpur City Centre
stakeholders as it creates better visibility, transparency and allows an informed assessment of our operations. 50088 Kuala Lumpur
Malaysia Tan Sri Dato’ Seri Datuk Tengku Muhammad Taufik
Mohd Bakke Salleh President and Group Chief Executive Officer
Scope and Boundaries relevant international standards. Additionally, we seek to www.petronas.com/contact-us Chairman
demonstrate how our business strategy and initiatives
The PETRONAS Integrated Report is produced and
contribute to the United Nations’ Sustainable Development
published annually, covering the full calendar year from
Goals (SDGs). NAVIGATION ICONS
1 January to 31 December 2021, unless stated otherwise.
The report covers all our operations and activities across
Forward-Looking Statements
PETRONAS and its subsidiaries (PETRONAS Group), joint
operations and associates. This report contains forward-looking statements. Words Three-Pronged Growth Strategy Six Capitals
such as “believe”, “anticipate”, “intend”, “seek”, “will”, “plan”,
This report extends beyond financial reporting. It includes “could”, “may”, “endeavour” and similar expressions are
our non-financial performance, governance, key strategies, intended to identify such forward-looking statements
Maximising Expanding Stepping Financial Capital Manufactured Capital Intellectual Capital
material topics, risks and opportunities, as well as but are not the exclusive means of identifying such Cash Generators Core Business Out
stakeholder value creation. The non-financial data in statements. By their nature, forward-looking statements
this report includes data from our owned and operated involve risk and uncertainty because they relate to future
businesses, in line with industry best practices. It does not events and circumstances and should be considered Key Stakeholders Human Capital Social and Natural Capital
include data from equity interest fields/projects, such as in light of the various important factors. While these Relationship Capital
joint ventures, where we do not have operational control. forward-looking statements represent our judgements and
Those areas that we do not have operational control over future expectations, a number of risks, uncertainties and
are included in disclosures of the management approach. other important factors could cause actual developments Federal/Host State Customers Internal/
Governments Governments Employees Key Risks
and results to differ materially from our expectations.
Reporting Frameworks The key factors that could cause our actual performance
This report is guided by local and global standards, including: or achievements to differ materially from those in the Market Financial Legal and Health, Safety,
Shareholders/ Media Industry Communities/
forward-looking statements include changes to IFRS and Partners and Risk Liquidity Regulatory Security and
• The International Integrated Reporting Council (IIRC) Investors/ Non-
Government- Risk Risk Environmental Risk
<IR> Framework, a principles-based approach that associated interpretations, applications and practices as Credit Rating Government
Agencies linked Organisations
promotes the six capitals concept and considers they apply to past, present and future periods; ongoing Companies
material inputs as well as resources required to create and future acquisitions; changes to domestic and
Geopolitical Hydrocarbon Technology Execution
and sustain value in the long term. international businesses and market conditions such as Risk Reserves and Risk Risk
exchange rate and interest rate movements; changes United Nations' Sustainable Development Goals Resources
• International Financial Reporting Standards (IFRS). in domestic and international regulatory and legislative Risk
• Malaysian Financial Reporting Standards (MFRS). environments; changes to domestic and international
• Ipieca/API/IOGP Sustainability reporting guidance for the operational, social, economic and political conditions; any
Human
oil and gas industry. labour disruptions and industrial action; and the effects of Capital Risk
• Global Reporting Initiative (GRI) Standards. both current and future litigations.

• World Economic Forum's Stakeholder Capitalism Material Topics

Metrics. Assurance
The financial information contained in this report, which
Sustainability Reporting has been extracted from the consolidated Audited Safety Health and Greenhouse Gas Anti-Bribery and Physical Climate Corporate Environmental
Financial Statements for the financial year ended Management Well-Being Emissions Corruption Risk and Adaptation Governance Management
We aim to embed sustainability consistently into our 31  December 2021, and was audited by KPMG PLT.
business strategy and decisions. We see this as an
essential component of our value creation. By focusing on We have also completed third party verification for the
responsible environmental, social and governance (ESG) Lifecycle Carbon Footprint (partial CFP) for PC Ethylene Employee Renewable Human Economic Biodiversity and Innovation and Sustainable
practices, we are better able to create long-term value products by DNV, USA. This increases the credibility of Attraction, Energy Rights Contribution Ecosystem Circularity Supply Chain
for all stakeholders. With this in mind, this report includes Retention and Services
internally conducted Life Cycle Assessment (LCA) towards Development
our sustainability aspiration and performance aligned with our disclosure to stakeholders, particularly customers.
 10 Integrated Report 2021

About This Report

Cross References
We value and appreciate all feedback to help make our
You can find more information within future reports more relevant to our stakeholders.
the report

You can find more information online in our

corporate website: www.petronas.com
Petroliam Nasional Berhad (PETRONAS)
Additional information about PETRONAS on our
197401002911 (20076-K)
corporate website is accessible via a QR Code
Tower 1, PETRONAS Twin Towers
Kuala Lumpur City Centre
50088 Kuala Lumpur
Feedback
Malaysia
PETRONAS is committed to continuously improving our
reporting, and we value input from our stakeholders in making
these enhancements. Should you have any queries or The PETRONAS Integrated Report is our
feedback on this report, please contact us through the primary report.
following channels:

Go online to our website at:

www.petronas.com
Integrated
Report 2021

Provides a comprehensive overview of the

Group’s financial and non-financial performance
in 2021 and our outlook for 2022.

Financial
Report 2021

This report is supplemented by the following disclosures,

which can be accessed online via
www.petronas.com:
Provides access to the Audited Financial
Statements comprising Directors’ Report, Financial
PETRONAS Activity Outlook 2022-2024 Statements, Notes to the Financial Statements
and our Independent Auditors’ Report.
PETRONAS Human Rights Report 2020

PETRONAS Half-Yearly Sustainability Scan the QR code to access our

Disclosures 2021 Integrated Report 2021 and
Financial Report 2021
https://www.petronas.com/sustainability/reporting
 PETRONAS Our Purpose, mandate,
aspirations, structure
in 2021 and presence

Recharge
to Deliver
14 Our Shared Values |
PETRONAS Cultural Beliefs
15 Competitive Advantage

a Positive Impact 16 Key

16
Highlights
Financial Highlights
16 Business Highlights
18 Sustainability Highlights
20 Awards and Recognitions
24 Event and Conference
Highlights
26 Business Snapshots
30 Our Integrated Value Chain
32 PETRONAS Around the World
34 Corporate Structure
 14 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 15

Competitive Advantage

PETRONAS
2021
Petroliam Nasional Berhad (PETRONAS) is a

in dynamic global energy and solutions company

with a core intent to power society’s progress
responsibly and sustainably. Recognised as one
Our long track record as a global energy and solutions partner
Since 1974, we have transformed PETRONAS from a domestic-based national oil company
into a fully integrated oil and gas multinational corporation. This experience has provided us
of the largest corporations in the world,
with the winning formula to drive the transition to a lower carbon economy and further
included in the Fortune Global 500® ranking, we contribute to societal progress.
have a total of 46,884 employees with a global
reach spanning over 100 countries.
A progressive energy and
As the custodian of Malaysia’s national oil and
solutions partner enriching gas resources, PETRONAS explores, produces and expansive global reach
lives for a sustainable future and delivers energy, both hydrocarbon and
renewables, to ensure the security of energy We are an organisation with a strong presence in over 100 countries and we strive to seek
supply for the nation and our customers around energy potential across the globe to deliver responsible energy solutions.
the globe. We have four core businesses –
Upstream, Gas + New Energy, Downstream, and
Project Delivery and Technology.
Our Shared Values
PETRONAS is also the largest petrochemical which is driven by a dedicated team of people
Loyalty
producer in Southeast Asia. The Group delivers
Loyal to corporation petrochemical products such as olefins, People are our strength and partners for growth, driving our passion for innovation to
polymers, fertilisers, methanol and other basic progress towards sustainable energy solutions. Our 46,884 employees worldwide continue to
Integrity be at the forefront of executing our strategic objectives, equipped with the skills and
chemicals and derivative products.
expertise to thrive in a lower-carbon future.
Honest and upright
In upholding our commitment as a responsible
Professionalism and conscientious player in the global energy
Strive for excellence sector, sustainability remains a core
consideration of what we do and how we do it.
We are committed to growing our business
and underpinned by responsible governance
Cohesiveness
responsibly, positively contributing to society Throughout the Group, we strive to achieve the highest standards of integrity in the conduct
United, trust and respect and the environment. Driven by our passion for of our business and operations. We have robust policies, systems and protocols in place to
for each other innovation to serve a lower carbon energy ensure good governance and ethical business practices.
future, every step takes us closer to attaining
our aspiration of net zero carbon emissions by
2050 (NZCE 2050).
supports our expanding business and portfolio
PETRONAS in 2021

We have a long history of success in exploration, development and production of crude oil
PETRONAS Cultural Beliefs and natural gas in Malaysia and abroad. Now, as the world’s energy systems are transitioning,
our portfolio is expanding to include cleaner conventional hydrocarbons, renewable resources
and a range of advanced products and adaptive solutions.

Customer Focused Be Enterprising Innovate Now Speak Up Courage to Act

I deliver solutions I seek opportunities I challenge norms I express my I take action to
from the customer
lens
and make them
happen
and push
boundaries
views openly progress with pace
Brand Positioning: “Passionate About Progress”
 16 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 17

Key Highlights Key Highlights

Financial Highlights Business Highlights

Project Delivery and Technology
Upstream Gas + New Energy
Managed 587 projects
valued at more than
Recorded a total daily production average of 2,275 First in the world to produce LNG from two
barrels of oil equivalent (boe) per day, a 3 per floating facilities: PFLNG Satu and PFLNG Dua. RM9 billion.
Revenue cent increase in comparison to 2020.

RM 248.0 billion Achieved first hydrocarbon for 21 projects – 14 in

Malaysia and 7 abroad (South Sudan (2), Chad
(1), Myanmar (1), Turkmenistan (1), Brazil (1) and
Delivered 12,000th LNG cargo from PETRONAS
LNG Complex in Bintulu, Sarawak, Malaysia, that includes
25 key technologies achieved
site readiness.
2020: RM178.7 billion five carbon neutral LNG cargoes.
Indonesia (1)).
RM25 million registered
Final Investment Decision (FID) for
Achieved Completed 960 Virtual Pipeline System and in commercialisation revenue
22 projects – Malaysia (18), Indonesia (2), Brazil (1) LNG bunkering deliveries across Malaysia, and
and Turkmenistan (1). through the deployment of 17
Profit/(Loss) After Tax 2,026 LNG deliveries in ISO tanks to China. technologies and 98

RM 48.6 billion Made 10 exploration discoveries – Malaysia

(7), Indonesia (1), Brunei (1) and United States (1). Close to 1 GW of
under development.
solar capacity in operation and
TechApps softwares.

2020: (RM21.0) billion Signed7 Production Sharing Contracts Created RM830 million in
(PSCs) with new and existing players in Malaysia. total value creation through
Grew Hydrogen expertise through ARIES, our digital enabling
strategic collaborations with engineering solutions.
Cash Flows from Operations (CFFO) Downstream Sumitomo Corporation, Tokyo Gas,

78.6 billion
ENEOS, JERA and MASDAR.
Overall Equipment Effectiveness (OEE) of Achieved RM818 million in
RM 93.3% across all business segments. cash generation through Alpha
2020: RM40.7 billion
Overall marketing sales volume of 21 billion Series, a digital transformation
litres from PETRONAS Dagangan Berhad (PDB), of our value chain.
Engen Petroleum and PETRONAS Lubricants
International Sdn Bhd (PLI), a 200 million litres
increase from previous year. Reduction of 6.4% of GHG
Total Assets emissions in support of NZCE

635.0 billion
Supplied fuel for the first Malaysia Airlines flight using 2050.
a blend mixture of 38% sustainable aviation
RM fuel (SAF) and conventional jet fuel as a cleaner
2020: RM574.1 billion and more viable energy option.
PETRONAS in 2021

Commenced commercial operations of 8,000

metric tonnes per year silicone blending facility
in Gebeng, Pahang, to strengthen position as key
Return on Average Capital silicone manufacturer in the region.
Employed (ROACE)
PETRONAS Marine’s first LNG
Conducted

10.8% bunkering in Port Klang and Port of

Sandakan to provide a cleaner source of fuel in
support of the International Maritime Organization’s
2020: (4.1%)
sulphur limit for ships’ fuel oil.
 18 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 19

Key Highlights Key Highlights

Sustainability Highlights
Corporate Governance Economic Contribution

• Board members attended programmes to • RM48.2 billion contributed to the

keep abreast on matters related to Federal Government of Malaysia and state
sustainability including human rights, governments.
Just Transition and climate
• Contributed 12,000 devices to students
change.
worth RM30 million for hybrid learning
and teaching.
Environmental Management • More than RM163 million invested in the
PETRONAS Education Sponsorship
• 40% of total waste generated was recycled.
Programme (PESP).
Health and Well-Being
• Invested up to RM635.8 million in CSR
Mental health and well-being signature programmes driven by Yayasan PETRONAS
programmes contributed to: (the Foundation) together with the businesses.
• 70% improvement in Depression,
Anxiety and Stress Scores.
Innovation and Circularity
• 1,409 employees enrolled for Digital
Healthy Lifestyle Coaching. • Identified 19 potential storage sites to
Human Rights
offer CCS as an option for carbon
• 98% of grievance cases closed. management solution.

GHG Emissions • 68% of employees completed Human

Rights Management e-learning module.
• GHG emissions reduced by 6.4%.
• Upstream GHG intensity reduced by 27.3%
• A decrease of an estimated 4.1 million
tCO₂e from GHG Emissions Reduction
Projects.
• Reduction of an estimated 0.1 million
tonnes of methane emissions.

Anti-Bribery and Corruption

PETRONAS in 2021

• More than 90% of PETRONAS employees

Employee Attraction, Retention and
completed online courses on the five Critical Development
Legal Areas: Ethics and Integrity, Data Privacy,
Sanctions, Export Control and Competition. • 2,172 new hires.
• Average 30 hours per employee spent on
training.
 20 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 21

Key Highlights Key Highlights

Awards and Recognitions

2021 Australian Reporting Award Dow Jones Sustainability Indices Hari Orang Kurang Upaya Sedunia
(ARA) (DJSI) 2021 Peringkat Kebangsaan Tahun 2021
We are delighted with our numerous accomplishments over the year. • PETRONAS Chemicals Group • PETRONAS Chemicals Group • PETRONAS
These awards and accolades are a strong testimony to our continuous Berhad Berhad – Anugerah Korporat Prihatin Tahun
pursuit of excellence across the PETRONAS Group of Companies. – Bronze in General Award: – Member of DJSI World Index 2021
Sustainability Reporting Award – Member of DJSI Emerging
Markets Index HSE Gold Medal Award
46th International Convention on • Project Delivery and Technology
ICQCC 2021 Duty of Care Summit and Awards – HSE Gold Medal Award
• PETRONAS Penapisan (Terengganu) 2021 (PGB – Utilities Kerteh)
Sdn Bhd • Group Security, Pandemic
– Two PAR Excellence and one Preparedness and Response Team IChemE Global Awards 2021
Excellence Awards – Honorable Mentions in Remote • PETRONAS Penapisan (Terengganu)
Resilience Category Sdn Bhd
Annual Report Competition (ARC) – Oil & Gas Award “VGSP
Awards International FTSE4Good Bursa Malaysia Eliminates Liquid in Sampling
• PETRONAS Chemicals Group • PETRONAS Chemicals Group Bombs” (Highly Commended)
Berhad Berhad
– Financial Data (Bronze) – Full 4-Star ESG Rating of Public IChemE Malaysia Awards 2021
– Specialised Annual Reports Listed Companies Assessed in • PETRONAS Penapisan (Terengganu)
– Integrated AR & CSR: Non- line with the FTSE4Good Bursa Sdn Bhd
traditional Format (Silver) Malaysia Review Cycle – Oil & Gas Award “VGSP
– Best of Shows (Winner – • PETRONAS Dagangan Berhad Eliminates Liquid in Sampling
Malaysia) – Full 4-Star ESG Rating of Public Bombs” (Highly Commended)
Listed Companies Assessed in – Process Safety Award “Digitalizing
APPIES Malaysia 2021 Marketing line with the FTSE4Good Bursa & Gamifying Process Safety”
Campaign Awards Malaysia Review Cycle (Highly Commended)
• PETRONAS Dagangan Berhad – Training & Development Award
– Silver Award in Marketing GasTech Awards 2021 “Incident Investigation
Innovation Category • Malaysia LNG Sdn Bhd Methodology & Presentation”
– Engineering Partnership of the (Highly Commended)
BTEC International Institution of the Year for AI Driven innovation, • Project Delivery and Technology
Year STELLAR Project that was co- – Process Automation and
• Institut Teknologi Petroleum developed by Malaysia LNG and Digitalisation Award (STELLAR)
PETRONAS (INSTEP) PETRONAS Digital – Training and Development Award
– Silver Award (Citizen Analytics)
GRADUAN Brand Awards 2021
Data Nerd Awards 2021 • PETRONAS IDC Future Enterprise Awards
• PETRONAS Dagangan Berhad – Malaysia’s Most Preferred • Project Delivery and Technology
– Winner in Data Creativity Employer in Oil & Gas Sector – Country Award for Future of
Category Connectedness
PETRONAS in 2021

Graduates’ Choice Award 2022 – Asia Pacific Award for Future of

Diamond Arrow Award • PETRONAS Connectedness
• Engen Petroleum – Top 5 Most Preferred Graduate
– The Most Admired Petroleum/ Employers in Malaysia IPSOS Malaysia
Diesel Brand in Namibia (Winner) – First place in Chemical Sector • PETRONAS
– First place in Oil & Gas Sector & – Highest Scoring Organisation in
Engineering Sector Managing a Crisis Situation
– Top 10 in Convenience Store
 22 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 23

Key Highlights
Awards and Recognitions

KPMG Customer Experience Malaysian Society for Occupational • PETRONAS Gas Berhad Randstad Malaysia Employer Brand Shared Services & Outsourcing • KLCC Property Holdings Berhad
Excellence 2021 Safety & Health (MSOSH) (Gas Processing Santong) Awards Network (SSON) Impact Awards 2021 – Significant Achievement, Supply
• PETRONAS Dagangan Berhad • Upstream – Notable Achievement in • PETRONAS • PETRONAS Chain Management Pillar
– First among Malaysia’s Top 10 – 15 Gold Merit Awards Environmental Performance – Inducted into ‘Most Attractive – Silver Award in Process – Significant Achievement, Business
Leaders – 6 Gold Class Awards • PETRONAS Gas Berhad Employer’ Hall of Fame since Improvement and Value Creation Ethics and Responsibility Pillar
(Regasification Terminal Sungai 2020 – Bronze Award in Best Shared
Leading Employers Graduates 2021 NACS Convenience Summit Asia Udang) Services Team Talend Data Masters Awards

• PETRONAS 2021 – Exceptional Achievement in Royal Society for the Prevention of – Bronze Award in Best Vendor • Project Delivery and Technology
– Second in Malaysia’s 100 Award • PETRONAS Dagangan Berhad Environmental Performance Accidents (RoSPA) 2021 Collaboration – Data Masters Award for the
– First in Energy, Oil and Gas, – Convenience Retail Technology • PETRONAS Gas Berhad (Tanjung • Institut Teknologi Petroleum – Honorary Mention in Change Enterprise Data Hub
Utilities sector for the fourth Award (Winner) Sulong Export Terminal) PETRONAS (INSTEP) Management Award
consecutive year since 2018 – Notable Achievement in – Gold Award – Customer Centricity Impact The Edge Billion Ringgit Club (BRC)
National Annual Corporate Report Environmental Performance Award Awards
• PETRONAS Chemicals Fertiliser
LinkedIn Talent Awards 2021 Awards (NACRA) 2021 • PETRONAS Gas Berhad (Utilities Kedah Sdn Bhd • PETRONAS Chemicals Group
Strategic Trade Act (STA) 2010 Berhad
• PETRONAS • PETRONAS Gebeng) – Gold Award Compliance Award
– Diversity and Talent Insight – Excellence Awards – Excellent Achievement in – Super Big Cap Companies Above
• Gas + New Energy • PETRONAS Chemicals Group RM40 billion market capitilisation
Pioneer Non-Listed Organisations – Environmental Performance – Gold Medal Award (PGB Gas
Platinum Berhad – Highest Returns to
• Malaysia LNG Sdn Bhd Processing Plant, Santong) – STA 2020 Compliance Award Shareholders over Three Years
Majlis Amanat dan Makan Malam • PETRONAS Gas Bhd – Exceptional Achievement in – Gold Medal Award (PGB Tanjung
Apresiasi Sempena Ulang Tahun (Winner)
– Special Awards Environmental Performance Sulong Export Terminal) Top Companies South Africa:
ke-75 Jabatan Kebajikan Masyarakat Best Designed Annual Report – Gold Medal Award (PGB Utilities
• PETRONAS Chemicals Polyethylene Sustainable Business Awards 2021 Reputation Index Award
• PETRONAS – Gold Sdn Bhd Plant Gebeng)
– Anugerah Korporat Prihatin – Gold Medal Award (PGB Utilities • PETRONAS • Engen Petroleum
– Exceptional Achievement Award – Winner, Community Pillar – Oil & Gas (Winner)
Prime Minister’s Hibiscus Award in Environmental Performance Plant Kerteh)
Majlis Anugerah Pembayar-Pembayar 2019/2020 – Winner, Stakeholder Management
Cukai Terbaik 2020 dan Most • PETRONAS Chemicals Ammonia Sarawak Chief Minister Pillar
• PETRONAS Carigali Sdn Bhd Sdn Bhd
Outstanding Hasilian 2020 Sempena (Terengganu Crude Oil Terminal) Environmental Award (CMEA) • PETRONAS Chemicals Group
Sambutan Hari Hasil ke-25 – Exceptional Achievement Award 2019/2020 Berhad
– Excellent Achievement Award in Environmental Performance
• KLCC Property Holdings Berhad • PETRONAS Carigali Sdn Bhd – Winner, Energy Management
• PETRONAS Carigali Sdn Bhd – Silver in Special Project Award Pillar
– The Best Taxpayer Award (Terengganu Gas Terminal) (Sarawak Asset)
• PETRONAS Chemicals MTBE Sdn – Champion under Large – Winner, Water Management Pillar
– Exceptional Achievement Award Bhd – Significant Achievement –
Malaysia Technology Excellence Enterprises Category for Mining &
Awards 2021 • PETRONAS Carigali Sdn Bhd – Notable Achievement Award in Resource Extraction Sector Sustainability Strategy Pillar
(Sarawak Oil) Environmental Performance – Gold Award under Large – Significant Achievement –
• PETRONAS Digital Sdn Bhd and – Notable Achievement Award Workforce Pillar
Malaysia LNG Sdn Bhd • Institut Teknologi Petroleum Enterprises Category for Mining &
Resource Extraction Sector – Significant Achievement –
– AI: Oil & Gas Award for the entry • PETRONAS Carigali Sdn Bhd (Sabah PETRONAS (INSTEP)
– Merit Award under Large Stakeholder Management Pillar
“AI-driven Live Advisory for LNG Oil & Gas Terminal) – Notable Achievement Award in
Plant Start-Up” – Notable Achievement Award Environmental Performance for Enterprises Category for Mining & • MISC Berhad
– Analytics: Oil & Gas Award for the year 2019/2020 Resource Extraction Sector – Winner, Waste Productivity &
• PETRONAS Penapisan (Terengganu)
the entry “PETRONAS Integrated Materiality Pillar
Sdn Bhd
PETRONAS in 2021

Pipeline Integrity Assurance Putra Brand Awards – Winner, Climate Change &
– Bronze in Special Projects Award
Solutions (i-PIMS)” Emission Pillar
– Exceptional Achievement Award • PETRONAS Dagangan Berhad
– Digital – Oil & Gas Award for the – Winner, Land Use & Biodiversity
in Environmental Performance – Gold Award in Automotive Fuel,
entry “HSSE Analytics Suite” Pillar
• PETRONAS Gas Berhad Lubricants and Accessories
– Significant Achievement,
• Project Delivery and Technology (Gas Processing Kerteh) Stakeholder Management Pillar
– HSSE Analytics Suite – Excellent Achievement in
– STELLAR: AI Environmental Performance
– Integrated Pipeline Integrity
Management System (I-PIMS):
Digital
 24 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 25

Key Highlights Key Highlights

Event and Conference Highlights

India Energy Forum by CERAWEEK [V]
20-22 October 2021
Throughout 2021, we engaged with key stakeholders at local and international events. Thousands of delegates from Indian, regional, and
Through these events, we exchanged insights and knowledge to drive the industry and international energy companies, institutions, and
governments gathered virtually and in New Delhi for
nation forward and deepen our understanding of how to unlock our own potential in
the 5th India Energy Forum by CERAWeek, under
meeting the energy needs of the future. the patronage of Hon. Shri Hardeep Singh Puri,
Minister of Petroleum and Natural Gas & Housing
World Economic Future Energy Asia [V] International Conference on and Urban Affairs. President and GCEO, Datuk
Forum [V] 25-27 August 2021 Nation-Building Tengku Muhammad Taufik, participated as one of
25-29 January 8-9 September 2021 the speakers under the topic “Creating Resilience to
As one of the Sponsors,
2021 We were represented by Senior Vice The Economist: Future of Climate Change: Lessons from the pandemic”.
President and GCEO, Datuk
We attended the Tengku Muhammad Taufik President of Corporate Strategy Mazuin Energy Week [V]
Ismail, who was invited as a conference 4-7 October 2021 ASEAN Methane Roundtable 2021 [V]
World Economic and VP LNG Marketing and
speaker. 26 October 2021
Forum, Trading, Shamsairi Ibrahim President and GCEO, Datuk
represented by spoke at the conference, GasTech 2021 Tengku Muhammad Taufik PETRONAS supported by Thailand’s PTT Public ADIPEC 2021
President and hosted by the Ministry of 21-23 September 2021 Company Limited (PTT), hosted the inaugural
was interviewed by the 15-18 November 2021
Group Chief Energy Thailand and co- President and GCEO, Datuk Tengku Muhammad Editor of The Economist ASEAN Energy Sector Methane Roundtable 2021. In
Taufik and Vice President of LNG Marketing & President and GCEO, Datuk Tengku
Executive Officer hosted by EGAT and PTT. and spoke on “To the Last his welcoming address, President and GCEO, Datuk
Trading, Encik Shamsairi Ibrahim respectively spoke Muhammad Taufik was one of the
(GCEO), Datuk Drop: The End of Oil and Tengku Muhammad Taufik stressed on the
on Sustainability and low-carbon commitment, and invited speakers at ADIPEC, hosted
Tengku Gas?” at the Plenary importance for ASEAN to embrace a transition
Growing LNG-to-Power Across Asia in the C-Suite by the Abu Dhabi National Oil
Muhammad Session. We were also one strategy that is responsible and equitable to ensure
Dialogue Sessions held at GasTech 2021 in Dubai. Company (ADNOC). We also inked
Taufik. of the event sponsors. the sustainability of the region’s energy system.
At the conference, PETRONAS and Malaysia LNG four new agreements with
was announced as Winner for Best Engineering Partnership. technology partners.

CERAWEEK 2021 [V] Reuters IMPACT [V] PETRONAS FutureTalks [V]

1-5 March 2021 4-7 October 23-24 November 2021
As a Strategic Partner and Agora Partner of CERAWEEK 2021, we The event brought together world leaders, PETRONAS’ inaugural FutureTalks
enhanced our position on the global platform with insightful topics and big business C-Suite, and forward-thinking focus on region's progress in the
strategic content presented by our leadership team. pioneers to inspire, drive action and energy transition – driven by
accelerate innovation towards the greatest
emerging digital technologies and
challenge of our generation: the climate
emergency. President and GCEO, Datuk shifting business-as-usual to
Tengku Muhammad Taufik, participated as a business-unusual.
EXPO 2020 DUBAI – Opening Ceremony speaker under the topic “Mobilising global
4 October 2021 business to deliver on climate action.”
As the Official Premier Partner of the
Malaysian Pavilion at the Expo 2020 Dubai, Energy Intelligence Forum (EIF) [V]
we invested RM5 million in the third- 5 October 2021
largest global event in terms of economic President and GCEO, Datuk Tengku
and cultural impact. Muhammad Taufik spoke during the
Leadership Dialogue session. Meanwhile,
EVP and CEO of Upstream, Adif Zulkifli
Khazanah Megatrends Forum [V] participated in a panel session on the
PETRONAS in 2021

4 October 2021 “Advantage Oil and Gas: What Makes Merdeka Award Grant Ceremony
IPTC 2021 (International President and GCEO, Datuk Tengku the Cut in the Age of Austerity”. 26 November 2021
Petroleum Technology Muhammad Taufik spoke at the
Conference) [V] conference during the Special Address As a Merdeka Award Trustee,
23-25 March 2021 session on "The Great Reset: Shaping a LNG Producer-Consumer alongside ExxonMobil and Shell, we
We proudly hosted IPTC for the Sustainable Energy Future". Conference (LPCC) [V] selected five young Malaysians to
third time, alongside Mubadala 5 October 2021 receive grants that offer learning
Petroleum and Schlumberger. President and GCEO, Datuk opportunities at world-renowned
PETRONAS President and Tengku Muhammad Taufik institutions.
GCEO, Datuk Tengku delivered a video message, in
Muhammad Taufik, delivered conjunction with the 10th
the keynote address during the Anniversary of the Conference.
Opening Ceremony. [V] – Virtual
 26 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 27

Business Snapshots Business Snapshots

Our role as Malaysia's fully integrated energy provider is built on a dynamic value chain. Through
our core businesses, we are able to deliver society's growing energy needs and contribute to a
better tomorrow for everyone.

Total daily production LNG production capacity

average of of approximately

2,275 barrels 47 million tonnes per

of oil equivalent (boe) annum
per day

Grown our solar capacity

in operation and under
Profit After Tax development close to
RM34.5 billion 1 GW in India,
Malaysia, and Dubai.

Upstream Gas + New Energy

PETRONAS’ Upstream business is a fully integrated business that encompasses Exploration, Gas + New Energy (G+NE) business comprises the Liquefied Natural Gas (LNG), Gas and Power,
Development, Production and Malaysia Petroleum Management (MPM), covering a broad portfolio New Energy and Hydrogen business segments.
of resources and play types. Upstream's presence extends across more than 20 countries globally,
As PETRONAS’ one-stop centre for a reliable and cleaner energy solutions, G+NE provides
PETRONAS in 2021

with 247 producing fields, 432 offshore platforms and 30 floating facilities. accessible cleaner energy fueling through our integrated value chain to meet the growing global
demand.
Upstream also promotes sustainable and orderly development of Malaysia’s petroleum resources
through 100 active Petroleum Arrangement Contracts (PACs), including within the Malaysia-Thailand In addition, we strive to create sustainable value and profitable growth for PETRONAS and our
partners by focusing on customer-centricity, operational and commercial excellence, supported by
Joint Development Area. We are also involved in 65 PACs internationally. the right talent, culture and digital innovations.
 28 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 29

Business Snapshots Business Snapshots

Portfolio value
Profits After Tax of more than

RM0.7 billion RM9 billion

for 587 projects

Refining Capacity Upskilled

More than 700 10,366

kilobarrels per day participants in Citizen
Analytics

Downstream Project Delivery and

PETRONAS' Downstream business enhances the value of petroleum resources through the refining,
marketing and trading of crude oil and petroleum products, as well as manufacturing and
Technology
marketing of petrochemicals, specialty chemicals and derivatives.
PETRONAS’ Project Delivery and Technology (PD&T) Division innovates and enables tech-digital
Downstream owns and operates an extensive retail network of more than 2,000 PETRONAS and transformation for PETRONAS, and leverages technology and digital synergy to achieve sustainable
Engen stations in Malaysia and sub-Saharan Africa respectively, offering high quality fluids and and regenerative development. PD&T’s role is to service, safeguard, and shape the Group's growth
PETRONAS in 2021

lubricants, as well as innovative non-fuel solutions to create seamless and frictionless experience and strategy, backed by distinctive research and technical expertise, innovative solutions, as well as
for our customers. robust systems and processes.

Guided by PETRONAS' Sustainability Agenda, the Downstream business also offers cleaner energy In recent years, PD&T’s role has increased significantly as PETRONAS moves into new areas of
solutions including sustainable aviation fuel (SAF), LNG bunkering and electric vehicles (EV) opportunities beyond oil and gas to meet our NZCE 2050 aspiration. As the engine that drives
infrastructure and fluids in supporting PETRONAS’ NZCE 2050.
groupwide growth, PD&T is committed to support the Group’s business targets by leveraging data
to deliver value via a wide spectrum of technology and digital products and solutions.
 30 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 31

Our Integrated Value Chain Our Integrated Value Chain

Refining
With a refining capacity of more than 700 kilobarrels per day, our processing plants
Upstream transform and refine crude oil and various alternative raw materials into high-value
petroleum products such as gasoline, kerosene, jet fuel, gasoil, bitumen, fuel oil and
Exploration progressive fiscal terms whilst ensuring optimum lubricant base oil.
Exploration activities in PETRONAS is a production is achieved in a prudent and safe manner for
people, facilities and the environment. We work with Chemicals
consolidation of exploration functions in Malaysia
and internationally, which explores, acquires, industry players to optimise efficiency throughout the We are one of the largest integrated chemicals producer in Southeast Asia, with over 12.8
extracts and delivers new resources to sustain field life by adopting innovative technical and million tonnes per annum production capacity from 11 manufacturing sites around the
long-term production. The role also includes the commercial solutions. We also champion collaboration world. We manufacture and sell a range of solutions including olefins, polymers, fertilisers,
responsibility to attract exploration investment in with various stakeholders ranging from government methanols, specialty chemicals and derivative products to our industrial customers in various
Malaysia through data enrichment, technical bodies to energy companies, business associations and sectors such as personal care, textile, automotive, construction, packaging, pharmaceutical,
evaluation and overseeing exploration activities as higher learning institutions to create a strong ecosystem among others.
part of the regulatory body for the upstream towards the development of a safe and sustainable
industry. Downstream
sector under the umbrella of Malaysia Petroleum Lubricants
Management (MPM) business unit of PETRONAS.
We manufacture and market a full range
Core activities include block promotion, block
acquisitions, basin evaluations, play generation, of high-quality automotive and industrial
prospect maturation and exploration drilling. products in over 90 markets globally
Exploration delivers new resource addition through more than 30 marketing offices
through continuous exploration in basins located in 27 countries.
domestically and abroad to provide a
pipeline of hydrocarbon resources for a Marketing and Trading
sustained and long-term hydrocarbon We deliver high-quality solutions
production. to customers including
automotive, marine and
Development and Production aviation fuels, gas for cooking,
Development and Production (D&P) heating and electrical power,
comprises a consolidation of as well as cleaner energy
development and production functions solutions such as electric
for Malaysia Assets, International Assets, vehicles (EV) charging
and Centre of Excellence (CoE), which stations, LNG bunkering and
provide value-driven, world-class sustainable aviation fuel
operational delivery, with utmost priority (SAF). In addition to operating
on Health, Safety and Environment (HSE) the largest fuel retail network
and Asset Integrity. D&P CoE, which includes
in Malaysia and South Africa,
Petroleum Engineering, Wells, Operational
we also have retail presence in
Excellence, Petroleum Economics, Global
sub-Saharan Africa.
Resource Planning and Capability Development
and Upstream Digital collectively provide value- PFLNG
driven operations in both technical and We also market and trade crude oil
commercial solutions. This is done in and petroleum products, including
collaboration with Assets, Exploration CoE, PETRONAS’ equity crude where we are
Project Delivery and Technology (PD&T) and internationally present in development
Group Digital to support business growth. and production activities.
Liquefied Natural Gas (LNG)
Malaysia Petroleum Management We are a leading global LNG Hydrogen
As the custodian of the country’s hydrocarbon producer and supplier. We have Our venture into hydrogen is built upon our expertise in extracting blue hydrogen
resources, PETRONAS through MPM plays its role a diverse portfolio of assets and from our facilities. We are developing a competitive green hydrogen supply chain by
as the oil and gas industry shaper and supply nodes located across leveraging our expanding renewables portfolio, energy partnerships and advanced R&D
PETRONAS in 2021

investment enabler by providing stewardship Malaysia, Egypt, Australia and in electrolysis. We continue to promote hydrogen as an energy source and grow
throughout the lifecycle of the upstream soon Canada. Malaysia’s position as a hydrogen hub and proximity to key demand centres in Asia.
petroleum activities in Malaysia. PETRONAS’
success in maximising the long-term value from Gas and Power New Energy
hydrocarbon resources in Malaysia are realised With a broad range of customer-centric products We continue to grow our position as an international renewable energy provider
through our effective partnerships with our and solutions, we maximise our position through flexible integrated solar and wind solutions. We offer a range of affordable and
Petroleum Arrangement Contractors (PACs), domestically and pursue growth in emerging customer-centric solar energy solutions to ensure customers receive a reliable supply
consisting of the oil and gas majors, large markets. Our world-class asset performance and of clean energy. These solutions include on-site rooftop solar, off-site solar, battery
independents and specialised oil and gas diverse customer portfolio allow us to be the ideal storage, hybrid solutions and advanced analytics energy monitoring solutions. To date,
companies. We continue to develop a solutions partner in delivering natural gas to our we have grown our solar capacity in operation and under development to close to
competitive and conducive investment
clients. 1  GW locally and internationally, reinforcing our position as one of the key clean
environment for our investors by offering Gas + New Energy energy providers in the region.
 32 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 33

PETRONAS Around the World

Europe
Albania: Georgia: Martinique:
Central Asia
Downstream Downstream Downstream
Andorra: Germany: Moldova: Armenia: Turkmenistan:
Downstream Downstream Downstream Downstream Upstream
Asia Pacific
Austria: Greece: Netherlands: Azerbaijan: Downstream
Downstream Downstream Downstream Upstream Project Delivery
and Australia: Japan: New Zealand:
Belarus: Hungary: Norway: Downstream
Technology Upstream Gas + New Downstream
Downstream Downstream Downstream Kazakhstan: Gas + New Energy Energy
Downstream Uzbekistan: Philippines:
Belgium: Iceland: Poland: Downstream Downstream
Downstream Downstream
Downstream Downstream Downstream Kyrgyzstan: Bangladesh: Macau:
Bosnia-Herz.: Ireland: Portugal: Downstream Downstream Downstream Singapore:
Downstream Upstream Downstream Gas + New
Brunei: Malaysia: Energy
Bulgaria: Downstream Romania: Upstream Upstream Downstream
Downstream Italy: Downstream Project Delivery Gas + New
Downstream and Technology Energy South Korea:
Croatia: Serbia: Gas + New
North America Downstream Project Delivery Downstream Cambodia: Downstream
and Technology Project Delivery Energy
Cyprus: Slovakia: Downstream
Canada: Kosovo: and Technology Downstream
Upstream Downstream Downstream China:
Downstream Malaysia-Thailand Thailand:
Gas + New Energy Czech Republic: Slovenia: Gas + New Energy
Latvia: Downstream Joint Development Gas + New
(under construction) Downstream Downstream Area:
Downstream Energy
Downstream India: Upstream
Denmark: Spain: Downstream
Project Delivery and Lithuania: Gas + New Energy
Downstream Downstream Myanmar: Vietnam:
Technology Downstream Downstream
Estonia: Sweden: Upstream Upstream
Mexico: Luxembourg: Indonesia: Downstream
Downstream Downstream Downstream
Upstream Downstream Upstream Project Delivery
Downstream Finland: Switzerland: Downstream
Macedonia: and Technology
Project Delivery and Downstream Downstream Project Delivery
Downstream
Technology France: United Kingdom: and Technology
Downstream Malta: Gas + New
United States of America:
Downstream Energy
Upstream
Downstream Downstream

Breakdown of Employees by Region (%)

Middle East

Bahrain:
Africa
Employment type: Downstream
Iraq:
Permanent Upstream
6.4 2021
86% 2020 Downstream
Project Delivery and 6.7 2020
87% 2021 Africa Technology
Jordan: Asia
Angola: Guinea: Downstream
Contract Upstream Downstream
Downstream
Kuwait: 84.7 2021
Latin America 13% 2020 Lesotho: Downstream
Botswana: Downstream Lebanon: 84.6 2020
Argentina: Colombia: Guyana: Peru: 14% 2021 Downstream
Libya: Downstream
Upstream Downstream Downstream Downstream Burkina Faso: Downstream
Downstream Oman:
Costa Rica: Haiti: Suriname Downstream
Madagascar: Upstream Australia and New Zealand
Belize: Downstream Downstream Upstream Burundi: Downstream Downstream
Downstream
Dominican Honduras: Downstream Gender Distribution: Downstream 0.1 2021
Mauritania: Qatar:
Bolivia: Republic: Downstream Trinidad & Cameroon: Upstream Downstream
Downstream Downstream Tobago: Female 0.1 2020
Nicaragua: Downstream Project Delivery Saudi Arabia:
Brazil: Downstream and Technology
Ecuador: Downstream 28 2020 Chad: Downstream
Upstream Downstream Uruguay:
Panama: Upstream Mauritius: Turkey: Commonwealth of Independent States
Downstream Downstream 28 2021 Downstream Downstream
El Salvador: Downstream Downstream
Chile: Downstream Congo Brazzaville: Morocco: 1.2 2021
Paraguay: United Arab Emirates:
Downstream
Guatemala: Downstream Male Downstream Downstream Gas + New Energy
Downstream Cote d’Ivoire: Namibia: Downstream 1.4 2020
72 2020
Downstream Downstream
72 2021 Democratic Republic Senegal: Europe
PETRONAS in 2021

of the Congo: Upstream

Downstream Downstream
2.9 2021
Egypt: South Africa: Total Employees:
Products and Listings by Business Upstream Downstream 2.7 2020
Gas + New Energy
South Sudan:
Downstream
Upstream
Project Delivery and Middle East
Upstream Gas + New Energy Downstream Project Delivery and Technology Project Delivery
Technology
and Technology 46,884
Eswatini:
Sudan: 2.3 2021
• Exploration • LNG • Petrochemicals • Project Downstream
Upstream
• Development • Gas Processing • Retail • Technology Ethiopia: Downstream 2.4 2020
• Production • Gas Transportation • Refinery • Technical Downstream
• Utilities • Digital Togo: 48,679
• Lubricants Gabon:
• Regasification Upstream
Downstream North and South America
• Marketing and Trading Tunisia:
• Gas Infrastructure Gambia:
Downstream 2.4 2021
• Gas Marketing and Trading Upstream
• Solar Ghana: 2.1 2020
Downstream 2020 2021
 34 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 35

Corporate Structure Corporate Structure

Wholly-owned Subsidiaries (184) Partly Owned Subsidiaries (54) Associate Companies (49)

PETRONAS Carigali Sdn Bhd Kebabangan Petroleum Operating Co. Sdn Bhd (40%)
PCPP Operating Company Sdn Bhd (40%)
PETRONAS Carigali Overseas Sdn Bhd
PETRONAS Carigali Nigeria Limited
PC Randugunting Ltd
PETRONAS Carigali (Ketapang) Ltd
PETRONAS Carigali (West Galagah Kambuna) Ltd
PETRONAS Carigali (Surumana) Ltd
PETRONAS Carigali White Nile (5B) Ltd
PETRONAS Carigali (Australia) Pty Ltd

PC JDA Limited Carigali Hess Operating Co. Sdn Bhd (50%)

Carigali-PTTEPI Operating Co. Sdn Bhd (50%)

E&P Venture Solutions Co. Sdn Bhd BC Petroleum Sdn Bhd (20%)
E&P O&M Services Sdn Bhd

E&P Malaysia Venture Sdn Bhd

Vestigo Petroleum Sdn Bhd Ophir Production Sdn Bhd (20%)

PETRONAS Assets Sdn Bhd

Petrofibre Network (M) Sdn Bhd
PETRONAS Digital Sdn Bhd
Virtus IP Sdn Bhd

PETRONAS Hartabina Sdn Bhd

PRBF Holdings Corporation Sdn Bhd
PRBF Properties Sdn Bhd

PETRONAS Trading Corporation Sendirian Berhad

PETCO Trading (UK) Limited
PETCO Trading Labuan Company Ltd
PETCO Trading DMCC
P.T. PETRONAS Niaga Indonesia

PETRONAS Technical Services Sdn Bhd

PTSSB DMCC
PETRONAS Technology Ventures Sdn Bhd
PETRONAS in 2021

PTV International Ventures Ltd

PETRONAS Global Technical Solutions Sdn Bhd

OGP Technical Services Sdn Bhd

 36 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 37

Corporate Structure Corporate Structure

Wholly-owned Subsidiaries (184) Partly-Owned Subsidiaries (54) Associate Companies (49)

PETRONAS International Corporation Ltd Transasia Pipeline Company Pty Ltd (35%)

PETRONAS Carigali Myanmar Inc. PT Transportasi Gas Indonesia (40%)

PETRONAS Carigali (Turkmenistan) Sdn Bhd
MITCO Labuan Co. Limited (MLCL)
PCM Chemical India Private Limited (PCMCIPL)

PETRONAS Carigali Nile Ltd Petrodar Operating Company Ltd (40%)

SUDD Petroleum Operating Co. Ltd (67.88%) Greater Nile Petroleum Operating Company (30%)
DAR Petroleum Operating Co. Ltd (40%)
Greater Pioneer Operating Co. Ltd (30%)

PICL (Egypt) Corporation Ltd Egyptian LNG Co. S.A.E (35.5%)

WDDM Energy Ltd Burullus Gas Company S.A.E (25%)
Idku Natural Gas Liquefaction Company S.A.E (38%)
Nada Properties Co Ltd El Beherah Natural Gas Liquefaction Company S.A.E
PC Madura Ltd (35.5%)
PC Muriah Ltd Egyptian Operating Company for Natural Liquefaction
PC (Myanmar) Holdings Limited Project S.A.E (35.5%)

PC Myanmar (Hong Kong) Limited

PETRONAS Carigali Myanmar III Inc. Taninthayi Pipeline Co Limited Liability Company (30%)
PETRONAS Carigali (Jabung) Ltd PP Oil & Gas Indonesia Holding Ltd (50%)
PICL Marketing Thailand Ltd PP (Indonesia Gas Aggregation) Ltd (50%)
Myanmar PETRONAS Trading Company Limited PP Oil & Gas (Indonesia – Jabung) Ltd (50%)
PETRONAS (Thailand) Co., Ltd
PC Vietnam Limited Lam Son Joint Operating Company (50%)
PC Mauritania I Pty Ltd
PC Mauritania II B.V
PETRONAS Philippines Inc
Argentinean Pipeline Holding Company S.A
PETRONAS Australia Pty Ltd (PAPL)
PAPL Services Pty Ltd
PAPL (Upstream) Pty Ltd
PAPL (Upstream II) Pty Ltd
PAPL (Downstream) Pty Ltd GLNG Property Pty Ltd (27.5%)
GLNG Operations Pty Ltd (27.5%)
Labuan Energy Corporation Limited
PSE Ireland Limited
LEC Ireland Employment Limited
PETRONAS in 2021

PETRONAS LNG Sdn Bhd Japan Malaysia LNG Co. Ltd (93%)
PETRONAS Energy (India) Private Limited
PETRONAS LNG (UK) Ltd
PETRONAS LNG Ltd
PETRONAS Energy Trading Limited MPF Holding Limited (14.06%)
LNG Investments Europe Ltd

PETRONAS Carigali Brunei Ltd

 38 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 39

Corporate Structure Corporate Structure

Wholly-owned Subsidiaries (184) Partly-Owned Subsidiaries (54) Associate Companies (49)

PETRONAS International Corporation Ltd (100%) (Cont’d)

PETRONAS (E&P) Overseas Ventures Sdn Bhd
PETRONAS Iraq Garraf Ltd
Natuna 1 B.V.
PETRONAS Carigali Canada B.V.
PETRONAS Carigali International E&P B.V.
PETRONAS Carigali Iraq Holding B.V.
PETRONAS Brasil E&P Limitada
PETRONAS Angola E&P Ltd
Garraf Technical Services Ltd
PETRONAS Azerbaijan Upstream Sdn Bhd
PC Kualakurun Ltd
PC North Madura II Ltd
PETRONAS Carigali Chad Exploration & Production Inc
PC Senegal Ltd
Petroliam Manpower Services Mexico S.A. de C.V,
PC Sakakemang B.V
PC Gambia Ltd
PETRONAS Petroleo Brasil Limitada
PC Oman Ventures Ltd
Petroliam Manpower Support Services Mexico S.A de CV
PETRONAS Carigali International Sdn Bhd
PETRONAS Gebang Indonesia B.V.
PETRONAS Andaman III Indonesia B.V.
PETRONAS West Papua IV Indonesia B.V.
PETRONAS Aru Indonesia B.V.

PETRONAS Lubricants International Sdn Bhd

PLI (Netherlands) B.V.
PLI Italy SPA

PETRONAS International Marketing (Thailand) Co., Ltd.

PETRONAS Base Oil (M) Sdn Bhd
PETRONAS Lubricants Africa Ltd
PETRONAS Lubricants (India) Private Limited
PLAL DMCC

PETRONAS Lubricants China Company Limited Guangxi Beihai Yuchai Petronas High Quality Lub Co. Ltd.
PETRONAS Lubricants International (China) Co, Ltd. (50%)
PETRONAS in 2021

PETRONAS Marketing (China) Co. Ltd

PT PLI Indonesia
PLI Australia Pty. Limited
 40 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 41

Corporate Structure Corporate Structure

Wholly-owned Subsidiaries (184) Partly-Owned Subsidiaries (54) Associate Companies (49)

PETRONAS International Power Corporation B.V.

Amplus Energy Solutions Pte Ltd.
Amplus Energy Solution FZE
Amplus Energy Solutions (Thailand) Co Ltd.
Amplus Energy Solutions Private Limited
Amplus Solar Power Private Limited
Amplus Solar Solutions Private Limited
Amplus Andhra Power Private Limited
Amplus Power Solutions Private Limited
Amplus KN Solar Power Private Limited
Amplus KN One Private Limited
Amplus Management Services Private Limited
Grian Energy Private Limited
Amplus Sun Solutions Private Limited
Amplus Ages Private Limited
Amplus Solar Power MH Private Limited
Amplus Costal Power Private Limited
Nay Energy Private Limited
Amplus RJ Solar Private Limited
Sunroot Energy Private Limited
Amplus Green Power Private Limited
Amplus Dakshin Private Limited
Amplus Poorva Private Limited
Amplus Shams Private Limited
OneVolt Energy Private Limited
Solbridge Energy Private Limited
Amplus Green One Power Private Limited
Amplus Power Supply Private Limited
Amplus Tumkur Solar Energy One Private Limited
Amplus Pavagada Solar Energy Two Private Limited
Amplus Venus Private Limited
Amplus Athena Energy Private Limited
Amplus Helios Private Limited
Amplus Iru Private Limited
Amplus Vidyut Power Private Limited
Amplus Beat Energy Private Limited
Amplus Active Private Limited
Amplus Uttar Private Limited
Amplus EON Private Limited
Amplus Sunlight Private Limited
Amplus Centaur Solar Private Limited
Amplus Phoenix Energy Private Limited
PETRONAS in 2021

Amplus Ampere Private Limited

Amplus IIFA Solar Private Limited
Amplus Alpha Solar Private Limited
Amplus Solar Shakti Private Limited

PETRONAS Power Sdn Bhd Eastern Sabah Power Consortium Sdn Bhd (30%)
NE Suria Satu Sdn Bhd (80%)
PETRONAS International Power Corporation (Mauritius) Ltd
Voltage Renewables Sdn Bhd (70%)
 42 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 43

Corporate Structure Corporate Structure

Wholly-owned Subsidiaries (184) Partly-Owned Subsidiaries (54) Associate Companies (49)

PETRONAS Chemicals Group Berhad (64.35%)

# BASF PETRONAS Chemicals Sdn Bhd (40%)
Kertih Terminals Sdn Bhd (40%)
PETRONAS Chemicals Marketing Sdn Bhd (100%)
Idemitsu SM (Malaysia) Sdn Bhd (30%)
PETRONAS Chemicals Marketing (Labuan) Ltd (100%) Ineos PCG Acetyls Sdn Bhd (30%)
PCM (Thailand) Company Limited (99.99%) (formerly known as BP PETRONAS Acetyls Sdn Bhd)
PCM (China) Co., Ltd. (100%) PCG PCC Oxyalkylates Sdn. Bhd. (50%)
PT PCM Kimia Indonesia (99.67%) (formerly known as PCC Oxyalkylates Malaysia Sdn Bhd)
Pengerang Petrochemical Company Sdn Bhd (50%)
LG PETRONAS Chemicals Malaysia Sdn Bhd (49%)
PT Anugerah Kimia Indonesia (49%)

PETRONAS Chemicals Derivatives Sdn Bhd (100%)

PETRONAS Chemicals Polyethylene Sdn Bhd (100%)
Vinyl Chloride (Malaysia) Sdn Bhd (100%)
PETRONAS Chemicals Methanol Sdn Bhd (100%)
PETRONAS Chemicals Glycols Sdn Bhd (100%)
PETRONAS Chemicals Ammonia Sdn Bhd (100%)
Polypropylene Malaysia Sdn Bhd (100%)
Kertih Port Sdn Bhd (100%)
PETRONAS Chemicals Fertiliser Kedah Sdn Bhd (100%) Malaysian NPK Fertilizer Sdn Bhd (20%)
PETRONAS Chemicals MTBE Sdn Bhd (100%)
PETRONAS Chemicals Isononanol Sdn Bhd (100%)
PRPC Elastomers Sdn Bhd (100%)
PETRONAS Chemicals Olefins Sdn Bhd (100%)
PETRONAS Chemicals LDPE Sdn Bhd (100%)
PETRONAS Chemicals Fertiliser Sabah Sdn Bhd (100%)
PETRONAS Chemicals Ethylene Sdn Bhd (87.5%)
Asean Bintulu Fertilizer Sdn Bhd (63.47%)
PETRONAS Chemicals Aromatics Sdn Bhd (70%)
PETRONAS Chemicals International B.V (100%)
Da Vinci Group B.V (100%)

PETRONAS Gas Berhad (PGB) (51%)

# Industrial Gases Solutions Sdn Bhd (50%)

Regas Terminal (Sg. Udang) Sdn Bhd (100%)

Regas Terminal (Lahad Datu) Sdn Bhd (100%)
Regas Terminal (Pengerang) Sdn Bhd (100%)
Pengerang LNG (Two) Sdn Bhd (65%)
Kimanis Power Sdn Bhd (60%)
Kimanis O&M Sdn Bhd (60%)
Pengerang Gas Solutions Sdn Bhd (51%)
PETRONAS in 2021

PETRONAS Dagangan Berhad (63.94%)

# IOT Management Sdn Bhd (20%)
Tanjung Manis Oil Terminal Management Sdn Bhd (20%)
PETRONAS Lubricants Marketing (Malaysia) Sdn Bhd (100%)
P S Pipeline Sendirian Berhad (50%)
Setel Ventures Sdn Bhd (100%)
P S Terminal Sendirian Berhad (50%)
PETRONAS Aviation Sdn Bhd (100%)
PDB (Netherlands) B.V. (100%)
United Fuel Company Limited Liability Company (40%)
Mesra Retail & Cafe Sdn Bhd (100%)
Note: Setel Express Sdn Bhd (100%)
#
Listed on Bursa Malaysia. (formerly known as D-Two Couriers (M) Sdn Bhd)
Kuala Lumpur Aviation Fuelling System Sdn Bhd (65%)
 44 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 45

Corporate Structure Corporate Structure

Wholly-owned Subsidiaries (184) Partly-Owned Subsidiaries (54) Associate Companies (49)

KLCC (Holdings) Sdn Bhd KLCC Property Holdings Berhad (66.94%)

#

MISC Berhad (51%)

# #
Bintulu Port Holdings Berhad (28.52%)

Malaysia LNG Sdn Bhd (90%)

Malaysia LNG Dua Sdn Bhd (80%)
PETRONAS LNG 9 Sdn Bhd (65%)
Malaysia LNG Tiga Sdn Bhd (60%)
PETRONAS Research Sdn Bhd Indianoil PETRONAS Private Limited (50%)
Primesourcing International Sdn Bhd Trans Thai-Malaysia (Thailand) Ltd (50%)

Institute of Technology PETRONAS Sdn Bhd TTM Sukuk Berhad (100%)

UTP FutureTech Sdn Bhd
Trans Thai-Malaysia (Malaysia) Sdn Bhd (50%)

PETRONAS Gas & New Energy Sdn Bhd

PETRONAS Hydrogen Sdn Bhd

(formerly known as PNW LNG Marketing Sdn Bhd)

PETRONAS Penapisan (Terengganu) Sdn Bhd

PETRONAS Penapisan (Melaka) Sdn Bhd
Malaysian Refining Company Sdn Bhd
PETRONAS Management Training Sdn Bhd
PETROSAINS Sdn Bhd
Pengerang Terminals (Two) Sdn Bhd (40%)
Sanzbury Stead Sdn Bhd
Pengerang Refining Company Sdn Bhd (50%)
PETRONAS Capital Limited
PETRONAS Global Sukuk Limited SPT Services Sdn Bhd (30%)

PETRONAS NGV Sdn Bhd

Energas Insurance (L) Limited
PETRONAS Technical Training Sdn Bhd
PETRONAS Floating LNG 1 (L) Ltd
PETRONAS Floating LNG 2 (L) Ltd
Other Companies (7)
PETRONAS Refinery and Petrochemical Corporation Sdn Bhd
Shell MDS (Malaysia) Sdn Bhd (7%)
Labuan Reinsurance (L) Ltd (10%)
PRPC Utilities and Facilities Sdn Bhd #
Tenaga Nasional Berhad (0.40%)
PRPC Water Sdn Bhd
Pengerang Power Sdn Bhd
Through PETRONAS Gas Berhad
PETRONAS in 2021

PRPC SPJ Sdn Bhd

#
Gas Malaysia Berhad (14.8%)
PETRONAS Marketing International Sdn Bhd ENGEN Limited (74%)
Through PETRONAS Technology Ventures Sdn Bhd
PETRONAS Energy & Gas Trading Sdn Bhd LanzaTech New Zealand Limited (3.6%)

Through Petrofibre Network (M) Sdn Bhd

Fiberail Sdn Bhd (10%)
Note:
This chart excludes subsidiary companies of MISC Berhad, KLCC (Holdings) Sdn Bhd and Engen Limited. Through PETRONAS Marketing International Sdn Bhd
#
Listed on Bursa Malaysia. Vivo Energy Plc (3.68%)
 Key Leadership perspectives
from the front line
Messages

Recharge
with Passion
48 Letter from the Chairman
56 Letter from the President and
Group Chief Executive Officer
62 Letter from the Executive Vice President and
Group Chief Financial Officer
68 Letter from the Vice President and
Chief Sustainability Officer
 48 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 49

Letter from the Chairman

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

Tan Sri Dato’ Seri
Mohd Bakke Salleh
unwavering in the delivery of its amanah (trust), always
Chairman 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 Reflecting on 2021
extreme disruptions to the energy ecosystem. This
PETRONAS’ performance for the year in review
achievement by the Group is credited to the courage,
demonstrates its relentless focus on operational
dedication and tenacity of our people. In this opportunity,
and commercial excellence across the Group.
I  would also like to thank our stakeholders for their support
The organisation ensured the reliability of its
and assistance that allowed us to continue operating safely
operations to leverage the recovery in global
and optimally throughout the lockdown periods.
energy demand seen in 2021 with the safety of
our people and assets as its highest priority.
Looking ahead, changes in the energy landscape will provide
new challenges and growth opportunities that we must
Although some degree of stabilisation was seen
approach with a credo and mindset for progress and
with the rollout of vaccinations and economies
innovation. To this end, I am confident that with the right
recovering from easing of lockdowns and
steer and support from the Board, PETRONAS is well-
gradual removal of border restrictions,
positioned to progress with pace and resilience to deliver
delivering the Group’s performance did not
profitable and sustainable growth aligned to our Three-

Letter from the

come easily. During the year, the oil and gas
Pronged Growth Strategy and net zero carbon emissions by
industry continued to be very volatile and
2050 (NZCE 2050) aspiration.
uncertain in the face of sudden shocks to the

Chairman
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.
Dear Stakeholders, 2 The oil and gas industry remaining fragile
as the rebound in oil price was driven by
Two years have passed since the pandemic began, and our world continues to be
Key Messages

the multi-speed reopening of economies,

challenged by volatility and uncertainty on an unprecedented scale in living memory. Even steadfast active market management by
as countries and industries alike strive to recover from the brutal impact of COVID-19, they OPEC+ and an unfolding global energy
supply crisis.
now face newfound challenges in the wake of the ongoing Russia-Ukraine conflict whose
3 The increasing pace of the energy
consequences may well long outlast the hostilities themselves and which are likely to transition causing sustainability-driven
reshape the industry landscape in fundamental and complex ways. structural changes to our industry with
stakeholders demanding more visible,
impactful results in our efforts to
decarbonise.
 50 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 51

Letter from the Chairman Letter from the Chairman

To enhance these efforts and further entrench

momentum, the PETRONAS Board has expressed its
support to incorporate environmental, social and
governance (ESG) elements in our assessments of
future investments in which decisions would consider
value-creation from the perspective of the 3Ps of
sustainability – people, planet and profits.

With the significant progress achieved under our core

portfolio in 2021, PETRONAS will continue to focus on
building a resilient portfolio that is not only robust to
the energy transition but also captures attractive
business opportunities which the transition presents.
Since we announced our NZCE 2050 aspiration last
year, the Group has undertaken deliberate steps in
moving from a commodity player to a customer-centric
solutions provider. PETRONAS’ roadmap for our NZCE
aspiration will see the organisation play its part in
moving the needle towards the goal of net zero,
contributing to Malaysia’s Nationally Determined
Contributions (NDC) to the Paris Agreement for the
long-term, while supporting our customers in
decarbonising their energy systems.

Reinforcing Strong Governance

In an increasingly challenging environment
Nevertheless, PETRONAS successfully demonstrated its ability to respond and characterised by market uncertainties and heightened
become part of the solution. Together, the PETRONAS Board and Leadership Team geopolitical risks, PETRONAS must continue to reliably
were able to not only preserve and enhance its core oil and gas portfolio but also It remains our duty demonstrate its ability to deliver its core responsibilities
grow in the new energy space for long-term business sustainability and resiliency.
to maximise the while transforming to meet the energy needs of the
future.
As a result, PETRONAS was able to generate healthy financial returns and value of Malaysia’s
contribute to its stakeholders in the form of cash payments, tax, export duties, PETRONAS holds Malaysia’s hydrocarbon resources in
state sales tax and dividends. In 2021, we paid the scheduled RM25 billion dividend hydrocarbon trust, and we have always striven to ensure its potential
payments to the Government of Malaysia.
resources to provide continues to be harnessed for the benefit of the people
and the nation. Similarly, in our global ventures, we
long-term economic have sought to build partnerships and gain hand-in-
Accelerating Sustainability hand support from our partners as well as customers in
As a National Oil Company, hydrocarbons will still be part of our energy mix even
value creation for our journey towards progress.
as we seek to integrate renewables and lower-carbon solutions as well as specialty shared prosperity
chemicals into our portfolio in a gradual and phased manner. It remains our duty With a strong foundation built on trust, PETRONAS has
to maximise the value of Malaysia’s hydrocarbon resources to provide long-term and energy security successfully balanced its unique position to fulfil its
commitment as Malaysia’s NOC while living up to the
Key Messages

economic value creation for shared prosperity and energy security – this, while
also contributing to the low-carbon aspirations of the nation.
– this, while also demanding expectations of being an international
contributing to energy player. Over the years, our stakeholders have
Reaching net zero carbon emissions is a monumental undertaking and requires a given us the opportunity to serve and create new value
steady, evolutionary approach of continuous improvements on emissions reduction. the low-carbon as their partners in progress, allowing us to continue
growing as a FORTUNE Global 500 company.
For PETRONAS, we have responded decisively to accelerated energy transition with
clarity and discipline with our 2024 sustainability targets and carbon commitments,
aspirations of the
supported by the right ecosystem for growth. We are making progress on zero nation.
venting and flaring, operational improvements, electrification and developing lower
carbon solutions.
 52 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 53

Letter from the Chairman Letter from the Chairman

As we embrace a more enterprising way of work and Delivering Our Amanah to The Nation
position ourselves to seize opportunities for future growth,
As we set out to serve our stakeholders safely and reliably,
PETRONAS will continue to uphold the highest standards
PETRONAS has never wavered from its commitment to
of governance and integrity as a culture in everything that
ensure the well-being of society wherever we operate.
we do. With our global footprint and commitment to
Anchored on our Statement of Purpose, we recognise the
enriching the lives of those around us, we must do our
importance of enriching the lives around us, especially in
very best to strengthen our commitment to integrity at
these prolonged trying times.
both individual and organisational levels. PETRONAS adopts
zero tolerance standards on corruption, and a strict
In 2021, PETRONAS’ CSR contribution which is focused on
consequence management approach should the
Education, Community Well-being and Development, and
boundaries be crossed.
the Environment totalled RM1.4 billion in a span of two
years alone.
The foundational integrity embedded in our Shared Values
along with Loyalty, Professionalism and Cohesiveness are
Following last year’s efforts, we continued to support
the core principles of work ethics for all employees. We
COVID-19 relief initiatives at home and abroad where we
have in place a Corporate Governance framework and
operate, amounting to more than RM75 million in 2021.
introduced our Code of Business Ethics (CoBE) in 2012
Among the efforts were repeated contributions to the
accompanied by an Anti-Bribery and Corruption Policy &
National Disaster Management Agency (NADMA) funds
Guidelines Manual. We have continued to step up our
through staff and corporate donations, Program Bakul
collaboration with the Malaysian Anti-Corruption
Prihatin Negara, and Program CERDIK, as well as the
Commission (MACC) to develop adequate measures as
contribution of essential items to hospitals and Despite the cyclical and volatile swings in the energy Our ability to uplift societies to achieve a better and
defined by Section 17A of the MACC Act.
communities to help ease the burden in coping with the market, I would like to reiterate that PETRONAS will sustainable quality of life has been through effective
effects of COVID-19. continue giving back to society towards creating positive collaboration. PETRONAS has long viewed its relationship
In 2021, significant initiatives were implemented to
strengthen groupwide awareness of the CoBE and the social impact for Malaysians and the countries where we with stakeholders as a partnership underpinned by
PETRONAS also supported the Government of Malaysia’s operate. common objectives and sustained by mutual
Anti-Bribery and Corruption Manual. This will empower
vaccination drive with the setup of six Pusat Pemberian understanding, respect and trust.
employees to speak up on any wrongdoing, facilitated
Vaksin Industri (PPVIN) for the oil and gas sector. This is in In 2021, the organisation awarded 302 scholarships via the
under the Whistleblowing Policy, to ensure secure and
line with our commitment to provide a safer environment PETRONAS Education Sponsorship Programme and For a partnership to be successful for the long-term
confidential disclosures.
within the oil and gas ecosystem by achieving herd enhanced the technical and vocational capabilities of 93 especially at a time of uncertainty and turbulence, the
immunity for its frontliners. We donated wheelchairs to students through the PETRONAS Vocational Institution aspirations of each party which include industry partners,
A Leaders Speak Integrity series was also launched as a
Pusat Pemberian Vaksin (PPV) through Yayasan PETRONAS Sponsorship & Training Assistance (VISTA) programme to Oil & Gas, Services and Equipment (OGSE) players,
platform for leaders to pledge their commitment towards
and also launched the PETRONAS Foodbanks at our Mesra nurture a market-ready future workforce. customers, the community and indeed governments must
integrity and rally employees to always aim for exemplary
stations across Malaysia. It was indeed heartening to see be duly recognised, and the right balance achieved to
conduct at all levels as a collective responsibility. Virtual
our people stepping up to adopt the Foodbanks, pooling PETRONAS expanded its community well-being and produce outcomes that prove mutually beneficial for all.
dialogues were also held to provide a safe space for
their own resources to ensure a continuous and development programmes in South Sudan with the Water
employees to discuss integrity-related topics.
sustainable supply of essential items to the needy. Our for Life programme which provides rural communities with On our part, PETRONAS will continue to adapt and
people continued to demonstrate exemplary courage by access to clean water. Closer to home, a Solar Systems transform to safeguard its ability to uphold the amanah to
I am also pleased to share that PETRONAS is a signatory
banding together to lend a helping hand when Malaysia Project was launched to provide electricity to Kampung our nation and the well-being of the people around us,
of the World Economic Forum’s Partnering Against
endured the effects of a devastating flood in December Orang Asli in Berasau, Johor. In collaboration with Tata and we welcome meaningful participation as well as
Corruption Initiative (PACI). As part of the PACI Vanguard
that severely affected up to eight States. The organisation Consultancy Services, PETRONAS onboarded 50 social genuine support from all parties to ensure effective
Board, PETRONAS leverages on the platform to collaborate
actively participated in relief efforts and contributed RM25 entrepreneurs to SEEd.Lab, a social enterprise innovation contributions that create value as we forge ahead together.
with leaders from international organisations, academia and
million to assist the Government of Malaysia with post- hub to address youth unemployment in Malaysia through
civil society to address and advocate the importance of
flood recovery. entrepreneurial opportunities.
anti-corruption measures, upholding business integrity,
Key Messages

transparency, and accountability.

To this end, I would like to assure that the PETRONAS

Board is wholly committed to upholding the highest
standards of governance and steadfastly supports all Group
initiatives on integrity-related matters.
 54 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 55

Letter from the Chairman Letter from the Chairman

Moving Forward with Purpose Looking ahead, the pressures on PETRONAS are only going
to increase as we continue to bear the expectations and
The year 2021 has proven that we need to constantly be
aspirations of Malaysia and the communities where we
prepared to pivot when faced with the unexpected. The
operate. We must make our move to navigate through the
unprecedented challenges of the past year offered
turbulence to find our position for the future. In our quest
PETRONAS an opportunity to reform strategies, expedite
to create a sustainable legacy for the next generation, we
transformation and prioritise sustainability risks. It was
must steer the business and shape an energy future that
imperative that PETRONAS emerged from this trying period
they deserve, one in which PETRONAS will continue to be
more resilient, more agile, technologically stronger and
their preferred energy and solutions partner.
financially more robust.

The achievements of 2021 demonstrate the dedication and

In Appreciation
strength of our people coupled with a robust integrated
portfolio that provided PETRONAS with the strong On behalf of the PETRONAS Board, I would like to take
foundation it needed to capitalise on price recovery. I am this opportunity to record my sincere appreciation to Tan
deeply grateful to the women and men who stood by Sri Ahmad Nizam Salleh for all his contributions as
PETRONAS amidst the turbulence and offer my sincere Chairman since August 2018 and wish him every success
thanks to each and every one of them. in his new undertakings. I would also like to extend a
warm welcome to three of our Directors who joined the
As we progress to capitalise on this period, PETRONAS will Board during the year – namely, Mr Thayaparan S.
continue in its efforts to safely deliver commercial and Sangarapillai as Independent Non-Executive Director,
operational excellence. We remain focused on maintaining Chairman of the Risk Committee and a member of the
fiscal discipline and careful operational spending as well as Audit Committee; Puan Liza Mustapha as Executive
preserving liquidity to ensure resiliency and high Director; and Datuk K Y Mustafa as Non-Independent and
performance across the Group. We are determined to seize Non-Executive Director. I am confident that their collective
new opportunities for sustainable, profitable growth as we experiences and diverse insights will be valuable additions
uphold our commitment to our shareholder and lay the in providing the right steer for the Group, especially as we
foundation for our future growth. navigate through these challenging times.

The PETRONAS of the future will still have hydrocarbons Furthermore, I would like to thank Datuk Tengku
as a key part of its portfolio with products delivered safely, Muhammad Taufik, President and Group CEO of
responsibly, cost optimised, and emissions abated. The new PETRONAS, and his Leadership Team for ensuring the
forays that we are making in step-outs today will company continues to dutifully discharge its obligations
complement our core portfolio to provide energy for a and responsibilities despite facing overwhelming odds and
world that continues to progress and develop, while being challenges. My deepest gratitude also to our employees for
in ever-greater need of solutions for emissions. their perseverance in upholding the trust as we continue
to brave these trying times.
While the variety of our business offerings expands, the We continue to bear Finally, I would like to express my deep gratitude for our
heart of the organisation, in its purpose and values are
timeless and remain the same. Our Purpose, Cultural the expectations and valued stakeholders – the Federal Government of Malaysia,
Beliefs, and Shared Values of Loyalty, Integrity, State Governments and the Governments of our Host
Professionalism and Cohesiveness will continue to bind us
aspirations of Malaysia countries, industry partners and customers for their strong
together. and the communities support and understanding during these times of prolonged
turbulence and uncertainty. With your trust and confidence
where we operate. in PETRONAS, I am optimistic that we will continue to
Key Messages

grow and deliver the energy for today and tomorrow, as

your progressive energy and solutions partner.
PETRONAS will continue in its efforts to safely
deliver commercial and operational excellence. Tan Sri Dato’ Seri Mohd Bakke Salleh
Chairman
 56 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 57

Letter from the President and Group Chief Executive Officer

Letter from the

President and
Esteemed Stakeholders,
As we are now all too aware, recent events

Group Chief
have overtaken the brief respite which the
oil and gas industry experienced in 2021,
following the unprecedented challenges of

Executive Officer
2020. The impact of the tragic conflict
between Russia and Ukraine, which
continues to unfold as I write this, is still Datuk Tengku
Muhammad Taufik
being felt globally and it is our hope that a President and
peaceful resolution will be achieved soon. Group Chief
Executive Officer

The Group is fully committed This conflict has roiled energy markets and
has presented fresh uncertainties that
to remain disciplined in its Profit/(Loss)
After Tax
Revenue
threaten an already uneven and extremely
delivery of our Three-Pronged RM248.0 fragile post-pandemic recovery. Driven by
RM48.6 billion heightened concern over disruption in
Growth Strategy, and resolute billion energy supply in a market already facing
2020: RM178.7 billion
in our efforts to achieve the structural supply issues, prices for human
+39%
2020: (RM21.0) billion
sustenance and economic activity have
goal of net zero carbon +>100% escalated to record highs- presenting even
more complex challenges and added
emissions by 2050. uncertainty to the economic recovery.

Even as we contend with this volatile period, Upholding the Safety of Our People
PETRONAS’ priority remains to ensure the security of
Upholding our people’s safety is PETRONAS’ top priority.
energy supply for Malaysia and our customers around
In  2021, the Group ensured operations continued to run pandemic started. Recognising the psychological impact of The sustained operational resilience demonstrated by the
the world. The Group is fully committed to remain
safely, reliably and efficiently with minimal interruptions. COVID-19 on mental health, various targeted interventions Group contributed to its strong performance, further
disciplined in its delivery of our Three-Pronged
Across our operations, significant efforts were undertaken focused on employees’ mental well-being were also supported by surging commodity prices driven by the
Growth Strategy, and resolute in our efforts to achieve
where work practices were modified to build safe working implemented to provide employees with access to trained recovery in global energy demand as key economies
the goal of net zero carbon emissions by 2050 (NZCE
environments and quality processes in accordance with professionals to improve their physical and mental health. reopened and travel restrictions eased amid higher
2050).
COVID-19 guidelines, upholding zero compromises on COVID-19 vaccination rates around the world.
safety and integrity. By the end of 2021, the Group achieved 80 per cent
In discharging this daunting responsibility, I am
vaccination and booster rates for employees. These The results we registered for the year in review
pleased to report that PETRONAS delivered a strong
Although Major Fire was contained to one incident, the deliberate efforts were absolutely essential for PETRONAS demonstrated the unwavering dedication of the PETRONAS
performance in 2021. The results were delivered under
lowest in the past 12-year period, we remain susceptible to to continue serving our customers safely and efficiently, workforce and the robustness of the Group’s integrated
challenging circumstances faced by every member of
high-risk situations in our work. Regrettably, we lost three ensuring their energy security as we weathered the portfolio. We remained resilient through two years of
the PETRONAS family as the threat of the COVID-19
colleagues in the line of duty. The Safety Stand Down was unavoidable challenges of operating during a pandemic. extreme disruptions to the energy ecosystem, eventually
Key Messages

pandemic remains ever present in our day-to-day

held for the Group to reflect on the incidents and its root benefiting from the oil price and market recovery. Our
operations. It is with great pride that I am able to
causes. I cannot emphasise enough that we must learn consistent emphasis on ensuring strong integrated
report that given the unwavering contribution and
support of PETRONAS’ employees and its partners, the
from these incidents and do everything possible in Strengthening Our Core and Growth Portfolio operational performance enabled us to maximise our cash
strengthening a safe working environment and culture generators.
Group remained on steady footing to weather possible PETRONAS recorded a commendable performance in 2021,
where everyone goes home safely.
market shocks. Given the resilience on display, significantly outperforming the previous reporting year. We
I  remain confident that PETRONAS can, and indeed achieved RM48.6 billion in Profit After Tax (PAT), in marked
Extensive vaccination programmes were also rolled out for
will, continue to deliver even more meaningful results contrast to a Loss After Tax of RM21.0 billion in 2020.
employees, contractors and the community where we
as a progressive energy and solutions partner Revenue stood at RM248.0 billion in 2021.
operate. Sadly, 64 deaths involving staff and contractors
enriching lives for a sustainable future.
were recorded cumulatively due to COVID-19 since the
 58 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 59

Letter from the President and Group Chief Executive Officer Letter from the President and Group Chief Executive Officer

The Group achieved significant progress in line with our Three-Pronged Growth Strategy, further strengthening our core divestment from Myanmar, Azerbaijan, energy market shocks and navigate projects we pursue and the production
and growth portfolio to provide the energy needed for today while we invest for the future. and Chad signifies the ongoing effort the challenges presented by energy we aspire can remain technically and
to reshape our portfolio and redeploy transition – which includes nurturing a economically feasible, despite the
capital to our identified areas of robust and strong Oil & Gas, Services inevitable cyclical swings in the energy
Project Delivery and growth. The direction we are and Equipment (OGSE) ecosystem. market.
Upstream Gas + New Energy Downstream Technology undertaking is centred on preserving
and strengthening our core portfolio In recognition of this, it is important Overall, PETRONAS will continue to
Delivered projects and Strengthened reliability to Sustained operational Maximised value for even as we grow our new energy to note that the Group’s initiatives to nurture a robust OGSE ecosystem to
commercial solutions as a meet customer needs for performance and expanded PETRONAS’ businesses business to remain relevant, resilient elevate the robustness of the OGSE strengthen our resilience in responding
safe, resilient, low-cost lower-carbon energy at a its offerings with innovative with project delivery and sustainable given a lower carbon sector were initiated as far back as to these challenges and effectively
and low-carbon exploration cost to serve to support the customer-focused solutions. excellence, technical future. 1993 with the rollout of the Vendor contribute to Malaysia’s economic
and production (E&P) energy transition. innovations and digital
• Recorded stable Development Programme. Initiatives growth. In this opportunity, I would
business. synergy.
• Safe delivery of more than operations with Overall In laying the foundation for our future continue to be introduced and like to thank our valued stakeholders
• Recorded total daily 12,000 LNG cargoes from Equipment Effectiveness • Managed 587 projects growth and upholding our implemented to improve the overall – Federal and State Governments,
production average of the PETRONAS LNG (OEE) sustained at 93.3 valued at more than commitment to our shareholder for resilience and maintain the stability of agencies and authorities, and OGSE
2,275 thousand barrels Complex (PLC) in Bintulu per cent, on the back of RM9 billion. long-term economic value creation, the ecosystem at large. partners for their many efforts and
of oil equivalent (boe) since operations began in strong asset reliability. PETRONAS’ priority going forward is to support for PETRONAS to continue
per day. 1983. • RM25 million registered
• BRB International located in commercialisation deliver energy from our portfolio as These initiatives have been wide- growing the value pie of the nation’s
• Malaysia Bid Round 2021 • Providing customers in in PCG’s petrochemical revenue through the differentiated products that are safe, ranging: from facilitating financial hydrocarbon resources for the benefit
– one of our most Japan and China with complex in Gebeng, deployment of 17 responsible, cost-optimised and assistance in collaboration with banks of the nation and its people.
successful bidding reliable supply of carbon Kuantan – a 8,000 tonnes technologies and 98 emissions abated for the energy under the Vendor Financing
rounds where close to neutral LNG cargoes, per year facility TechApps softwares. security and sustainability of Malaysia Programme, to becoming the first
50 per cent of acreages supporting their respective manufacturing cosmetic and our customers across the globe. Government Linked Company (GLC) to Accelerating Our NZCE 2050
offered were taken up transition to a low-carbon grade silicone gum blend, • Created RM830 million support the JanaNiaga initiative by the Aspiration
by small and major economy. technical and food grade in total value creation Ministry of Finance and Exim Bank to
through ARIES, our As we navigate the increasingly
players, further silicone emulsion and Nurturing an Ecosystem for assist Small and Medium Enterprises
• 960 Virtual Pipeline digital enabling challenging operating landscape, the
demonstrating Malaysia
System (VPS) and LNG
silicone antifoam is the
engineering solutions.
Collective Progress (SMEs) under the Malaysia economic
as a world class first and only producer in call for greater action to manage the
bunkering deliveries recovery plan.
investment destination. Southeast Asia. • Achieved RM818 million In our role as the National Oil energy transition has never been
completed in 2021, Company, PETRONAS fully recognises stronger. As I write to you today, we
• PETRONAS marked its ensuring greater access to • PETRONAS Marine – a in cash generation We have also been continuously
through Alpha Series, a the Amanah – the duty of trust- it has now live in a time described by many
entry into the prolific LNG for off-grid one-stop marine solutions investing in upskilling OGSE capabilities
digital transformation of to fulfil to its stakeholders to be their as a “post-Glasgow” era. It has
Santos Basin of Brazil customers. partner for the shipping under the PETRONAS Vendor
our value chain. partner in progress. This sacred become abundantly clear to the world
with 21 per cent industry completed its first Development Programme (VDP) since
• Close to 1 GW of solar responsibility to maximise the value of at large – after COP26 was convened
participating interest in LNG bunkering operations its inception. To this end, the VDPx
capacity in operation and the nation’s hydrocarbon resources is in this Scottish city in 2021 – that a
the Sépia field, in line in Sabah, developing programme launched in 2018
under development. enshrined in the 1974 Act that brought more intense focus on decarbonisation
with the Group’s global Malaysia as an LNG empowered VDP anchors to replicate
us into being and remains our duty for efforts must be accelerated, not later,
growth strategy. bunkering hub. the programme to develop their very
shared prosperity and energy security. but right now.
own vendor ecosystem.
• Eight greenhouse gas • Malaysia Airlines’ inaugural
(GHG) emissions flight from Amsterdam to In 2021, PETRONAS together with the Governments are transitioning towards
reduction projects were Kuala Lumpur using PETRONAS recognises its role as a
State Governments of Sarawak and a low-carbon future where
completed in Peninsular sustainable aviation fuel catalyst for the Malaysian OGSE sector,
Sabah have entered into mutually approximately 90 per cent of the
Malaysia, Sarawak and (SAF) supplied by PDB in and it remains committed in working
beneficial agreements which now world has committed to net zero
Sabah with cumulative collaboration with PETCO together with our partners. This
secure the path to value creation targets. Malaysia is no exception: it
GHG reductions Trading (UK) Ltd, Malaysia collaboration will become even more
opportunities for all parties. On our too has pledged to reduce its carbon
estimated to be 3.83 Aviation Group and Neste important, even as the oil and gas
part, PETRONAS will continue to grow intensity by 45 per cent by 2030 and
million tonnes of carbon demonstrates the viability industry collectively accelerate its
our heartlands in Sarawak and Sabah aims to deliver net zero by 2050, with
dioxide equivalent of SAF in decarbonising efforts to decarbonise operations as
for shared prosperity, anchored on our its path to action outlined in the
(tCO₂e) per year. the aviation sector. part of a far-reaching energy
mutual commitment to develop the Twelfth Malaysia Plan.
transition. Such a transition must be
respective State’s oil and gas industry.
executed responsibly and sustainably,
PETRONAS will deliver this by inviting On this front, PETRONAS had the
Key Messages

As much as we contend with the inexorably accelerating During the year in review, PETRONAS also continued with where we would need to deploy
energy transition, oil and gas continues to remain essential its practice of enforcing effective portfolio management. It increased participation throughout the privilege and opportunity to
lower-carbon technologies strategically
sources of energy to propel the global economy. In is necessary to emphasise that continuous portfolio value chain- in effect, working closer collaborate with the Economic
and systematically.
recognising this, PETRONAS will continue to focus and management is part and parcel of any commercial entity’s together to grow the “value pie”. Planning Unit (EPU) to develop clear
amplify its efforts towards the decarbonisation of our ongoing obligation to its shareholders. This ensures the targets and policies for the National
So, this next statement cannot be
operations and seize new areas for growth. The Group will assets under its care are capable of generating the required While the oil and gas industry has Energy Policy and the Natural Gas
reiterated enough times, it has
execute this even as it steadfastly adheres to ensure safety returns from the capital it deploys, given the risks it long been vulnerable to the boom- Roadmap which aims to provide the
become absolutely critical for our
in pursuit of commercial and operational excellence. We expects to undertake. and-bust cycles, the unprecedented optimal balance of energy equity,
OGSE players to pursue innovation, so
will continue to exercise firm discipline when reinvesting to challenges of the past two years will security and sustainability for Malaysia.
they can ultimately be as competitive
strengthen our core and grow our portfolio, given our To this end, the Board of PETRONAS regularly examines very likely remain significant for a
as global players in the course of
responsibility to prudently manage our financial the Group’s portfolio and determines candidates for both good while yet. Therefore, resilience
doing business. This would ensure the
commitments and debt obligations. growth and divestment. The recent conclusion of our will be required to respond to the
 60 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 61

Letter from the President and Group Chief Executive Officer Letter from the President and Group Chief Executive Officer

PETRONAS will indeed support these In 2022, PETRONAS will be National Trust Fund during the year Acknowledgements On 1 August 2021, it was the distinct
national ambitions and strengthen our undertaking its next phase of growth where the fund size stood at RM17.5 privilege of PETRONAS to welcome
own targets and governance towards by elevating the progress that has billion as at 31 December 2021. Since The stage is well and truly set for Tan Sri Dato’ Seri Mohd Bakke Salleh
progressing our NZCE 2050 aspiration. been achieved under the Gas + New the Fund was created in 1988, PETRONAS to step up even more as its new Chairman. Given Tan Sri
Our recent progress on this front Energy (G+NE) business. PETRONAS is PETRONAS remains its sole contributor meaningfully in pursuing its purpose Dato’ Seri Mohd Bakke’s reputation for
includes the endorsement of the determined to grow the new energy with cumulative contributions of and delivering profitable growth, integrity, astute insights and
World Bank Zero Flaring Commitment business profitably at scale and with RM10.5 billion as at 2021. responsibly and sustainably. To this commercial acumen, I am assured his
and the successful organisation of the pace by establishing a new, end, we would be the first to vast experience will ensure that the
ASEAN Methane Roundtable. We are independent entity focused fully on Despite the obvious headwinds we recognise that the respectable organisation remains a trusted partner
also leveraging on our partnership cleaner energy solutions. This entity faced and challenging markets we performance we registered in 2021 for progress.
since February 2020 with the World will be charged to capture contended with, Alhamdulillah I am was due to the contribution and
Business Council on Sustainable opportunities at pace in the energy pleased to report that PETRONAS was efforts of many parties whom we now In 2021, we bid farewell to two
Development (WBCSD) towards transition alongside our core portfolio able to continue with its social wish to acknowledge. members of the PETRONAS Executive
adopting the Task Force on Climate- by providing customers with lower- initiatives in the areas of Education, Leadership team – Encik Maliki Kamal
related Financial Disclosures (TCFD) to carbon solutions in three core Community Well-being and Permit me to firstly place on record Mohd Yassin, who retired as Senior
ensure our continued ability to access offerings – Renewables, Hydrogen and Development, and the Environment. It my appreciation to members of the Vice President and Group General
financial markets. Green Mobility. Our ambition is for the is a great source of pride to the PETRONAS Board of Directors, for Counsel and Haji Samsudin Miskon,
entity to eventually be organisation that it was able to remain their wise counsel and vigilant who retired as Senior Vice President of
Furthermore, through increased uncompromisingly green, addressing unwavering in its commitment to stewardship that saw us navigate the Project Delivery and Technology
technological partnerships with industry our customers’ growing need for these causes, and registered RM1.4 challenging period to emerge a (PD&T). We are immensely grateful for
players, PETRONAS is undertaking cleaner energy solutions and PETRONAS has in place a fully billion in Corporate Social stronger and more resilient their dedicated service to the
efforts to unlock Malaysia’s potential as supporting the shared global aspiration functioning Corporate Governance Responsibility (CSR) contributions in organisation. organisation and unwavering support
a regional carbon capture and storage for a lower carbon future. framework. Our constituted these areas within the past two to see us through the many
solutions (CCS) hub. PETRONAS is also organisational structure continues to see difficult years alone. Given this opportunity, please allow challenges faced by the industry. They
exploring opportunities in lower-carbon PETRONAS will also be accelerating an Internal Audit function that reports me to extend my personal and have now been ably succeeded by
solutions through collaborations in decarbonisation efforts across its own directly to the independent directors on PETRONAS’ commitment – to heartfelt appreciation to Tan Sri Encik Razman Hashim and Haji Bacho
carbon dioxide (CO₂) storage entire integrated value chain by our Board Audit Committee. Malaysians and the societies we serve Ahmad Nizam Salleh, who will always Pilong respectively.
technologies, deployment of DC Fast managing a carbon storage portfolio – remains intact and we will continue be remembered as an upright and
EV chargers at Mesra stations across for emissions produced by its Our employees are guided by the to uphold the highest standards of thoughtful leader who has made In early 2022, we saw the departure
Malaysia, and undertaking a joint operations and establishing a regional PETRONAS Code of Business Ethics governance and integrity for the innumerable contributions - not only of Datuk Md Arif Mahmood, Executive
feasibility study in carbon-neutral storage hub for carbon emissions as a (CoBE) and the Anti Bribery and well-being of the organisation, even as throughout his three-year tenure as Vice President and CEO of PETRONAS
methane. new revenue generator. Corruption Policy & Guidelines Manual we continue to navigate in a volatile Chairman, but over his many decades Downstream Business, after 37
in how they should ethically carry out and uncertain business landscape. of service to the PETRONAS Group of illustrious years with the company. A
Through rigorous efforts in We are positioning ourselves to his or her duties. PETRONAS also Companies. friend and mentor to many, he
decarbonising our operations, I am accelerate growth in these fast- continues to leverage its collaboration became known as a leader who
pleased to share that we are on track developing spaces with the new entity with the Malaysian Anti-Corruption pushes boundaries, as demonstrated in
with total reduced GHG emissions in and the Carbon Management Unit. Commission (MACC) which was his pivotal role in our Pengerang
Malaysia by 5.4 per cent in 2021 to The Group is confident that with the initiated since 2012. Following the Integrated Complex (PIC). In his stead,
43.8 million tCO₂e, below our 2024 strength and reliability of its core formation of an Integrity Unit in we welcome Datuk Sazali Hamzah,
mid-term target which is to cap GHG portfolio combined with our new suite PETRONAS, we have a fully who previously served as Vice
emissions to 49.5 million tCO₂e in of offerings, PETRONAS will evolve to functioning Whistleblowing Committee President and CEO for PETRONAS
Malaysian operations. While our present itself to its customers as an chaired by a Chief Integrity Officer Chemicals Group Bhd (PCG).
methane emissions intensity has also ‘energy superstore’ that powers who independently reports to the
recorded a steady downward trend, businesses and fuels progress in a just PETRONAS Board. No acknowledgment would be
more can be done and accordingly our and sustainable manner. complete without thanking our
efforts will be intensified on this front. With collaboration as the cornerstone employees, stakeholders and industry
I look forward to sharing more of all our endeavours, PETRONAS partners both at home and wherever
exciting updates with you in due takes accountability of the resources we operate for their unwavering
Seizing Opportunities for Future course. we have been entrusted with. The contribution, support and trust in
Growth organisation’s actions are deeply PETRONAS.
embedded with the Shared Values of
Looking ahead to 2022, while there is
Key Messages

Upholding the Trust Anchored Integrity, Professionalism, Cohesiveness The PETRONAS family looks forward
a certain degree of recovery and and Loyalty, living up to our purpose
on Shared Values to navigating this next phase of
growth expected with the reopening as a trusted partner for progress for growth with you as we fulfil our
of economies, immense uncertainties As PETRONAS positions itself for the our stakeholders. purpose and become your preferred
still prevail. Therefore, PETRONAS will future, it remains our sacred duty to progressive energy and solutions
continue exercising prudent financial manage and maximise the nation’s Even as it discharges its duty of trust partner.
management given our cautious outlook hydrocarbon resources for the benefit in managing the nation’s valuable
amid an ultra-volatile geopolitical of all, and we will continue to do so resources, PETRONAS fully recognises
environment and an accelerating energy with integrity and professionalism. that managing such finite resource
transition. At the same time, it is also cannot be an infinite venture. For the Datuk Tengku Muhammad Taufik
imperative for the Group to seize the benefit of the nation and the President and
attractive opportunities which will generations to come, PETRONAS Group Chief Executive Officer
surface as the energy transition unfolds. contributed RM100 million to the
 62 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 63

Letter from the Letter from the Executive Vice President and Group Chief Financial Officer

Executive Vice Our Financial Year in Review

President and Group PETRONAS achieved a Profit After Tax (PAT) of RM48.6
billion for 2021, which is a major turnaround from the Loss

Chief Financial Officer

After Tax (LAT) of RM21.0 billion the previous year. PAT for
Profit/(Loss) After Tax the year also exceeded the RM40.5 billion recorded in
FY2019, before the industry-wide disruptions caused by
COVID-19. The substantial rise in profit was driven by a
rebound in revenue and the effectiveness of cost discipline
2021 2020 measures that PETRONAS continued to practice.

RM48.6 (RM21.0) The Group saw a substantial rise in revenue to RM248.0

billion, a 39 per cent increase from the RM178.7 billion
billion billion recorded in 2020, also exceeding the RM240.3 billion
recorded in 2019. The significant increase in revenue was
contributed by rising energy prices, following a rebound in
>100% demand for gas, petroleum products and Liquefied Natural
PAT for the year also exceeded the RM40.5 billion
Gas (LNG), amongst other market influences.
recorded in 2019

PETRONAS also saw stronger performance across other

key financial metrics. In line with the higher revenue and
effective cost management, Earnings Before Interest, Tax,
Revenue Depreciation and Amortisation (EBITDA) rose to RM100.5
billion, an 82 per cent increase from the previous year’s
Liza Mustapha
RM55.3 billion.
Executive Vice President and
Group Chief Financial Officer
2021 2020
Segmental Performance
RM248.0 RM178.7 PETRONAS Group recorded improved performance across
billion billion all three business segments in 2021. While the volatile
crude oil prices in 2021 had varying impacts across
different business segments, the Group as a whole
39% benefitted from the integrated business that encompasses
Revenue exceeds the RM240.3 billion recorded in 2019 the total oil and gas value chain.

Upstream business recorded revenue growth of 48 per

cent to RM104.4 billion by capitalising on rising energy
prices and higher gas demand from Malaysia and
international operations. Upstream’s PAT stands at RM34.5
billion for the year.

Gas + New Energy (G+NE) business recorded a 38 per

PETRONAS Group delivered a strong set of financial and operational results for the year as the company continued to The Group saw a cent increase in revenue, to RM85.8 billion. G+NE’s overall
accelerate its recovery efforts. Improvements in global energy prices have been fundamental this year, with the reopening performance was positively impacted by the increase in
of economies globally. Despite the rising trend in energy prices, the situation remained volatile and uncertain. The global substantial rise in revenue energy prices, maximising gas and LNG sales to fulfil the
landscape faces ongoing COVID-19 challenges, geopolitical factors and supply chain disruptions, which coincided with
to RM248.0 billion, a market supply-demand gap. G+NE also achieved growth
Key Messages

the acceleration of the energy transition. Therefore, the Group responded to the favourable market conditions with a by leveraging the increasing demand for new energy
disciplined approach. Despite the prevailing high oil price towards the end of the year, we exercised fiscal discipline to 39 per cent increase from products.

ensure long term sustainability and growth. As such, we remain prudent and maintain our long-term price outlook within
the range of USD50-60/bbl. At the same time, the Group continued to strengthen the core business through commercial the RM178.7 billion Downstream revenue rose by 46 per cent to RM124.5
billion. The business saw a rise in the cost of inputs as
and operational excellence, while accelerating its efforts to pursue growth in non-traditional businesses. The focused
execution of strategies coupled with agile and resilient operations, has been key to the Group’s commendable
recorded in 2020, and energy and feedstock prices were higher than normal in
2021. Stronger financial results for the year can be
performance in 2021. exceeds the RM240.3 attributed to an increased focus on cost discipline and
securing more favourable commercial deals by being more
billion recorded in 2019. customer-centric.
 64 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 65

Letter from the Executive Vice President and Group Chief Financial Officer Letter from the Executive Vice President and Group Chief Financial Officer

Strong Financial Position Prudent Financial Management

The Group’s Cash Flows from Despite the more favourable operating
Operations (CFFO) remained robust at environment, PETRONAS continued to
RM78.6 billion, in line with higher cash maintain stringent financial discipline
operating profits. CFFO margin also during the year. The Group worked to
increased to 32 per cent in 2021, up achieve the right balance between
Total Assets
from 23 per cent in 2020. Stronger financial prudence and strategic
RM635.0 cash flow during the year resulted in a investments to catalyse future growth.
billion 29 per cent rise in the Group’s net Both bond issuances were
(2020: RM574.1 billion) cash position to RM67.2 billion for
2021. The current solid cash position
During the year, PETRONAS continued
to invest in growth projects. However,
well received by investors in
puts PETRONAS in the top quartile
among its peer group of international
many projects were affected by the
prolonged movement restriction order,
the international debt capital
CFFO
RM78.6
oil majors. coupled with supply chain interruptions. market, drawing high
Both domestic and international
billion Total assets stood at RM635.0 billion projects experienced delays and demand, resulting in the
(2020: RM40.7 billion) as of 31 December 2021, marking an deferments, resulting in a nine  per cent
11 per cent rise from RM574.1 billion decrease in capital expenditure (CAPEX) lowest coupon and tightest
in the preceding year. Growth in to RM30.5 billion.
assets during the year was attributable issue spreads in PETRONAS’
CAPEX
RM30.5
to higher cash and fund investments,
as well as higher receivables, in line
CAPEX continues to be divided almost
equally between Malaysia and
30-year issuance history.
billion with higher benchmark prices. international projects. A total of
(2020: RM33.4 billion) RM15.0 billion was directed to
Cash flows from operating activities domestic projects, principally in the
grew by RM37.9 billion or 93 per cent Upstream segment, where the focus
from 2020, in line with higher cash remained on the development of new
from operations. Additionally, gearing fields. International expenditure
ratio increased to 23.1 per cent from continues to be primarily directed to
21.3 per cent in 2020, which is the monetisation of gas in Canada and
primarily due to the issuance of notes the shipping business in China and the Additionally, the Group invested in Debt Capital Market in 2022. Both issuances were well
and bonds. Americas. innovative technologies that aim to received by investors in the
PETRONAS continuously assesses its
improve the efficiency and costs of international debt capital market,
funding requirements and evaluates
operations. For instance, Upstream drawing high demand, resulting in the
financing strategies in order to
adopted remote operations applications lowest coupon and tightest issue
optimise the cost of funding and
at eight drilling sites for improved cost spreads in PETRONAS’ 30-year
capital. During the year, PETRONAS
savings. issuance history. This is a testimony to
issued two bonds as part of the
the strength of its credit and investors’
Global Medium-Term Notes
The majority of the CAPEX for 2021 confidence in the Group’s financial
programme. The first bond, worth
was directed to maintaining existing future. These issuances have further
USD600 million, was issued by
cash generators. However, significant strengthened PETRONAS’ balance
PETRONAS Energy Canada Ltd (PECL)
investments were channelled towards sheet and extended its debt maturity
to fund its continued development and
future growth drivers, which includes profile.
production activities in Canada. The
Key Messages

non-traditional businesses such as

second bond was issued by
solar and speciality chemicals.
PETRONAS Capital Limited (PCL),
amounting to USD3 billion, to
refinance PETRONAS’ maturing debts
 66 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 67

Letter from the Executive Vice President and

Group Chief Financial Officer

Credit Rating Delivering on Our Purpose The year 2022 will be critical to revive
Beyond Profit delayed or deferred projects mainly
PETRONAS’ credit ratings remain
from the disruptions caused by
strong, with a rating of A2, A- and The year witnessed evolving
COVID-19. An increase in capital
BBB+ from Moody’s, Standard & Poor’s stakeholder expectations and global
expenditure from project launches and
(S&P) and Fitch, respectively. The pressure on businesses to identify and
deals is expected, coupled with a
standalone credit profile is four manage their environmental, social
steep rise in renewables and low
notches above PETRONAS’ credit and governance (ESG) impacts. Within
carbon technology and solutions
ratings, as assessed by S&P and Fitch. the energy industry, oil and gas
spending in the near to medium-term.
These ratings bear testimony to producers are expected to devise
PETRONAS is well-positioned to
PETRONAS’ robust financial strength strategies to respond to the energy
leverage this changing landscape, with
and solid business fundamentals, transition as well as any direct
its affordability matrix, where necessary
which bolster our ability to adapt and implications on their business and
investments have been earmarked
remain resilient amidst the new normal operations. Against this backdrop, one
towards future growth strategies and
for the industry and market. of the biggest change for oil and gas
sustainability goals while exercising
(O&G) companies would be to redirect
strict capital discipline.
sizeable capital or investment towards
Contributions to Governments other sustainable sources of energy
As it enters a new year, PETRONAS
and low carbon solutions such as
PETRONAS’ contribution to the Federal will remain committed to its strategic
carbon capture and storage (CCS)
Government of Malaysia and state planning process, driven by the energy
technologies.
governments amounted to RM48.2 transition and NZCE 2050 aspiration.
billion for the year ended The Group will achieve its ESG
In response to this changing
31  December 2021. This includes commitments and growth through risk
landscape, PETRONAS has allocated core business, mainly on renewables. In  2020, PETRONAS Group embarked on
dividends, taxes and cash payments. assessments, cost controls, responsible
approximately 20 per cent of total its first decarbonisation project for high carbon dioxide (CO₂) gas field at the
In addition, PETRONAS paid RM100 governance and above all, strong
CAPEX over the next five years for Kasawari gas field in the waters off Sarawak.
million to the National Trust Fund fundamentals for sustainable value
green investments in pursuit of
(NTF) in 2021.
meeting the net zero carbon emissions Cumulative The project will deploy CO₂ reinjection technology into a storage reservoir,
creation.

by 2050 (NZCE 2050) aspiration. In Contributions to potentially preventing up to 90 per cent of emissions, or 3.7 million tonnes of
To this end, PETRONAS’ cumulative
2021, close to RM1.0 billion of CAPEX Governments and NTF carbon dioxide equivalent (tCO₂e), from being released into the atmosphere.

RM1.3
contributions to the Federal
was spent on stepping out beyond our This will entail significant initial investment. Under the annual Plan and Budget
Government of Malaysia, state Liza Mustapha
FY2022-2026, various investments shall be explored including carbon offsets

trillion
governments and NTF amounted to Executive Vice President and
and carbon technologies towards delivering NZCE 2050.
RM1.3 trillion. Group Chief Financial Officer

Moving Forward
Components of contributions to the Federal Government of The outlook for the year ahead remains uncertain. Volatility in oil prices will
Malaysia, state governments and NTF continue to pose new challenges in the operating environment. The strong
(RM billion) rebound in energy prices since the beginning of 2021 has been supportive of
25
25.0 PETRONAS Group’s performance. Notwithstanding, the current state of higher
prices could well be short-lived, given the uncertainties of geopolitical climate,
along with other shocks that could hit the energy market. This is further
20 In 2021, close to aggravated by significant pressure arising from energy transition, which
necessitates us to intensify efforts to decarbonise, and scale up investments in
RM1.0 billion of
Key Messages

15 the renewables space. Accordingly, the business remains cautious and continues
12.3
CAPEX was spent to focus on operational efficiencies, commercial excellence and prudent
financial management.
10
7.3
on stepping out
5 3.3
beyond our core
0.3
business, mainly
0.1
0
Dividend Taxes Cash State Sales Export Duty National
Payments Tax Trust Fund
on renewables.
 68 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 69

Letter from the Vice President and Chief Sustainability Officer

Dear Stakeholders, At PETRONAS, we are embracing these rising

expectations for sustainable business practices.
Sustainability to us goes hand-in-hand with
I am pleased to join PETRONAS as its first Vice our long-term strategic objectives. By taking a
President and Chief Sustainability Officer during an proactive stance we protect our business from
environmental, social and governance (ESG)
exciting albeit trying time. The world is at a pivotal risks and improve our prospects to achieve
moment. The events of recent years have long-term growth while supporting the needs
highlighted the importance of addressing societal of our stakeholders. Therefore, we view the
rapid changes as a defining opportunity to
and environmental challenges. From the socio- create positive change benefitting more
economic impacts of the COVID-19 pandemic to segments of the population – transforming
the energy system to create economic growth,
rising climate-related disasters, the need to build a revitalising society and leaving behind a better
more resilient and sustainable future is clearer than planet for future generations.
ever. People across society are looking at
businesses to help drive this sustainability agenda, The Sustainability Landscape
with increasing pressure from customers, investors, At the 2021 United Nations’ Climate Change
regulators and other stakeholders. For the energy Conference (COP26) held in Glasgow, United
Kingdom, I sensed new levels of commitment
sector, this means undergoing a radical shift to climate action. People from a range of
towards greener, low-carbon solutions capable of groups, including the private sector,
governments, investors, NGOs and activists,
meeting long-term energy demands. This energy
came together to try and solve the global
transition is necessary to limit the worst effects of climate crisis. The conference was framed by
climate change and stimulate sustainable and the findings of the 6th Assessment Report by
the Intergovernmental Panel for Climate
inclusive economic development. Change (IPCC), which warns that without
drastic and immediate action to reduce
greenhouse gas emissions, the world is
headed towards a global temperature increase
significantly above 1.5°C that is expected to
result in irreversible consequences.

Letter from the

Key Messages

Vice President and

Chief Sustainability Officer
Charlotte Wolff-Bye
Vice President and
Chief Sustainability Officer
 70 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 71

Letter from the Vice President and Chief Sustainability Officer

COP26 is considered a significant Malaysia is classified as one of the

turning point in collective climate most biodiverse-rich countries in the
action, as 90 per cent of global Gross world. Going forward, we will seek to
Domestic Product (GDP) has now better understand our impact on nature
committed to achieving net zero and take more assertive action in
carbon emissions. The pledges made promoting nature conservation. It is pertinent that PETRONAS, in its
alongside the COP26 event support the
global shift to more sustainable The social aspect of sustainability has capacity as a national oil and gas
solutions, with many international
leaders taking a stance on the energy
also gained much needed attention
recently. The disproportionate impacts
company, develops its own unique
transition. For instance, over 100
countries signed the Global Methane
of COVID-19 on vulnerable communities
highlighted severe inequalities faced by
narrative that is specific to Malaysia,
Pledge, limiting methane emissions by society, resulting in increased calls for building on the strength and ambition of
30 per cent by 2030, compared to action. Companies are scrutinised for
2020 levels. Several nations have also their diversity and inclusion efforts, the nation.
committed to phasing out the use of human and labour rights practices, and
coal, including Malaysia. In support of stance on other societal issues.
the energy transition, the Glasgow
Financial Alliance for Net Zero (GFANZ), It is important to note that many
a global coalition of leading financial economies are at very different stages
institutions pledged over USD130 of maturity in navigating the
trillion of private capital to accelerate sustainability landscape. We are
decarbonisation with a specific conscious that the energy transition
emphasis on developing countries. needs to be just and equitable, Institutionalising Sustainability
especially in Asia, where major
The inherent link between climate value creation, which is considered
Over the year, nature has become a economic gaps exist between and
change, nature loss, persistent during risk assessments and strategic
key aspect in climate-related policy within countries. This requires
inequality, and business resilience and decision making. All risks identified in
discussions. The alarming loss of unprecedented collaboration between
performance is now better understood. our corporate risk profile are
biodiversity is now recognised as a policymakers, industry, investors,
The debate has moved on from the deliberated by the Board through the
critical factor in securing a stable community groups and society at large
‘why’ to the ‘how’ we should be Board Risk Committee. In 2021, this
climate and well-being for the world’s in driving an energy transition that
addressing these systemic sustainability included deliberation on ESG risks
population. Also here we can expect creates better outlooks for the growing
challenges. We are seeing a rapid scale associated with climate change, health
greater demands on corporate action. population of the region.
up in emissions-related regulation, ESG and safety, and human rights.
standards and frameworks that in turn
drive investor confidence in low carbon The establishment of my new role,
technology and solutions. Chief Sustainability Officer (CSO),
reporting directly to the President and
PETRONAS recognises sustainability as Group Chief Executive Officer, sets out
a critical element in how we develop to orchestrate PETRONAS’ roadmap for

The social aspect of sustainability has also our business. We are responding to the
external context by developing robust
our net zero carbon emissions by 2050
(NZCE 2050) aspiration, to guide future
gained much needed attention recently. The data collection and analysis as a basis
for future target setting, firming up
business propositions and PETRONAS’
journey across the value chain in
disproportionate impacts of COVID-19 on governance, capacity and capability working towards this aspiration. It is
Key Messages

around sustainability management. We pertinent that PETRONAS, in its

vulnerable communities highlighted severe are exploring better integration of ESG capacity as a national oil and gas
factors into PETRONAS’ Enterprise Risk company, develops its unique narrative
inequalities faced by society, resulting in increased Management (ERM) process. Similarly, specific to Malaysia, building on the
we conduct an annual materiality strength and ambition of Malaysia as a
calls for action. Companies are scrutinised for their assessment to determine key ESG nation.

diversity and inclusion efforts, human and labour matters that impact our sustainable

rights practices, and stance on other societal issues.

 72 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 73

Letter from the Vice President and Chief Sustainability Officer Letter from the Vice President and Chief Sustainability Officer

Towards a Low Carbon Future Partners of Society

We acknowledge the scientific consensus on climate As we increase our efforts in protecting the planet, we
change, and recognise the express need to cut our remain steadfast in our commitment to providing positive
emissions in contribution towards global climate goals. In social impact.
2020, we announced our aspiration to reach net zero
carbon emissions by 2050 (NZCE 2050) – the first oil and Our commitment to safeguarding people intensified with
gas company in Southeast Asia to do so. Our aspiration the COVID-19 pandemic. We swiftly introduced COVID-19
underscores our ambition to meet higher sustainability platforms and programmes with the aim to keep our
goals for the longer term that address stakeholder people safe with minimal disruptions to our operations –
concerns and support the ambitions of the Paris a true testament to the agility of our organisation. Further
Agreement. details about our robust response to the pandemic is
outlined on page 193 of this report.
In 2021, we recorded a total of 45.2 million tonnes of
carbon dioxide equivalent (MtCO₂e) emissions across our Additionally, through Yayasan PETRONAS, the Corporate
global operations, a reduction of 6.4 per cent from 2020. Social Responsibility arm of PETRONAS, we provided flood
In Malaysia, our greenhouse gas emissions decreased by relief aid to hard-hit communities, delivering necessary
5.4 per cent to 43.8 MtCO₂e from 46.3 MtCO₂e, in 2020 supplies to prevent, control and treat impacted
mainly contributed by venting and flaring reduction communities located across our assets. We mobilised our
projects in Upstream operations. employee volunteers to offer on-the-ground assistance to
local communities with an additional contribution of
We understand that our NZCE 2050 aspiration will require RM25.0 million towards relief and assistance for the
a major shift in how we develop our business going victims. In 2020, we became a member of the World Business We are also working closely with the Malaysian
forward. We are committed to expedite our emissions Council for Sustainable Development (WBCSD), joining over government to support policy development and further
reduction, including a specific focus on methane emissions. The COVID-19 pandemic has forcefully exposed and 200 other forward-thinking multinational companies. drive the nation’s sustainability efforts. For example, we are
To this end, PETRONAS has endorsed the World Bank’s exacerbated inequalities across the world. As partners of Through WBCSD, we can shape and gain insights and engaging directly with the government in the development
Zero Routine Flaring by 2030 Initiative, which aims to end society, we recognise the need to accelerate our efforts in collaboratively develop solutions to address pressing of voluntary carbon markets for nature-based carbon
routine flaring of associated gas from our oil production. providing equal access to resources and opportunities, as sustainability challenges. We can leverage WBCSD’s wide solutions. This will be an important tool in not only
We are also signatory to the international Methane Guiding well as the importance of putting human rights at the networking platform across a variety of sectors. preserving biodiversity and the ecosystem, but also
Principles initiative that promotes collaboration between centre of our operations. We are continuously looking to
supporting a net zero carbon economy.
stakeholders to expedite emissions abatement. improve and systemise our human rights assessments in
To remain a WBCSD member, we need to adhere to
the company and throughout the value chain.
stringent criteria, such as setting ambitious science-
The shift to cleaner, more sustainable energy sources
informed environmental goals, committing to becoming What the Future Holds
present a major growth opportunity for our business. We
Strengthening Performance through Collaboration net zero by 2050, declaring support for the United Nations
are already on this journey. In 2021, we had close to 1  GW In the years ahead, the need for green and sustainable
of solar capacity in operation and under development. We Guiding Principles on Business and Human Rights,
As a national oil and gas company with an extensive practices will only grow. For PETRONAS, we are
have also formalised our collaborations with customers, supporting inclusion, equality and diversity, and operating
international reach, we play a strong role in supporting determined to seize new opportunities for sustainable,
technology and industry partners to develop carbon at the highest level of transparency through sustainability
sustainable development, particularly in driving a low- profitable growth as we uphold our responsibility as
capture and storage (CCS) technology as a viable disclosures.
carbon energy future for Malaysia. The energy transition Malaysia’s national oil and gas company and lay the
abatement option for our own operations and other high foundation for our future growth. In 2022, we will be
demands a whole transformation of society. To better We are also part of the CEO Action Network (CAN),
emitting industries, studying the feasibility of producing stepping up even more meaningfully in pursuing our
prepare the organisation and our value chain, we need to
carbon neutral methane and sustainable aviation fuel (SAF), Malaysia’s first sustainability-focused coalition of leading
bring our partners along the path to a low carbon purpose to become a progressive energy and solutions
to mention a few areas with promising growth prospects. CEOs and senior decision-makers. CAN focuses on
economy, while ensuring our employees, partners and partner enriching lives for a sustainable future. This
changing the nation’s market landscape through
stakeholders are all upskilled on sustainability. We firmly includes releasing more details about our pathway towards
Our NZCE 2050 aspiration provides the necessary impetus sustainability advocacy, capacity building, action and
believe that real positive change can only occur through NZCE 2050 and how this will lay the foundation for other
for us to pursue more climate-friendly solutions and performance. PETRONAS President and Group Chief
collective action and a more assertive approach. sustainability priorities.
Key Messages

opportunities in the broader energy space that will create Executive Officer, as CAN chairperson of the steering
sustainable new values for the organisation. committee, announced collective ESG commitments for
2023. These commitments will be pivotal to enabling
To openly inform and engage our stakeholders in how Malaysia’s transition to a net zero carbon future, as well as
climate change may affect our business both from Charlotte Wolff-Bye
accomplishing the aspirations of Malaysia’s Shared
downside risk and opportunity angles, PETRONAS will Vice President and Chief Sustainability Officer
Prosperity Vision 2030.
adopt the recommendations of the Task Force on Climate-
related Financial Disclosures (TCFD), with a target to
commence our disclosures in 2023.
 Value The framework boundaries and
principles that guide us in our
We Create Integrated Reporting journey

Recharge
to Grow
76 Our Integrated Approach to
Value Creation
78 Our Key Capitals
80 Value Creation Model
82 Performance by Capital
88 Engaging with Stakeholders
96 Because We Care
 76 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 77

Our Integrated Approach to Value Creation Our Integrated Approach to Value Creation

At PETRONAS, we adopt an integrated approach to deliver long-term sustainable value to our

stakeholders. We do this to gain a holistic view of our activities, examining the interaction between the Reinforcing Good Governance
environment, the evolving expectations of our stakeholders and our overall operations to achieve our We see corporate governance as a critical tool in our value creation story. For us, it means going beyond
business aspirations. This ensures that our business remains strong, resilient and sustainable, thus enabling compliance in protecting the best interest of all stakeholders. We uphold the highest levels of integrity,
us to meet the energy needs of current and future generations. governance and ethical business practices, anchored by a strong culture of transparency and accountability. This
safeguards our business and protects the best interest of all our stakeholders.

Understanding the Context Developing and Deploying Our Strategy Our Key Capitals
Creating Meaningful
Value for All
The effective execution of our strategy is measured based on our ability to
reasonably and intelligently utilise the following six types of resources:
Operating Landscape
Our ability to realise our value creation
abilities hinges on the global
Material Topics Our ultimate goal is to
Financial Capital: create sustainable value
macroeconomic landscape and its impact Our ability to deliver stakeholder value is
The pool of funds obtained through financing or generated for all our stakeholders.
on the global oil and gas industry. The influenced by a range of ESG factors. Hence,
by our business. Through our integrated
varying factors that affect the we identify material topics that are closely
macroenvironment are closely analysed in related or could impact our stakeholders to approach, we ensure all
relation to our business and operations, help us develop and execute the right elements are taken into
allowing us to identify potential trends strategies that will drive the future of energy. Manufactured Capital: consideration to allow us
and opportunities. The physical assets and infrastructure required to ensure our to deliver value, now and
See page 108 business operates. for the future.
See page 102

Intellectual Capital:
Stakeholder Expectations The intellectual capabilities and intangibles associated with
As we transition to expand our portfolio our brand, technical expertise and experience.
to include cleaner energy solutions, we
are aware of the importance of managing
the changing needs of our stakeholders. Human Capital:
Strategy
We proactively engage in meaningful The skills and knowledge inherent in our workforce to drive
dialogues, collaborations and We are guided by PETRONAS’ Three-Pronged
business operations.
Growth Strategy (3PGS), designed to meet our
engagements on various platforms to
long-term stakeholder needs and position us
position ourselves as a credible,
as a progressive energy and solutions partner
trustworthy partner. enriching lives for a sustainable future. The Social and Relationship Capital:
See page 88
3PGS are: The network of relationships between our business and
1. Maximising Cash Generators stakeholders
2. Expanding Core Business
Value We Create

3. Stepping Out

See page 132 Natural Capital:

The natural resources such as water, fuel, and materials used
across our operations.

See pages 80-81 for a full disclosure of how the See page 80
capitals are fully utilised in our Value Creation Model
 78 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 79

Our Key Capitals Our Key Capitals

Our value creation story relies on a range of resources broadly categorised into Financial, Although each capital is distinct from one another, they are interrelated. Therefore, our strategy

Value
Manufactured, Intellectual, Human, Social and Relationship, and Natural Capitals. The efficient and development and execution involve contemplating the dynamics between the six capitals to
intelligent utilisation of these capitals is key to achieving our operational, commercial and growth optimise stakeholder value over the short, medium and long term.

Creating
aspirations.

Business
Financial Capital Manufactured Capital Intellectual Capital Human Capital Social and
Relationship Capital Natural Capital Model

Guided by strong financial metrics We possess an extensive range of Our operations are backed by The future of our organisation We develop long-lasting, mutually- Our business model leverages
and a prudent financial highly reliable and efficient assets, proprietary technologies, knowledge, depends on the skills, knowledge beneficial relationships with our natural resources to ensure the Statement of Purpose
management track record, we have such as our offshore platforms, systems procedures and protocols and capabilities of our people. We stakeholders to help business security of energy supply as well as
built a pool of funds to finance floating facilities, processing plants, that drive value creation and deliver invest in providing a wholesome growth and improve the well-being the development of quality products
operations and deliver business
growth. By upholding disciplined
innovative equipment, world-class
office buildings and many more.
sustained growth. This is our
differentiating factor and will enable
talent experience to nurture a
high-performing, innovative culture
of the communities. Doing so
enables us to build stakeholder trust
and services for customers.
Respecting the delicate balance A Progressive
Energy and Solutions
Financial Capital spending, we are Our Manufactured Capital allows us us to meet our long-term strategic that is able to navigate a volatile and support in our ability to deliver between the natural environment
able to balance stakeholder value to meet the changing market and objectives. industry for long-term growth. value far into the future. and human economy, we advocate
responsible utilisation of natural
Partner Enriching
with business growth. energy demands, current and future.
resources to create sustainable
value for all stakeholders.

Lives for a
RM361.80 RM0.6 billion
Return on Average Property, Plant and Investment in Employee More than
Capital Employed Equipment
million
Training and
Development: RM163 million of CAPEX spent in Sustainable Future
10.8 % RM282.9 billion Investment in RM111.9 million
was invested in the
PETRONAS Education
renewable energy
2020: (4.1%) Technology Sponsorship Programme
(PESP)
Net Cash
Capital
Investment 175 researchers A diversified workforce

RM30.5 billion attached to 178

Over
Position

RM67.2 billion
of 46,884 7,000 benefited Brand Positioning
Value We Create

2020: RM33.4 billion laboratories in employees across the

from various education
2020: RM52.1 billion PETRONAS Research
Sdn Bhd
globe programmes Passionate About
Overall Equipment
Return on Total Assets Effectiveness (OEE)
RM84.8 million
Employees breakdown
2 Progress
(ROTA)

11.2 %
98.1% G+NE spent for digital 72% Male MARA Junior Science
College (MRSM) campuses
are in construction in
intangible assets
2020: (2.3%) 93.3% Downstream 28% Female Ranau, Sabah and Bintulu,
Sarawak
 80 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 81

Value Creation Model

Processes Inputs Outputs Outcomes Stakeholders

Three-Pronged Growth
Strategy Products and Services
Financial
• 2,644 MMscfd Malaysia average sales gas
Financial Capital Manufactured Intellectual Human Capital Social and Natural Capital volume • 82% growth in EBITDA
1 Maximising Cash Capital Capital Relationship • 32.74 MMT of overall LNG sales • RM25 billion dividend
• RM350.9 billion • A diversified • 2% CAPEX spent
Generators shareholders’ • Property, Plant • RM361.8 million workforce of
Capital on renewable • 10.4 million tpa petrochemical production payout
• More than RM163 energy volume
equity and Equipment: investment in 46,884 employees
Malaysia million invested in • 262.4 million barrels of petroleum
Integrated Future Cash • RM635 billion in RM282.9 billion technology across the globe
New Cash PESP product sales volume
Value Chain Generator total asset value • 178 R&D • RM111.9 million
Generator • RM100 million Manufactured
Laboratories invested in Environmental Emissions and Waste
invested in
International training and community/nation- • 45.2 million tCO₂e GHG emissions • 98.1% in G+NE Overall
Asset development building initiatives • 124,884 tonnes of waste generated Equipment Effectiveness
Today’s • 133,962 MT nitrogen oxides (OEE)
Cash • 47,954 MT sulphur oxides • 93.3% in Downstream
Generator Overall Equipment
Effectiveness (OEE)
Guided by Our Value Creating Activities
2
Expanding Core Sustainability Agenda Intellectual
Business Upstream • 30 hours of average
Invest to Sustain Material Topics training received per
Deliver A business consisting of Exploration, Development,
Sustain investments employee
Material Production and Malaysia Petroleum Management (MPM).
to maximise our • Safety Management • Renewable Energy • 3 proprietary chemical
Resources Continued
current cash • Health and Well-Being • Human Rights Read more on page 136
formulations
Value Creation
generators Future Core • GHG Emissions • Economic Contribution • 33 patents secured
Monetise Expand
Unconventional for Long-Term • Anti-Bribery and • Biodiversity and
Core To
Positioning Sustainability Corruption Ecosystem Services
New Areas

Bu si n e ss Activities
• Physical Climate Risk • Innovation and Gas + New Energy Human
Grow the PETRONAS’
and Adaptation Circularity
Integrated
Business
Invest to Grow
Invest to broaden
Safeguard
the
Four Positive
Social
• Corporate Governance
• Environmental
• Sustainable Supply
Chain
A one-stop centre for cleaner energy solutions, comprising
Liquefied Natural Gas (LNG), Gas and Power, New Energy
• More than 31,000 upskilled
through online programmes
Sustainability
Model and resource base and Hydrogen. • More than 2,100 technical
Environment Lenses Impact Management
Expand and replicate our expertise developed
• Employee Attraction, Read more on page 144
Adjacencies integrated model Retention and
internationally to Development
build the next line Social and
Read more on page 108 Downstream Relationship
of cash generators Responsible
Governance Enhances the value of petroleum resources through refining,
3 marketing and trading of crude oil and petroleum products, • RM15 million contributed
Stepping Out and manufacturing and marketing of petrochemicals, to flood relief efforts
Invest to Diversify specialty chemicals and derivatives. • 343 scholarships awarded
Invest to future-proof to students
Specialty Market Landscape Key Risks Read more on page 152
our overall portfolio
Chemicals Stepping
Out Beyond • COVID-19 Pandemic • Trade and • Market Risk • Geopolitical Risk
Natural
Value We Create

Existing • Oil and Gas Market Geopolitical Conflicts • Financial Liquidity Risk • Hydrocarbon Reserves Project Delivery and Technology
New Energy • Legal and Regulatory and Resources Risk
Core Volatility • Economic Crisis Innovate with pace, leverage technology and digital synergy • 2,321.2 MWh of solar PV
• Energy Transition Risk • Technology Risk to achieve sustainable development. energy generated resulting
Customer- • Human Capital Risk • Execution Risk in 1,352.8 tCO₂e Scope 2
Read more on page 160
Centric Read more on page 102 • HSSE Risk GHG emissions reduction
Solutions • 17.5 MtCO₂e per annum
Read more on page 117
cumulative GHG emissions
reduction
 82 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 83

Performance by Capital Performance by Capital

Performance Financial Capital Manufactured Capital

by Our strong financial base through income and

earnings generated by our business, is necessary
Our highly reliable and efficient equipment,
infrastructure and other physical assets are

Capital to fund our long-term objectives. required to meet evolving market demands.

Inputs Outputs/Outcomes Inputs Outputs/Outcomes

2021 2020 2021 2020

2021 2020 2021 2020
Number of producing fields 247 247
Total assets (RM billion) 635.0 574.1
Revenue (RM billion) 248.0 178.7 Offshore platforms 432 432 LNG Sales (MMT) 32.74 33.12
Shareholders’ equity (RM billion) 350.9 330.6
Profit/(Loss) After Tax 48.6 (21.0) Floating Facilities 30 30 Malaysia average sales gas 2,644 2,521
Cash Flows from operations 78.6 40.7 (RM billion) volume (MMscfd)
Number of LNG Plants 4 3
(CFFO) (RM billion)
EBITDA (RM billion) 100.5 55.3 LNG Floating Facilities 2 2 Total petrochemical 10.4 10.7
Free cash flows (RM billion) 48.1 7.3 production volume
How We Sustain Value: CAPEX (RM billion) 30.5 33.4 Number of gas processing
complexes
2 2
(million tpa)

Performance by Dividend Payout to

Government (RM billion)
25.0 34.0
Number of utilities complexes 2 2 OEE (%)
– G+NE 98.1 96.8
Capitals Number of regasification
terminals
2 2
– Downstream 93.3 90.0
Trade Offs
The business growth achieved over Number of gas pipelines 4 4 Renewable energy 851 644
the long-term is dependent on our • Financial Capital helps create value through its Number of processing plants 5 5 installed capacity (MW)
ability to draw value from our six conversion into other forms of capital. Number of petrochemical 11 11
Actions to Enhance Outcomes production sites
capitals, which are categorised as • We need to balance the utilisation of Financial Capital
Financial, Manufactured, Intellectual, between investments in our core business, • Strengthen liquidity and risk management to protect
Trade Offs Actions to Enhance Outcomes
Human, Social and Relationship, and predominantly Manufactured Capital, and growth. cash flow.
Natural Capitals. As these capitals are • Financial Capital is utilised to fund capital investments • Maintain prudent and disciplined financial • As an asset-heavy organisation, the growth of our • Improve asset reliability and integrity to deliver
largely based on our resources and and operating expenditures to increase other capitals management system. company depends on growth in our Manufactured business targets.
relationships that are essential to our to achieve long-term growth and sustainable Capital.
• Uphold and strengthen transparency and corporate • Ensure world-class maintenance of assets to deliver
business, they provide stakeholders performance. • Financial Capital needs to be used to expand our
governance disclosures. operational excellence.
infrastructure, processing plants, equipment,
with greater clarity on how we • Although this may reduce our short-term Financial renewable technologies, and more so that we can • Increase focus on customer-centric and demand-led
maximise positive outcomes, minimise Capital, we can replenish this and create greater continue meeting society’s energy demands, which solutions to gain access to broader market and
trade-offs and, at the same time, financial value in the long run through disciplined and contribute to our Social and Relationship Capital. achieve business targets.
effective investment decisions.
balance our environmental, social and • However, we must manage our Manufactured Capital
in a responsible manner. Health and safety issues will
Value We Create

governance (ESG) scorecard. We

negatively affect our Human Capital, while poor
leverage these capitals in a responsible environmental practices impact our Natural, and Social
manner to deliver our strategy for and Relationship Capital (loss of stakeholder trust).
long-term sustainable growth and, • Our focus on clean energy solutions means expanding
most importantly, create added value our Manufactured Capital to include renewable
infrastructure, which requires a high amount of
for our stakeholders. Financial Capital in the near term, but this will
positively impact all other capitals, particularly Natural,
Social and Relationship, and Intellectual Capitals.
 84 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 85

Performance by Capital Performance by Capital

Intellectual Capital Human Capital

Our proprietary technologies, knowledge, systems A diverse and high-performance workforce

procedures and protocols that enable us to equipped with future-ready skills and capabilities.
deliver sustained value and growth.

Inputs Outputs/Outcomes Inputs Outputs/Outcomes

2021 2020 2021 2020

2021 2020 2021 2020
Number of R&D Laboratories 178 160 Total number of PETRONAS 46,884 48,679
Number of new products 35 14 employees Lost Time Injury 0.14 0.10
Number of dedicated 175 184 and softwares launched Frequency (LTIF)
researchers Total investment for training 111.9 170.0
Number of patents 33 31 and development (RM million) Fatal Accident Rate (FAR) 1.13 1.47
Investment in technology 361.8 335.7 secured
(RM million) Gender diversity in workforce 28 28 Employee attrition rate (%) 8.4 4.9
Number of proprietary 3 5 (% of women) Number of employees 31,207 30,268
chemical formulations
completed online
Number of technical 62 23 training
solutions deployed/
Number of Technical 1,281 1,173
piloted
Professionals developed
Trade Offs Number of registered 67 54
trademarks
• It is important to invest in smart and innovative Trade Offs
solutions that improve our Intellectual Capital and
overall competitive advantage. • We believe in investing in upskilling and reskilling our
global workforce to compete and win in the future
• We channel Financial Capital into research and
marketplace, given the constantly changing market
development (R&D) to enhance our end-to-end Actions to Enhance Outcomes
landscape.
visibility and processes across the value chain,
including operational and cost efficiencies. Actions to Enhance Outcomes • We invested in digital tools to better churn insights • Intensify investment in upskilling/reskilling
and intelligence from data, simplify work processes, programmes especially in areas such as agile ways
• Although this may immediately deplete our Financial • Foster innovation and accelerate presence in the empower decision making and enable seamless of working, innovation, analytics, and digital, as well
Capital, the expected benefits gained in the coming digital space for optimised, effective solutions across collaboration. as sustainability.
years will strengthen our long-term value through the value chain.
improved Natural, Social, Human, and Intellectual • Additionally, we continue to invest in providing the • Provide flexible work arrangements to ensure the
• Intensify low-carbon technology solutions, R&D right environment for our people to thrive, for
Capitals, which inadvertently results in sustainable safety, health, and well-being of employees.
capabilities and innovation pipeline to maximise example a conducive workplace that promotes
financial growth.
efficiency and support towards NZCE 2050. well-being, Diversity and Inclusion (D&I), and • Continue to build awareness and progress to
Value We Create

organisational culture. improve D&I.

• Improve cost and operational effectiveness in the
delivery of top quartile products. • This may impact Financial Capital but will positively • Continue to inculcate the refreshed PETRONAS
impact Human Capital to deliver business Cultural Beliefs through various engagements and
• Improve the number of patents secured.
performance, hence, it will also benefit Financial communications.
Capital in the longer term.
 86 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 87

Performance by Capital Performance by Capital

Social and Natural Capital

Relationship Capital

A strong network of mutually-beneficial The responsible utilisation of natural resources by

relationships that allow us to contribute to our operations, as well as our ability to take care
societal well-being and empowerment. of the environment.

Inputs Outputs/Outcomes Inputs Outputs/Outcomes

2021 2020 2021 2020

2021 2020 2021 2020
Total investment in PETRONAS >163 >177 Total freshwater withdrawal 71.19 60.03
Education Sponsorship Total number of 7,272 5,175 (million m³) Absolute GHG emissions 45.2 48.3
beneficiaries from various (MtCO₂e)
Programme (PESP)
PETRONAS programmes
(RM million) Hazardous waste disposed 59,228 33,349
Total contribution to flood 15 n/a (MT)
Investments in community/ 100 100 relief efforts (RM million)
nation-building initiatives Oil in water content (MT) 452 532
(RM million) Number of students
awarded scholarships 302 370 Sulphur oxides emissions 47,954 84,225
(Malaysian) Trade Offs
(MT)
Scholars recruited by 66 61 • A large part of our operations still depend on carbon- Nitrogen oxides emissions 133,962 138,035
PETRONAS (%) based energy and materials, resulting in waste and (MT)
Total contribution to 86.0 50.6 emissions that could potentially impact Natural
COVID-19 relief efforts Capital.
Trade Offs (RM million)
• In achieving our NZCE 2050 aspiration, we need to
• To achieve our strategic vision, we need to build improve our consumption of Natural Capital. This
stakeholder trust and loyalty, which is essentially requires investments in reduction and mitigation
reflected in our Social and Relationship Capital. initiatives that minimise our environmental footprint. Actions to Enhance Outcomes
Actions to Enhance Outcomes
• We utilised our Financial Capital in 2021 to protect • Financial Capital is channelled into our Manufactured • Continue to reduce carbon footprint by accelerating
• Strengthen collaboration and relationships with Capital as we invest in resource-efficient infrastructure
our stakeholders and business from the impact of lower carbon solutions, leveraging technology-driven
industry players. and operations, thus minimising our use of Natural
COVID-19. Funds were channelled to help employees operations.
navigate new work environments, support suppliers’ • Drive multifaceted strategic initiatives with Capital.
government agencies to help shape policies for the • Enhance operational efficiency and achieve zero
operations during lockdown periods, and provide • We also use Financial Capital to improve our Human
energy industry. continuous hydrocarbon venting and flaring to
critical assistance to communities in need. Capital, in which we train and upskill employees so reduce GHG emissions.
• Amplify collaborations with the Malaysian they can accelerate the move towards a low-carbon
• While this may have impacted Financial Capital, it has
Government and host governments for humanitarian economy, which improves Natural Capital in the long • Pursue new plastics economy and waste reduction
enhanced our position as a responsible corporate
relief efforts such as COVID-19, natural disasters, term. potential to address global waste issue and
citizen among our stakeholders, which indirectly
Value We Create

and others. Malaysia’s sustainability agenda.

serves all our other capitals. • Through resource efficiency, we can achieve cost
• Enrich the lives of our communities by continuing • Enhance our research and development activities in
savings for improved Financial Capital in the long run.
to provide education opportunities through carbon capture and storage (CCS) technology to
Furthermore, by taking care of our Natural Capital,
sponsorship, programmes, and infrastructure. effectively manage high carbon dioxide (CO₂) field
we also gain stakeholder trust (Social and Relationship
• Advocate the use of natural gas and renewable Capital). development.
energy to stakeholders to realise our energy
transition plan.
 88 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 89

Engaging with Stakeholders Engaging with Stakeholders

Our stakeholders are at the heart of everything we do. We work with a broad range of stakeholders, with a strong Quality of Engagement Frequency of Engagement
emphasis on proactive, transparent and open engagement. This, in turn, promotes mutually beneficial relationships and
No existing relationship W Weekly Q Quarterly
value for our stakeholders and PETRONAS. From rising inequalities, climate change, natural disasters and the COVID-19
pandemic; stakeholder management has been key in navigating a volatile business environment. Hence, meaning Relationship established, but much work to be done to improve quality of relationship
M Monthly T Twice Yearly
collaborations and timely engagements with relevant stakeholders are important in fulfilling our strategic objectives. Relationship established, value-generating connection, but with some room for improvement
E Every Two Months Y Yearly
Good-quality, mutually beneficial relationship, with some room for improvement
To ensure this, we identify, attend to our stakeholders’ expectations, track our engagement outcomes against our planned
initiatives, and measure our stakeholders’ sentiments through a stakeholder management system through periodic surveys. Strong relationship of mutual benefit
Ultimately, our goal is to be recognised as a credible and progressive partner in providing the right solutions and
contributing towards common goals.

Federal/Host Governments State Governments

Quality of Engagement: Material Topics: Quality of Engagement: Material Topics:

Why They Are Important Why They Are Important

We proactively engage with government agencies and regulators as this enhance lasting relationship in ensuring As PETRONAS operates in various states within Malaysia, continuous engagements with state governments help
continuous business operations. In addition, we serve as a key thought partner in shaping policies that support broaden their understanding of our operations and build trust over the long term. We operate according to the
the broader economy with the foresight to anticipate future regulations that may potentially affect the industry. state’s regulatory requirements to ensure safe operations and minimise business disruptions. In return, it creates
It also builds trust and promotes synergies to advance mutually-beneficial objectives. This strengthens our business opportunities for the local industries, enriches local communities, and contributes to the state and
position as a responsible solutions partner for the industry and for the government, as well as a trusted partner country’s economy.
in nation-building.
How We Create Value
How We Create Value
• Spur the state’s economic growth and social upliftment through local industry and human capital
• Catalyse nation-building through economic contributions, as well as provide human capital development and developments, as well as equitable employment opportunities.
employment opportunities.
• Establish partnership with the states and leverage the pool of local talents and the new energy growth
• Engage as a credible thought partner in shaping policies for the energy industry to help realise the
frontiers.
government’s aspiration in advancing the country’s sustainability agenda.

Stakeholders’ Key Concerns PETRONAS’ Response Stakeholders’ Key Concerns PETRONAS’ Response

• Nation-building agenda. • Supported Government nation building and • Employment opportunities. • Supported the states’ economic transformation
• Compliance with laws and regulations. economic recovery initiatives such as Program Bakul • Skills and entrepreneurship development. projects, and economic recovery efforts.
Prihatin Negara and Program CERDIK. • Environment and climate change. • Provided technical advisory to states during crisis
• Ethical business practices.
• Participated in Government’s initiative under the • Community investment. such as during water supply shortages in certain
• Health and safety.
collaboration with the Economic Planning Unit (EPU) • Compliance with laws and regulations. states.
• Employment opportunities. • Ensured business continuity by adhering closely to
to develop clear targets and policies for the National
• Human capital development. • Social development.
Energy Policy and the Natural Gas Roadmap. state laws and regulations.
• Sustainable development. • Collaborated in COVID-19 responses and • Ethical business practices.
• Provided timely updates and information on
• Environment and climate change. management measures to ensure business continuity. • Health and safety. PETRONAS’ business operations.
• Social development. • Strengthened collaborations on NZCE 2050 • Contributed to the construction of two MARA Junior
aspiration and sustainability ambitions. Science College (MRSM) campuses in Sabah and
• Operated in compliance to safety standards, laws Sarawak to encourage and promote students’
and legislations. interest in STEM for a combined capacity of 900
• Provided timely update and information on
Value We Create

students.
PETRONAS business operations.

Engagement Channels/Platforms Value Creation Highlights Engagement Channels/Platforms Value Creation Highlights

• Face-to-face and virtual meetings. W • Conducted various programmes that benefitted 3,111 • Face-to-face and virtual meetings. W • Participated in state governments’ policy-shaping
students in vocational and industrial training such as initiatives and programmes.
• Regular reporting, briefings and meetings. W
GEES, VISTA, internship and others. • Regular meetings, briefings and dialogues • Facilitated engagements and communications
• Participated in government-related • Advisory role in Chemical Industry Roadmap to bring with state Ministries. W
between businesses and various state governments
conferences and exhibitions. Q up the chemicals sector to position Malaysia • Joint Working Committee meetings and as well as agencies for business opportunities in the
amongst the top competitive nations by 2030. new energy sector.
Strategic Dialogues. Q
• Allocated RM25 million for disaster relief aid nationwide.
 90 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 91

Engaging with Stakeholders Engaging with Stakeholders

Customers Internal/Employees

Quality of Engagement: Material Topics: Quality of Engagement: Material Topics:

Why They Are Important Why They Are Important

Customers provide valuable feedback, which enables us to deliver innovative and quality customer-centric Our workforce is unquestionably our most valuable asset. We value their talent and contributions, and that is
products, services and technological solutions that create value and improve their overall experience. Our strong why their health, safety and overall well-being remain our top priority. Despite challenges faced during the
ability to constantly diversify our portfolio will also build long-term trust and loyalty from customers, which COVID-19 pandemic, they remained committed and dedicated to helping PETRONAS achieve its 2021 business
ultimately will support our growth and sustainability agenda. goals against a challenging market landscape. They are fundamental to our success, growth and sustainability.

How We Create Value

How We Create Value
• Provide a wholesome talent experience that emphasises on a self-driven culture for growth via learning and
Provide positive customer experience through superior, innovative products and timely product delivery with
development, supported by the right environment.
reliable after-sales support. • Encourage the spirit of innovation and creativity to accelerate the move towards a lower carbon future and
new energy industry.

Stakeholders’ Key Concerns PETRONAS’ Response Stakeholders’ Key Concerns PETRONAS’ Response

• Customer experience. • Introduced high-quality and innovative products and • Competitive remuneration and benefits. • Provided upskilling and reskilling of existing talents
• Health and safety. solutions. • Flexible work arrangement. to ensure we have the best talents in the right role.
• Opportunities for career growth. • Provided regular enterprise engagement and
• Operational efficiencies. • Ensured supply reliability and security of oil and gas
• Learning and development. communications to keep employees informed and
• Product quality and availability. products. engaged.
• Product pricing and credit terms. • Rolled out the PETRONAS Dynamic Diesel Euro 5 • Strategic direction, business growth and
• Ensured the overall safety, health and well-being of
• Ethical practices. with Pro-Drive that contains less sulphur at more performance. employees.
• Sustainability matters. than 1,000 PETRONAS stations nationwide. • Safe and healthy work environment. • Enhanced PETRONAS’ Remote Working Arrangement.
• Environment and climate change. • Expanded Setel® ecosystem, enabling seamless • Ethical and sustainable business practices. • Provided New Ways of Working (NWOW) assistance
service delivery across key lines of our business and • Diversity and inclusion. and introduced monthly Connectivity Assistance.
• Conducted various programmes as part of Diversity
providing added convenience to our customers.
and Inclusion (D&I) efforts to enhance gender
• Increased usage of environmentally friendly products diversity in many areas including leadership.
and packaging such as sustainable fabrics for • Established Employee Assistance Programme 2.0
PETRONAS merchandise through PRYSM products. (myFriends), MIND-A-CARE (First Aid for Mental Health),
Engagement Channels/Platforms • Issuance of biodegradable and compostable bags at Building Personal Resilience via iC4RE in efforts to
PETRONAS stations. safeguard PETRONAS’ employees mental well-being.
• Face-to-face and virtual meetings. W • Continued collaboration with Alam Flora for drive- • Introduced myLearningX, a new digital learning
Engagement Channels/Platforms
platform that offers personalisation and flexible
• Events, dialogues, roadshows and engagements.  Y through recycling initiatives at selected PETRONAS
learning options.
stations and collected 8.72 tonnes of recyclable • Staff engagement sessions. M • Advocated youth empowerment through PETRONAS
• Marketing activities and outreach programmes.  Q
items. • Leaders’ Townhall. Q Young Professionals Club (YPC).
• Social media platforms (such as YouTube, • Mobilised ROVR (mobile refuelling service) to provide
Facebook, Instagram and Twitter). W • Employee feedback sessions. W
critical refuelling services in areas affected by flood Value Creation Highlights
• Company’s website. Q in Malaysia. • Intranet and email blast announcements. W
Value We Create

• Feedback management system. Q • Close to 100 per cent of PETRONAS employees

have been fully vaccinated.
• Customer appreciation programmes. Q
• More than 30,000 users on PETRONAS Dot App
– an internal platform for employees to stay
Value Creation Highlights engaged with the latest happenings within the
Group, have dialogue with Leaders and quick access
• Provided reliable services, innovative and sustainable
to important announcements during the Movement
products and solutions to customers. Control Order (MCO). It became a valuable and
cohesive tool for PETRONAS staff groupwide to
remain connected.
 92 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 93

Engaging with Stakeholders Engaging with Stakeholders

Shareholders/Investors/Credit Rating Agencies Media

Quality of Engagement: Material Topics: Quality of Engagement: Material Topics:

Why They Are Important Why They Are Important

We nurture stakeholders’ trust and confidence to ensure continued access to capital at competitive rates/terms. The media is an important partner in relaying the right messages and information to our stakeholders. It builds
We also value the stakeholders’ support in imparting market intelligence and insights, which enable early brand strength, safeguards our reputation and strengthens rapport. Continuous engagements are conducted with
identification of opportunities and emerging trends within the financial markets. the media to increase PETRONAS’ share of voice, to shape perception and address the expectations of our
targeted audiences (media/industry/public).
How We Create Value
Progressive business with strong fundamentals, prudent financial performance and good governance with firm How We Create Value
commitment towards energy transition and sustainability goals. • Communicate accurate and timely information to build trust and confidence.
• Advocate transparency, ethical business conduct and practices, business performance, environmental, social
and corporate governance.
• Sustain media trust towards PETRONAS.
• Mantain professional relationship with the media.
• Credible conduit for information dissemination.
Stakeholders’ Key Concerns PETRONAS’ Response • Enhance visibility of PETRONAS’ corporate agenda and business developments.
• Manage positive perception towards PETRONAS’ performance, behaviour and transparency.
• Business and industry outlook. • Provided accurate and timely reporting with
• Financial positions and shareholders’ returns. transparency.
• ESG and energy transition. • Robust fundamentals and resilient financial
• Regulatory compliance. performance. Stakeholders’ Key Concerns PETRONAS’ Response
• Strong commitment to delivering NZCE 2050
aspiration (aligned with the international frameworks, • Governance. • Fostered open and transparent communication.
standards and progressive improvements in ESG • Products/Services. • Ensured timely communication and dissemination of
practices). • Financial Performance. information.
• Leadership. • Undertook robust activation of media strategies and
• Technology and digital innovation. plans.
• Sustainability and renewables. • Initiated collaboration and support for meaningful
Engagement Channels/Platforms Value Creation Highlights • Environment and climate change. initiatives.

• Stakeholder engagements. Q • Maintained standalone credit ratings.

• Continued access to capital at competitive rates and
• Financial results announcements. Q
terms, notably USD3.6 billion bonds issued with Engagement Channels/Platforms Value Creation Highlights
• Analyst briefings. Q
lowest coupon and tightest issue spread for
• Announcements and disclosures via PETRONAS in recent years. • Face-to-face and virtual engagement sessions • Positive reporting on PETRONAS-related news.
corporate websites. Q (dialogues, press conferences, press releases, • Improved mitigation on issues.
announcements). Q • Increased publicity.
• Annual General Meetings. Y
• Timely dissemination of information via press • Strengthened media presence.
releases, statements or announcements. Q • Facilitated fair and informed reporting of stories.
Value We Create

• Maintained positive news sentiment.

• Media sponsorships. Y
• Maintained positive public perception.
 94 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 95

Engaging with Stakeholders Engaging with Stakeholders

Industry Partners and Government-linked Companies (GLCs) Communities/Non-Government Organisations (NGOs)

Quality of Engagement: Material Topics: Quality of Engagement: Material Topics:

Why They Are Important Why They Are Important

We continue to work closely together with industry partners to elevate industry standards as well as develop Community engagement reflects our position as a responsible corporate citizen, builds public trust and ensures
new cleaner technology and solutions for a mutually-thriving and sustainable energy industry. This enables us to the continued viability of our business in the long term. We aim to enrich the lives of the communities through
improve operational efficiencies and build capabilities to explore new areas for growth that support our NZCE the social investments we make towards societal upliftment and safeguarding the environment.
2050 aspiration in meeting the energy needs in a lower-carbon future.
How We Create Value
How We Create Value Uplift communities and work with NGOs of similar cause for greater social good in creating positive social
• Develop the nation in a sustainable manner through collaborations on research, development and impact, safeguarding the environment and continuous value creation.
commercialisation of technology solutions fit for the energy industry and beyond.
• Improve industry standards/regulation through advocacy via regulators (government/non-government).
Stakeholders’ Key Concerns PETRONAS’ Response
• Deploy and exchange best practices to improve operations, products and services across multiple industries.
• Governance and integrity. • Implemented community development and socio-
Stakeholders’ Key Concerns PETRONAS’ Response • Health, safety and environment. economic programmes.
• Education. • Collaborated with NGOs for the protection and
• Governance and integrity. • Timely delivery of capital projects for PETRONAS. preservation of wildlife, environment and social
• Social well-being.
• Business continuity and industry relevance amidst • Applied best practices, research and development causes such as recycling and rainwater harvesting.
• Compliance with relevant legislation.
Just Transition phase. (R&D), commercialisation and technology solutions. • Introduced eco-friendly product designs and
• Sustainability.
• Health, safety and environment. • Strengthened the supply chain through collaborative operations.
• Ethical practices.
• Local participation in the industry. programmes and initiatives. • Amplified Food Bank Programme at 400 PETRONAS
• Human rights.
• Industry requirements, local content, regulations and • Continued to nurture vendors under programmes stations.
policies. such as Vendor Development Programme (VDP) and • Established Industry Vaccination Centre or Pusat
• Business opportunities. support the vendors by facilitating access to Pemberian Vaksin Industri (PPVIN) at six locations
• Oil and gas as well new as energy capabilities. financing under the Vendor Financing Programme across Malaysia.
(VFP). • Conducted periodic engagement with communities
• Collaborated with relevant stakeholders in countries on safety education and crisis preparedness at
where we operate, such as the governments, PETRONAS operations areas to improve community
regulators, agencies and organisations. resilience.
• Elevated knowledge sharing and technology transfer • Conducted surveys and focus group discussions to
in engineering solutions. identify and mitigate social and safety risks with
• Improved monetisation through commercialisation of local communities near to PETRONAS’ operation.
PETRONAS’ emerging technologies.
Engagement Channels/Platforms Value Creation Highlights
Engagement Channels/Platforms Value Creation Highlights • Corporate Social Responsibility (CSR) • Improved the economy of communities through the
programmes. Q MEKAR programme.
• Face-to-face and virtual meetings. W • Capabilities in key energy industry activities through
• Regular briefings and engagements with • Increased the livelihood of local farmers and the
multilateral knowledge sharing with regional industry
Value We Create

• Familiarisation visits for stakeholders.  Q

local communities. Q lower-mid income demographics (B40 and M40) via
players.
• Content sharing and festive greetings via emails. Q PETRONAS Dagangan Berhad’s (PDB) Segar@Mesra.
• Technical expertise and technologies on hydrogen
• Promoted local brands via the Love Local campaign
• Official events (MoU signings, launching production available to customers from both at PDB’s Kedai Mesra.
ceremonies, etc). Q industry players and public. • Local community grasp the significance of
• Drones at PETRONAS facilities are being used as a environmental care and coastal ecology with about
case study for application in other industries and 20,263 mangrove trees planted in a 14,000 sqm
wider purposes resulting in operational efficiency, ecoCare area along the Sungai Kertih in Terengganu.
cost optimisation and reduction of HSE risks.
 96 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 97

Because We Care Because We Care

The year 2021 has been particularly difficult for many Malaysians. Not only were there resurgence of new COVID-19 State Governments
variants and economic slowdown, but but also severe floods that affected several states in Malaysia at the end of
the year. It was a challenging year for everyone across various stakeholder groups who faced loss of lives and
livelihoods, leaving far-reaching economic consequences. What Happened Our Response

Despite the challenges, we rallied our workforce together. We stood united to reach out and help those in need, State governments faced • Collaborated with oil-producing state governments (Sabah,
through on-the-ground support, digital solutions, and monetary contributions. To this end, we prioritised the health challenges in accelerating Sarawak and Terengganu) to minimise oil and gas supply
and safety of our workforce and our communities through rapid, coordinated and effective response. Leveraging on vaccinations and managing post disruption by assisting in state-led economic recovery, COVID-19
our workforce’s broad range of competencies, we partnered with governments and forged powerful alliances to COVID-19 economic recovery and natural disaster relief aid.
drive economic recovery, assisting our vendors through a difficult period significantly marked by the pandemic. efforts. • Contributed more than RM750,000 towards the development of
Meanwhile, for our customers, we introduced products, services and solutions to cater to their needs. vaccination centres in Kedah, Perak, Perlis and Selangor.
• Mobilised ROVR to flood-impacted areas to help residents’
refuelling needs in Kuala Lipis, working closely with the Ministry
of Domestic Trade and Consumer Affairs, Pahang.
• Mobilised assistance for COVID-19 and flood relief efforts in the
respective states.
Federal Government/Host Governments
• Yayasan PETRONAS also contributed medical equipment and
supplies to Hospital Canselor Tuanku Muhriz UKM (HCTM), Kuala
Lumpur; Hospital Sungai Buloh and Hospital Shah Alam, both in
Selangor; and Hospital Labuan, and to the Kelantan State Health
Department, amounting to approximately RM3.4 million.

Customers

What Happened Our Response

What Happened Our Response
Governments around the world • Strengthened COVID-19-related Standard Operating Procedures
Customers adapted • The Setel® App, which was
faced continuous pressure to (SOPs) throughout our value chain.
to the new normal by introduced by PDB to
revitalise the economy. In • Contributed RM4 million towards the setup and operation of six
leveraging technology encourage customers to
Malaysia, the government PPVINs.
and solutions to make seamless purchases
accelerated the National • Introduced the Green Bubble and Green Net approaches at 33
work, learn as well as minus the queues, was also
Vaccination programme and assets in Malaysia and PETRONAS’ selected international
stay connected with used as a platform for
gradually opened economic locations to curb the spread of COVID-19.
friends and family. In donations toward PETRONAS’
sectors. Various stimulus • Channelled funds to purchase critical medical equipment and
addition to strict Food Bank Programme.
packages were introduced to supplies to hospitals and frontliners.
COVID-19 SOPs, • Implemented innovative
help businesses and the • Collaborated with government agencies to facilitate approvals
Value We Create

border closures and solutions to ensure the

population, especially those from for essential vendors to operate during the MCO.
restricted movements security of energy supply to
the lower-income group. • Facilitated business continuity mitigation during the pandemic by
led to challenges in customers via ROVR, ISO
liaising with authorities and government agencies as well as
obtaining their daily tanks, bunker solutions,
coordinated approval for Program Imunisasi Industri COVID-19
needs and disrupted Virtual Pipeline System (VPS)
Kerjasama Awam-Swasta (PIKAS) for more than 10,000 employees
the security of energy and more.
and contractors nationwide.
supply. • Implemented strict SOPs in
• PETRONAS contributed RM10 million and Yayasan PETRONAS
retail and customer-facing
contributed RM5 million to NADMA’s flood relief efforts.
areas.
 98 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 99

Because We Care Because We Care

Internal/Employees Industry Partners and Government-linked Companies (GLCs)

What Happened Our Response What Happened Our Response

The safety and well-being of our • Provided financial and connectivity assistance to support The pandemic caused • Enabled essential vendors to
employees remained a top employees working from home. disruption to the supply operate during restrictive
priority. With the implementation • Achieved close to 100 per cent vaccination rate among chain, both locally and movement periods for
of a flexible working employees with the establishment of 11 vaccination centres, globally. The MCOs and business continuity by
cautious outlook by facilitating approvals with
arrangement policy, employees onshore and offshore across our operations nationwide,
various economic government agencies.
continued to Work From Home partnering with governments and the private sector.
sectors led to suppliers • Simplified internal interface
(WFH), except for those in • Established COVID-19 One-Stop Centre, Incident Action Plan and vendors facing processes between PETRONAS
critical and essential sectors. (for international assets), Pandemic Preparedness and Response difficulties in obtaining and vendors to overcome
Strict safety measures, including Team (PPRT), COVID-19 digital platform and E-Health access to financial logistic challenges due to
cybersecurity awareness, were Vaccination, backed by 85 technical guidelines and directives to assistance and also travel restrictions.
implemented. Assistance on improve Business Continuity and safeguard the workforce. inability to operate • Continued to support and
mental well-being was also • Introduced My Personnel e-Tracker (MyPeT) app for oil and gas during the lockdowns. ease Oil and Gas Services and
rendered to employees in personnel and supply chain to ensure minimal industry-wide Equipment (OGSE) vendors by
managing WFH challenges, disruption at domestic and international assets. facilitating access to financing
particularly having an appropriate • Partnered NALURI (for EAP Counselling) and Malaysian under the Vendor Financing
Programme.
work-life balance. Psychiatric Association (for MIND-A-CARE Programme) to
improve mental health and overall well-being of employees.
• Partnered with the private medical sectors to provide 200
emergency/non-emergency assistance to COVID-19 infected
employees.
• Enhanced security measures during the various containment Communities/Non-Government Organisations (NGOs)
measures to protect PETRONAS’ interests, locally and abroad.
• Distributed hygiene kits to employees.
• Extended financial support to vaccinated employees and What Happened Our Response
international assignees and their families returning to Malaysia.
• Established quarantine centres for employees from the Upstream More segments of • Initiated COVID-19 relief aid by providing
and gas operations at local hotels to allow smooth transition our communities, necessary supplies to prevent, control and
especially those in treat impacted communities located across
and changes in shifts.
the lower-income our domestic and international assets.
segment, continued • Total donations of more than RM2 million
to be impacted by raised for the PETRONAS Food Bank
COVID-19. Apart Programme which benefitted 2,142,000
from recipients during the COVID-19 pandemic.
unemployment, • Assisted frontliners via the PDB Coffee
many lacked access Break Programme at 15 hospitals
to food, basic nationwide, with discounts for vehicle-
hygiene necessities, related services.
and remained • Contributed medical equipment and
Value We Create

unaware of the hygiene products/kits to frontliners and

importance of being communities in collaboration with Federal
vaccinated. and State authorities.
• Activated disaster relief for communities
affected by flood in key operating states.
• Contributed over RM30 million worth of
learning devices that benefitted 12,000 B40
students to support virtual learning during
the pandemic for the CERDIK initiative.
 Strategic Insights into how we
execute strategy to
Progress create value

Recharge
for a Shared
102 The World in 2021
108 Material Topics
117 Risks Linked to Creating Value
Future 132 Strategic Performance Review

Business Review
136 Upstream
144 Gas + New Energy
152 Downstream
160 Project Delivery and Technology
 102 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 103

The World in 2021 The World in 2021

In 2021, the world faced pandemic-led challenges as a resurgence of COVID-19 variants weighed heavily on Oil
businesses and people across the world. Heightened geopolitical tensions followed by uneven global vaccination
rates also led to uneven economic growth. In Malaysia, the national vaccination programme made inroads in Daily Dated Brent Prices 2021: USD70.9/bbl
stemming the spread of COVID-19 though new variants led to extended lockdowns that slowed economic recovery. Unit: USD/bbl

The global oil and gas sector rebounded strongly in 2021, which saw an increasing number of industry players
scaling up their commitments towards driving a low-carbon future. 100
Energy crisis, soaring
gas prices lead to
OPEC+ agrees to fully gas-to-oil switching
90 unwind production cuts Supply disruptions in
Improving by Sept 2022 Libya, Nigeria &
vaccination rates, US, Europe lift Ecuador
IMF raises 2021 restrictions
80 GDP growth to 6%
Geopolitics Economy Saudi
surprise 1 mil
1 2 bpd
unilateral oil
70
cut
Throughout 2021, geopolitical flashpoints
continued to erupt despite the resurgence of new
60 US plans to
COVID-19 variants that kept many regions and coordinate SPR
release
countries under lockdown measures. In certain Hurricane Ida shuts
Delta variant
countries, elections were called as leaders aimed 50
US Texas ice storm disrupts WHO designated detected in more
1.7 mil bpd of US Gulf
of Mexico production Omicron variant
to gain fresh mandates to implement policies to 40% of US oil supply Delta as variant of than 100 countries triggers travel ban
concern
revive spending and boost their economy to 40

counter economic headwinds. Amidst efforts to Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21

curb the spread of the pandemic and the uneven According to the International Monetary Fund
pace in vaccination rates, nations refocused (IMF), the global economy expanded 5.9 per cent
efforts on improving domestic recovery. While in 2021, even with border restrictions and
vaccine roll-outs led to improved consumer intermittent mobility restrictions imposed by Gas and Liquefied Natural Gas (LNG)
confidence, some countries faced additional nations to limit the impact on their healthcare 4
setbacks from military coups and proxy wars that systems. These pandemic-led limitations resulted Gas and LNG prices surged to record levels in 2021, mainly due to the increase in demand that coincided with
led to further political instability worldwide. in prolonged supply chain disruptions that sent supply disruptions at LNG plants and reduced gas supply from Russia. Asian spot LNG exceeded USD50/mmBtu, a
prices of commodities and consumer goods record, in the year due to extreme cold weather in Europe and China at the start of 2021, followed by hotter-
soaring. than-usual summer in the middle of the year. These events led to depleted gas storage in Europe, just as Russia
cut supplies. As a result, spot LNG prices in Asia surged to levels unseen in the past.

Northeast Asia gas price Europe’s low gas

Oil Unit: USD/mmBtu storage leads to
3 60 increased competition
with Asia for LNG
In 2021, a re-opening of economies led to oil demand Rising
outpacing supply, and the world experienced one of LNG plant demand
50 during
its worst energy crisis. Dated Brent rose from USD50/ China’s coal crunch leads to disruptions
in Australia winter
bbl at the beginning of 2021 to a three-year high of Cold snap in a surge in power producers’
demand for LNG reduce
Europe and
USD86/bbl in late October. For 2021, Brent crude supply
40 Northeast Asia
averaged USD71/bbl, up from USD42/bbl a year earlier.
Oil inventories in developed markets fell below the
five-year average since May 2020, as OPEC and its 30 Europe’s gas in
Strategic Progress

allies remained cautious in releasing more oil into the storage falls below
market. Supply was disrupted in the US due to a deep Hotter-than-usual 5-year average

freeze in Texas and hurricanes in the Gulf of Mexico. 20

summer in Northeast
Asia sends power
demand soaring

10 2021:
USD18.6/mmBtu
0

Jan-2021 Feb-2021 Mar-2021 Apr-2021 May-2021 Jun-2021 Jul-2021 Aug-2021 Sep-2021 Oct-2021 Nov-2021 Dec-2021
 104 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 105

The World in 2021 The World in 2021

Chemicals
2022 Outlook: What the Future Holds
5
The chemicals market rebounded in 2021 from the lowest in more than a decade, led by a surge in demand for
Geopolitics Economy
plastics used in food packaging, personal protection and medical equipment and electronic goods. Ethylene, a
1 2
benchmark for chemicals, averaged USD1,009 per metric tonne last year, up 43 per cent from the average in
2020. Prices had tumbled in 2020 as the COVID-19 pandemic led to lockdowns and consumption fell. China, the Due to heightened tensions on multiple fronts, The International Monetary Fund (IMF) expects the
world’s biggest market for most chemicals, drove the recovery as its economy expanded 8.1 per cent in 2021, the world is expected to move into multipolarity. global economy to expand by 4.4 per cent in
fastest in 10 years, bolstered by the reopening of economies and post-lockdown spending surge which boosted The emergence of proxy wars and attacks on key 2022, a downgrade from the earlier 4.9 per cent
demand for chemicals and other goods and materials. infrastructure will further elevate the risk of supply projections, citing the spread of the Omicron
disruptions, leading to increased volatility in oil variant that would lead to border closures, travel
prices and operational risks, especially in upstream restrictions, supply chain disruptions, elevated
Global
financial oil and gas. Protests against authoritarian regimes inflation and the return of tightening monetary
The US-China
crisis are also likely to escalate as the extensive impact conditions. High energy prices are also expected
1,500 China trade war
joined of social media platforms prevents governments to contribute to inflation, adding to manufacturers’
1,200 WTO from cracking down on dissidents. and businesses’ ongoing supply chain issues.
USD/tonnes

900
Given the rising concerns over stagflation, where
860 829 prices remain high while economies stagnate, it is
600 708 anticipated that businesses, including the oil and
300 422 COVID-19 gas sector, will struggle due to higher costs, even
as demand fails to pick up as quickly.
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Ethlylene Prices, Southeast Asia

Oil
3
Upstream Alternative Energy Oil prices are seen facing greater volatility amid
6 7 heightened geopolitical strife that has disrupted output
In 2021, Upstream spending rebounded from the lowest level Governments made stronger pivots from key producers, especially those in the Middle
in 15 years as the reopening of economies boosted energy towards a low-carbon future to East and North Africa. In 2022, OPEC+ agreed to fully
prices. Upstream capital expenditure (CAPEX) stood at about reverse the effects of climate change unwind its historic production cuts of 9.7 mil bpd
USD400 billion as oil and gas players remained focused on in 2021. To date, 90 per cent of while continuing its active market management.
sustaining capital discipline to improve cash flows. Following emitters have made the pledge However, operational issues in Nigeria and Angola
the recovery experienced in oil prices, US-led mergers and towards net zero carbon emissions. coupled with declining OPEC spare capacity have
acquisitions reached a two-year high in the second quarter of A noteworthy event that took place trimmed the Group’s ability to react to supply-demand
2021. During this period, companies realigned their portfolios. during the year in review was the shocks. Meanwhile, rising supply from non-OPEC
Some players disposed petroleum assets while others picked- establishment of the first-ever climate producers such as the US, Canada and Brazil,
up assets to gain economies of scale and cut operational pact that directly referenced coal and including threats of new COVID variants on oil
costs. fossil fuels at the United Nations (UN) demand recovery, will pose downside risk to the oil
Climate Change Conference (COP26) market.
The energy crisis in the previous year led to an increase in in Glasgow. This was followed by key Growing calls for the oil and gas sector to
Strategic Progress

nationalistic pride as countries looked inwards to ensure pledges to reduce methane, phase- As governments around the world prioritise climate
decarbonise have also pushed industry players to seek
security of supply. While short-term energy security means out inefficient fossil fuel subsidies and change and draw up related policies, adoption of
and deploy carbon-removal solutions along their
nations have to be able to meet sudden surges in demand, increase commitment towards cleaner alternatives in the transport sector is set to
entire value chain. Slow adoption of decarbonisation
as seen across the world when lockdowns were eased, zero-emission vehicles. increase at a faster pace. Escalating oil prices will also
strategies will stand the risk of being side-lined by key
longer-term energy security requires sufficient investments to force consumers to seek more efficient transport
stakeholders, namely the financial industry, regulators
be made today. solutions, hastening the transition towards electric
and end-consumers.
mobility.
 106 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 107

The World in 2021 The World in 2021

Gas and LNG Upstream

4 6
Upstream CAPEX is forecasted to rise in 2022 to around USD500 billion, though spending may remain below
the peak of USD800 billion achieved in 2014. The increase is due to higher costs that have eroded the
expenditure’s value to boost production. This has emerged as a cause of concern for the oil and gas sector as a
lack of growth in spending will impede output growth in the later years.

Supply chain disruptions and increased commodity prices, including steel, will also increase costs. Following
growing calls to lower their carbon footprint, there will be many players allocating spending on carbon-
abatement technology.

Escalating oil and gas prices is expected to increase merger and acquisition activities in 2022, opening up
opportunities for cash-rich companies to expand market share by acquiring smaller rivals. There is increased
vibrancy in the M&A sphere with opportunities present in many regions. Companies with pledges of net zero are
Gas and LNG prices are expected to remain elevated in 2022, driven by Europe’s heightened demand as the gravitating toward differentiated opportunities to swap out and highgrade their portfolios in an effort to reduce
Russia-Ukraine conflict prolongs. Amid a re-opening of economies and Europe’s determination to wean itself off carbon intensity. The oil and gas sector will be seeing costs rise as commodity prices jumped and the labour
Russian gas, has increased LNG demand. Europe, which consumes more than 500 bcm of natural gas a year, is market remains tight. Some projects under consideration may be delayed as project economics are impacted by
competing for LNG with Asia when extended plant disruptions keep supply limited. Following a subdued 2020, the higher costs.
surge in gas and LNG prices is expected to boost developers’ confidence in taking FID for LNG projects.
With oil prices remaining volatile, net importing countries will look for alternative energy supply or boost
The number of carbon-neutral LNG cargoes being sold globally has multiplied, from less than a handful in 2019. domestic production to meet demand.
This is due to buyers increasing demand for cleaner fuels to avoid taking on emissions in their value chain, after
adopting stricter emission targets.

Alternative Energy
7
The 2021 United Nations Climate Change
Chemicals Conference (COP26) has left the world with a
5 longer climate to-do list, pressuring governments
and corporations to transition towards a low-
In 2022, the chemical industry is in a strong position for growth as consumer demand strengthens and restocking
carbon future. Amidst increasing scrutiny and
of supplies takes place amid rising demand. The chemicals market is set for a second year of recovery supported
regulations, ESG will be the immediate focus for
by growing demand for plastics and packaging amid a growing population, rising urbanisation and improving living
companies as more investors face sustainability
standards. As the pandemic alters consumer behaviour and amplifies the importance of sustainability in daily
mandates.
products, specialty chemicals is an area with potential for faster growth. Rising pressure from consumers and other
stakeholders is pushing chemical producers to invest in boosting the circularity of their products through plastics With renewables becoming more cost-competitive
recycling, battery recycling and incorporating bio-based feedstock in their value chain. and playing an increasing role in the energy mix,
the demand for green hydrogen and energy
storage is expected to rise, though this is a likely
scenario for the long term.
Strategic Progress

To this end, technology and innovative solutions to

reduce and capture emissions are becoming more
critical, especially the adoption of carbon capture,
utilisation and storage (CCUS), and methane
capture. Carbon offsets are poised for growth in
the quest to net zero as companies race for time
to achieve short-term targets. Meanwhile, the
upcoming COP27 in Egypt this year will see
governments being called to account for their
pledges and provide updates on their progress.
 108 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 109

Material Topics Material Topics

Material topics are an essential aspect of our value creation and growth strategy. By addressing these topics, we are able
to stay ahead of new trends, evolving customer demands and other challenges based on our operating environment. Materiality Matrix

High
Material Topics
Materiality Assessment Process 1. Safety Management
We conduct a materiality assessment on an annual basis to capture topics that substantively affect our ability to create 2. Health and Well-Being
4 3 1 3. GHG Emissions*
sustainable value over the short, medium and long term, guided by the International Integrated Reporting Council (IIRC)
2 4. Anti-Bribery and Corruption
<IR> Framework. Our materiality assessment process consists of four steps:
5. Physical Climate Risk and Adaptation
5 6. Corporate Governance
Step 7. Environmental Management

Importance to Stakeholders
6 7
1 Identification
8. Employee Attraction, Retention and
• Relevant legislations in the countries we operate. Development*
We identified a list of potential material topics that 10
8
9 9. Renewable Energy*
are important to our stakeholders and PETRONAS via • National industry-specific trends and surveys outcome.
10. Human Rights
an in-house desktop analysis based on a range of • ESG rating and benchmarking agencies. 11. Economic Contribution
internal and external sources, as follows: • Peer benchmarking. 11 12. Biodiversity and Ecosystem Services
• Reporting frameworks and standards (GRI, Ipieca, • Internal and external audits. 13. Innovation and Circularity
12
TCFD, World Economic Forum’s Stakeholder 14. Sustainable Supply Chain
• Reputation Issue Analysis, Reputation Strength Index and
Capitalism Metrics, and SDGs). *Material topics with targets
internal Sustainability Survey.
14 13
• Internal strategies, policies, processes and Material
Continued Value Creation
documentation (Anti-Bribery and Corruption Based on this analysis, a total of 52 potential material Safeguard the Environment Topics
Manual, Whistleblowing Policy, Code of Conduct topics were identified. Positive Social Impact Emerging
and Business Ethics). Topics
Responsible Governance

Impact on our business High

Step
2 The emerging topics demonstrate the changing landscape and stakeholder expectations. Similar to our material topics, we
Stakeholder Engagement • Communities and customers.
are currently developing the appropriate monitoring and reporting processes for the emerging topics, as well as looking
We then conducted a validation process via • Media. into their impact on our business and portfolio.
interviews and surveys with external and internal
• Investors, credit rating agencies and financial institutions.
stakeholders to assess the impact of these topics.
• Industry partners, alliances and business councils. Management Approach to Material Topics
The stakeholders engaged include: • Non-government organisations (NGOs) and special Lens 1: Continued Valued Creation
• Employee representatives including union interest groups.
Economic Contribution
leaders. • Learning institutions.
• Government and regulatory bodies. What It Means Why It Is Important Risks Opportunities
We also conducted interviews and surveys with internal
• Embassies, high commissions and foreign
subject matter experts and the leadership team to assess Generating economic value from The long-term success of • Impacted business • Prioritising local
representatives.
the impact of the identified topics on our business. capital contribution to the our business goes hand- performance due to employment increases
economy through generation of in-hand with the economic recession. the community’s
products and services, servicing of prosperity of the markets • A weak economy socioeconomic
capital, payment of wages, taxes, and communities in which impacts the expansion performance.
and community investment. we operate. Our ultimate of our market reach. • Responsible and
Step Step Ensuring that PETRONAS is goal is to drive economic transparent tax
3 Prioritisation 4 Endorsement and responsible and transparent in tax development that benefits payments contribute to
We prioritised the identified topics based on two key areas – their
Approval practices, governed by applicable all segments of society. economic growth and
Strategic Progress

importance to stakeholders and their impact on our business.

We submitted the local or regional tax regulations. stakeholder trust.
materiality matrix
For 2021, the prioritisation criteria also included material topics across
for endorsement Our Response
several areas:
to the
• Occurrence in grievances. Sustainability • Substantial rise in revenue driven by a rebound in demand for our products and cost optimisation measures allows us
• Topics highlighted by investors and rating agencies in their assessment Council, which
to continuously contribute to the Government, amounting to RM48.2 billion in 2021.
• In the face of evolving stakeholder expectations and global pressure to identify and manage ESG impacts, we intensify our
of PETRONAS. was then approved
planning for capital allocations, including the introduction of Green CAPEX, in preparation for our NZCE 2050 aspiration.
• Discussions at Board and Executive Leadership Team meetings. by the Vice
• Yayasan PETRONAS introduced various academic, skills and entrepreneurship training programmes to uplift and
President and
• Items identified as significant risks to the company. empower the low-income communities and improve their income level and be self-sustaining in the long term.
Chief Sustainability
Officer.
Through this process, a total of 14 material topics were identified.
Capitals: Risks: Strategic Thrusts: Stakeholders: SDGs:
 110 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 111

Material Topics Material Topics

Innovation and Circularity Lens 2: Safeguard the Environment

GHG Emissions
What It Means Why It Is Important Risks Opportunities

Embracing innovation and Innovation drives • Poor development of • Strong pipeline of What It Means Why It Is Important Risks Opportunities
circularity through implementation PETRONAS’ competitive technology solutions innovative products Assessing and addressing climate-related Climate change poses • Inability to achieve • Lower resource
of internal frameworks and advantage. We encourage lowers our product/ using recycling risks and opportunities to guide PETRONAS’ a risk to our business climate targets may consumption leads
measures that promote challenging continuous innovation to solutions pipeline and technologies reinforces strategic decisions. Measuring and monitoring growth, societal lead to loss of to better cost
current norms and practices in develop products, services growth aspirations. our role as a greenhouse gas (GHG) emissions and well-being and shared stakeholder trust. management and
product design and operations to and solutions that support • Failure to manage sustainable leader. intensity from our business operations, and prosperity. Thus, it is • Failure to mitigate financial
generate new solutions which growing market demand waste negatively • Continuous reducing GHG emissions through reductions important to minimise emissions from performance.
enhance competitive advantage and drive sustainable impacts the development of in flaring and venting, improvements in our global emissions operations may • Future proofs our
and brand reputation, add value to product consumption. environment, social solutions improves energy efficiency in operations, utilisation of to mitigate the worst result in financial business against
customers and create operational safety and overall operational efficiency. renewable energy solutions, CCS and others. impacts of climate and non-financial new risks, such as
and cost efficiencies. reputation. Additionally, improving measurements and change. penalties. regulatory changes.
mitigating methane emissions from
operations to limit the impact of GHG
Our Response
emissions over a more immediate period, as
• Leveraging the full potential of technologies at our disposal, including partnering with industry players to unlock well as participating in collaborative
Malaysia’s potential as a regional carbon capture and storage (CCS) solutions hub. initiatives with industry peers. Demonstrating
• Exploring methods to convert end-of-life plastic waste into reusable products, to recover 100 per cent of the plastic a clear understanding of energy
waste of our polymer production volume for the Malaysian market by 2030. consumption within the company and
throughout our value chain to support our
emission mitigation efforts.
Capitals: Risks: Strategic Thrusts: Stakeholders: SDGs:
Our Response

• Lowering GHG emissions through reductions in flaring and venting, improvements in energy efficiency in operations,
Sustainable Supply Chain and utilisation of renewable energy solutions.
• Improving measurements and mitigating methane emissions from operations.
What It Means Why It Is Important Risks Opportunities • Participating in collaborative initiatives with industry peers.
Demonstrating long-term commitment to Supplying customers • Loss of trust in our • Sustainable products
product stewardship, procurement and with off-specification products and are in demand and
supply chain management which considers products could damage potential legal may improve brand
Capitals: Risks: Strategic Thrusts: Stakeholders: SDGs:
the environmental, social, and economic our reputation, lead to implications. perception.
risks, consequences and benefits, as well regulatory action and • Inability to manage • Strong partnerships
as the sustainability and safety of our legal liability, and impact the supply chain with local suppliers
products over the entire life cycle. This our financial leads to unreliable improve productivity Physical Climate Risk and Adaptation
includes sourcing locally and supporting performance. It is also products and and supply chain
local suppliers in boosting the essential to strengthen solutions, and resilience. What It Means Why It Is Important Risks Opportunities
development of regional supply chains supply chain resilience operational • Continuous supply
Strengthening PETRONAS’ The rise in extreme • Inability to protect • Regular asset
where possible and applicable, as well as by considering ESG risks disruptions. of skilled suppliers
resilience to the physical impacts weather events exposes assets may impact monitoring improves
supporting a stable local economy and across our value chain. • Poor ESG practices ensures the quality
of climate change and building our assets and operations financial performance asset reliability and
sharing global work practices with local We rely on a wide within the supply of products and
business sustainability, while to significant damage and and reputation. reduces repair cost.
companies. network of suppliers to chain may lead to solutions.
reducing potential asset damage. disruptions. We need to • Failure to manage • Increase in digitalisation
deliver products and financial and non-
build our climate change climate change impact of assets improves
services crucial to our financial implications.
Strategic Progress

resilience to continue could cause injuries efficiency, safety and

operations.
meeting society’s long- and fatalities. lowers carbon footprint.
term energy needs.
Our Response
• Embedding product stewardship in PETRONAS’ research and development to ensure that product safety, compliance
and sustainability aspects are considered for all new products, and adopting a Life Cycle Thinking approach during Our Response
product development.
• Supporting local suppliers in boosting the development of regional supply chains where possible and applicable. • Putting in place the necessary tools, processes and governance to assess, identify and adapt to physical climate risks,
• Supporting a stable local economy and sharing global work practices with local companies. in order to effectively quantify the net risk value.

Capitals: Risks: Strategic Thrusts: Stakeholders: SDGs:

Capitals: Risks: Strategic Thrusts: SDGs:
 112 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 113

Material Topics Material Topics

Environmental Management Biodiversity and Ecosystem Services

What It Means Why It Is Important Risks Opportunities What It Means Why It Is Important Risks Opportunities

Identifying and assessing the As an environmental • Inadequate • Strong efforts in Preventing and minimising impacts Biodiversity is a key • Inability to prevent • Conservation efforts
environmental impact of our steward, we have a management of natural environmental to biodiversity and the ecosystem, indicator of planetary biodiversity loss may improve public
operational activities, and responsibility to minimise resources may lead to management improve while restoring and rehabilitating health. The human cause environmental perception and
sustainably managing resources in the impacts of our penalties or future stakeholder trust and the ecosystems around us through population, and by disruptions and stakeholder trust.
our operations, including but not operations on the resource availability public perception. conservation efforts. extension our business reputational damage. • Strong biodiversity
limited to reducing the impact of surrounding environment. issues. • Waste reduction and and activities, rely on a • Severe biodiversity loss management may
emissions and waste streams, This means protecting • Non-compliances to resource efficiency range of ecosystem exacerbates climate- result in more financing
developing water management environmental health, environmental reduce operational services to generate related risks. from investors.
strategies, preventing spills to the which is linked to long- regulations result in costs. economic and social
environment and decommissioning term social and business stop-work orders and value.
assets sustainably and safely. health. business disruptions.

Our Response
Our Response
• Conducting detailed Biodiversity and Ecosystem Services Risk Assessments and implementing Biodiversity Action Plans
• Integrating our environmental stewardship practices into our business processes and operations by emphasising for operations that are categorised as High and Very High risks.
compliance with international standards and leveraging technologies. • Collaborating with the private sector on issues related to biodiversity conservation to support the implementation of
Malaysia’s National Policy on Biological Diversity (NPBD).
• Supporting the development of a national Voluntary Carbon Market Framework.
Strategic
Capitals: Risks: Thrusts: Stakeholders: SDGs:

Capitals: Risks: Strategic Thrusts: Stakeholders: SDGs:

Renewable Energy

What It Means Why It Is Important Risks Opportunities Lens 3: Positive Social Impact
Reporting company’s installed To achieve a lower carbon • Inability to increase • Aligning with future Safety Management
renewable energy capacity and economy, society needs to renewable energy global energy demand
renewable energy power transition to energy capacity impedes increases visibility as a What It Means Why It Is Important Risks Opportunities
generation. Aligning research systems of lower carbon access to new markets. trusted renewable
Ensuring all employees, The safety of our people • Injuries and fatalities • Enhanced safety
initiatives and projects with future and renewable sources. As • Failure to expand the energy provider.
contractors and assets under our has always been our result in regulatory management
global energy demand by using a national energy solutions energy mix may impact • Collaborating with
care are working under the safest utmost priority. It protects actions and legal framework attracts and
renewable energy which reduce provider, we need to our ability to achieve a industry and
possible conditions, through not only our operations, liabilities. retains top industry
carbon footprint of operations and progressively drive the low carbon future and government to drive
proactive risk management but more importantly our • Health and safety talents.
products. energy transition. NZCE 2050 aspiration. renewables helps
approach across the organisation stakeholders from possible incidents lead to • Improved operational
accelerate the energy
in striving for operational harm and injuries. operational disruptions. discipline safeguards
transition.
excellence. workforce, assets,
information and
Our Response operations.
Strategic Progress

• Exploring the development of green hydrogen production and promoting a hydrogen value chain to key demand
centres in Asia. Our Response
• Growing our solar capacity both locally and internationally to reinforce our position as one of the key clean energy
• Ensuring all employees, contractors and assets are under the safest possible conditions.
providers in the region.
• Implementing proactive safety risk management across the organisation through stringent HSE policies and
management systems which are aligned with the International Organisation for Standardisation’s (ISO) 14001:2015 and
ISO 45000:2018.
Strategic
Capitals: Risks: Thrusts: Stakeholders: SDGs:

Strategic
Capitals: Risks: Thrusts: Stakeholders: SDGs:
 114 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 115

Material Topics Material Topics

Health and Well-Being Human Rights

What It Means Why It Is Important Risks Opportunities What It Means Why It Is Important Risks Opportunities

Protecting all employees and As the backbone of our • Poor employee morale • Continuous risk Respecting human rights across our Human rights through • Failure to adhere to • Enhanced integration
contractors from work-related organisation, employees’ and health may impact assessments and suppliers, contractors, partners, and fair and ethical human rights leads of human rights
hazards and promoting good health and well-being overall productivity. adequate controls communities where we operate through treatment are to regulatory practices improves
health and well-being in our directly impact our • Unhealthy and toxic increase productivity establishment and implementation of fundamental to our penalties and position as a fair and
workforce and the wider long-term performance. It work environment lead levels. human rights policies and practices, to business. It creates a damaged reputation. ethical employer.
community, through risk is important to create a to high employee • A wide range of health address issues of forced labour, human safe and secure • Loss of trust from • Robust human rights
assessments and implementation safe and conducive work turnover. and wellness trafficking, modern slavery, fair working operating environment stakeholders and the practices attract a
of adequate controls, while culture that protects their programmes attracts and living conditions, non-discrimination, that meets the public due to human strong talent pool.
providing a range of health and overall well-being. and retains top talent. and Diversity and Inclusion (D&I). expectations of our rights breaches.
wellness programmes which Establishing and integrating processes for stakeholders.
address both physical and mental human rights due diligence and
well-being. compliance within PETRONAS’ systems, Our focus are
processes, and functions throughout the community well-being,
Our Response value chain, including remediation actions labour and working
when encountering human rights issues. conditions, responsible
• Implementing risk assessments and adequate controls for employees’ good health and well-being.
security, and supply
• Providing a range of health and wellness programmes for both physical and mental health in the face of the COVID-19
chain.
pandemic, including remote working arrangement, paid leave for employees who obtained vaccination, provision of
oximeter and COVID-19 self-test kits, financial assistance and reimbursements for vaccinations and others.
Our Response

• Centering human rights in our operations by ensuring strict compliance with human rights principles and laws, and
Capitals: Risks: Strategic Thrusts: Stakeholders: SDGs:
embedding industry practices throughout our Social Performance standards and guidelines in alignment with the United
Nations Guiding Principles for Business and Human Rights.
• Continuously raising awareness to respect, identify, and address any human rights risks through the introduction of
Employee Attraction, Retention and Development initiatives to employees and periodic dialogues and discussions with stakeholders.
• Managing grievances via an integrated platform to ensure sufficient oversight of all cases.
What It Means Why It Is Important Risks Opportunities

Attracting and retaining the best talents In today’s fast-paced • Underperforming and • Investment in a
with emphasis on the well-being of and dynamic landscape, disengaged high-performing and
everyone in our workforce, by providing we require top talent employees may professional talent
flexible working arrangements, competitive with the right type of lower productivity pool ensures
Capitals: Risks: Strategic Thrusts: Stakeholders: SDGs:
remuneration, nurturing of individual’s skills to drive our and impact efficient business
potential and reward-based performance. long-term strategies. It reputation. operations.
Enabling a high-performing workforce by is important to make • Undeveloped skills • An inclusive and
developing new types of capabilities, tools, meaningful investments and capabilities empowering work
and ways of working, building capabilities to develop future impede innovation culture attract high
of our employees, and broadening their talents for our business and growth. performing talents.
career prospects, while making meaningful and the energy sector.
investments into developing future talents
Strategic Progress

for PETRONAS and the industry.

Our Response

• Investing in the cultivation of high-potential and high-performing talents by equipping them with future-ready skills
through on-the-job training, leadership and core skill programmes, as well as a self-learning platform to promote
self-driven culture.
• In ensuring we have quality future talents, we support them through sponsorship and industrial programmes.

Capitals: Risks: Strategic Thrusts: Stakeholders: SDGs:

 116 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 117

Material Topics
Risks Linked to
Lens 4: Responsible Governance
Anti-Bribery and Corruption
Creating Value
What It Means Why It Is Important Risks Opportunities
Effective risk management is a fundamental component of our value creation strategy. This has been
Preventing bribery and corruption A strong foundation of • Bribery and corruption • Enhanced policies, particularly crucial given the increasingly dynamic and volatile landscape, particularly with the COVID-19
among employees and business ethics and integrity are within the supply chain procedures and risk pandemic posing uncertainties on many fronts. Building on our experiences gained in the previous year, we
partners throughout the value chain, important to create lead to regulatory and practices improve pushed ahead to continuously identify, assess and manage our risks and opportunities to realise our strategic
including suppliers, contractors, and shared and equitable reputational risks. reputation among imperatives. We have a robust risk management and internal control system to build our resilience,
other intermediaries, with internal values for stakeholders. • Disputes and legal stakeholders. strengthen our ability to meet stakeholder demands and deliver on our long-term strategic goals.
controls, responsible business We have a moral and proceedings may cause • Strong culture of
practices, and other processes in business obligation to operational disruptions, integrity enhances Preserving Value Through Effective Risk Management
compliance with PETRONAS’ Anti- protect our operations reputational damage our position as a top
Bribery and Corruption Policy and from any corrupt and and value deterioration. employer. To ensure that the PETRONAS Group is able to continue creating, preserving and realising value, we are proactively
Guidelines and other applicable laws. unethical activity. leveraging on a comprehensive system of risk management and internal control to mitigate any significant risks. This
system, which includes identifying, assessing, managing and monitoring a range of financial and non-financial risks, remains
a cornerstone of our business strategy and is fundamental to our goal of delivering sustainable long-term value. It is not
Our Response
intended to eliminate risk entirely, but instead to manage our risk exposure across our businesses, while at the same time
• Ensuring consistent adherence to PETRONAS’ Anti-Bribery and Corruption Policy and Guidelines, Whistleblowing Policy making the most of any opportunities. This system provides reasonable but not absolute assurance against material
and other applicable laws by practising zero tolerance for malpractices and non-compliance. misstatement or loss.
• Joining collective initiatives such as the World Economic Forum’s Partnership Against Corruption Initiative to increase
public trust in business, deliver fair markets and level the playing field by fighting corruption. Setting the tone from the top, our risk management and internal control system is driven by the PETRONAS Board and its
sub-committees, namely the Risk Committee (RC) and Audit Committee (AC) as well as the Executive Leadership Team
(ELT). In addition to the above committees, risk oversight is supported by the Risk Management Committee (RMC) and
respective Risk Management functions.
Capitals: Risks: Strategic Thrusts: Stakeholders: SDGs:

Roles and Responsibilities

Corporate Governance
PETRONAS Board
What It Means Why It Is Important Risks Opportunities
Oversees and ensures sound system of risk management and internal control across the PETRONAS Group.
The system of rules, practices, and Our ability to operate • Failure to comply with • A strong governance
processes by which PETRONAS is and create value relies on standards leads to framework improves
directed and controlled. Corporate upholding the highest business disruptions, reputation with RC Risk Committee AC Audit Committee
Governance refers to the way in which standards of corporate regulatory and stakeholders.
companies are governed and to what governance, which is reputational risks. • High level of
Assists the Board in reviewing principal risks, oversees Assists the Board in fulfilling its oversight functions in
purpose. It identifies who has power crucial to business • Poor corporate transparency ensures
the adequacy and effectiveness of risk assessment and relation to the Company’s internal controls.
and accountability, and who makes continuity and long-term governance impacts efficient and
risk management system for the PETRONAS Group.
decisions. This also includes the growth. our strategic effective execution
highest-level governance on the execution. of business
structures, policies, and strategies on strategies.
sustainability-related matters, including Executive Leadership Team
the strategy and roadmap to realise
Reviews and assists RC and the Board on key risk management matters.
Strategic Progress

our NZCE 2050 aspiration.

Our Response The above risk oversight structure shall be read together with the “Corporate Governance at PETRONAS” section.
• Incorporating sustainability discussions as part of the strategic review and planning cycle led by the PETRONAS Board
of Directors. Risk Management Committee (RMC) Risk Management Functions
• Engaging with external sustainability experts and undergoing various sustainability-related training as part of the Board RMC serves as a central platform to support Risk management functions exist within the PETRONAS
of Directors and top management’s upskilling programmes. PETRONAS’ Management and Board in managing risks Group to drive risk management implementation and
and maintaining acceptable levels of risks as well as provide risk reporting and assurance to PETRONAS
providing guidance and advisory on Groupwide risk Management and Board that risks are effectively being
Strategic management system and its implementation. managed across the PETRONAS Group.
Capitals: Risks: Thrusts:  Stakeholders: SDGs:
 118 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 119

How We Manage Risks

PETRONAS Risk Policy
The PETRONAS Risk Policy outlines the general principles and guidelines for making risk-based decisions. Through this
Policy, we continuously strive to implement risk management best practices to protect and create value. The Policy also
ensures a balanced and holistic view of exposures to achieve business objectives, thus strengthening our position as a risk
resilient organisation.
Crisis Management (CM)
This Policy is complemented by the PETRONAS Resiliency Model, which provides an integrated and holistic view of the
overall strategy for more effective risk management. It focuses on three (3) areas of business resilience, namely Enterprise CM is an integrated process that aims to prepare an organisation’s domestic and international operations to respond
Risk Management (ERM), Crisis Management (CM) and Business Continuity Management (BCM). to and manage crises in risk areas to protect the People, Environment, Assets and Reputation (PEAR). Under CM,
there is a three-tiered response protocol that demarcates the roles and responsibilities of the emergency site
management, operating unit management, corporate and internal/external response agencies, and/or authorities.
PETRONAS Risk Policy and PETRONAS Resiliency Model
Testing and Exercising (T&E) via simulation of test scenarios are conducted to ensure the effectiveness of response
Enterprise Risk Management strategies and promote continuous improvement, as identified in the Emergency/Crisis Management Plan.
PETRONAS is committed to become
a risk resilient organisation. Structured and holistic approach to identify, assess, manage and monitor
risks. The aim is to REDUCE the likehood and impact of identified risks CM Framework
to enhance the organisation’s ability to achieve its strategic objectives.
PETRONAS shall continuously strive Governance Crisis Assessment Crisis Response Testing and Continuous
to implement: • Risk Oversight • Risk Assessment Strategy Exercising (T&E) Improvement
Crisis Management Structure • Credible Scenarios • Strategies and • T&E Planning, • System Monitoring
• Risk management best practices to • Crisis Management Identification Actions Execution and and Review
Comprehensive set of processes that aim to PREPARE the organisation Structure • Thresholds Development Review • Risk Assurance
protect and create value within
to respond and manage crises to protect people, environment, assets • Three-Tiered Identification • Resources • CM Capability
the set boundaries.
and reputation. Response Protocol Identification Building
• Risk-based decision-making by and Activation • Emergency/Crisis
providing a balanced and holistic • Roles and Management Plan
view of exposures to achieve Business Continuity Management Responsibilities Establishment
• Emergency/Crisis
business objectives. Holistic management process that aims to build the capability of an Management Plan
organisation to RECOVER and continue delivering products or services Communication
Managing risk is everyone’s at acceptable predefined levels following a prolonged disruptive
responsibility. incident.

Business Continuity Management (BCM)

Enterprise Risk Management (ERM)
The ERM process is an integral part of managing the decisions at the corporate level. It reflects our position, BCM is a management process that aims to build our capabilities to recover and continuously deliver products or
business as it acts as a guide to systematically identify, propensity and acceptability to take risks in various areas, services at acceptable, predefined levels following any prolonged disruption.
assess, treat, monitor and review risks. It aims to improve namely strategic, financial, operational, and reputational,
our ability to reduce the likelihood and/or impact of the while maintaining legal and regulatory compliance. It is Key to the BCM Framework is the Business Continuity Plan (BCP), which aims to enhance the PETRONAS Group’s
identified risks that may affect the achievement of defined by the respective area’s tolerance and threshold preparedness to recover and restore business-critical functions within a reasonable period, to sustain activities and
business objectives. levels. At the corporate level, PETRONAS Group’s Risk minimise disruptions to stakeholders. T&E via simulation of test scenarios are also conducted to validate the
Appetite is monitored and reported every quarter to the effectiveness of recovery strategies as well as maintain a high level of competence and readiness as identified in the
These risk profiles are established through the ERM ELT, RC and the Board. BCP.
process and monitored at the corporate level across the
PETRONAS Group. It identifies principal risks with the Risk assessments are conducted at key decision points to
corresponding risk mitigations and key risk indicators. ensure decisions that have a significant impact on our BCM Framewrok
This ensures that risks are being effectively managed by business operations and strategies are made based on
the respective units. considerations of the risk-reward trade-off and to create Governance Business Business Impact Business Testing and Continuous
• Risk Oversight Continuity Analysis (BIA) Recovery Exercising (T&E) Improvement
risk-reward conversation at respective decision platforms
Structure Assessment • Critical Business Strategy (BRS) • T&E Planning, • System Monitoring
Strategic Progress

The PETRONAS Group’s Risk Appetite articulates the type and/or Approving Authority (AA). • Operationalisation • Risk Functions • Recovery Execution and and Review
of risks that we are willing to accept to guide strategic of BCM Identification • Minimum Strategy Review • Risk Assurance
• Roles and • Risk Analysis Resource • BCP • BCM Capability
ERM Framework Responsibilities • Risk Evaluation Requirement Building

Governance Context Setting Risk Assessment Risk Treatment Risk Monitoring Continuous
• Risk Policy • External Context • Risk • Risk Treatment and Review Improvement
• Organisation • Internal Context Identification Strategy • Risk Reporting • System Monitoring
and Structure • Risk Appetite • Risk Analysis • Risk Treatment and Monitoring and Review
• Roles and • Risk Criteria • Risk Evaluation Plan • Risk Information • Risk Assurance
Responsibilities System • ERM Capability Building
 120 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 121

Risks Linked to Creating Value Risks Linked to Creating Value

Our extensive network of operations and businesses is

Market Risk
subject to several factors, some of which are beyond
our control. Whether known or unknown, these and
other risks may have potential material adverse impacts Our financial performance is impacted by the volatility Mitigation Strategies Link to:

on our operations. The risks set out below are linked to of commodity prices, change in customer preferences, • A review of our Holding Company Units (HCUs) strategies is continuously
Strategic Thrusts:

our targets of achieving the Group objectives. However, fluctuations in exchange rates and the general
undertaken in response to the wide-ranging market risks and the
macroeconomic outlook.
this is not an exhaustive list of challenges that we corresponding challenges in generating value from our business. We focused
currently face or may develop in the future. The order on prioritising resources to areas of the highest importance to the Material Topics:
in which these risks and uncertainties appear also does organisation and business whilst meeting the expectations of our key
Impact on Value
not necessarily reflect the likelihood of their occurrence stakeholders. We also proactively conduct rigorous efforts to secure new
or the relative magnitude of their potential material • Our core business is predominantly in oil and gas. Hence, demands within the core business and growth areas. Capitals:
adverse impact on our business. our financial performance is highly influenced by • The PETRONAS Financial Policy (PFP) sets the overarching philosophy to Financial Capital: External risks
commodity price volatility, which is generally determined become financially resilient over the long term. Supporting the PFP is the that can undermine our
In addition to the key risks highlighted below, we are by the supply and demand in the market. The prolonged capacity to realise strong
PETRONAS Financial Standard (PFS), which outlines high-level principles and returns will impact the pool of
strengthening our risk management efforts and COVID-19 pandemic and its adverse effects on the global requirements to promote efficient capital and liquidity management practices. funds available for the Group to
corresponding disclosures for environmental, social and economy have substantially influenced the fluctuation in sustain and grow its operations.
Relevant supporting guidelines are also in place to guide and ensure the
governance (ESG) risks, including a specific climate commodity prices and customers’ demands. Manufactured Capital:
effective implementation of financial management and financial risk
change risk. To ensure consistency with global Identifying the assets that can
• Other players within the industry also felt the effects of management practices. This also enables us to identify financial risk be the core engine to support
sustainability frameworks and standards, our efforts are
the prolonged pandemic, and indirectly, PETRONAS was exposures for improved risk management through required reporting to our current and future
positioned in due course, to align with the operating model may also be at
impacted by the performance of key counterparties, relevant HCUs.
recommendations of the Task force on Climate-related risk of changing market
among others, our vendors, contractors and partners. The • As part of financial and business risk management, businesses undertake demands and external
Financial Disclosures (TCFD) and the World Economic
impact may extend to contractual specifications, non- regular monitoring and review of counterparties’ performances to identify any regulations.
Forum’s Stakeholder Capitalism Metrics.
performance and counterparty obligations. On a bigger critical issues with the key counterparties. Where relevant, specific actions to Intellectual and Human
Capitals: Existing intellectual
scale, this could lead to supply or operational disruptions. limit PETRONAS’ exposure are undertaken. capital required to support the
• We have also witnessed a shift in customers’ preferences, • To address the integrated demand and supply chain, digital and strategic business can be made
namely increasing demand for lower-carbon energy redundant in the face of sharp
initiatives have been outlined. This enables the creation of new demand and changes to the market
sources. The change in customers’ preferences and the optimisation of value within the value chains. The PETRONAS Risk Appetite environment.
emergence of cleaner energy sources have intensified was also implemented across the Group. Key factors affecting PETRONAS’
competition within the oil and gas industry, indirectly financial performance and risk appetite, including market risk, are reviewed
affecting PETRONAS’ value chain. and monitored regularly to facilitate strategic decision-making, ensure
• The Group is exposed to exchange rate volatility as our business activities are undertaken within the approved thresholds, and trigger
reporting currency is in Ringgit Malaysia, while some actions promptly.
transactions are dealt with in the US Dollar. Our global
presence also exposes us to the changes in the value of
other currencies and exchange controls imposed by our
countries of operations.
Strategic Progress
 122 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 123

Risks Linked to Creating Value Risks Linked to Creating Value

Financial Liquidity Risk

Our business activities require significant capital investments, sufficient operating cash flows and/or sufficient Mitigation Strategies Link to:
external financing to support business activities and growth projects. • The Asset Liability Committee (ALCO) oversees, deliberates, reviews and
Strategic Thrusts:

monitors asset and liability management strategies in managing foreign

Impact on Value exchange, interest rate and liquidity risks. Our liquidity position is reviewed
and monitored regularly, aligned to the risk appetite established for liquidity Material Topics:
• Financial performance deterioration and the inability to obtain the required financing during these challenging times
and indebtedness levels.
may affect our capital investments and achievement across our growth projects. In addition, the global or regional
• Like managing Market Risks, we are also guided by the PFP and PFS to ensure
financial crisis, unfavourable credit events and market conditions may negatively affect liquidity, customers, businesses
that financial management and risk management practices are implemented. Capitals:
and operational results.
• To ensure responsiveness and the Group’s financial sustainability is Financial Capital: The ability to
• The year 2021 has seen an upward trend and strong emphasis on green funding and ESG-related investing. Key hold a strong financial and liquidity
safeguarded in a crisis, we established the Liquidity Risk Contingency
stakeholders such as investors and banks highly focus on organisations that contribute towards ESG. Failure to position can be affected by
Protocol (LRCP), which will act as a liquidity crisis management plan. The changing regulations and
demonstrate our efforts in supporting these targets may affect our competitiveness and ability to tap into the capital
LRCP is carried out by the Liquidity Crisis Management Team (LCMT), unfavourable market conditions,
market as and when needed. limiting our ability to secure
which has the responsibility to deliberate on impact assessments as well as
financing.
decide on the relevant mitigation strategies and financial levers.
• Engagements with key stakeholders, including current and potential
investors, banks and other counterparties, are regularly performed to ensure
clear narration and communication, in line with substantial efforts
undertaken in the ESG space.

Legal and Regulatory Risk

Changes in the regulatory landscape and rising climate change concerns could increase the cost of compliance, Mitigation Strategies Link to:
reduce demand for our products, affect provisions and limit access to new growth opportunities. Inherent • The establishment of appropriate governance, compliance and legal
Strategic Thrusts:
uncertainties due to litigation proceedings could adversely impact our business operations, financial condition, and/ frameworks, including the PETRONAS Code of Conduct and Business Ethics
or reputation. (CoBE), is central to managing legal and regulatory risks. The Legal
Compliance Framework (LCF) serves as a control oversight and measure of Material Topics:

Impact on Value legal compliance for the Group. LCF is based on five critical legal areas
that could pose as an enterprise risk to the Group.
• As a multinational corporation, we comply with the wide-ranging legal and regulatory requirements unique to each
• Regular communications, awareness sessions and training programmes on Capitals:
country in which we operate. These include critical legal areas such as international sanctions, anti-trust, anti-bribery,
critical legal areas and specific laws affecting the respective entities are Financial Capital: Legal and
anti-corruption, anti-money laundering and data protection laws with extra-territorial effects. regulatory breaches can result in
conducted by Group Legal to enhance awareness and emphasise strict
• We are also exposed to various claims, suits and legal proceedings that could involve shareholders, labour, intellectual financial penalties and reduced
compliance with legal and regulatory requirements. access to external financing.
property, tax and other matters. The disputes and legal proceedings are often subject to many uncertainties beyond
• Compliance levels by the workforce and business are regularly reviewed and Social and Relationship Capitals:
our control and can be difficult to predict outcomes. Due to the inherent uncertainties in the litigation and dispute Relationships with key stakeholders
monitored, aligned to the risk appetite established for compliance with
resolution process, the resolution of any particular legal proceeding or dispute may adversely impact our business will be damaged due to loss of
critical laws and anti-corruption measures. Strict compliance with legal and trust and credibility, should there
operations, operational results and/or financial condition.
regulatory measures is emphasised Groupwide. We have zero-tolerance for be legal and regulatory breaches.
• With 46,884 employees in our workforce, limited awareness and misaligned incentives can lead to intentional or non-compliance to legal and regulatory standards, including acts of bribery Human Capital: Reputational
unintentional non-compliance with laws and regulations by personnel, which is beyond our control. These actions
Strategic Progress

and corruption. damage to our position as a

may go beyond personal liability, with the possibility of impacting the wider organisation. favourable employer due to legal
• We aspire to achieve net zero carbon emissions by 2050 (NZCE 2050). The and regulatory breaches.
• Rising concerns over climate change could lead to additional legal and regulatory measures, including higher Group’s Sustainability Agenda supports our efforts in reducing carbon
compliance costs. The nature of oil and gas operations may expose us to potential claims and suits by environmental emissions and managing other environmental impacts resulting from our
and legal authorities and communities on issues pertaining to carbon emissions, waste materials, as well as business operations.
commissioning and decommissioning activities of our operations.
 124 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 125

Risks Linked to Creating Value Risks Linked to Creating Value

Health, Safety, Security and Environmental (HSSE) Risk

The nature of our business operations exposes us to a wide range of health, safety, security and environmental risks Risk Management in Action: PETRONAS’ Health Safety and Environment (HSE) Efforts
which could cause harm to people, the environment, and our social assets. It may also result in regulatory action, legal Business continuity management is a core element of our risk management strategy. As a Group, we were not spared from
liability, business interruptions, increased costs, damage to our reputation, and potentially, our social licence to operate. the global disruptions arising from the pandemic in early 2020. Learning from the experiences gained in 2020, effective plans
Additionally, the ongoing COVID-19 pandemic has continued to affect the health of our people and operations. were put in place to ensure business continuity, protect employee health and well-being, and minimise operational disruptions.

1. Operation Green Bubbles

Impact on Value Link to: Given the nature of PETRONAS’ business, about 30 of our assets, mainly critical PETRONAS’ offshore and plant-based
• Any incidents during business operations could result in injury or loss of life, Strategic Thrusts: operations, require the on-site presence of around 500 employees to ensure continued operations. This, however, posed
environmental damage, resulting in rectification costs as well as damage to our significant risks on two fronts. First is the increased likelihood of our people contracting COVID-19 due to workplace
equipment and facilities. A shutdown of the affected facilities could disrupt exposure. Secondly, the large number of people required could lead to significant operational disruptions should there be
production and increase production costs. workplace infections.
Material Topics:
• The ongoing COVID-19 pandemic and movement restriction orders globally have As a result, the Green Bubble Strategy was introduced, whereby screened workers were isolated for a specified period at
resulted in interruptions and deterioration of financial performance within certain dedicated accommodations away from the community who were at high risk of COVID-19 transmission. This significantly
parts of our business. This has led to adverse market impacts and affected the reduced the likelihood of COVID-19 infections and ensured operational continuity for these critical projects.
health of our people.
Capitals: We adopted a Green Net approach in places where the Green Bubbles strategy was not feasible. Here, employees could
• Security threats such as acts of terrorism, piracy/sea robbery, demonstration and
kidnapping may adversely affect our business operations, the safety of our people Financial Capital: HSSE incidents can either stay at the dedicated accommodation provided or designate their home as the fixed Green Net accommodation.
result in penalties, damaged assets,
and assets, as well as causing environmental damage. and disrupted business operations,
impacting the Group’s financial 2. PETRONAS Immunisation Programme Taskforce
Mitigation Strategies position. As a responsible energy provider, we made significant strides to expedite vaccination programmes to bring Malaysia closer
Social and Relationship Capital: to herd immunity status.
• The management’s clear requirements and commitment are stipulated in the HSSE incidents can lead to loss of
Group’s Health, Safety, and Environment (HSE) and Security policies. These policies trust and reputational damage Collaborating with the relevant government ministries, state health authorities and service providers, we assisted with the
are supported by dedicated HSE and Security Management Systems, covering among key stakeholders.
establishment of six (6) Pusat Pemberian Vaksin Industri (PPVIN). This includes Pengerang Integrated Complex (PIC), Kerteh,
requirements for health, operational and process safety, environment and security Natural Capital: HSSE incidents can Malaysia Refining Company Sdn Bhd (MRCSB), Bintulu, Miri and Pulau Duyong Jetty Terminal (PDJT). The PIC PPVIN
for consistent as well as effective Groupwide implementation. The HSE Mandatory affect the natural environment where
we operate, undermining our efforts emerged as the first PPVIN established in Malaysia, following a collaboration between the Ministry of International Trade
Control Framework (MCF) and Minimum Mandatory Security Standards (M2S2) to be responsible stewards of natural and Industry (MITI) and the relevant industries.
provide minimum HSE and Security standards to effectively manage HSE and resources.
security risks. Both frameworks and management systems strengthen HSE Human Capital: HSSE incidents can The PPVINs contributed RM4.0 million to support the National Immunisation Programme. PETRONAS also contributed
governance within the Group. cause reputational damage to our another RM750,000 to Pusat Pemberian Vaksin (PPVs) in Kedah, Perak, Perlis, and Selangor.
• PETRONAS is committed to respecting human rights in areas of our operations, status as a favourable employer.
complying with its Code of Conduct and Business Ethics (CoBE) and all relevant Manufactured Capital: HSSE Offshore Outreach Programme
legal requirements. incidents can cause significant
damage to key assets. Meanwhile, a relatively unique approach was taken to drive vaccination efforts was the offshore outreach programme. This
• Operational discipline has been further heightened through intervention and first-of-its-kind was conducted in Labuan, Sabah and Sarawak to ensure our offshore operations did not experience
oversight via HSE assurances, enhancements to contractor management and business disruptions once it was fully operational. It was a collaborative outreach that involved working together with other
leveraging of the HSE digital system. The Generative Culture Leadership contractors across five offshore locations to ensure the successful vaccination of more than 2,000 employees and
Programmes at all levels focused on psychological safety and conscious risk contractors.
awareness. Process Safety Management was strengthened by establishing the Loss of Primary Containment (LOPC) Reduction
Framework and the Fire Prevention and Mitigation Framework. The adoption of new businesses and asset acquisition was 3. Strong Collaboration with Key Stakeholders on COVID-19 Management
reinforced by accelerating due-diligence and post-acquisition integration processes, as well as firming up our first line of
assurance to drive an effective management system and compliance. Beyond our Green Bubble framework and vaccination drives, we also ensured our operations were fully aligned to the
COVID-19 SOPs introduced by the Government. In this regard, PETRONAS maintained regular communication with key
• Security risk assessments are carried out to identify potential threats, analyse the adequacy of current security measures and
stakeholders, including the Ministry of Health (MOH), MITI, National Security Council, Department of Occupational Safety &
develop mitigation actions, gap closure activities and countermeasures to address the risk. Additionally, security exercises to
Health (DOSH) and various state governments. We also maintained close communication with key government agencies
strengthen capabilities, response and readiness in the event of security crisis and/or incidents are conducted to safeguard
where we have an international presence.
our people, assets, information and operations.
• Continuous protective security monitoring and predictive analyses are control measures to enable timely security insights, By communicating openly with our key stakeholders, we swiftly adapted to the dynamic COVID-19 situation affecting
taking into account direct and indirect factors which could impact wider security environment in our countries of Malaysia and adjusted to SOPs accordingly, minimising operational disruptions and transmission risk within our business.
operations. The tailored and bespoke insights developed by dedicated in-house security practitioners facilitate informed
Strategic Progress

management decision making to safeguard PETRONAS’ interests in upholding our duty of care. In addition, periodic Beyond regular communication with relevant government agencies, we also consulted with external health and security
engagements with PETRONAS international businesses are also carried out as a proactive solution to enable discourse and experts to discuss best practices in navigating the pandemic.
sharing on relevant security subject to facilitate optimum security readiness.
• As the risks for the COVID-19 pandemic remained high, the Corporate Command Centre (C3) task force and Pandemic 4. Staff Mental Health and Well-being Programmes
Preparedness and Response Team (PPRT) continued to make critical cross-business decisions to ensure the safety of our Mental health and well-being was another area that came into focus following the onset of the COVID-19 pandemic and
people and continuity of business operations. Directives, guidelines, daily updates and awareness materials are issued via the various movement restriction orders implemented throughout 2020/2021.
COVID-19 One-Stop Centre. Efforts undertaken in curbing transmission risk within the Group included implementing
operational green bubbles for key plants and operations, COVID-19 immunisation programmes to expedite vaccination and Group HSE and Group HRM organised various programmes, in collaboration with businesses and representatives from
support the nation’s effort towards achieving herd immunity, and strong collaborations with key stakeholders on COVID-19 corporate functions, to address mental health concerns among our employees throughout the organisation as well as
management. implement proactive measures to improve their mental well-being. Among the programmes established and conducted
were the Employee Assistance Programme 2.0 (myFriends), i-C4RE, and Leaders Reach Out sessions, alongside publications
• Given the importance of mental health, a series of initiatives and programmes were conducted to address psychosocial risk
on mental resilience. These programmes, among others, helped improve employees’ mental health and resilience, thus
factors to improve employees’ mental well-being. These programmes were coordinated and tracked by the Wellness
Committee, with regular reports to the management. reducing the number of cases of mental illness.
 126 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 127

Risks Linked to Creating Value Risks Linked to Creating Value

Geopolitical Risk

Our domestic and global businesses are exposed to a wide range of political, legal and fiscal developments, which Mitigation Strategies Link to:
could affect our operations and financial condition. • The Country Risk Management Framework (CRMF) was established to
Strategic Thrusts:

govern oversight structure, roles and responsibilities, and assessment tools

Impact on Value to ensure country risks are managed systematically across the Group. CRMF
also prescribes pre-entry, in-country and exit management requirements to Material Topics:
• We operate across numerous countries with differing degrees of political, legal and fiscal stability. This exposes us to support decision-making concerning international investments and
a wide range of political developments that could change contractual terms, laws and regulations. managing in-country risk holistically. This is then reported to the respective
• Our global business activities are subjected to regulations and directives of national and host governments concerning country’s Management and Board. Capitals:
limitations on production volumes and exports, pricing and trade policies, environmental protection controls, and • Crisis and business continuity plans were established in each country we Financial Capital: Geopolitical
possible nationalisation of assets, expropriation and cancellation rights. Governments may intervene directly or have a presence in to ensure management and recovery from any incidents issues can lead to disruptions
that lower returns from key
indirectly in our commercial and operational affairs, adversely impacting our business. and/or crises. Plans were regularly tested and exercised to ensure readiness assets.
• The inability to mitigate the internal and external challenges within the domestic and international business landscapes for execution when required. Manufactured and Human
Capitals: Escalated geopolitical
may deteriorate our financial condition and constrain our growth capacity. • The geopolitical landscape and investment concentration in the countries incidents can compromise the
we are in is also regularly reviewed and monitored to ensure it aligns with safety of staff and assets.

the risk appetite established for our international investments. Frequent Social and Relationship
Capitals: Inability to manage
review of our investment portfolio is undertaken to optimise the value key relationships in foreign
generated from the overall portfolio. countries may deteriorate trust
among key stakeholders.

Hydrocarbon Reserves and Resources Risk

We recognise that our oil and gas reserves and resources may decline over time. Our reserves and resources Mitigation Strategies Link to:
depend on exploration success, project maturation, reservoir or field performance, asset acquisition or • Reserves and resources are reviewed annually via the Annual Review of
Strategic Thrusts:
relinquishment and commercial factors. Petroleum Resources (ARPR) process, as per the requirements stipulated in
PETRONAS Reserves and Resources Management System (PRrMS). Assets
are reviewed through in-year and year-end assurance processes, aligned to Material Topics:
Impact on Value
PRrMS. PETRONAS’ international ventures form part of the strategy to
• Ineffective management of reserves and resources can severely threaten the viability of our business operations, cause secure new resources.
financial performance deterioration, and adversely impact our growth ambitions.
• The ongoing efforts to manage production sustainability include the Capitals:
• Oil and gas resources are provided in different scenarios and levels of estimations to capture the range of development of the carbon capture and storage (CCS) technology for the Financial Capital: Inability to
uncertainty. While the reliability of these estimates is done via a rigorous assurance process, the estimations still development of the high carbon dioxide (CO₂) fields. monetise resources can
involve some degree of uncertainty and may differ from the actual levels. The reliability of discovered resource compromise the financial
stability of the Group as it is
estimates depends on the quality and quantity of technical and economic data, and the production performance of the core activity.
the fields, all of which may also be subject to revision due to changes in published rules and guidance. Manufactured and Intellectual
Capitals: Inability to develop
Strategic Progress

new technologies and innovate

will result in low-value assets
that may not perform to the
required standards.
 128 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 129

Risks Linked to Creating Value Risks Linked to Creating Value

Technology Risk

• We also maintain a strong position in mitigating risks on the Intellectual

Deployment of innovative practices and new technology are essential to our long-term competitiveness. However, Link to:
Property (IP) front. We hold over 4,000 IPs ranging from patents and trade
new technology is itself at risk of becoming obsolete. Particularly where technological advancements exceed the Strategic Thrusts:
secrets to copyrights and trademarks across different technology
pace of investment and deployment.
segmentations, including Bio-Chemical and Advanced Materials. A robust IP
Besides that, if we inadvertently develop technology that has unfavourable effects on safety and the environment, Policy has been developed at an enterprise level to protect our innovations.
Material Topics:
this could impact our financial condition and reputation. It also provides systematic structure, procedures and guidelines to manage
our technology IPs effectively. IP Guidelines are also included as part of the
The acceleration of digital efforts across the organisation has been intensified to ensure Information Technology (IT) key processes in the PTMS.
and Cyber Security resiliency. Our inability to do so may impact the safety of our operations, people, environment, • We have established a strict recruitment policy for our research and Capitals:
data and sensitive information. It may also lead to legal and regulatory breaches as well as reputational damage. development arm, hiring best-in-class experts to help develop and deploy Financial Capital: Inability to
innovate and adopt best
technology and continuously upskill its current crop of researchers. Group practices can put the Group at
Digital is responsible for shaping and driving a unified digital vision and a competitive disadvantage and
Impact on Value reduce projected returns.
strategy Groupwide, as well as accelerating concerted efforts to drive digital
Manufactured and Intellectual
transformation. This is done via a strong pipeline of technical talents
• We remain dedicated to creating and delivering the best solutions to support the growing requirements of analytics, Capitals: Inability to innovate
nurtured from the implementation of Digital Skill Group and Digital can leave current physical and
where trusted data is liberated for valuable insights. Implementing new technologies comes with an inherent set of intellectual assets obsolete, and
Academy, including continuous Upskilling and Reskilling programmes in
risks covering adoption, legal and regulatory compliance, cyber security exposure and in-house capabilities. lack of cyber defence leaves
Agile, DevOps, Cloud, Software Engineering, Data, and Cyber Security. assets vulnerable to attacks.
• Investments in new technology also come with the risks of identified technology being rendered obsolete by newer
• Group Digital is also accountable for upholding Digital and Information and
offerings.
Communications Technology (ICT) governance across the Group in Cyber
• While we strive to deliver excellence in business operations, there could still be an adverse material impact on the Security, Enterprise Architecture and Enterprise Data. We are guided by the
delivery of our strategy and our licence to operate, resulting from ineffective development and deployment of PETRONAS ICT Principles and PETRONAS Records Management Principles,
technology and innovation. Inability to develop the right technologies and products in a timely and cost-effective supported by the ICT Framework, Standards and Guidelines, which set out
manner, or the development of technologies and products that adversely impact the environment or safety of the the purpose, commitment and governance of ICT and Records Management
people, could damage our financial performance and reputation. for the Group. Any incidents involving ICT and cyber-attacks are monitored
• Rising cyber security threats could lead to major business disruptions globally. A breach or failure of our digital and alerted regularly, aligned to the risk appetite established for ICT and
infrastructure from cyber-attacks could result in the loss or misuse of data or sensitive information, injury to people, cyber security.
business disruptions, and cause harm to the environment or our assets. It could also lead to legal or regulatory • Group Digital established an IT Disaster Recovery Plan for identified critical
breaches and legal liability. business applications and Cyber Security Incident Response Procedure for
cyber incident recovery strategies, covering all business units. The Business
Continuity Plan (BCP) prescribes an overarching strategic response and
Mitigation Strategies recovery plan to oversee and steer prolonged ICT and cyber security crises
that significantly impact business operations. Scheduled drills and exercises
• To strengthen competitive advantage, we drive dynamic in-house research and innovation solutions. We have the
are conducted periodically to ensure readiness in the event of an IT and
PETRONAS Technology Management System (PTMS), which is used to mitigate and manage risks. This ensures the
cyber security disaster.
development of technology solutions that meet business needs and are also aligned with the current challenges and
• The Enterprise Cyber Security Governance Framework (ECSGF) was
agenda. It curates the value chain and focuses on the technology journey, beginning from ideation, development,
established to provide a single consolidated view of the frameworks,
management, deployment, and optimisation of technology programmes to the commercialisation aspects of each
standards and guidelines required to govern and manage cyber security
technology.
across PETRONAS. It is aligned to leading industry standards and best
practices, namely the National Institute of Standards and Technology (NIST),
ISO 37001, ISA/IEC 62443, Personal Data Protection Act (PDPA), General
Strategic Progress

Data Protection Regulation (GDPR) and Payment Card Industry Data

Security Standard (PCI DSS).
 130 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 131

Risks Linked to Creating Value Risks Linked to Creating Value

Execution Risk

• Group Project Delivery (GPD) provides oversight on all capital, technical

Our business, financial performance, and results of operations depend on the successful delivery of complex, Link to:
deployment and plant change projects, plus performs its role as Asset
long-term, capital-intensive projects and asset portfolio optimisation. Insufficient insurance coverage could have an Strategic Thrusts:
Owner Representative, where we are the major shareholder. Throughout
adverse material impact on financial performance.
execution, project performance, cost and scope are monitored regularly.
Emerging risks and early warning signals are tracked and mitigated
Material Topics:
Impact on Value accordingly to protect the overall project value.
• Our overall business and financial performance within the Upstream, Downstream, Gas + New Energy, Corporate and • The risk management of our plant and facilities are governed by PETRONAS
other divisions are highly dependent on the successful execution of projects. The complex nature of oil and gas Asset Management System (P-AMS), PETRONAS Technical Standard (PTS),
PETRONAS Technical Guideline (PTG), PETRONAS Technical Authority Capitals:
projects relies on the high degree of technology applied, technical capabilities of our talent, capacity to undertake the
Standard, and Plant and Facility Risk Management (PFRM) guidelines. P-AMS Financial Capital: Inability to
required capital investments and market conditions at the point of the investment decision. execute growth strategies will affect
provides a comprehensive overview of managing physical assets to achieve the Group’s long-term financial
the required safety, utilisation, availability, maintainability, integrity, and cost position.
performance of the Group’s plants and facilities, over the design, operation Intellectual Capital: Inability to
Mitigation Strategies properly execute targets may lead
and maintenance asset life cycle. It is supported by governing documents
to obsolete intellectual property
• The progress achieved for key projects is reviewed and monitored regularly, aligned to the risk appetite established that prescribe the specific system and work processes. due to a lack of innovation.
for project delivery. • Meanwhile, PFRM prescribes the principles and structured processes for
• Project risk management is implemented following the PETRONAS Project Management System (PPMS) to reduce the managing operational risks following the PETRONAS Resiliency Model. It
risk of unexpected technical and/or commercial factors significantly affecting the project’s viability. The PPMS Phase guides plants and facilities to systematically identify, assess, control, monitor
Gated Process aims to retain and maximise project value across a project’s life cycle, from identifying business and review operational risks to reduce the likelihood and/or impact of
opportunities until the operationalisation of the project. This is done to bring a measure of rational processes to identified risks.
decision-making associated with the transformation of business opportunities into operational assets. • Capability development programmes are conducted to equip personnel with
the technical knowledge required. Collaborative efforts with peers/partners
within the oil and gas industry facilitated the transfer of technical
knowledge.

Human Capital Risk

• We intensified our upskilling and reskilling efforts to ensure our talents are
Our people are PETRONAS’ greatest asset in delivering our strategies and sustaining our business. As such, it is Link to:
equipped to win in the marketplace. We equipped senior leaders to lead
crucial to attract and retain the best talents with the right capability, mindset and behaviour to achieve our Strategic Thrusts:
and navigate the business and the workforce towards achieving
aspirations.
organisational goals anchored on PETRONAS Cultural Beliefs and Shared
Values through several key programmes. We also continued to build a
Material Topics:
Impact on Value pipeline of leaders by nurturing leadership at all levels to ensure sustainable
bench strength for succession. In 2021, we focused heavily on creating a
• Our skilled talents are an important asset to the company and crucial for the achievement and delivery of our
pervasive innovation culture at all levels, from Board members right down
business objectives, strategies and performance. Talent acquisition and retention are key to our overall human capital
to the masses to bring to life PETRONAS Cultural Beliefs (specifically Capitals:
strategy. We must ensure our talent pool is equipped with the right skill sets and competencies to ensure
Innovate Now, Customer Focused, Be Enterprising) through programmes Human and Social and
performance delivery. Relationship Capitals: Inability to
like Innovation Masterclass (IM) and Agile Awareness, to immerse employees position PETRONAS as the
• The inability to attract and retain the right skilled talents will adversely impact our talent pipeline and ability to remain
in the innovation and agile methodology designed to drive new innovative desired workplace will result in
competitive in the market. This, in turn, may affect the delivery of our strategies and objectives.
Strategic Progress

reputational damage, loss of

ideas towards achieving business objectives.
stakeholder trust and inability to
• We continuously strengthen our efforts to create and sustain the right attract and retain top talent.
environment for our people to thrive, through our PETRONAS Cultural Intellectual and Manufacturing
Mitigation Strategies Capitals: Inability to recruit, train
Beliefs anchored on our Shared Values and fostering Diversity and Inclusion. and match talents to fit business
• Several efforts have been established to ensure we get the right, capable talent at the right place, at pace. needs will result in poorly
executed strategies, leading to
• Efforts are made to enhance our Employee Value Proposition to attract and retain the best talents to meet the
lower quality intellectual and
changing needs of our traditional and non-traditional business activities. We have enhanced our Performance manufacturing capital.
Management in linking to our business targets with a focus on performance and development including coaching to
ensure talents achieve their full potential. Our on-going HR transformation aims to redefine our talent experience
towards an empowered, agile, and enabled workforce through people, process and platform to enable better talent
decision making through analytics and artificial intelligence.
 132 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 133

Strategic Performance Review Strategic Performance Review

Our growth aspirations follow a thematic strategic approach that enables us to operate safely, reliably and THEME 2: Growth – Seizing New Opportunities
cost effectively, seize growth opportunities, and create positive impacts that benefit all stakeholders. In 2018, we introduced our 3PGS to provide a sharper guard rail for all ongoing efforts to pursue non-traditional growth
Throughout the year, we continue to make significant progress in each of these three themes, thus as we reshape our portfolio to future-proof the organisation. Given the changing industry landscape, this growth strategy
accelerating our growth momentum towards becoming a progressive global energy and solutions partner that was conceptualised alongside the accelerated energy transition brought on by the pandemic.
meets the energy demands of current and future generations.

Sub-theme Strategic Focus Areas

Operational
Growth Sustainability
Excellence Expanding Core Business • Promote opportunities in Malaysia exploration and production (E&P) sector to
increase investments via greater industrial engagements, opportunity matching and
We implement We execute our We secure new data sharing.
measures that 3PGS that is opportunities by • Secure new E&P acreages and assets as well as maximise value from existing assets
via commercial excellence.
01 strengthen our
operations and core 02 designed to achieve
sustainable growth 03 driving ESG practices
that support the • Create new monetisation route for East Malaysia gas resources.
• Pursue new supply nodes for LNG.
business, thus as we reshape our energy transition,
establishing a strong portfolio to future- socio-economic • Extend value chain into higher margin chemical products.
foundation for value proof the business. progress and strong • Achieve full Euro 5 compliance in Malaysia.
creation and governance.
growth. Stepping Out into • Pursue growth in non-traditional businesses to capture opportunities in the energy
Non-Traditional Business transition space:
– Specialty chemicals.
– Renewable energy and storage.
– Hydrogen.
– Green mobility.
– Carbon capture and storage.
THEME 1: Operational Excellence – Strong Foundation for Growth
– Non-fuel retail.
During the year, we were steadfast in operational excellence to maximise value creation, while prioritising safety aspects.
Fortifying Future • Fortify relationship with key stakeholders both within and beyond the oil and gas
Position with industry, technology partners and academic institutions to pave the way for new
Sub-theme Strategic Focus Areas
Stakeholders opportunities.

Health, Safety and • Sustain a health and safety awareness culture across all businesses and operations, Refer to the section on ‘Engaging with Stakeholders’ for more information.

Environment (HSE) including consumer touch points.

• Minimise impact of the COVID-19 pandemic and natural disasters on the
communities in areas where we operate.
• Leverage new technologies in high-risk environments to minimise HSE risk and
environmental footprint.
• Embark on initiatives that focus on managing our employees’ mental health and
overall well-being.

Reliability and Value • Ensure safe, reliable, and cost-effective operations across all operating assets and
Strategic Progress

Creation units.
• Implement agile measures to preserve the value and optimise production.
• Leverage technology, digitalisation and intelligent facilities to reduce costs. We also
increased productivity and efficiency to drive informed decision-making.
 134 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 135

Strategic Performance Review Strategic Performance Review

THEME 3: Sustainability – Progress in a Responsible Manner

Sustainability is deeply rooted in our Statement of Purpose, as “a progressive energy and solutions partner enriching lives
for a sustainable future”. As a purpose-driven organisation, sustainability considerations contribute directly to what we
do as a business, how we operate and how we engage with employees, customers, suppliers, service providers, local 2022 Strategy Outlook
communities, regulators, investors and other stakeholders. In 2022, PETRONAS will continue to focus on
the strategic themes in 2021 with heightened
Sub-theme Strategic Focus Areas intensity specifically in pursuing the 3PGS, in
the following areas:
• High-grade portfolio with higher value
Path to NZCE 2050 • Develop a credible approach to net zero carbon emissions.
return and lower carbon intensity.
• Deliver interim commitment to GHG reduction.
• Collaborate with government agencies on national policies and regional green • Establish an independent entity to deliver
growth to build resilience and prepare the organisation for a sustainable future. cleaner energy solutions in the spaces of
Hydrogen, Renewable Energy and Green
Lower Carbon Solutions • Expand our portfolio offerings to include lower carbon solutions: Mobility.
– Implement CCS in Upstream producing assets
• Pursue growth in specialty chemicals
– Carbon Neutral LNG
which pivots towards technology driven
– LNG bunkering
customer-centric businesses.
– Sustainable aviation fuel
– Biodiesel. • Undertake opportunity framing in new
business areas such as Carbon Capture and
Diversity and Inclusion • Nurture an inclusive workplace that values equal opportunities, diversity, talent, and Storage, Circular Economy and Advanced
(D&I) overall employee well-being, and operate with a strong foundation of merit and Materials.
equality. Our remuneration structure is anchored on a pay-for-job principle,
and at the same time accelerate the
irrespective of gender, age, nationality, ethnicity, or religion.
momentum towards decarbonisation.

Refer to the section on ‘Employee Welfare and Fair Remunerations’ for more information.

Corporate Social • Contribute and drive CSR programmes to deliver sustainable impact, improve the
Responsibility (CSR) quality of life and socio-economic outcomes for communities in regions where we
operate based on three key pillars – Education, Community Well-being and
Development, and Environment.

Governance • Align business operations and decision with PETRONAS’ overall purpose, objectives
and interests through effective governance document management and ensure good
governance across PETRONAS Group through PETRONAS Group Management
Framework (PGMF).
• Establish various governance documents such as policies, standards, guidelines,
frameworks and procedures which are the foundation for carrying out internal
controls such as PETRONAS Code of Conduct and Business Ethics, PETRONAS
Anti-Bribery and Corruption Manual, Whistleblowing Policy, others.
• Deliver enterprise or customised training and awareness programmes for its
employees and Directors to ensure firm understanding of internal controls through
Strategic Progress

various digital and communication platforms.

• Manage third-party risks through PETRONAS Third Party Risk Management (TPRM), a
robust due diligence process to safeguard PETRONAS Group from any exposure in
the event of misconduct by third parties including partners, contractors, vendors,
suppliers, distributors, agents.
 136 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 137

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“The year 2021 saw the industry stabilise and start to recover from the
shocks of 2020, albeit in a shroud of uncertainty as the world continued
to grapple with multiple waves of COVID-19. Valuable lessons were learnt
about our vulnerability as a business, driving us to step up our efforts to
ensure that we continue to be resilient in providing the world with the
energy security it needs. This resilience begins with ensuring the health,
safety and security of our employees and those they work with; we are
proud to maintain our solid HSE record, true to our goal that “everyone
goes home safely”, every time.
Recognising that we have a large part to play supporting PETRONAS’ net
zero carbon emissions by 2050 (NZCE 2050) aspiration, while balancing
the obligation to deliver energy to the world, the Upstream business has
stepped up its efforts in lowering our carbon footprint, with several
projects underway to achieve zero continuous flaring and venting, an
increased level of digitalisation towards energy-efficient operations, and a
marked level of collaboration with leading industry players to advance
Adif Zulkifli carbon capture and storage (CCS) technologies and solutions.
Executive Vice President and
We believe that Upstream will continue to be PETRONAS’ main cash
Chief Executive Officer, generator that will provide crucial support for the Group’s sustainability
Upstream aspirations. As the custodian of Malaysia’s hydrocarbon resources, we
continue to increase Malaysia’s resource base through efforts such as the
Malaysia Bid Round (MBR), bringing in responsible investors who share the
same pragmatic approach in providing the world with affordable energy via
a safe, resilient, low cost and lower carbon exploration and production.”

10
Achieved first hydrocarbon for Achieved Final Investment

21 projects
Made Decision (FID) for
exploration
discoveries 22 projects
GHG emissions reduction Total daily production Total Contingent

3.83
average (boe) per day Resources (2C)

tCO₂e
million

(8 projects completed)
2,275 15.34
Bboe

Upstream
Total Petroleum 3-year average Overall Reserves Life More than

10,000
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Reserves (2P) (2P + 2C) Resources Index (RLI)

9.11 9.8
Life Index (ORLI)

Bboe 39.7 years

years employees
 138 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 139

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What We Do
Key Priorities Results
Our Upstream business is involved in the exploration and development of hydrocarbon resources and the operations of
Technology-Driven Operational
oil and gas production assets, with a growing international presence in over 20 locations across the globe. In Malaysia,
Excellence
through Malaysia Petroleum Management (MPM), we regulate and manage the country’s petroleum resources. We
spearhead the growth and development of the nation’s oil and gas industry. • Leveraged technology, digitalisation, • Gained incremental production of 1,320 barrels of oil equivalent per
and intelligent facilities to reduce day (boe/d) from Brownfields via Digital Fields solutions that unlock
The Upstream business continues to deliver results operationally through strategic and decisive measures. We adopted costs and increase productivity and production enhancement opportunities leveraging on artificial
digitalisation and technology in the way we work to deliver business excellence. We reduced costs and maintained efficiency to drive informed intelligence and machine learning technologies.
liquidity, strengthening our portfolio by encouraging more value-driven exploration and development of discovered decision-making. • Achieved cost avoidance of RM17.5 million in production maintenance
resources to promote a vibrant oil and gas landscape. • Harnessed data to gain integrated, and drilling operations through execution of predictive maintenance
end-to-end visibility across key and machine learning technologies across Malaysia Assets namely
markets and data centres for better Baronia, Baram, D35 and Angsi.
decision making on new • Enabled 30 per cent process efficiency improvement at Dulang, Belud,
discoveries and new block PC4, Baronia, Tukau Timur and PM Gas fields via a cloud-based
Key Priorities and Results acquisitions. Software as a Service (SaaS) solution with LiveFDP that allows secured
data accessibility to users.
Capitals Deployed: • Implemented non-intrusive inspection of TharJath export pipeline using
Key Priorities Results Magnetic Tomography Method (MTM) technology for Sudd Petroleum
Operating Company (SPOC) which lowered the risk of pipeline failure
Sustainable Supply
and shorten the duration of inspection campaign compared to
• Ensured a sustainable supply of • Recorded a total daily production average of 2,275 barrels of oil
conventional method. This resulted in a safe production resumption, six
energy to stakeholders. equivalent (boe) per day.
• Achieved first hydrocarbon for 21 projects – 14 in Malaysia weeks earlier than scheduled.
(12  Brownfield, 2 Greenfield) and 7 abroad – 2 Greenfields • Replication of Physical Asset Management (PAM) digital solutions such
Capitals Deployed: (in  Turkmenistan and Brazil), 5 Brownfields (2 in South Sudan, 1 in Chad, as PROTEAN (real time alerts), VINCI (digital inspection reporting), SICS
1 in Myanmar and 1 in Indonesia). (digital risk ranking and prioritisation) in Turkmenistan and Iraq
• Achieved Final Investment Decision (FID) for 22 projects; in Malaysia operations enabled faster, accurate and transparent decision making,
(18), Indonesia (2), Brazil (1) and Turkmenistan (1). which improves overall process cycle efficiency.
• A total of 10 exploration discoveries were made in 2021 of which eight
discoveries contributed to our resource addition namely in Malaysia,
Indonesia and Brunei.
• Signed seven Production Sharing Contracts (PSCs) in Malaysia, attracting
four new investors.
• Awarded six of the 13 offshore exploration blocks offered in the
Malaysia Bid Round (MBR) 2021. MBR is an annual Malaysia licensing
round hosted by MPM which offers investors diverse upstream
opportunities.

Portfolio Expansion
• Grew business portfolio as part of • Expanded footprint in Brazil with the acquisition of the Sépia field,
our global strategy. located in the Santos Basin. This marks PETRONAS Petróleo Brasil
Ltda’s entry into the prolific basin, strengthening its ventures in the
Capitals Deployed: country and presence in the Americas.
• Secured a 20-year extension for the Jabung Production Sharing
Contract. With the extension, PETRONAS Carigali (Jabung) Ltd. will
continue to add value to Indonesia’s energy industry and grow its
Business Review

business portfolio in the region.

• Acquired 10 per cent participating interest from JAPEX Montney Ltd in
the North Montney Joint Venture (NMJV), bringing PETRONAS Energy
Canada Ltd’s interest to 72 per cent, up from 62 per cent.
• Signed the Block 29 Production Sharing Contract in Angola, which
expands our presence in West Africa.
• Signed a Multi-Well Participation Agreement with Chevron USA Inc for
participation in exploration acreages in the US Gulf of Mexico in line
with PETRONAS’ continuous efforts to explore opportunities in the
Americas.
 140 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 141

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Key Priorities and Results Value Created for Stakeholders

Key Priorities Results

Stakeholder Expectations Value Created
Health and Safety
• Robust management of COVID-19 • Introduced the My Personnel e-Tracker (MyPeT) app, designed for more Malaysia • Spearhead the growth and development of Malaysia’s exploration and
• Maximise long-term production (E&P) industry towards maximising the value of the country’s
cases among employees and than 10,000 oil and gas personnel in Malaysia. The app allows for value of the hydrocarbon resources whilst ensuring sustainable energy security.
contractors to ensure business real-time check-in and tracking of COVID-19 vaccination and health Government
nation’s oil and gas • Promote Malaysia as an investment destination to grow energy
continuity at our areas of status from embarkation to disembarkation points at various offshore resources. portfolio with the right infrastructure and attractive opportunities via
operations. locations in the country. the annual Malaysia Bid Round.
International host • Contribution to host countries through our commitment to deliver
• Fostered Generative HSE Culture • Recorded the best HSE performance in terms of major HSE incidents in authorities
at all our areas of operations. five years. safe energy supply as well as socio-economic development by
• Development of creating job opportunities and upskilling of the workforce via
• PETRONAS Carigali Sdn Bhd received 15 Gold Merit Awards and six host nation’s oil training programmes.
Capitals Deployed: Gold Class 1 Awards at the 39th Malaysian Society for Occupational and gas industry.
Safety & Health Award ceremony for its HSE performance.
• Healthy return on • Facilitate and champion industry-wide collaboration with the
investments. industry players including the government bodies to ensure business
Sustainability continuity post pandemic recovery and production sustained for
Petroleum
• Operational Excellence and • Completed eight GHG emissions reduction projects estimated to reduce Arrangement year 2021 in a prudent and safe manner for people, facilities and
Collaboration to lower overall GHG emissions by 3.83 million tonnes of carbon dioxide equivalent Contractors the environment.
(tCO₂e) annually from Upstream operations in Malaysia with estimated • Significant enhancements in the Malaysia Bid Round 2021, both in
carbon footprint.
value creation of RM161 million per annum. This includes the integrated fiscal and non-fiscal of the PSC terms, designed to match the risk
and rewards of the investments with the type of assets available.
Capitals Deployed: Bokor-Betty project, located off the coast of Sarawak which achieved
zero continuous flaring of hydrocarbon while monetising the recovered • Monetisation of oil • Leveraging on our fully integrated value chain to meet with
flared and vented gases. and gas discoveries. customers’ demands and expectations.
• Signed three agreements with industry partners to explore carbon Partners • Adopt innovative technical and commercial solutions to enable
capture and storage technologies as well as carbon dioxide (CO₂) monetisation of resources and to prolong the economic life of fields.
• Implement measures to lower cost and promote efficiency in
storage solutions to decarbonise Malaysia’s upstream sector and provide
operations.
CO₂ storage solutions for the region. The partners are ExxonMobil • Proven track record of prudent financial management.
Exploration and Production Malaysia Inc, Sarawak Shell Berhad and • Implementation of HSE measures and standards at our operations to
POSCO International Corporation and POSCO Engineering & ensure safety of personnel.
Construction Co Ltd.
• Corporate Social • We have invested in programmes designed to promote and support
Responsibility health, environment, education and social welfare initiatives in our
Communities initiatives to areas of operations.
support community • Examples:
Performance Highlights and Achievements
development. – COVID-19 contribution in both our domestic and international
operations amounted to RM1.2 million.
Total Daily production Total Petroleum Total Contingent 3-year average Overall
– PETRONAS Carigali Sdn Bhd (PCSB) planted 500 saplings in
average (boe) per day Reserves (2P) (Bboe) Resources (2C) (Bboe) (2P + 2C) Resources Life Kerteh, Terengganu and 300 saplings in Miri, Sarawak, as part of
Index (ORLI) (years) PETRONAS Sentuhan Alam mangrove rehabilitation programme.
– PCSB also contributed fire extinguishers, safety helmets, life
2,406 15.34 39.7 jackets, floating rope and safety boats to the villagers in Sabah as
part of the Community Emergency Response Team programme
2,275 15.27 38.7 for safety awareness.
9.24 38.2
9.11 – PETRONAS Carigali Brunei Ltd sponsored and organised the
2,209 PETRONAS School of Life Programme aimed at educating the
15.08
8.55 youth in Brunei on essential life skills beyond the classroom.
Business Review

– As part of PETRONAS Carigali Iraq Holding B.V. (PCIHBV)’s

commitment to the social well-being of the Republic of Iraq,
PCIHBV together with its partner refurbished two schools at the
Garraf Contract Area.
– PETRONAS Carigali Nile Ltd completed Water for Life project for
Nyakuron West, Juba, South Sudan. The project aims to provide
clean water to the community in the area.
2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021 • Opportunities to • Upstream continuously upskills all of its employees with the right
upskill themselves. training to improve their capabilities according to their skill
Note: groups (Technical and Business).
1. Reserves and Contingent Resources volumes based on a new gas to oil-equivalent conversion factor of 5,650 scf = 1 boe. The new conversion factor Employees
results in an approximately 5 per cent increase in Reserves and Contingent Resources volumes across all levels of uncertainty.
 142 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 143

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Risks and Opportunities Moving Forward

Risks Opportunities Actions Taken Results Throughout 2021, the upstream business experienced • Carbon management
volatility due to the pandemic and geopolitical tensions In delivering the aspiration towards a low carbon
• Energy transition • Leveraged • Focused on cost • Paved the way for strict that disrupted output from key producers. In 2022, the Upstream business, the establishment of a centralised
coupled with digitalisation and optimisation for both CAPEX liquidity management and adoption of cleaner alternatives is expected to accelerate, Carbon Management Division (CMD) shall drive carbon
COVID-19 pandemic. technological and OPEX to maintain our financial disciplines which given growing calls to decarbonise the sector. capture and storage and physical decarbonisation at
innovation. resilience and competitivess contributed to cost pace. This is in alignment with PETRONAS’ NZCE 2050
• Collaborated with through technical, containment and successful Production is expected to increase as governments aspiration to maximise value while executing sustainable
industry partners commercial and operational cash repatriations in 2021. worldwide focus on increasing the security of energy production through physical decarbonisation of
and solution excellence. • Acquisition of new assets supply. Upstream activities, monetising resources from high
providers. • Pursued strategic globally in strengthening carbon dioxide fields and delivering carbon dioxide
assessment on investment PETRONAS’ presence in Brazil, Upstream will continue to execute its plans anchored on storage facilities. Additionally, CMD is empowered to
and acquisition globally to US Gulf of Mexico, Angola and making sure our business is safe, resilient, low cost and deliver carbon capture and storage business to generate
align with our growth Indonesia. low carbon. new revenue for Upstream and PETRONAS.
agenda. • Completed eight GHG
• Carried out phased emissions reduction projects, Moving forward into 2022, our key focus areas include: • Technology and digitalisation
initiatives to reduce which is estimated to reduce There will be continued focus and investments being
• Malaysia
emissions in keeping with 3.83 million tCO₂e of GHG placed on key technologies to further compress cost
Our plan to revitalise Malaysia’s E&P landscape remains
our NZCE 2050 aspiration. emissions from offshore while maintaining asset integrity and reliability. This
imperative in ensuring continued growth and to make
operations. includes the development and adoption of robotic
Malaysia a home for dynamic and robust investors.
• Improved production output, inspection tools, online sensors, and advanced materials
Focused efforts such as the Malaysia Bid Rounds would
increased operational efficiency as part of the new way of working in Upstream.
offer investors attractive exploration blocks and
and cost savings through
discovered fields, with innovative fiscal terms. In addition
digitalisation and technology The development of new competitive advantages is
to these efforts, Late Life Assets and Small Field Assets
such as machine learning, being supported through rigorous R&D efforts and
are being effectively managed through techno-
artificial intelligence, Open digitisation of the Upstream ecosystem to help address
commercial solutions with simplified processes and
Subsurface Data Universe the pain points and achieve higher operational
governance.
(OSDU), and the cloud-based efficiency. We are determined to create an agile, secure
Software as a Service (SaaS) and trusted digital ecosystem that is fundamental to the
• International
solution. new way of working in a data-driven organisation.
– Canada
• Three agreements were signed
PETRONAS has a unique integrated position in
to collaborate on CCS
Canada that allows maximising our value from
technologies as well as CO₂
Upstream production to LNG markets. Moving
storage solutions to
forward, PETRONAS will continue focusing on
decarbonise the country’s
monetising its competitive resources while leveraging
upstream sector and provide
on the growing gas demand markets in North
CO₂ storage solutions for the
America and globally.
region, namely Memorandum
of Understanding (MoU) with
– Mexico and Brazil
POSCO International
We will pursue and realise material growth in Mexico
Corporation and POSCO
and Brazil by focusing on exploration activities with a
Engineering & Construction Co
clear path to monetisation to build a value driven
Business Review

Ltd, MoU with ExxonMobil

portfolio. Key efforts are being put in place to realise
Exploration and Production
planned resource addition while we continue to be a
Malaysia Inc.
safe operator and partner, leveraging on our synergy
with partners and host authorities.
 144 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 145

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“To meet the growing demand as economies reopened in 2021,

Gas + New Energy (G+NE) adapted to the changing landscape to
deliver flexible and tailored solutions for our customers. This
resulted in G+NE recording a solid financial and operational
performance in 2021, backed by favourable Liquefied Natural Gas
(LNG) and sales prices.

We achieved this by fulfilling our role as a one-stop centre for

cleaner energy solutions, providing customers with a reliable supply
of LNG, renewables, and hydrogen. Additionally, we are accelerating
digitalisation to provide optimised and efficient solutions across our
integrated gas value chain. G+NE plays a pivotal role in delivering
low-to-zero carbon energy that enables sustainable business
Adnan Zainol Abidin
growth for our customers while progressing with the
Executive Vice President and
decarbonisation of our operations.”
Chief Executive Officer,
Gas + New Energy

Gross LNG sales of Close to Overall Overall Equipment

32.7 1 GW
Effectiveness (OEE) of

MMT
of solar capacity in
operation and under
98.1%
for onshore gas and
development offshore floating LNG plants

960
Delivered

5 Carbon Completed Virtual Pipeline

System and LNG bunkering deliveries across
Malaysia and

Neutral
LNG cargoes to China and Japan 2,026

Gas + New
LNG in ISO tanks to China

6.69 MTPA 697 MMscfd

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Energy
of LNG sales concluded of natural gas deals secured
 146 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 147

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What We Do Key Priorities and Results

G+NE’s portfolio underscores our commitment as a

cleaner energy solutions partner. It reflects our support for Key Priorities Results
the global energy transition that has accelerated the shift Operational Excellence
from fossil-based to lower carbon-based sources. As part • Achieved Gross LNG sales of 32.7 MMT.
of the Group’s aspirations to meet the growing demand • Provide reliable gas supply
through top quartile operational • Achieved overall OEE of 98.1 per cent for onshore gas and offshore
for cleaner energy and realise a low carbon future, G+NE
performance. floating LNG plants in Malaysia.
provides a wide range of low-to-zero carbon-based
energy sources. In this regard, G+NE powers businesses • Strengthen position as a one-stop • Gas processing business achieved OEE of 99.7 per cent for ethane,
while ensuring a sustainable future for customers and centre for cleaner energy propane and butane respectively.
society at large by growing our position in the natural solutions. • Emerged as the first global energy company to produce LNG from two
gas, renewables, and hydrogen businesses. This allows floating facilities – first LNG production and cargo delivery by PFLNG
PETRONAS to be a partner in enabling our customers to Dua.
undertake their energy transition plan. Capitals Deployed: • PETRONAS’ first FLNG, PFLNG Satu, produced its 50th LNG cargo.

With the increased momentum of the energy transition,

G+NE aims to provide long-term value creation and
profitable growth for PETRONAS and its partners by
focusing on sustainability, customer-centricity, operational
and commercial excellence, supported by the right talent,
culture and digital innovations. Customer-Centricity
• Provide innovative and customised • Concluded five carbon-neutral LNG deals with China’s Shenergy Group
With business presence across 12 countries and over 4,000 solutions to meet customers’ Company Limited (Shenergy) and Japan’s Hiroshima Gas and Shikoku
employees globally, G+NE serves as PETRONAS’ one-stop Electric.
energy demand.
centre for cleaner energy solutions and is a crucial enabler • Completed 960 Virtual Pipeline System (VPS) and LNG bunkering
• Collaborate with industry players
in realising PETRONAS’ net zero carbon emissions by 2050 deliveries across Malaysia and 2,026 cryogenic-fitted ISO tanks of LNG
(NZCE 2050) aspiration. to explore possibility in co-
creating innovative and customer- to off-grid customers in China and enabled access to clean energy.
centric solutions. • Performed the first LNG bunkering operation via LNG Bunker Vessel,
Our Businesses and Key Focus Areas • Pursue integrated small-scale MV Avenir Advantage, in Port Klang, Selangor. Conducted the first LNG
solutions in Southeast Asia to bunkering operation in Sabah for HL Green, the world’s largest
LNG 180,000-tonne LNG-powered vessel.
enhance accessibility of natural
• Expand and create markets through customer-centric gas to various industries. • Introduced Canada Alberta Energy Company (AECO) Index to offer
solutions. customers a competitive pricing structure.
• Maximise production from existing assets through East Capitals Deployed:
Malaysia gas development.
• Expand footprint by securing new markets for North
America supply portfolio.

Gas and Power

• Maximise position in domestic market.
• Sustain operational excellence.
• Pursue growth in domestic and emerging markets.

Hydrogen
Business Review

• Capture opportunities to generate revenue streams.

• Co-create the market for hydrogen as the future fuel of
choice.

New Energy
• Expand business presence in Malaysia.
• Enter and expand the Asia Pacific portfolio in solar and
wind.
• Enhance our business presence in India by developing
new solutions and securing contracts for energy
storage/hybrid solutions.
 148 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 149

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Key Priorities and Results Performance Highlights and Achievements

Revenue Profit After Tax (PAT) Overall LNG Sales Overall OEE for G+NE
Key Priorities Results
(RM Bil) (RM Bil) (MMT) (%)
Growth Delivery Excellence
15.0 33.1 32.7
• Explore opportunities to increase • Entered into a 10-year deal with CNOOC Gas and Power Trading & 83.3 85.8 30.6 97.1 96.8 98.1
LNG market share. Marketing, a subsidiary of CNOOC, to supply 2.2 MTPA of LNG. 9.8
• Develop new LNG projects. • Concluded a 0.36 MTPA of LNG deal with Mercuria. 62.2
• Expand supply nodes to • Awarded Front End Engineering Design (FEED) contracts for the
strengthen ability to serve market development of nearshore LNG project in Sabah.
demands. • Initiated the following growth projects:
• Strengthen position as the nation’s – 42 km lateral gas pipeline extension project to the new power plant -10.0
leading gas infrastructure and in Pulau Indah, Selangor. 2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021
centralised utility company. – Project to expand Southern Peninsular Gas Utilisation (PGU) delivery
• Strengthen New Energy’s business capacity through the installation of gas compressor station in Kluang,
presence in renewable energy Johor. Value Created for Stakeholders
internationally and domestically. – Executed the Southern PGU debottlenecking exercise to meet higher
• Offer flexible generation and pressure requirements in Segamat, Johor.
delivery solutions to strengthen • Successfully commissioned the following solar projects:
– MMHE in April 2021 with 8.3 MW capacity. Stakeholder Expectations Value Created
our position as an end-to-end
renewable energy solutions – Lotus’s Phase 1 in December 2021 with 10.8 MW capacity. • Reliable, affordable • Delivered more than 12,000 LNG cargoes to customers
provider. – Project Neo (India) in January 2021 with 75 MW capacity. and customer- around the world from PETRONAS LNG Complex (PLC).
• Collaborate with industry players – Project Matahari (India) in July 2021 with 48 MW capacity. Customers centric solutions that • Delivered innovative solutions such as VPS and ISO tanks to
– Expanded our footprint in the Middle East with successful and timely contribute to their off-grid customers in Malaysia and China to enable greater
and government agencies to build
commissioning of the first Commercial and Industrial (C&I) project in green agenda. access to cleaner energy.
nationwide hydrogen supply chain • Offered carbon-neutral LNG as part of cleaner energy
capabilities, capacity and Dubai.
solutions to help customers achieve their sustainability
infrastructure. • Pursued collaboration with the following partners to grow RE industry: aspirations.
• Capture opportunities to emerge – Signed Memorandum of Understanding (MoU) with Institut Teknologi • First in Southeast Asia to offer LNG as a cleaner marine fuel
as a hydrogen producer through Petroleum PETRONAS (INSTEP) in March 2021. via LNG bunkering solution.
critical projects. – Expanded partnership in Asia Pacific via signing of MoU with Abu
• Security and reliability • Continued to expand natural gas delivery network throughout
Dhabi National Oil Company (ADNOC) and Masdar in March 2021.
of gas supply to Peninsular Malaysia.
Capitals Deployed: • Delivered PETRONAS’ first Battery Energy Storage System (BESS) with power the nation. • Ensure safe, reliable and efficient operations across all
Government and
1  MW standalone storage for Amazon (India). • Safety and reliability facilities.
Regulators
• Project Yelo, powered by Amplus, expanded its fleet of electric vehicles of gas and power • Collaborated with government agencies to build Malaysia’s
(EV) for cargo delivery to two more cities, Hyderabad and Pune. plant operations and Hydrogen and RE industry as well as reduce carbon dioxide
Currently, it has 14 hubs across India that provide EVs for clients such impact on the (CO₂) emissions domestically.
as Amazon, Flipkart, and Big Basket. surrounding
communities.
• Embarked on a technical-commercial joint-study of a hydrogen supply
• Promote usage and
chain to explore other hydrogen opportunities via a partnership with provide greater
ENEOS Corporation. access to renewables
• Entered into an MoU with JERA Co., Inc. to collaborate on ammonia to support the
and hydrogen supply chains. country’s
• Participated in the Government’s initiative through collaboration with sustainability agenda.
Business Review

the Economic Planning Unit (EPU) to develop clear targets and policies • Corporate Social • Implemented Rays of Hope, a G+NE Signature CSR project to
for the National Energy Policy and the Natural Gas Roadmap, which Responsibility (CSR) power homes of Orang Asli (indigenous peoples of Malaysia)
aim to provide the optimal balance of energy equity, security and Communities initiatives that will and community centres with clean energy.
sustainability for Malaysia. create positive • Introduced CSR initiatives focusing on education, environment
impact to the and community outreach:
environment and – Back-to-School programmes under PETRONAS Sentuhan
community at large. Ilmu.
– Sayangi Sungai Latoh mangrove planting in Johor under
PETRONAS Sentuhan Alam.
– Outreach programmes to foster good relationship with the
community.
 150 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 151

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Risks and Opportunities Moving Forward

As the world moves towards a low carbon future, natural gas and LNG continue to play an important role within
Risks Opportunities Actions Taken Results
the energy mix, alongside renewable energy. It provides a reliable and flexible lower carbon energy supply, thus
• Energy transition • Collaborate with key • Offered a suite of • Concluded 6.69 MTPA of new LNG complementing renewable energy. As PETRONAS’ one-stop-centre for cleaner energy solutions, G+NE is well-positioned
accelerated by stakeholders and customer-centric sales to customers in Japan, South to meet the changing energy demands by providing a diverse range of cleaner energy solutions.
COVID-19. customers to offerings to meet Korea, China and Indonesia.
• Highly volatile and maintain our customers’ differing • Deployed large-scale LNG ISO Tank Key focus areas for G+NE in 2022:
competitive market. business needs. deliveries to inland China by working • Maximise value via LNG and domestic gas sales • Pursue lower carbon customised solutions
competitiveness and • Focused on cost with our partner, Tiger Clean Energy,
With the expected increase in global demand for LNG G+NE continues to expand in renewable energy spaces,
ensure business optimisation for to enable greater access to inland
and domestic gas, G+NE seeks to maintain market focusing on solar, wind and energy storage.
goals are achieved. CAPEX and OPEX to China.
leadership by leveraging its global LNG portfolio, world- Furthermore, G+NE is also building its Hydrogen
• Leverage digital and maintain our • Achieved Profit After Tax (PAT) of
class operations and customer-centric solutions. G+NE business with the aspiration to make Malaysia an
technology to business’ resilience RM15 billion and maintained high
continues to build its LNG portfolio through LNG important hydrogen energy hub within the region.
enhance business and competitiveness. level of OEE at 98.1 per cent.
Canada and Sabah’s first nearshore LNG facility. For
operations and • Embarked on new • Dual FEED contracts for Sabah
domestic gas, G+NE is engaging various government • Advocate for the benefits of gas and renewable
innovate to meet projects to nearshore LNG were awarded timely
agencies and authorities to secure the approval of energy
customers’ demands. strengthen our and received full support and
Regulatory Period 2 (RP2) tariffs for PGU and In supporting Malaysia’s energy transitions target, we
position as a global commitment from Sabah State
regasification terminals (RGT) to ensure sustainable worked closely with policymakers to create the right
LNG producer and agencies for the project to further
returns for our assets. regulatory environment, backed by a proper fiscal
natural gas supplier mature.
in Peninsular • Development of 42 km gas pipeline regime. Given our long-standing experience in the
• Expand market reach through customised solutions industry, we will continue to support Government
Malaysia. project in Pulau Indah, Selangor.
• Continued to expand • Debottlenecking of Southern gas G+NE seeks to meet growing demand from new initiatives such as Malaysia’s Natural Gas Roadmap, and
our RE business to pipeline in Peninsular Malaysia to customer segments and smaller-scale natural gas the Malaysia Gas Hub Study.
provide greater meet increasing demand. customers. In this regard, G+NE is expanding its VPS,
access to clean • Construction of a new gas LNG bunkering and LNG in ISO tanks solutions to
energy in support of compressor station in Johor. increase accessibility to natural gas. Plans are also in
energy transition. • Expanded utilities contract to supply place to venture into the power generation business in
• Pursued electricity to KANEKA, renewed emerging markets.
collaboration with contact with PETRONAS Chemicals
potential partners to Group Berhad (PCG) and its
offer hydrogen as an subsidiaries for the next 20 years.
alternative form of • Strengthened NE portfolio with the
clean energy. commissioning of four new Amplus
projects.
• Diversified revenue to the Middle
East with the first RE project.
• Delivered PETRONAS’ first Battery
Energy Storage System (BESS) with
1  MW standalone storage for
Amazon (India).
• Secured two new contracts in
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Malaysia and expanded into new

cities in India (Hyderabad and Pune)
via Yelo.
• Initiated four Hydrogen projects in
Malaysia (Kerteh, Terengganu and
Bintulu, Sarawak) which are currently
in FEL studies.
• Signed MoUs with key partners in
Japan (ENEOS and JERA) and
domestically (Sarawak Energy
Berhad).
 152 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 153

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“In 2021, Downstream business continued to be challenged by a

rapidly evolving industry, shaped by the onset of digitalisation,
disruption from new technologies and economic uncertainties.
Against this backdrop, we took decisive and strategic measures to
ensure the resilience of our business, guided by our strategic pillars:
Operational Excellence, Commercial Excellence and Growth
Delivery.

We executed our strategies in an agile manner, improving overall

efficiency to further unlock value from our core business while
innovating sustainable and customer-centric solutions to generate
new revenue streams. We optimised on the interplay between
various technologies to sharpen our competitive advantage, while
closely monitoring changes within the volatile industry. Overall, I
Datuk Sazali Hamzah am grateful for our team’s resilience amid new challenges and their
Executive Vice President and dedication in sharing their unique talents to support the growth of
Chief Executive Officer, the business.”
Downstream

Downstream Overall Equipment Downstream

Effectiveness (OEE) Reliability

93.3% 96.6%

Petrochemical Plant Utilisation (PU) Achieved petroleum product

(Nexant) sales volume of

92.6% 262.4

Downstream
million barrels
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 154 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 155

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What We Do Key Priorities and Results

PETRONAS’ Downstream businesses encompass a diverse

set of activities to enhance the value of our petroleum Key Priorities Results
resources, transforming it into high-quality, value-added Portfolio Expansion
products available in over 90 markets across Asia-Pacific, • Identified and ventured into new • Acquired D-Two Couriers Sdn Bhd in a move to accelerate PDB’s
Central Asia, the Middle East, Africa, Europe and the businesses with high growth strategic expansion into e-commerce delivery service.
Americas. potential.
• Expanded non-fuel business in • Launched Segar@Mesra in collaboration with the Ministry of Domestic
Downstream’s activities include: domestic marketing. Trade and Consumer Affairs, and Ministry of Agriculture and Food
Industries to bring locally farmed fresh produce to Kedai Mesra at
• Refining with a capacity of 700 kilobarrels per day
affordable prices.
(kbpd).
• Strengthened position in • Signed an MoU with Mercedes-Benz Malaysia and EV Connection Sdn
• Marketing and trading of crude oil and petroleum sustainable solutions for greener Bhd to deploy DC Fast electric vehicle (EV) chargers at five PETRONAS
products. mobility and commercial aviation. stations by 1H2022, providing faster EV charging coverage in strategic
locations for long distance travel.
• Manufacturing and marketing of petrochemical products • Achieved milestone with first Malaysia Airlines flight fuelled by
including polymers, fertilisers, methanol, other specialty sustainable aviation fuel (SAF), supplied by PDB in collaboration with
chemicals and derivative products. PETCO Trading (UK) Ltd, Malaysia Aviation Group and Neste.
• Supplying marine solutions including LNG bunkering, • Established the largest and most accessible network for Euro 5
Leveraging digital technology, advanced infrastructure and
sulphur fuel oils, marine gas oil and lubricants. compliant diesels in Malaysia with three biodiesel blends of PETRONAS
robust strategies, the Downstream business remains Dynamic Diesel Euro 5 with Pro-Drive to provide drivers access to
committed to continue providing innovative, sustainable cleaner fuel options with a smaller carbon footprint.
and customer-centric products and services. We will • Continued growth in specialty • Commenced construction on new oxyalkylates plant at the Kerteh
continue to enhance our operational and commercial chemicals segment. Integrated Petrochemical Complex, Terengganu via PETRONAS Chemicals
excellence while simultaneously diversifying and expanding Group Berhad (PCG)’s PCC Oxyalkylates Sdn Bhd to produce ethoxylates
our portfolio towards becoming an agile business and and polyether polyols, with commissioning scheduled for 2023.
preferred solutions partner worldwide. • Commenced commercial operations at BRB International’s 8,000
tonnes per year silicone blending facility in Gebeng, Pahang, to
manufacture cosmetic grade silicone gum blend, as well as technical
and food grade silicone emulsion and silicone antifoam for the Asia-
Key Priorities and Results Pacific and Middle East-Africa regions.
• Explored opportunities in bio- • Invested in the world’s first direct conversion of high-purity Bio-
Key Priorities Results based chemicals to increase the Monoethylene Glycols (Bio-MEG), a by-product of palm biomass.
revenue stream.
Operational Excellence
• Captured bunkering solutions • Conducted PETRONAS Marine’s first LNG bunkering in Port Klang,
• Sustained safe, stable, and • Achieved an Overall Equipment Effectiveness (OEE) rate of 93.3 per market and positioned Malaysia as Selangor and Port of Sandakan, Sabah to provide cleaner source of fuel
efficient operations at all cent for Downstream business. an LNG bunkering Hub. in support of the International Maritime Organization’s sulphur limit for
operating units. • Maintained petrochemicals Plant Utilisation (PU) (Nexant) rate at 92.6 ships’ fuel oil (IMO 2020).
per cent. • Enhanced value creation for local • Doubled the paddy yield and income of 68 farmers in Kedah through
• Recorded annual petrochemicals production volume of 10.4 million paddy farming communities the Paddy Integrated Smart Farming Project in collaboration with
Capitals Deployed: metric tonnes. through the introduction of National Farmers Organisation, Braintree Technologies Sdn Bhd and
innovative agricultural solutions Social Enterprise Education Lab (SEEd.Lab), an innovation hub powered
and methodologies. by PETRONAS Downstream. The project introduced the new Enhanced
Commercial Excellence Efficiency Fertiliser (EEF), drone technology and paddy planting standard
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Capitals Deployed: operating procedures to deliver the improved results.

• Increased efficiency and captured • Achieved petrochemicals product sales volume of 8.2 million metric
bigger margins by optimising tonnes, sustaining the achievement from the previous year.
Health and Safety
delivery. • Achieved petroleum product sales volume of 262.4 million barrels, a
• Sustained a culture of health and • Recorded zero major fire incidents and fatalities across Downstream’s
• Expanded core business to create 0.6 million barrel increase from 2020.
safety awareness at all businesses operations.
long-term value and new revenue • Achieved overall marketing sales volume of 21.2 billion litres from
and operations, including • Advocated a safety-first mindset to consumers via PDB’s Consumer
streams. PETRONAS Dagangan Berhad (PDB), Engen Petroleum and PETRONAS
consumer touchpoints. Safety Campaign in collaboration with the Ministry of Domestic Trade
Lubricants International (PLI), a 200 million litre increase from 2020.
and Consumer Affairs.
Capitals Deployed: • Reshaped portfolio mix to ensure high value returns with focus on
Capitals Deployed: • Promoted the Setel® app to encourage safer transactions among
non-fuel business and specialty chemicals. customers with minimal physical touchpoints.
 156 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 157

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Key Priorities and Results Value Created for Stakeholders

Key Priorities Results

Stakeholder Expectations Value Created
Digitalisation
• Institutionalised a culture of • Collaborated with Amazon Web Services (AWS) to customise Innovation
• Products and solutions that are • Introduced sustainable and innovative solutions via
innovation. Engine programmes to drive innovation.
sustainable and innovative. Setel® and the greater Setel® ecosystem, ROVR,
• Promoted enterprise-wide • Harnessed data, advanced artificial intelligence (AI), analytics and
Customers Segar@Mesra, Makan@Mesra, EV chargers and
technology-digital transformation. machine learning technologies to inspire innovation, experimentation
e-fluids (PETRONAS iona) and sustainable aviation
and scaled solutions.
fuel (SAF).
• Enhanced end-to-end data visibility across the value chain via
• Expanded into specialty chemicals.
Capitals Deployed: Enterprise Data Hub, with 70 Downstream operating units (OPUs)
• Diversified product offerings with bio-based and
signing the Group Data Liberalisation Agreement. circular economy portfolios, such as Bio-MEG.
• Enhanced packaging design for marketing products
to use 15 per cent less plastic.

• Relevant training and capability • Enhanced Agile practices through new training
development opportunities. modules, coaching enablement and Agile Enterprise
Employees team setup.
Performance Highlights and Achievements • Developed PETRONAS Working Backwards in
collaboration with AWS to enhance innovation
Revenue EBITDA PAT capabilities.
(RM Bil) (RM Bil) (RM Bil)
5.2 • Adhere to rules and regulations • Strengthened regulatory collaborations for better
124.5 set by local and foreign market growth.
115.5 15.1
Government and authorities in countries we • Ensured good governance in the local oil and gas
85.4 Regulators operate in. industry.
0.7
9
• Ensure zero non-compliances
to laws and regulations.
3.4
-3.5
• Social impact initiatives to • Provided platform for social enterprises to address
2019 2020 2021 2019 2020 2021 2019 2020 2021
support community operations. social pain points via SEEd.Lab to positively impact
General Public • Platforms and support for communities.
education and career • Amplified Food Bank Programme at over 400
Petroleum Product Sales Petrochemicals Product Sales enhancement. PETRONAS stations to benefit Malaysians affected
(million barrels) (million metric tonnes) by the COVID-19 pandemic.
• Championed the Love Local programme to create
258.8 261.8 262.4 8.4 8.2 8.2 greater awareness of local brands in support of
small and medium enterprises (SMEs) with Kedai
Mesra as a platform.
• Conducted nine webinar sessions nationwide
through the Plastic, Sustainability & You Education
(PSYE) programme, involving 130,000 teachers,
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students, government officers, industry players, the

2019 2020 2021 2019 2020 2021 public and internal PETRONAS employees. The
webinars aim to accelerate circular economy in
Malaysia and educate the audience on sustainable
and responsible plastic production and consumption.
• Supported the Imbumba Foundation’s Caring4Girls
initiative which saw 11,402 sanitary towels
distributed to female learners in 22 schools located
close to Engen’s facilities in Mpumalanga, Limpopo,
North West Province, Free State and KwaZulu-Natal.
 158 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 159

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Moving forward into 2022, our key focus areas include:

Risks and Opportunities
• Continued expansion and diversification into
Risks Actions Taken Results derivatives, specialty chemicals and solutions to sustain
• Energy transition • Commenced commercial • BRB became the first and only producer of silicone our position as one of the largest integrated chemicals
accelerated by the operations for BRB antifoam in Southeast Asia. Targeted to achieve producers in Southeast Asia.
COVID-19 pandemic. International (a wholly-owned 8,000 tonnes per year production capacity for
• Continued challenging subsidiary of PCG)’s silicone cosmetic grade silicone gum blend, as well as • Sustain operational and commercial excellence in
outlook in the energy blending plant in the vicinity technical and food grade silicone emulsion and petrochemicals to deliver value with PU above 90 per
industry. of PCG’s petrochemical silicone antifoam for the Asia-Pacific and Middle cent, production volume above 10 million tonnes per
• Need to future-proof complex in Gebeng, Pahang, East-Africa regions. annum and sales volume above 8 million tonnes per
business through to strengthen our footing in • Expected annual NBL capacity to reach 200,000
diversification of specialty chemicals. tonnes upon plant completion in 2023 to capture annum.
portfolios in view of • Incorporated LG PETRONAS increased demand for medical, critical appliances, • Startup of the Pengerang Integrated Complex
continued challenging Chemicals Malaysia Sdn Bhd and Personal Protective Equipment (PPE).
outlook in the energy for nitrile butadiene latex • Achieved first drop of Bio-MEG product from the targeted for 2H2022 to maximise growth potential and
industry. (NBL) plant in Pengerang, pilot plant and continued to evaluate the technology capture new opportunities further downstream.
Johor; began business and for commercial scale.
operation readiness activities, • Paved the way to provide sustainable solutions for • Strengthen presence in the biofuels space through a
Opportunities as well as ongoing customers in packaging, textile, automotive and planned greenfield biorefinery/co-processing plant
• Growing middle recruitment. electronics industries. targeted for 2025. The facility will be positioned to
income market • Invested in the world’s first supply SAF with operational flexibility to also produce
segment in the Asia- direct conversion of high-
HVO, also known as renewable diesel.
Pacific region. purity Bio-MEG, a renewable
• Increased demand for by-product of palm biomass. • Execute Refinery-to-Terminal Project to convert
lower carbon solutions
as international • Advanced sustainability • Achieved aviation historic milestone with the first Engen’s refinery in Durban into a world-class import and
organisations and impact in the aviation Malaysia Airlines flight using a blend of storage facility to capture new profit opportunities and
nations commit to net industry via a collaboration approximately 38 per cent sustainable aviation fuel safeguard against market threats in a challenging refining
zero goals. between PDB and the (SAF) made from used cooking oil as well as
Malaysia Aviation Group. conventional jet fuel, travelling successfully from environment.
• Increased demand for
• Provided access to the Virtual Amsterdam to Kuala Lumpur International Airport.
petrochemical products • Continued expansion of non-fuel business in
post-pandemic for Pipeline System (VPS) for • Planned greenfield biorefinery/co-processing plant
industries in Peninsular targeted for 2025 and positioned to supply SAF with domestic marketing to increase retail market share and
economic recovery.
Malaysia. operational flexibility to also produce Hydrogenated future-proof business.
• Increased demand for
customer-centric and • Expanded Setel® ecosystem Vegetable Oil (HVO) or renewable diesel.
and other non-fuel offerings • Commemorated PDB’s 1,000th VPS delivery. • Growth of Setel® ecosystem to deliver more innovative
innovative products for
by PDB. • Served 3.5 million motorists and counting with and customer-centric solutions in a single app, with
a more seamless
customer experience. Setel®, with over 46 million transactions and 1.9 features including e-Wallets, parcel delivery services, and
billion Mesra points redeemed on the app. Moving Forward
vehicle insurance purchase.
• Enhanced offerings with Setel® Share, Malaysia’s first
e-wallet sharing feature. The Downstream business will continue to sustain • Innovate solutions in sustainable mobility through
• Utilised Setel® as an important tool/enabler to operational excellence as well as seize new opportunities providing faster charging facilities for EVs in Malaysia via
provide basic necessities for the needy through the in key growth markets in Malaysia and around the world.
Food Bank Programme. PDB’s strategic network of stations, innovating next-
• Mobilised ROVR as part of the emergency rescue Given the increasing focus on decarbonising our generation EV fluids via the iona range and harnessing
team during floods in Malaysia. operations, we have taken a holistic approach to drive the power of collaboration through EV symposiums and
operational excellence guided by economic, environmental, webinars.
• Initiated discussions between • Attended by 150 participants comprising industry
PETRONAS Lubricants experts, Original Equipment Manufacturer (OEM) social and governance (EESG) standards.
International (PLI) and industry partners, academia and suppliers from around the • Expand lubricants market share in the industrial
players on e-mobility via an world to discuss opportunities for collaboration to Moving into 2022, we will continue to focus on growing segment to capture opportunities from construction,
Electric Vehicle Fluids Webinar. co-engineer EV solutions. our sales volume through competitive pricing strategies, agriculture, mining, power generation and other
• Developed safe, high- • Introduced the latest range of iona EV fluids,
Business Review

revolutionising customer experience and delivering high- industries

performing and dependable designed for OEM first-fill applications in November
fluids specifically for electric 2021. value products in a sustainable manner. Anchored on our • Establish stronger foothold in the Asia-Pacific
powered trains via a net zero carbon emissions aspiration, we will improve lubricants market leveraging Fluid Technology
collaboration between PLI energy efficiency for manufacturing and reduce emissions Solutions™ to capture opportunities from the growing
and Imperial College London,
by shifting towards lower carbon sources. To this end, the middle-class population in the region.
FEV Group, IAV and other
additive companies. Downstream business is well-positioned to capture new
offerings in the non-fuel segment to maximise our growth • Strengthen PETRONAS Marine as a one-stop marine
• Offered a wide range of • Strengthened Malaysia’s position as an LNG solutions provider and establish Malaysia as a regional
marine solutions via bunkering hub in the region with successful LNG potential, expand our portfolio, and optimise value across
our entire value chain as we shape future growth. LNG bunkering hub.
PETRONAS Marine including bunkering operations in Pasir Gudang, Johor; Port
a selection of marine and Klang, Selangor and Port of Sandakan, Sabah.
LNG bunker fuels.
 160 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 161

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“The challenges brought forth by the COVID-19 pandemic have

shed light on Project Delivery and Technology (PD&T)’s strengths in
driving digital transformation across PETRONAS. Guided by
PETRONAS’ Three-Pronged Growth Strategy to drive groupwide
advancement and maximise value across the three business
segments, we continue to take decisive, proactive actions to fortify
differentiated portfolios and elevate low-carbon energy delivery with
innovation. We harness the power of data, technology and digital
solutions to drive operational excellence and create growth
opportunities. We proffer and deploy technology and digital
solutions that bring step changes to business operations, to enrich
and bring betterment to the lives of PETRONAS’ customers and
stakeholders within, and beyond the energy industry.”
Bacho Pilong
Senior Vice President,
Project Delivery and Technology

587
projects managed valued at
RM25 million
commercialisation revenue
more than RM9 billion
Site readiness for25
key technologies achieved

6.4% 17 technology and digital solutions deployed

98
reduction of GHG emissions in
support of NZCE 2050 TechApps™ softwares available

37 million
Technology Digital

RM830 million
Project Delivery
man-hours with a Full Time
total value creation through ARIES, our digital Equivalent of

12,600
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enabling engineering solutions

personnel

RM818 million at work site and achieved zero

and Technology
fatality
in cash generation achieved through Alpha Series,
a digital transformation of our value chain
 162 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 163

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What We Do Key Priorities and Results

PD&T provides technical, project, technology, and digital

services while shaping and safeguarding PETRONAS’ growth Key Priorities Results
and future positioning strategies through best-in-class Data-Driven Operational Excellence
project delivery, extensive research and development, • Enabled digital transformation to • Achieved RM818 million in cash generation, gained end-to-end value
leading-edge technical expertise, and novel digital improve efficiency, enhance chain visibility and increased decision-making at the enterprise level via
solutions. PD&T serves as the engine that accelerates productivity and strengthen Alpha Series.
growth and ventures across PETRONAS, driving operational resilience. • Achieved the shortest pre-cooling time in 17 years, 10 hours faster, and
transformation by leveraging data as an asset, digital as an • Increased the safety of offshore 10 per cent reduction in carbon emissions via the STELLAR project.
accelerator and technology as a differentiator. As platforms via the Facilities of the • Enhanced operational efficiency by pushing digital-enabled efforts via
PETRONAS’ Centre of Excellence (CoE) and a solutions Future programme utilising NervCentre, gaining RM830 million via the ARIES project and RM28
partner, PD&T has a vital role in driving PETRONAS’ robotics and drone technologies. million in cost savings via remote consulting to project teams.
aspiration towards NZCE 2050 and all strategic goals • Improved workforce digital • Achieved RM188 million in value creation, improved onshore pipeline
through a well-established and expanding ecosystem of competency. monitoring and predictive analytics via Pipeline of the Future (PotF).
innovation. • Introduced new initiatives to • IoT reduced HSSE risks, improved efficiency and productivity as well as
accelerate innovation and pandemic/future-proofed assets.
transformation in technology and • Improved Cybersecurity awareness where average phishing rates
digitalisation. trended downwards between 2 per cent and 5 per cent from 8.8 per
• Increased resilience and cent in 2020.
automation through scalability. • Achieved 62 per cent of applications migrated to Cloud (ahead of
Key Priorities and Results • Leveraged Internet of Things (IoT) targets) and are on target to have at least 90 per cent applications on
for remote monitoring of plants Cloud by 2022.
Key Priorities Results and facilities Groupwide. • Upskilled 10,366 participants under the Citizen Analytics programme.
• Established Project Delivery Digital • Launched 16 PDE digital solutions that will be the Digital Backbone for
Delivering Projects Beyond
Ecosystem (PDE) to ensure project delivery and enabling Artificial Intelligence to assist decision
OTOBOS • PD&T managed projects had recorded over 37 million man-hours with rigorous portfolio management making.
• Delivered projects ahead of a Full Time Equivalent of 12,600 personnel at work site and achieved
and improved process efficiency. • Rolled out CBE to nine on-going projects with process improvements
schedule safely despite challenges zero fatality despite the increased HSE risk exposure mainly due to
• Established Construction-Based towards cost optimisation.
caused by COVID-19 pandemic. intensity and complexity of project related activities coupled with
• Delivered more value to the battling the COVID-19 situation. Engineering (CBE) to improve
group through cost reduction, • Projects delivered ahead of schedule: construction cost through
operational efficiency, and cash – Garagol Deniz West (GDW) first oil. Advanced Work Packaging (AWP)
generation. – Kuala Lumpur International Airport Pipeline Project (KLIPP) Initial and Project Production
Acceptance. Management (PPM) process
– NC3 condensate export pump modification Initial Acceptance. improvements.
– Safeguarding Operations, Asset and Resilience (SOAR) Project
completion. Capitals Deployed:
• GDW revival in Turkmenistan achieved RM139 million cash generation.

Innovation Driven Operational

Excellence Growth Engine Acceleration
• Achieved progress on key • Achieved site readiness and commercialisation of 25 key technology • Facilitated innovation of new • Support enterprise growth and sustainability by cementing partnerships
technology projects. projects. solutions among industry players, to drive value-added technology and innovation in the areas of:
• Pursued new revenue streams • Registered RM25 million in commercialisation revenue through the
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focusing on long-term – Carbon capture and storage (CCS)

through technology and digital deployment of 17 technologies and 98 TechApps™ software.
sustainability. – Specialty chemicals
products to drive competitive • Enhanced commercial execution through market expansion, accelerated
• Pursued new industry-wide – Hydrogen
advantage. commercial readiness and implementation of bolder commercialisation
• Improved operational efficiency methods. collaborations to accelerate – Renewables
through technical solutions. • Deployed 52 technical and digital solutions to improve reliability and technology and digital – Advanced Materials
efficiency of plants and facilities. transformation, and upskill talent. – Circular Economy
Capitals Deployed: • Established PETRONAS Drone Control Tower with the support of the
Civil Aviation Authority of Malaysia (CAAM) to expedite approval for Capitals Deployed:
drone operations in line with increasing demand for drone services
within the group.
 164 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 165

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Key Priorities and Results Performance Highlights and Achievements

Investment in Technology Portfolio size Number of Projects Value Creation

Key Priorities Results
(RM Million) (including CAPEX and OPEX) (RM Bil)
Capability Accelerator
– Technology Delivery and (RM Bil)
• Bench strength measures of the • Bench strength of the organisation recorded that our technical R&D Budget
organisation’s technical workforce, workforce met top quartile requirements. 587
369.2 361.8 >11 566 >11
succession planning and • RESCISCO received recognition by the Malaysia Productivity Corporation 335.7 531
>10
competency management efforts (MPC) bagging the regional Gold Award in Innovation and Productivity, >9
for Technical Authorities, and 2nd place at the national level. RESCISCO also enabled cost
>6 >6
Technical Professionals, Technical reduction while talents were better valued through systematic
Trade Specialists and others. evaluation and recognition. Scale up implementation to other locations
• RESCISCO for Technical planned for the year.
Executives, an initiative to develop • CoC tracking ensured license to operate and sustainability compliance
empowered, enabled and agile while establishing closer collaborations with stakeholders including 2019 2020 2021 2019 2020 2021 2019 2020 2021 2019 2020 2021
talent to deliver business results. governing authorities to optimise operations.
• Certification of Competencies • PETRONAS TTS, through the Technical Trade Specialist Symposium,
(CoC). encouraged replication of successful innovation, ideas, improvements to
Value Created for Stakeholders
• PETRONAS Technical Trade bring forth cost optimisation, cost avoidance and cost savings.
Specialist (TTS). • Digital Academy takes an all-round approach to digitally upskill and
• Digital Academy. reskill the PETRONAS workforce, the initiative also goes beyond the
• Industry-academia collaborations. Group to benefit communities through efforts such as PETRONAS Stakeholder Expectations Value Created
Digital Bootcamp during which participants were offered employment • Sustainable and • Collaborated with a spectrum of industry partners to
Capitals Deployed: by partner organisations, and collaborations with tertiary institutions. innovative products and deliver value-added digital innovations to support
• On the Corporate Sustainability Responsibilities front, the Senior Vice Customers solutions. sustainability.
President of PD&T was appointed by the Ministry of Higher Education • Developed the most competitive green hydrogen
to expand and strengthen industry-academia collaboration amid a other production technology in its class using our own patented
Proton Exchange Membrane (PEM) Electrolyser, putting
human capital development efforts.
PETRONAS at par with other hydrogen market leaders.
• Developed Bio-MEG technology to diversify our product
offerings with bio-based and Circular Economy portfolios.
Sustainability
• Completed first Integrated Multi-Site Optimisation Study across 14 sites • Elevate industry • Strengthened regulatory collaborations to enhance market
• Supported the nation to help capabilities and shape growth with, among others, Immigration Department of
those affected by natural disasters. under the Kerteh Side-wide Strategic Review (SSR).
Government and industry standards via Malaysia, Fire and Rescue Department, Malaysian
• Accelerated decarbonisation of • PETRONAS New Leadership Campus obtained Certificate of Partial multilateral knowledge Communications and Multimedia Commission (MCMC),
Regulators
existing PETRONAS assets. Completion in December 2021, with the aim to be the first Green sharing. Department of Safety and Health (DOSH) and Department
• Produced sustainable fertiliser to Certified building in PETRONAS. • Create opportunities to of Environment (DOE).
increase energy efficiency and • Completed plastic bitumen road paving under PETRONAS Research Sdn collaborate on the latest • Established Joint Industry Collaboration (JIC) for Advanced
Bhd’s Greenification Initiatives. technologies for Work Packaging and Project Production Management with
achieve carbon dioxide (CO₂)
• Achieved a reduction of 6.4 per cent of GHG emissions in 2021 application in other 27 companies.
emission targets. industries and wider • Established reputation as the leader in Decommissioning
• Leveraged new technologies in compared to 2020, in support of NZCE 2050.
purposes. and Abandonment capability in the Southeast Asian region.
high-risk environments to • Fast-tracked decomposing process using biochemical compost • Pursue a strong • Collaborated with the Civil Aviation Authority of Malaysia
minimise HSSE risks and technology. partnership ecosystem (CAAM) and Department of Survey and Mapping Malaysia
environmental footprint. • Helped clean up 35 homes of PETRONAS employees and families from to support growth in (JUPEM) to obtain approval for the use of drone
Business Review

local communities affected by floods. the hydrogen business. technology for pipeline and facility inspections as well as
logistics.
Capitals Deployed:
• Collaborated with SIRIM Berhad to develop a solution
providing data transparency to simplify approval and
validation process of custody metering.
• Training and capability • Contributed to myDigital aspirations to build a strong
development pipeline of digital-ready workforce for the nation through
Employees opportunities. Digital Academy.
• Enhanced cybersecurity awareness among talent base.
 166 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 167

Business Review Business Review

Risks and Opportunities Moving Forward

Risks Opportunities Actions Taken Results As PETRONAS’ CoE, PD&T will continue its efforts to • Explore new focus areas to future-proof the business,
identify innovative solutions to maintain a competitive and realise PETRONAS’ Sustainability Agenda via:
• Prolonged • Leverage • Implemented COVID-19 • Successfully rolled out Green Bubble, Green
COVID-19 digitalisation and percautionary measures Net and Strengthening Current Control edge, leveraging its expertise in project delivery, – Circular Economy, which aims to repurpose waste
pandemic may enhance such as HSE checklist and Measures (SCCM) concept and enhanced technology, technical and digital solutions, and ensuring into new products
impact PD&T technological Pandemic Preparedness Standard Operating Procedure (SOP) in safe and efficient operations throughout the value chain. – Advanced Materials to strengthen asset integrity,
projects and innovation to and Response Team Q1  2021 including vaccination requirements extend service life and reduce overall carbon footprint
service delivery. achieve project (PPRT) Guideline for as per PPRT directive. In this regard, PD&T has charted a Five-Year Strategic Plan – Improved decarbonisation efforts by managing and
and service PETRONAS groupwide. (2022-2026), which is aligned with the Group’s Three- reducing GHG emissions of assets
delivery with pace.
Pronged Growth Strategy, focusing on three key thrusts: – Driving renewables and supporting growth of
• Untimely • Realise • Identified technology • A Suite of carbon capture, utilisation and • Continuous safety, reliability, and efficiency hydrogen to fast-track the energy transition
delivery of opportunities to projects achieving major storage (CCUS) technologies achieved improvements through distinctive digital and technology – Progress in production and utilisation of specialty
proven, capture renewable milestone towards commercial readiness, opening opportunities
solutions. chemicals beyond oil and gas, into everyday
competitive, and and green Strategic Technology to monetise recoverable reserves in Malaysian
differentiated technology via Objective (STO), to unlock waters and Southeast Asia. • Pursue commercialisation opportunities for PD&T consumer products.
technology to strategic the technology readiness. • Achieved first drop for Bio-MEG plant. solutions to generate new revenue for the Group.
deliver value via partnerships with • PETRONAS Research Bio-MEG technology is being scaled up to Moving forward, we will continue to pursue technology
development Global Centre Sdn Bhd (PRSB) is capture new markets in sustainable bio- and digital advances throughout our value chain to ensure
and deployment Technology connected globally with derived products. we meet the Group’s business goals and achieve our NZCE
may affect Centres. our Global Technology • Proton Exchange Membrane demonstrated 2050 aspiration.
competitiveness Centres – Heriot Watt low hydrogen production cost and
for future University, Imperial progressing for business application in the
investment. College London and region.
Universiti Teknologi • Achieved commercial readiness for advanced
PETRONAS (UTP). material technology.
• Established technology • Immersive Cooling Fluid prototype met target
agenda for Future specification for Electric Vehicle (EV) Battery
Positioning (FP) and Thermal Management.
updated Competitive Edge • Achieved critical milestones for thermal
(CE) technology management in battery solid state technology.
programmes. • Ramped up technology commercialisation
efforts with the establishment of Digital,
Automation, Robotics Technology (DART) to
pursue new revenue stream from Technology.
• Rolled out new personal and healthcare
products in response to market opportunities.
• Identified technologies to future-proof
PETRONAS and elevate its competitive edge.
• Cyber threats • Leverage strategic • Continuous improvement • Completed the implementation and
could lead to collaboration in of enterprise cyber security deployment as well as change management
breach of developing cyber resilience by enhancing of the Cyber Security Enterprise Governance
information and awareness, cyber cyber security preparedness Framework for Malaysia and International
security resulting hygiene, and in Information Technology Assets.
in business independent (IT) and Operational • Completed Cyber Security Programme.
disruption. assurance to Technology (OT) to Incident Response Procedure has been rolled
shape cyber proactively mitigate any out to PETRONAS sites groupwide, and to all
security practices prolonged effect of high Malaysia OT Sites.
Business Review

and behaviours in impact incidents to

PETRONAS. business and operations.
These include proactive
efforts to secure Identity,
Assets and Data that are
monitored by the Cyber
Security Operations Centre.
• Established a dedicated
plan for Cyber Security
Programme and Incident
Response Procedure to all
IT systems and OT sites.
 Our Our progress to
date on the
Sustainability sustainability front
Journey

Recharge
for A Better
170 Sustainability Governance
174 Safeguard the Environment
186 Positive Social Impact
Tomorrow 218 Five-Year Sustainability Key Performance Data
 170 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 171

Sustainability Governance Sustainability Governance

Sustainability Council Organisation Structure

A robust governance system drives the successful At the same time, the Executive Leadership Team
execution of our sustainability ambitions. Spearheaded receives periodic performance updates on key
Chairperson
by the Board and Executive Leadership Team, we adopt sustainability performance and progress across the
VP and Chief Sustainability Officer
a top-down approach to sustainability, clearly delineating Group either directly from the respective businesses or
roles and responsibilities for improved accountability and via the Sustainability Council. This enables sustainability
integrity. The Board plays an active role in the issues to move up across all levels of the Group and Members
governance and oversight of sustainability matters, with allows the management team to maintain accountability
ongoing efforts to embed sustainability into the Board’s for our sustainability targets. Group Health, Safety and Corporate Strategic Group Risk Management
scopes. This is part of our continuous effort in Environment (HSE) Planning
strengthening sustainability governance for efficient
Group Human Resource
decision-making and execution of sustainability-related A Future-Ready Board
Group Financial Controller Group Procurement Management
matters.
Board members undergo various sustainability-
This year, we appointed our first Vice President and related training and engagements to keep abreast
of emerging matters: Group Strategic Communications Group Legal Group Security
Chief Sustainability Officer (CSO), who reports directly to
the President and Group Chief Executive Officer (GCEO), • Sustainability discussions as part of the annual
to provide a dedicated focus on managing sustainability strategic review and planning cycle. Project Delivery and Technology Malaysia Petroleum Management Yayasan PETRONAS
strategically in the company. We have also established a • Imperatives of Human Rights and Just
dedicated Sustainability Council, in line with the recent Transition.
reorganisation of the Group. Chaired by the CSO, the KLCC Holdings Business representatives from Upstream, Gas + New Energy, and Downstream
• Engagements with external experts. In 2021
Sustainability Council cascades decisions from the Board topics included net zero carbon emission
and Executive Leadership Team into implementation and strategies and carbon markets. By invitation – representatives from PETRONAS’ public listed entities, labour union, youth employees association,
deliberates bottom-up recommendations to the and relevant corporate functions and businesses
Executive Leadership Team and Board.

Key discussions deliberated at Sustainability Council in 2021 The implementation of our sustainability decisions is
include: supported by other councils and committees:
PETRONAS’ Sustainability Governance Structure • Endorsement of material topics. • Security Risk and Oversight Committee.
• Monitored progress toward PETRONAS 2024 • Health, Safety and Environment (HSE) Council.
Sustainability targets. • Diversity & Inclusion (D&I) Council.
PETRONAS Board
Provide oversight and shape • Apprised on the plan in charting a credible approach to • Whistleblowing/Central Complaint Management
long-term sustainability our net zero carbon emissions by 2050 (NZCE 2050) Committee.
Nomination &
strategies and policies Risk Audit aspiration.
Remuneration
Committee Committee • Apprised on CCS project progress.
Committee
• Apprised on commitment towards World Economic
Provide strategic direction on Forum’s Stakeholder Capitalism Metrics.
sustainability management, Executive Leadership Team (ELT)
Our Sustainability Journey

• Apprised on strategy in creating positive social impact

targets and performance through diversity and inclusion.
• Apprised on reputational issue analysis and Reputational
Implement sustainability Corporate-level committees/councils* Strength Index (RSI).
strategies by applying
technical capacity Corporate/business Corporate/business
working committees leadership teams

Establish and execute

Operating units/assets Operating units/assets
tactical plans and operations
working committees leadership teams

Note:
* Corporate-level committees/councils include the Sustainability Council.
 172 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 173

Sustainability Governance Sustainability Governance

Memberships and Associations Pledges

We actively participate in professional associations, events and memberships with the aim to strengthen our sustainability
efforts. Through these various platforms, we are able to exchange knowledge on best practices to drive the sustainability
agenda within and outside of our operations. This is part of our commitment to nation-building of Malaysia and creating World Bank’s Zero An initiative that commits governments and oil companies to end routine flaring no
positive impact across industries and society. Routine Flaring by later than 2030, aiming to support cooperation between all relevant stakeholders so
2030 (ZRF) Initiative that solutions to gas flaring can be found through appropriate regulation, application
Memberships of technologies, and financial arrangements.
Our Contribution:
CEO Action Network CAN is a peer-to-peer network of CEOs and Board members focused on sustainability We endorsed the global pledge on 4 November 2021 as part of our broader effort to
(CAN) advocacy, capacity building, action and performance. CAN represents 56 leading strengthen transparency around our actions on climate change. This aligns with our
businesses and more than 20 business sectors in Malaysia. aspiration to achieve NZCE 2050.
Our Contribution:
Recommendations of A framework for the type of information that companies should disclose to support
President and Group CEO of PETRONAS, Datuk Tengku Muhammad Taufik chairs the
CAN. In 2021, CAN hosted a series of 14 roundtable discussions, bringing together the Task Force on investors, lenders, and insurance underwriters in appropriately assessing and pricing a
corporate leaders from different industry sectors, public sectors and civil society to Climate-related specific set of risks, specifically risks related to climate change.
discuss the national agenda of net zero emissions for Malaysia. The roundtables foster Financial Disclosures
Our Contribution:
collaboration and partnership among private-public sectors, and support policy advocacy (TCFD)
through strategic discussions amongst the public sector, regulators, civil society, industry We acknowledge the importance of transparency on climate-related disclosures and
associations and businesses. expressed our public support for TCFD on 4 November 2021. We aim to commence
our disclosure practice towards TCFD in 2023.
World Business A CEO-led community of over 200 of the world’s leading businesses working collectively
Council for Sustainable to accelerate the system transformations needed for a net zero, nature positive, and World Economic A principal CEO-led platform in the global anti-corruption arena, building on the
Development (WBCSD) more equitable future. Forum’s Partnering pillars of public-private cooperation, responsible leadership and technological
Our Contribution: Against Corruption advances, serving as the leading business voice on anti-corruption and transparency.
We play an active role in WBCSD’s work programme to shape business narratives and Initiative (PACI)
performance on sustainability. Our top management is actively engaged in WBCSD’s Our Contribution:
workstreams and projects. Through WBCSD, we leverage thought leadership and PETRONAS became a signatory of PACI on 21 July 2021, joining 90 other signatories
collaboration with other global leaders to foster effective peer learning, enabling us to across different sectors worldwide. In doing so, we strengthen our zero tolerance on
accelerate and scale up group-wide delivery of PETRONAS’ sustainability agenda. corruption in all its forms and join collective action initiatives to increase public trust
APEC Business The private-sector arm of the Asia-Pacific Economic Cooperation (APEC) comprising in business, deliver fair markets and level the playing field by fighting corruption.
Advisory Council high level officials from 21 member countries, dedicated to advising leaders and other
(ABAC) APEC officials on issues of business interest. World Economic The Stakeholder Capitalism Metrics (the Metrics) was launched in September 2020 by
Forum’s Stakeholder the International Business Council of the World Economic Forum. The Metrics is a
Our Contribution:
Capitalism Metrics disclosure framework that aims to strengthen the ability of companies and investors
Our President and Group CEO, Datuk Tengku Taufik is a member of ABAC. He co-
chaired the Climate Change priority with Malcolm Johns from ABAC New Zealand, under in benchmarking progress on sustainability matters, and to enhance transparency of
the ABAC Sustainability Working Group (SWG) led by ABAC China in the first ABAC sustainability disclosures.
meeting in 2022. The co-chairs presented recommendations to APEC Leaders and
Our Contribution:
advised APEC officials on business sector priorities and concerns.
Commenced our reporting practice towards the Metrics in 2021. A cross reference
Methane Guiding An international multi-stakeholder partnership developed collaboratively by a coalition of table on the Metrics is available on page 276.
Principles (MGP) industry and civil society organisations. It focuses on reducing methane emissions across
the natural gas supply chain, from production to final consumption.
Our Contribution:
Our Sustainability Journey

As a member, we work together with other signatories and supporting organisations to Engagements
foster effective methane management, and create transparency in emissions reporting
aligned with internationally recognised frameworks and standards.
Ipieca Ipieca was founded in 1974 at the request of the United Nations (UN) Environment ASEAN Energy Sector A series of regional roundtables held to intensify collaboration on methane emissions
Programme and remains the industry’s principal engagement channel with the UN Methane Roundtable management by leveraging collective capabilities, global best practices and insights.
particularly in the development or update of environment related international
conventions. Our Contribution:
Our Contribution: PETRONAS initiated and hosted the inaugural ASEAN Energy Sector Methane
As a member, PETRONAS is part of the collective energy industry to provide insights on Roundtable in October 2021. We extended invitations to participants from key ASEAN
key HSE and sustainability issues to global stakeholders. Additional participation in energy players such as PTT, PERTAMINA and Shell, as well as international
taskforces enables knowledge transfers including hands-on experience for subject matter organisations, including Offshore Energies United Kingdom (OEUK), International
experts and foresight to anticipate future regulations as many peers operate in highly Energy Agency (IEA), World Bank Group, United Nations Environment Programme
regulated regimes such as on EU climate regulations. Beyond compliance, PETRONAS
(UNEP) and Methane Guiding Principles (MGP).
also benefits from the horizon scanning, knowledge sharing and guidance on the energy
transition and other emerging trends.
 174 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 175

Safeguard the Environment

Safeguard the What is our position?

TECHNOLOGY

Environment PETRONAS Carbon Commitments (PCC)

were established in 2012 focusing on
reducing flaring and venting, and improving MITIGATION ADAPTATION
energy efficiency. Subsequently the PCC The
have been enhanced with elements of PETRONAS
carbon capture and storage (CCS), CLIMATE
Climate
We recognise the scientific renewable energy, carbon offsets and CHANGE
Change
consensus on climate change. carbon pricing. Framework

CA
As a responsible global energy

T
PA

SE
BIL

ND
CARBON
company, we understand our

IT Y

MI
FOOTPRINT
crucial role in lowering carbon
emissions towards limiting the
rise in global temperatures to
1.5°C above pre-industrial PETRONAS Carbon Commitments consist of three key areas:
levels, as per the Paris
Agreement. We remain Planning and Projects
committed to achieving our
net zero carbon emissions by • Zero continuous flaring and venting of hydrocarbons shall be incorporated into the design philosophy of all new
facilities and projects.
2050 (NZCE 2050) aspiration, • Malaysia Petroleum Management (MPM) to apply for country-level carbon dioxide (CO₂) emissions allowance in
strive to reduce our impact on the planning process of high CO₂ field development.
• Upstream high CO₂ field development shall incorporate carbon capture and storage (CCS) technologies at the
climate change, minimise our design stage.
• Carbon pricing shall be considered in project decision-making with the option of carbon offsets where
environmental footprint and
economically feasible.
protect the natural
environment. Operations
• Zero continuous venting of hydrocarbons for all existing facilities.
• Reduce continuous flaring of hydrocarbons for all existing facilities where operationally and
economically feasible.
• Downstream and Gas + New Energy (G+NE) operating assets to meet and sustain top quartile
energy performance.

Renewable Energy
• Renewable energy technologies are to be considered in all facilities and projects where
operationally and economically feasible.
Our Sustainability Journey

Climate Change and Greenhouse Gas (GHG) Emissions

Why is it important? Our business development has increased focus on renewable energy, gas, LNG and hydrogen as these forms of energy
Our ability to reduce GHG emissions that contribute to climate change today will strengthen our future shared prosperity, will drive the energy transition towards a lower carbon economy and ensure the security of energy supply.
societal well-being and business growth. Stakeholders are increasingly demanding scaled-up action on climate change,
To increase our resilience in the energy transition, we work closely with our partners, suppliers and contractors
with the energy sector facing rising pressure to deliver. Given the complex nature of climate change, concerted efforts by
throughout the supply chain. As part of our efforts to reduce methane emissions, we have joined other industry and
governments, business and individuals are necessary to foster a transition to a sustainable future.
non-industry members under the Methane Guiding Principles (MGP) initiative as a signatory member. The rising demand
for clean energy has also prompted the move towards CCS development and hydrogen, as part of our strategy to reduce
An inability to effectively minimise carbon emissions may lead to a loss of stakeholder trust in the energy sector. We also carbon from our assets and develop a carbon capture business.
need to manage and prevent as far as possible the impact of extreme weather events on physical assets. Despite the
challenges, business opportunities arise with the transition towards a low-carbon economy and bring possibilities to We continue to leverage technology and digital solutions, namely the PETRONAS Environment and Social Performance
improve livelihoods and revitalise economies. Integrated and Centralised System (EPICS), to gain end-to-end visibility of our efforts to improve environmental
performance throughout our value chain.
 176 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 177

Safeguard the Environment Safeguard the Environment

What did we do in 2021? Climate Adaptation

Climate Change Mitigation • Embarked on addressing the need for PETRONAS – Conducted capacity building on the management of
businesses and facilities to adapt to climate change by physical impacts of climate change as well as a
• Operational Emissions • Improved Solutions
conducting a global high-level screening on the most high-level desktop vulnerability assessment across
– Recorded total GHG emissions of 45.2 million tonnes – Generated 2,321.2 MWh from our solar Photovoltaic vulnerable regions and countries in the world. several sites in Malaysia.
of carbon dioxide equivalent (tCO₂e), further details (PV) systems at 11 sites, avoiding 1,352.8 tCO₂e.
– Established the PETRONAS ADAPT team with people – Developed a five-year Adaptation Activity Plan to
can be found on page 218.
– Upgraded PETRONAS Dynamic Diesel to meet Euro 5 from various disciplines; including Health, Safety and facilitate our Adaptation needs and journey for the
– GHG emissions reduction of 4.1 million tCO₂e per standards at petrol stations nationwide, making it the Environment (HSE); operations and maintenance; coming years.
year. widest and most accessible network of Euro 5 design and engineering; and crisis management
compliant diesel in Malaysia. • Conducted a workshop on climate change risks which
– Upstream operations achieved a 27.3 per cent teams.
focused on identified risks, and developed enterprise-
reduction in GHG intensity, mainly contributed by – Fully leveraged renewable energy at PETRONAS – Organised training programmes to close the level risk statements, aligned with the recommendations
flaring and venting reduction. Lubricant International’s Arexons car care and knowledge gap in Climate Change Adaptation among of the Task Force on Climate-related Financial
multipurpose lubricant plant in Cernusco, Italy, PETRONAS staff. Carried out in the first half of 2021,
– GHG emissions reduction in PETRONAS can be Disclosures (TCFD) to improve awareness on climate
classified as a Zero Scope 2 GHG emissions the ultimate goal is to address the concerns about
clustered into three main areas as below: change risk and prepare for future TCFD disclosures.
operation. the physical impacts of climate change at a
o Flare Reduction: Achieved mainly in Upstream • Conducted capacity building on the management of
groupwide level. These programmes were conducted
operations in Malaysia through flare gas recovery • Low-Carbon Partnerships physical impacts of climate change, as well as a high-
projects and improvements in compressor capacity at eight PETRONAS operation sites – Bintulu and Miri
– Collaborated with Abu Dhabi National Oil Company in Sarawak, Johor, Kedah, Labuan, Melaka, Pahang level desktop vulnerability assessment for several sites in
o Vent Reduction: Occurred in Upstream operations Malaysia.
(ADNOC) and Masdar to pursue clean energy and Terengganu.
in Malaysia, mainly from vent-to-flare conversion
solutions by exploring joint participation in large scale
and vent recovery projects
solar and wind opportunities for utilities and
o Energy Efficiency: Achieved through operational commercial/industrial customers in Asia.
excellence efforts such as optimisation of gas Partnerships and Collaborations
turbine operations and process optimisation – Partnered with ENEOS Corporation to jointly develop,
initiatives, mainly from Downstream and G+NE a competitive, clean hydrogen supply chain in • Participated as speakers and panellists in several international conferences such as Sabah Climate Change International
businesses Malaysia and Japan, as well as explore other Conference (SCCIC) and Expo 2020 Dubai where we reaffirmed our pledge to reduce our carbon footprint.
hydrogen opportunities.
– Endorsed the World Bank’s Zero Routine Flaring by • Organised the second Electric Vehicle Fluids Webinar, themed Accelerating Efficiency, Revolutionising e-mobility, which
2030 initiative, where we commit to end routine • Carbon Storage was attended by 150 participants comprising industry experts, OEM partners, academia, and suppliers worldwide.
flaring of associated gas from our oil production.
– The identified CCS field for Kasawari Gas Field’s CO₂ • Commenced a series of stakeholder roundtable discussions in the Southeast Asia region to advocate for the
• Methane Emissions Management has completed subsurface maturation suited for CCS importance of managing methane to deliver lower carbon energy.
site, and Conceptual Engineering Design was
– Initiatives to reduce methane emissions were driven approved in Q4 2021.
by the establishment of PETRONAS Carbon
Commitments in 2012. Through flaring and venting – In our efforts to build storage volume potential, we
What did we achieve?
reduction initiatives, we have reduced 0.38 million have identified 19 potential storage sites (6 saline
tonnes of methane since 2013. aquifers and 13 depleted fields) to offer CCS as an GHG Emissions Reduction
option for carbon management solutions in Malaysia
– Established PETRONAS methane emissions and regional industries. Given such intent, PETRONAS
quantification and reporting standard as well as a has adopted a collaborative approach with both oil • 6.4 per cent reduction in GHG emissions to • 3.6 million tCO₂e (26.8 MMscfd) reduction in
handbook for improving the completeness and and gas (O&G) and non O&G players to progress the 45.2 million tCO₂e in 2021 from 48.3 million tCO₂e venting in 2021
Our Sustainability Journey

transparency of methane emissions. CCS work further. in 2020

– Set up a dedicated task force to implement effective • 0.2 million tCO₂e reduction through energy
quantification and reduction of methane. • E-mobility • 32.4 per cent reduction in methane emissions to efficiency initiatives
– PETRONAS Dagangan Berhad (PDB) entered into a 0.23 million tonnes of methane in 2021 from 0.34
– Completed methane emissions baseline study in • 1,352.8 tCO₂e avoided in Scope 2 GHG
selected Upstream Malaysia offshore and onshore partnership with Mercedes-Benz to deploy EV chargers million tonnes of methane in 2020
at PETRONAS stations along the North-South emissions due to renewable energy power
assets, using insights to improve methane emissions
inventory. Expressway and part of the East Coast Expressway to • 0.3 million tCO₂e (8.8 MMscfd) reduction in generation of 2,321.2 MWh
enable end-to-end coverage of fast chargers. flaring in 2021
– Engaged with internal and external stakeholders,
including upstream service providers, to improve – Introduced a new range of iona electric vehicle (EV)
awareness, understanding and capabilities in methane fluids, designed for Original Equipment Manufacturer
emissions management. We also shared the latest (OEM) first-fill applications in November 2021.
developments in methane measurement and
technologies to improve current practices.
 178 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 179

Safeguard the Environment Safeguard the Environment

Responsible Waste Management What did we do in 2021?

Waste Management
Why is it important?
Waste generation presents a broader challenge that affects human health, livelihoods, the environment, and economic – 124,884 metric tonnes of waste generated, a 36 per cent increase from 92,019 metric tonnes in 2020.
growth. Poor waste management can reap a variety of negative consequences to our stakeholders and business – Hazardous waste generated in 2021 increased to 59,228 metric tonnes, mainly from PETRONAS Energy Canada Ltd
environment, such as air and water contamination, hygiene and health concerns. Limiting our waste and increasing (PECL) drill cuttings (PECL contributed 43 per cent of total hazardous waste generated) that require disposal at secure
circularity will reduce environmental footprints and operational costs. landfills. As with other assets under PETRONAS, PECL is exploring waste minimisation options to reduce hazardous
waste disposal.
A major component of the global waste problem is plastic. The throwaway culture has resulted in the rapid disposal of
– Conducted periodic assurance at our waste contractors’ facilities to verify that all aspects of waste management
single-use plastic, which may persist in the environment for hundreds of years. This presents significant environmental
conformed to established waste management procedures and regulatory frameworks. The findings of the assurance at
and health issues, as plastics can end up in oceans and food systems, affecting the entire ecosystem. To combat this
waste contractors’ facilities were tracked to closure and documented for our reference.
problem while still providing the social benefits of plastic, we need to apply circular economy principles to transform into
a New Plastics Economy (NPE). Through the NPE initiative, plastics never end up as waste. Instead, they re-enter the – Waste performance data are monitored by all PETRONAS Operating Units (OPUs) on a monthly basis.
economy as valuable products, thus creating improved economic and environmental outcomes. By driving the nation’s
NPE, we continue to build our competitive advantage and resilience with the aim to drive the solutions to this global
problem. New Plastics Economy

• Innovation • Education
What is our position? – Collaborated with Plastic Energy Ltd to develop a – Developed and distributed Plastics, Sustainability and
solution that turns non-recyclable plastic waste into You Education (PSYE) modules to schools in Malaysia,
As a commitment to contributing towards United Nations’ 12th Sustainable Development Goal – Responsible Consumption
crude naphtha and further processes it into polymers, in collaboration with the Ministry of Education (MOE),
and Production, we have set the path towards waste reduction via the 3R (reuse, recycle and recover) practice. We
which acts as feedstock for plastic production. Solid Waste Management and Public Cleansing
implement plans and procedures on waste management at all PETRONAS operating sites. Activities producing waste are
– Performed a feasibility study with Plastic Energy Ltd Corporation (SWCorp) and Malaysian Plastics
identified along with the type, quantity, frequency of generation, handling requirements as well as treatment and disposal
to construct a plastic waste to crude naphtha facility Manufacturers Association (MPMA).
methods. We also conduct periodic assurance on our waste management efforts while looking for ways to minimise
in Malaysia. The objective of the study is to bring the – Held live webinar sessions on Pusat STEM Negara’s
waste generation. Furthermore, waste performance indicators are reported every month to a centralised reporting
technology to Malaysia by turning low quality, mixed social media channels for primary and secondary school
platform.
plastic waste from landfills into naphtha quality students as well as teachers. We also conducted webinar
pyrolysis oil. The end product will be used as sessions for:
Meanwhile, through PETRONAS Chemicals Group Berhad (PCG), we aim to spearhead the nation’s transition into NPE.
feedstock for polymer production, enabling PCG to o Public and school students through Karnival Sains
This involves collaborating with the Malaysian authorities and relevant stakeholders through the Malaysia Sustainable
offer certified circular polymers. Sabah Edition, in collaboration with PETROSAINS and
Plastic Alliance (MaSPA), which complements the actions set out in the Malaysia Roadmap towards zero single-use
– Explored other innovative solutions based on the the Ministry of Science, Innovation and Technology
plastics (2018-2030). Additionally, PCG explores ways to convert end-of-life plastic waste into pyrolysis oil, creating an
three focus areas: Sabah
end product of certified circular polymer resins. Based on this roadmap, we are targeting to recover 100 per cent of the
o ReDESIGN: Enhance the recyclability of plastic o Employees of the Prime Minister’s Office and its
plastic waste of our polymer production volume for the Malaysian market by 2030.
materials agencies
o ReGENERATE: Regenerate end-of-life plastics into o ASEAN polymer industry during the ASEAN
PETRONAS’ four key workstreams of NPE: valuable materials Federation of Plastic Industries (AFPI) meeting and
o ReNEWABLE: Develop renewable-based plastic Asia Plastics Forum (APF) Conference in
materials collaboration with MPMA. The participants were
– Conducted a process trial of converting plastic waste from 12 countries, namely Malaysia, Bangladesh,
into circular naphtha at a PETRONAS refinery in China, India, Indonesia, Japan, Myanmar, the
Our Sustainability Journey

Melaka. Philippines, Singapore, Sri Lanka, Thailand and

Vietnam.
• Infrastructure
– Secured feedback supply for projects currently • Clean-Up
ongoing in collaboration with local recyclers. – Conducted clean-up initiatives through our Be Green
– Initiated internal and external collaborations to Programme, which encourages surrounding
improve the recovery of recyclable materials through communities in our areas of operation to learn about
our internal 3R programme involving PCG OPUs and the importance of preserving the environment
Innovation: Infrastructure: Education: Clean-Up: other PETRONAS Business Units, such as PETRONAS through proper waste and plastics management.
Establishing a viable Developing strategic Imparting knowledge Enhancing awareness
Gas Berhad.
collaboration in partnerships and and education on of caring for the
innovative collaborations for an plastic to address environment through
technology solutions effective, sustainable misconceptions and 3R education, CSR
to address plastic waste recovery promote change in activities and green
pollution system behaviour and campaigns
culture
 180 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 181

Safeguard the Environment Safeguard the Environment

What did we achieve?

Environmental Quality
Waste Management
Why is it important? What is our position?
Our business is deeply connected to our planet’s natural We integrate progressive environmental stewardship
• 49,561 metric tonnes of waste recycled/
resources. As a responsible operator, we aim to minimise practices into our business practices and operations. We
recovered, which is equivalent to 40 per cent of
the impact of our operations on the surrounding do this by placing a high priority on ensuring compliance
the total waste generated by the Group. environment. This means managing our freshwater with international standards, namely the International
• A decrease of oil in water content to 452 metric withdrawal, air quality, potential spills and biodiversity Finance Corporation (IFC) Performance Standards on
tonnes in 2021 was due to operational improvement. conservation efforts to protect the environment. Environment and Social Sustainability, and the World Bank
Group Environmental, Health and Safety Guidelines (EHS
Guidelines) as well as leveraging tools and databases such
as the World Resource Institute’s (WRI) Aqueduct Water
Stress Atlas and the Integrated Biodiversity Assessment Tool
(IBAT).

PETRONAS’ Environmental Focus Areas

Air Emissions: Air emissions from our facilities are

monitored, and risks are evaluated and addressed
accordingly as part of our integrated air emissions
management approach. To enhance data visibility, we Decommissioning: We ensure that the disposal of
developed an online monitoring platform that allows us to petroleum facilities adheres to the structured
accelerate our response rate. Decommissioning Option Assessment (DOA). We also
work closely with the Department of Fisheries (DOF)
Our sulphur oxide (SOx) and nitrogen oxide (NOx)
New Plastics Economy to evaluate the feasibility of converting decommissioned
emissions are measured directly from continuous
oil and gas platforms into artificial reefs to maximise
monitoring systems or periodic samplings. Measurement
the lifetime of decommissioned structures and to
systems comply with host country requirements or in their
contribute to marine biodiversity.
absence, reference is made to international accepted
standards.
Our Sustainability Journey

Oil Spills Prevention: We

safeguard our facilities by
incorporating industry best
practices on spill prevention in
the design of our facility, Water Management: We implement internal
implementing scheduled standards, policies and initiatives to optimise our
inspection and maintenance freshwater withdrawal. Our water management
programmes, and applying focuses on three main pillars – conducting water
• Education lessons learnt from spill accounting, understanding water availability, and
incidents. increasing water use efficiency. Freshwater
– Conducted nine webinar sessions nationwide, on Plastics, Sustainability and You, involving 130,000 withdrawal in areas at risk of water stress is regularly
tracked, with the water system operating at best-
teachers, students, government officers, industry players, the public and internal PETRONAS employees. The
achieved levels. Wastewater discharge from our
webinars aim to support NPE and educate the audience on sustainability and responsible plastics management. facilities are monitored, and risks are evaluated and
addressed.
 182 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 183

Safeguard the Environment Safeguard the Environment

What did we do in 2021? • Promoted Malaysia’s decommissioning achievements and New Solutions
aspirations via the presentation, among others: • Developed an analytical software, PETRONAS Reefing
Water Oil Spill Prevention – Decommissioning in Malaysia: Learning and Moving Viability Index (RVI), to be able to assess the viability of
Forward from 2020 to around 300 global operators offshore sites as reefing locations.
• Freshwater Withdrawal • Co-hosted with Malaysia’s Department of Environment and service providers during Decom Week 2021, • Conducted reefing study in collaboration with academia
– Continued to track the best-achieved freshwater use (DOE) a regional hybrid oil spill response exercise organised by Decom North Sea, United Kingdom. led by Universiti Teknologi PETRONAS (UTP), focusing
intensity for the top 13 freshwater users that were involving 17 agencies and three countries namely – Malaysia’s Sustainable Decommissioning Framework on site-specific reefing engineering, development of a
first identified in 2020. Malaysia, Indonesia, and Singapore. at the Oil & Gas UK (OGUK) Decommissioning strategic plan for sustainable Rigs-to-Reef programme,
– In 2021, PETRONAS’ freshwater withdrawal increased • Conducted an Oil Spill Response Capability Assessment Conference, attended by over 400 participants from as well as socio-economic impact assessment to local
by 11.1 million cubic meters, due to the inclusion of (OSRCA) for employees from various PETRONAS OPUs. across the globe. communities, industries and stakeholders.
PETRONAS Refinery and Petrochemical Corporation The exercise aimed at helping participants: • Signed the Decommissioning Side Agreement, a
Sdn Bhd (PRPC)’s Utilities and Facilities (UF) which is – Understand the core of oil spill management. supplementary agreement to the Gumusut/Kakap -
currently undergoing start-up. PRPC UF’s freshwater – Conduct semi-quantitative oil spill risk assessments. Geronggong/Jagus East Fields Unitisation Agreement,
withdrawal is 14 per cent of PETRONAS’ total – Identify appropriate response options to mitigate with the National Unitisation Secretariat (NUS)
withdrawal volume. representing the Government of His Majesty The Sultan
credible scenarios.
– To ensure freshwater use is within design efficiency, and Yang Di-Pertuan of Negara Brunei Darussalam.
– Compare the requirements against the available
water balance and internal procedures on water preparedness procedures and provide
systems for PRPC UF have been established. recommendations.
What did we achieve?
• Wastewater Discharge
Water Decommissioning
– Continued to monitor discharges from onshore and
offshore installations. Decommissioning
– Continued to conduct water risk-based assessment • Completed a detailed water risk study in Continuous efforts towards sustainable
updates for all our onshore and offshore platforms. Governance Labuan, one of the locations projected to decommissioning of Malaysia’s disused Upstream
• Strengthened relationships with the National Security experience water stress by 2050. facilities:
Council via National Security Council – Malaysia • Actively participated in the Ipieca Water • Finalised the 10-year Master Reefing Plan (MRP)
Air Emissions Petroleum Management (MPM) Annual Engagement Working Group and developed Ipieca’s guidance with Department of Fisheries (DoF), covering 11
Session for upstream oil and gas activities. The National document, Review of Drought and Flood Risk Tools. offshore structures and identified locations for
• Continued to monitor emissions from all stationary Security Council took no exception to the planned Rigs-to-Reef off-the-coast of Peninsular Malaysia.
emission sources. decommissioning projects to be executed as well as
• Successfully decommissioned two pipelines and
• The decrease in sulphur oxide (SOx) emissions value by securing approvals for marine resources used.
Environmental Health repurposed one major trunk line with an aggregated
47 per cent was attributable to the decommissioning of • Engaged with Malaysia-Thailand Joint Authority (MTJA) cost saving of 17 per cent, amounting to
Engen Petroleum’s refinery in Durban and operational on: RM12.9 million.
improvement in PETRONAS Floating LNG (PFLNT).
• 14 existing baseline and 7 new baseline HHRAs
– Decommissioning best practices and lessons learnt • Completed three pipeline decommissioning projects
for air emissions.
for the mutual benefit of both parties; and 13 wells plugged and abandoned, complying
• 2 existing baseline and 6 new baseline HHRAs
– Developing the Ministerial Regulation for Offshore with local regulations and internal guidelines, which
Environmental Health for groundwater.
Installation Decommissioning Standards to strengthen are aligned with established international guidelines
MTJA’s pre-decommissioning processes, which is • From the new baseline HHRAs, we have identified
and standards.
• Embarked on a voluntary, evidence-based management areas of improvement to reduce chemical exposures
expected to be ready towards the end of 2022.
system for improved environmental health. This ensured in air emissions and groundwater, going beyond
• Actively contributed to the International Association of
safety and control measures were well integrated into regulatory compliance.
Our Sustainability Journey

Oil and Gas producers (IOGP) Decommissioning

our operations without impacting the environment and
Committee which includes completion of IOGP Asset
human health.
Retirement Obligation (ARO) White Paper and Habitat
• Since 2018, we have been conducting baseline Human Oil Spill Prevention
Retention Guide. PETRONAS was also appointed Co-
Health Risk Assessments (HHRA) at selected domestic Chair of IOGP’s Asia Pacific (APAC) Decommissioning
operations to evaluate community exposure to Sub-Committee to establish potential regional • Led the establishment of the National Oiled Wildlife Response Plan for Malaysia, in alignment with
chemicals in ambient air and groundwater. collaborations and region specific studies/projects. Global Oiled Wildlife Response System (GOWRS) and Ipieca best practices and guidelines.
• In 2021, we established new baseline HHRAs for • Collaborated with the Malaysian Oil and Gas Services • The oil spill response exercise demonstrated the effective communication between Malaysia, Indonesia and
identified PETRONAS facilities at domestic and Council (MOGSC), identifying four technologies that Singapore.
international locations. could potentially contribute to decommissioning cost • 13 employees trained in competent Oil Spill Response Capability Assessment (OSRCA).
compression efforts, and three companies interested to
be involved in asset repurposing.
 184 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 185

Safeguard the Environment Safeguard the Environment

Biodiversity
Why is it important? What is our position? What did we achieve?
Biodiversity is an intricate web that encompasses all We will continue to take holistic actions to minimise our
species, habitats, ecosystems and ecological processes that impact on biodiversity, at the policy level and on the • Obtained endorsement for new biodiversity • Planted close to 40,000 trees from 14
helps sustain life and the natural environment. It is closely ground, to reverse biodiversity loss. Thus, we are shifting metrics by the PETRONAS HSE Council in community nurseries established to supply
tied to the growth of our natural resources, source of food our approach from compliance-based to strategic November 2021 and reporting to commence in 2023 seedlings for the programme, generate income and
and medicine; critical elements which contribute to our positioning on nature and biodiversity. in line with the WEF’s Stakeholder Capitalism Metrics develop capabilities in nursery management and tree
health, well-being and the overall economy. That is why and the Global Reporting Initiative (GRI) standards. planting monitoring for the identified local
we need to strengthen efforts and drive systemic shifts to At PETRONAS, we adhere to stringent impact assessment communities.
promote nature conservation, preserve ecosystems and and reporting standards on Biodiversity and Ecosystem
protect natural habitats. Our inability to mitigate biodiversity Services (BES) set by the Global Reporting Initiative (GRI) • Organised the Biodiversity Tech Talk which was
loss will have irreversible consequences on the environment, and World Economic Forum (WEF). To protect biodiversity attended by 550 employees and KeTSA
humans and economic activity. Permanent destruction of and ecosystem services in the areas where we operate, we representatives.
natural capital will further aggravate other risks. identify BES risks, leveraging on Environmental Impact
Assessments (EIAs) and BES Risk Assessments (BESRA),
The Post-2020 Global Biodiversity Framework, Taskforce using tools such as Integrated Biodiversity Assessment Tool
on Nature-related Financial Disclosures (TNFD) and national (IBAT) and be guided by our internal guidelines, such as
policies such as the Malaysia National Policy on Biological the PETRONAS Technical Guidelines (PTG) on BES
Diversity (NPBD) are developments that aim to reverse Management and industry best practices from organisations
biodiversity loss. At PETRONAS, we recognise the such as Ipieca, International Union for Conservation of
significance of nature and biodiversity to our business and Nature (IUCN), International Association of Oil & Gas
communities in areas where we operate. Producers (IOGP) and World Business Council for
Sustainable Development (WBCSD).

In line with our NZCE 2050 aspiration, PETRONAS strives to

demonstrate visible leadership on Malaysia’s nature and
biodiversity agenda and the countries in which we have a
presence. We aim to restore, maintain and enhance
biodiversity as we recognise that climate and biodiversity are
intertwined issues that need to be addressed in tandem.

What did we do in 2021?

• In 2020 the BES Risk Profiling for PETRONAS domestic • Embarked on a tree-planting programme involving local
operations was completed, utilising the Integrated communities in 14 sites across 11 states, a collaboration
Biodiversity Assessment Tool (IBAT), information from between Group HSE (GHSE), Yayasan PETRONAS and
Environmental Impact Assessment (EIA) and other Global Environment Centre (GEC). The target is to plant
published information. As a result of the risk profiling, 50,000 trees by the first quarter of 2022. This is also in
9  per cent of PETRONAS’ domestic operations were conjunction with our Walk4Trees programme and
categorised as “very high” to “high” risk for BES. For aligned with the Ministry of Energy and Natural
these operations, a more detailed risk assessment - Resources (KeTSA)’s 100 million Tree-Planting Campaign.
BESRA will be conducted and a Biodiversity Action Plan
Our Sustainability Journey

• Conducted the Biodiversity Tech Talk as part of the

(BAP) will be implemented. In 2021, BESRA was awareness building process for employees. KeTSA Minister
conducted for PDB’s terminals in Pasir Gudang, Johor delivered the keynote address in a virtual event while we
and Langkawi, Kedah. presented a paper on Malaysia’s experience in Rigs-to-
• PETRONAS recognises the need to work with other Reef, together with two other papers by KeTSA and
members of the wider business community towards BES Tenaga Nasional Berhad (TNB).
management. To this end, PETRONAS is actively
involved as a member of the Interim Working Group
(IWG) to establish the Malaysia platform for Business and
Biodiversity (MPBB). The MPBB is envisaged as a space
for the private sector to discuss, share and collaborate
on issues related to biodiversity conservation and its
mainstreaming, in particular to support the
implementation of the Malaysia National Policy on
Biological Diversity (NPBD).
 186 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 187

Positive Positive Social Impact

Social Impact Digital HSSE at PETRONAS

The myHSSE digital platform serves as our one-stop knowledge centre for all PETRONAS Health, Safety, Security and
Health and Safety Environment (HSSE) matters.

Our approach to sustainability begins with our What is our position?

By adopting a single information platform that houses all 18 systems of our HSSE digital solutions, each of which addresses
employees, suppliers, and the communities in We view our people’s overall safety, health, and well-being different business pain points for users’ easier access and fit-for-purpose usage.
which we have a presence. To deliver as a shared responsibility. To foster a Generative Health,
Safety and Environmental (HSE) Culture, we have put in We are also enabling users to harness the power of HSSE data to derive insights on HSSE performance, trends, emerging
sustainable and responsible growth, we place a HSE policy, backed by a HSE Management System risks and other essential elements so that we can make proactive interventions. As we move towards our goal of realising
stepped up efforts to respond in ways that and Crisis and Incident Management System, all of which
predictive and even prescriptive HSSE analytics, we aspire for the Group HSSE endeavours to rise several notches higher.
would make a meaningful difference. are aligned to the International Organisation for
Standardisation’s (ISO) 14001:2015/ISO 45000:2018.
SHIELD IPSS HIRA
To elevate Generative HSE Culture and enhance Stewardship, Health, Information Integrated Process Safety Solution HSSE Integrated Risk Assessment
Why is it important? compliance, the HSE Accountability Behaviour and and Environment Linked Database An integrated solution to optimise An integrated system to manage and
Reinforcement (HSE ABR) programme was rolled out A unified platform to manage the Process Safety work processes, provide perform HSSE-related risk assessments.
The health, safety and overall well-being of our employees PETRONAS HSE database. It contains governance oversight to minimise
groupwide to amplify and nurture Desired HSE Behaviours IM
and contractors is a key priority given the complex nature modules on Occupational Health (OH), human error and ensure compliance,
while simultaneously diminishing Undesired HSE Behaviours.
of our work. We are constantly looking for ways to Industrial Hygiene (IH) and Product while providing valuable insights into Incident Management
In pursuing our annual goal of zero safety incidents and
improve our processes to create a safe working Safety (PS). risk management. A system to report, record and track
fatalities, we are constantly looking for ways to improve actions on groupwide HSSE incidents
environment because this ensures our employees and
our processes and systems to make them safer through a SDS e-Learning and grievances for PETRONAS.
contractors achieve their full potential, and our assets
structured assurance process focusing not only on existing PETRONAS Safety Data Sheet HSSE e-Learning
remain productive. In addition to protecting our employees, AM
operations but also on new business, which is enforced A search portal that provides valuable A centralised digital platform that
communities, and other stakeholders throughout our value
through a Post Acquisition Implementation Plan (PAIP). information on PETRONAS’ products in offers HSSE learning modules to Action Management
chain, health and safety excellence also gives us the terms of product composition, labelling employees. A centralised platform to record and
license to operate over the long term. Our ability to drive for containers and transport, safe track groupwide HSSE-related action
Periodic exercises and drills are also conducted to ensure
a safety culture builds our brand reputation and handling and storage, incident UAUC items for PETRONAS.
our emergency and crisis teams are equipped with the
strengthens our position as a caring employer and partner management and compliance with Unsafe Act, Unsafe Condition
right competencies. Several other frameworks, namely HSE ABR
in the industry. It also helps us attract and retain high- regulations. A centralised platform to report, track
Process Safety Loss of Primary Containment Reduction
performing talents. and provide analytics of Unsafe Act, HSE Accountability and Behaviour
(PSLR) Framework, Fire Prevention and Mitigation myHealth Unsafe Condition and Safe Observation Reinforcement
Framework (FPMF), and the PETRONAS Contingency myHealth for PETRONAS groupwide. A digital solution to manage both
Despite our best efforts, we are deeply saddened by the
Planning Standard guidelines were also established to One-stop centre for Approved Medical positive and constructive
news of casualties suffered in 2021, where two out of CMIS
improve compliance levels. PETRONAS also leverages Examiners (AME) and medical reinforcements.
three casualty incidents were related to land transport.
myHSSE, a one-stop digital solutions platform that presents practitioners to manage medical Crisis Management Information
We  held the Safety Stand Down groupwide to pay our records submission. System PSRS
challenges, insights, performance, emerging risks and other
respects, honour their lives, foster involvement and A solution to minimise human actions PETRONAS Self-Regulation System
elements to help us mitigate risks.
reiterate the importance of safety. Efforts on land transport LegalEasy by providing an assisted approach in A centralised digital platform for Plant
enhancement have been intensified by implementing the LegalEasy managing a crisis through technology. Management System (PMS)
Fatigue Remedy and Sleep Hygiene programme at targeted A solution to create a specific entity’s implementation. It provides a platform
What is our focus area? legal register and conduct compliance EPICS for PMS compliance monitoring and
entities, upskilling heavy vehicle drivers on land transport
safety, and specific development of land transport Given the challenging environment caused by the audits against the legal register or Environment and Social Performance information management through
procedures for newly acquired businesses. We had also COVID-19 pandemic, we continued to safeguard our selected legislations, which is based on Integrated and Centralised System standardising work processes, data
employees and partners by focusing our efforts on mental a set of audit questions. An integrated system that provides monitoring and performance reporting.
recorded 10 Tier 1 Process Safety Events (PSE) in 2021,
holistic environmental and social
a  slight increase from nine incidents in the previous year. health and wellness through programmes such as MIND-A-
Our Sustainability Journey

FMS performance data management for

A  Tier 1 Process Safety Event is a Loss of Primary CARE, i-C4RE online, and myFriends. We intensified our Fatigue Management System compliance and sustainability reporting.
Containment (LOPC) with the greatest consequence as effort by closely engaging with our partners, including A centralised system to track and
defined by API 754, Process Safety Performance Indicators suppliers and contractors, to strengthen grievance monitor the Hours-of-Service Limit MARS
for the Refining and Petrochemical Industries. It is an management and heighten HSE compliance in reducing (HSL) for PETRONAS’ employees and Monitoring and Reporting System
unplanned or uncontrolled release of any material, incidents. contractors. An integrated and centralised system
including non-toxic and non-flammable materials, from a to report, record and monitor HSSE
Efforts to sustain HSE performance were made through ICMS performance indicators for PETRONAS
process that results in one or more of the consequences
as listed in the API 754. Through effective implementation specific interventions focusing on culture, capability and Integrated Contractor Management groupwide.
System You will find specific instances of how
of fire reduction intervention programmes including Fire competency, and compliance. Additionally, we continued e-RGO some of PETRONAS’ HSSE digital
A system to screen contractors and
Prevention and Mitigation Framework (FPMF), only one to collaborate with relevant stakeholders to strengthen solutions are utilised throughout this
prevent blacklisted personnel from Ergonomics Management System
major fire incident was recorded out of the 10 Tier 1 PSE. relations and nurture trust, including accelerating our entering PETRONAS’ premises. An ergonomic self-assessment Integrated Report. Just look for the
readiness towards self-regulation, which has received adjustment and case tool to reduce myHSSE    icon.
endorsement from the Malaysian national authorities. the risk of musculoskeletal disorders.
 188 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 189

Positive Social Impact Positive Social Impact

What did we do in 2021? • Conducted Walk4trees Challenge under the MOVE Safety Management
RIGHT element to plant 40,000 trees in 14 sites across
• Conducted 12 site assessments on Unsafe Act and
Culture 11 states. It is an element under the MESTIfit4health
Unsafe Condition (UAUC), implemented by Operating
programme to drive active lifestyles and fulfil our
At PETRONAS, we are working towards building a culture • Conducted risk assessments and implemented adequate Plant Units (OPUs) and Project Sites, along with quarterly
responsibility towards the environment and community.
of Health and Safety as this will improve our processes, controls and investigations on health-related incidents to UAUC Implementation Working Group (IWG)
protect our employees and ensure our assets remain protect our employees and communities from workplace • Conducted eight Leaders Reach Out (LRO) sessions, led engagements to enhance user experience.
productive. health hazards. by PETRONAS President and Group CEO and the
• Implemented PETRONAS Contractor HSE Mentorship
Executive Leadership Team (ELT), which provided a
Programme, with commitment from the Senior
Change and Communication Crisis and Incident Management platform for open sharing and dialogues about mental
Management of major contractors that subscribed to the
health and wellness with the leaders. This was done to
• Increased the number of virtual trainings on Generative • Encouraged the learning culture across PETRONAS programme, to improve the HSE system and culture
improve psychological safety and strengthen work
HSE Culture Leadership Programme (GCLP) targeting the through six groupwide Failed Stories and Experience with contractors.
culture through an empathetical approach by the
Top Leaders, management of PETRONAS, Partners, Sharing sessions.
leaders. • Introduced HSE Accountability and Behaviour
Middle Managers, and frontliners. Reinforcement (HSE ABR) to ensure a consistent
Health
• Connected leaders to Behaviour Series training approach and fairness across PETRONAS when
programmes to help them understand human factors • Established a holistic mental health and well-being recognising and rewarding Desired HSE Behaviour,
through Process Safety Essentials, Human Performance signature programme under the THINK RIGHT element including addressing Undesired HSE Behaviour.
Improvement as well as HSE Accountability and of the MESTIfit4health initiative to:
• Improved Process Safety competencies and governance
Behaviour Reinforcement. – address mental health issues and their risk factors at
by benchmarking against industry standards and practices.
an early stage
• Assessed PETRONAS Culture Maturity Survey (CMS) for – promote mental resilience and psychological safety
domestic and international operations in 49 locations, – manage mental health problems among employees
which garnered more than 38,000 responses globally. Compliance
and contractors.
• Obtained endorsement for the National Occupational • Strengthened Industrial Hygiene capabilities for non-HSE We carry out various initiatives to improve our processes Safety Management
Safety and Health (OSH) Masterplan and Self-Regulation employees in specific focus areas, namely chemical and address potential risks.
Framework through continuous engagements with the • Established Operational Legal Areas Functional Checklist,
management, hearing conservation, ergonomics, and a collaboration between GHSE and Group Legal.
Department of Occupation, Safety and Health (DOSH) COVID-19 controls via upskilling and communication Crisis and Incident Management
and Ministry of Human Resources Malaysia. programmes. • Conducted 12 Second Line Assurances and six HSE Due
• Collaborated with the Fire and Rescue Department of
Diligence at selected businesses.
Malaysia (FRDM) to strengthen the regulatory compliance
and governance as well as ensure business continuity. • Launched Organisation Management of Change (OMOC)
digital modules to strengthen Integrated Process Safety
Health Solutions to manage risks and ensure business continuity.

• Implemented an improved Food Poisoning Intervention • Implemented a new practice of doing HSE induction for
plan across business units, OPUs and assets in contractors’ Senior Management across PETRONAS for
collaboration with the Ministry of Health (MOH). companies awarded with significant contracts valued at
RM500 million and above.
• Enhanced Fatigue Management System (FMS) at OPUs to
prevent incidents, improve compliance based on
Self-Regulation
PETRONAS requirements on fatigue management, and
Our Sustainability Journey

increase investment return. • Streamlined Generative HSE Culture to the Self-

Regulation Culture and Behaviour Assessment in
• Strengthened Health Risk Management, focusing on
ensuring compliance with Plant Management System
engineering and digitalisation to improve compliance
(PMS) requirements through Self-Regulation Programme.
and prevent adverse health effects across the workforce
(noise engineering in design, chemical management • Conducted PMS Documentation Compliance Audit on
system and ergonomics management system). PRefChem through collaboration with the Department of
Occupation, Safety and Health (DOSH) in preparation for
a start-up.
• Obtained endorsement for the Self-Regulation
Framework through strategic taskforce collaboration and
continuous engagement with DOSH and Ministry of
Human Resources Malaysia in supporting the National
OSH Masterplan.
 190 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 191

Positive Social Impact Positive Social Impact

Capabilities and Competencies What did we achieve?

Culture
A continuous effort to enhance employees’ HSE capability • Enhanced collaboration with government bodies via an
development and growth, drive sustainable HSE capability MoU with Fire and Rescue Department of Malaysia
programmes, and embed overall HSE values and (FDRM) to elevate technical competency and sharing of Change and Communication Safety Management
appreciation amongst our stakeholders and the larger emerging technology in Fire Safety Systems and
• PETRONAS Culture Maturity Survey results ascended • Reported 32,378 unique users under the
community. Firefighting.
the culture ladder to Proactive (4.03) from Unsafe Act and Unsafe Condition (UAUC) initiative,
• Build HSE Leaders of Tomorrow:
• Collaborated with external stakeholders to improve Calculative (3.98) level, with visible leadership a 14 per cent increase from the previous year,
quality and knowledge: and HSE ownership driven within line functions. demonstrating higher safety culture awareness levels
– Conducted continuous talent competency
– Contractors: Engaged with partners that assured the among employees and contractors.
development via certification training such as Tripod • Accomplished participation of more than 2,300
presence of competent contractors at the worksite,
Beta Investigation Tool, Oil Spill Response, Marine
and provided learning opportunities such as focused leaders/supervisors/frontliners and programme • 10 Senior Management of major contractors
Safety, Fire and Emergency Response, Industrial Coaches/Facilitators through Generative HSE Culture expressed commitment and subscribed to the
mentorship and technical guidelines.
Hygiene, Approved Medical Examiners, and more. (GC) programmes for Top Leaders, Middle Managers, PETRONAS Contractor HSE Mentorship Programme.
– Institutions of Higher Education: Collaborated with
– Conducted HSE Talent Outlook exercise to anticipate Rakan HSE and Partners in accelerating GC HSE
higher education institutions to encourage knowledge • Obtained commendable Process Safety Culture
and build the required green capabilities to support journey.
exchange between academia and industry; enhanced Maturity Score amongst PETRONAS employees based
our green ventures and NZCE 2050 aspiration.
Universiti Teknologi PETRONAS (UTP) HSE – 387 leaders trained under Generative HSE on HSE Culture Maturity Survey (4 out of 5).
• Design sustainable capabilities building programmes. Introductory module; and instill HSE values as we Culture Leadership Programme (GCLP), including
develop an HSE-conscious workforce. top leaders and middle managers across all • Established and rolled out the HSE Accountability and
– Structured the HSE Engineer programme to
sustainably provide a pipeline of technically equipped – Professional Bodies – Partnered with the Centre for business units. Behaviour Reinforcement (HSE ABR) Guideline. This
and operationally experienced HSE engineers to line Chemical Process Safety (CCPS) and Institution of Guideline was communicated through two e-learning
– Over 2,000 frontline supervisors were
operations. Chemical Engineers (IChemE) Safety Centre (ISC) to modules and a series of groupwide communications,
upskilled with the relevant capabilities to
encourage knowledge sharing on Process Safety for supported by the HSE ABR System.
• Enhanced Fire Hazards Management proficiency by accelerate our HSE journey.
PETRONAS and the industry.
sharing 33 technical papers and conducting five
TechTalk webinar series. • Adopt Digitalised HSE Learning: • Transformed challenges into opportunities by
creating more avenues in sharing behaviour series,
• Optimised the execution of emergency exercises – Established a sustainable HSE e-Learning and Blended
demonstrating efforts for care and keeping people
through utilisation of digital tools and systems through Learning approach (virtual webinar and group
workshops) to promote HSE upskilling anytime, for business continuity.
Hybrid Emergency Response Exercise (HERE).
anywhere, while providing just-in-time HSE
• Collaborated with Regional Leaders and government knowledge to our stakeholders.
agencies in strengthening Natural Disaster Contingency
– Enhanced and digitalised HSE Test assessments, with
Plan (NDCP) through emergency response exercises.
new modules included, such as Sustainable Health
• Strengthened incident management capability by Development, to embed HSE and sustainability values
enhancing groupwide Incident Investigation team across our frontliners (PETRONAS non-Executive • 200 per cent increase in the utilisation of PETRONAS Employee Assistance Programme (MyFriends) in 2021
leaders, reflective learning and root cause analysis Technicians). compared to the previous three-year average (2018 – 2020), showing increased openness among employees to
facilitators. – Launched Organisation Management of Change reach out to professionals to manage their problems.
• Strengthened Industrial Hygiene awareness, knowledge (OMOC) digital modules to strengthen Integrated • 74 per cent improvement in resilience score among 840 participants involved in Individualised Coaching for
and capability by introducing industrial webinars (4), Process Safety Solutions to manage risks and ensure
Our Sustainability Journey

Resilience Enhancement (i-C4RE).

upskilling programmes (2), HSE culture talks (2), and business continuity.
industrial hygiene infographics which resulted in 1,889 • 15,023 employees from PETRONAS global operations attended the eight Leaders Reach Out (LRO) sessions on
views. mental health and well-being.
– Received 4,045 comments and feedback around four major areas – Wellness, Leadership, Working
Arrangement and Employees Performance, leading to some immediate interventions such as subsidies for work
from home expenses, individualised coaching programmes, and strict vaccination requirements for entry into
work premises to manage COVID-19 risk.
 192 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 193

Positive Social Impact Positive Social Impact

Compliance Capabilities and Competencies COVID-19 Response

Health A progressive step towards Generative HSE capability Throughout 2021, PETRONAS moved swiftly to
• 50 per cent reduction in food poisoning cases in building among our talents while impacting the larger provide our employees, customers, clients,
2021 compared to a rolling five-year average community and society through our HSE capability communities and those across our supply chain with
(2016-2020). efforts. relevant support during this challenging period of the
• Zero food poisoning incidents involving COVID-19 pandemic. With a strong focus on
in-house caterers. • Build HSE Leaders of Tomorrow: maintaining their health and safety, we reached out
• High Ministry of Health (MOH) Hygiene Standards to assist those in need and create a lasting positive
– Developed capability tools and framework for the
among PETRONAS in-house caterers where 97 per impact in the communities where we are present.
development of Green and Clean Energy skillset.
cent achieved MOH’s Clean, Safe and Healthy
(BeSS) certification and the remaining achieved – Identified over 30 new and emerging HSE
Grade A Standard. skillsets to be developed for HSE professionals
• Zero fatigue-related fatality and incident among and established GHG Management as a new
OPUs applying Fatigue Management System. discipline. Activity Highlights
– Prevented 16,900 potential fatigued employees
from entering 32 PETRONAS OPUs. • Designed sustainable capability building programmes:
PETRONAS Pandemic Preparedness and Response Team (PPRT),
– Achieved High compliance (99.85 per cent) – Industrial Hygiene training resulted in: the Directives, Standard Operating Procedures (SOPs) and
for PETRONAS Technical Standard requirements o 16 trained professionals Mitigation Measures
on fatigue management among employees and o 23 Initial Ergo Trained Persons (ETPs) • Established the COVID-19 PPRT at Holding Company, Business • No major interruptions recorded due to
contractors. o 21 Advanced ETPs. and Operating Units both at Malaysia and international operations timely and effective SOPs as well as
– Reduction of 12.5 per cent in fatigue
– Developed a sustainable pipeline of new HSE to manage the transmission and impact of COVID-19. direction/guidance given by PPRT and
management non-compliance frequency to
engineers for business and economic growth: management.
14,224 from 16,266 in 2020. • Set up a COVID-19 One-Stop Centre on the PETRONAS Intranet
– Saved 231,000 manhours and RM11.6 o 48 HSE engineers mobilised to line operations, which acts as the main platform of the latest information • Achieved RM700,000 in cost savings from
million through the digitalisation of fatigue with an accelerated HSE talent time-to- including all the directives, technical guidelines and general these internally-developed digital platforms,
management, including automated checks on autonomy information to guide employees on COVID-19 management. with no data breaches.
fatigue compliance at site, reduce administrative – Introduction of innovative learning infrastructure
costs, and blocked entries of fatigue employees. • Developed Incident Action Plans and SOPs across all levels of • Achieved 100 per cent utilisation for
via digital and blended HSE learning resulting in:
• Targeted noise reduction projects in several OPUs the Group. COVID-19 Digital Platform as all employees
o 7 HSE e-Learning modules shared to upskill all updated their vaccination status.
show significant noise reduction. Routine surveillance • Launched the COVID-19 Digital Platform (e-Health Vaccination
PETRONAS contractor personnel.
programme and close monitoring detected a few
o 12 in-house HSE e-learning modules Tracking) for employees to update their vaccination status and
Occupationally-acquired Noise-Induced Hearing Loss
developed in 2021. other mitigation measures, backed by 85 technical guidelines and
(ONIHL) cases, and investigations were carried out
to determine root causes and mitigate actions. o Improved overall HSE competency level with a directives to improve business continuity and safeguard the
health and safety of the workforce.
• Zero cases of over exposure to chemicals in 2021 stronger HSE Technical Professional and
and 2020. competent person with Certificate of • Provided medical emergency support to employees and
Competency (CoC) pool. contractors during the peak period of COVID-19, enabling them
Safety Management o Achieved 71 per cent Process Cycle to obtain necessary treatment including admission into
• Improved compliance in managing organisational Efficiency through the digitalisation of the HSE PETRONAS’ panel hospitals.
change as seen through increased Integrated Process Test process.
Safety Solution (IPSS) utilisation rate. PETRONAS Vaccination Centres
• Collaboration with external stakeholders to improve
Our Sustainability Journey

• Through Safety Intervention Plans, we achieved: • Established six onshore Industry Vaccination Centres or Pusat • RM4.0 million contributed by the six
– Aviation: Sustained zero incidents. quality and knowledge:
Pemberian Vaksin Industri (PPVIN) in Pengerang Integrated PPVINs to support the National
– Maritime: 20 per cent reduction in Maritime – Enhanced quality of HSE course module by Complex (PIC), Johor; Malaysia Refining Company Sdn Bhd Immunisation Programme.
Lost Time Injury incidents, with zero Fatal rolling out enhanced HSE Introductory module for (MRCSB), Melaka; Bintulu and Miri, Sarawak; and Kerteh and
Accident Rate (FAR). • A total of 99.6 per cent of PETRONAS
all Universiti Teknologi PETRONAS (UTP) first-year Pulau Duyong Jetty Terminal (PDJT), Terengganu; to help reduce
– Land Transport: 17 per cent reduction in Total students. the nationwide daily infection rates.
employees have been fully vaccinated.
Vehicle Accident Rate (TVAR) and 33 per cent
• Over 1,000 employees’ dependents,
reduction in Vehicle Loss of Primary Containment • Distributed hygiene kits to all employees.
community members and school-going
(LOPC) recorded for Downstream.
• Conducted the first-of-its-kind outreach programme by setting children vaccinated at the PPVs.
Self-Regulation up five offshore vaccination centres.
• RM750,000 contributed to Pusat Pemberian
• Facilitated Self-Regulation readiness for four Vaksin (PPV) in Perlis, Kedah, Perak and
endorsed OPUs through Structured Assurance and Selangor.
Culture Baseline Assessment.
 194 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 195

Positive Social Impact Positive Social Impact

Activity Highlights Activity Highlights

Green Bubble Strategy and Green Net COVID-19 Disaster Relief

• Grouped different work areas as Green Bubbles to sustain • 33 assets worldwide implemented the • Provided COVID-19 relief in the form of donations as well as • 1,507 hygiene kits distributed to frontliners
business continuity throughout our operations, where personnel Green Bubble Strategy and Green Net. necessary supplies to prevent, control and treat impacted and the community via collaborations with
who entered these ‘bubbles’ are required to conduct COVID-19 communities located across our domestic and international Resident Bintulu Office and Sebauh District
• Close to 100 per cent vaccination rates for
testing. assets (Azerbaijan, Brazil, Brunei, Canada, China, Egypt, Gabon, Office, Sarawak respectively.
the offshore ecosystem – Upstream,
Gambia, India, Iraq, Italy, Myanmar, Mexico, South Sudan, Spain
• Established quarantine centres for employees from the Upstream PFLNG, Malaysian Petroleum Management
and Suriname).
and Gas operations at local hotel establishments to allow a (MPM), Petroleum Arrangement Contractors
smooth transition and changes in shifts. (PACs), crew, with no major business
disruptions.
Supply Chain
• Continued to support and ease Oil and Gas, Services and • Facilitated the approval and disbursement
Equipment (OGSE) vendors by facilitating access to financing of funds totaling RM1.37 billion to 243
My Personnel e-Tracker (MyPeT)
under the Vendor Financing Programme. applicants since its inception in 2018.
• Introduced a tracker for personnel to ensure minimal industry- • Ensured the safety of 10,000 offshore
wide disruptions across all operations and the value chain. employees.
MyPeT was designed to fill in the gaps for Upstream operations
• Facilitated the process of contact tracing. Split Work Arrangements
as the Malaysia’s official MySejahtera app was only applicable for
• Introduced PETRONAS Split Work Arrangement to encourage • Strengthened remote working arrangements
onshore locations.
employees to be productive and thrive in any working by introducing New Ways of Working
• Monitored personnel movements, including contractors and environment. Flexible work options such as Compressed Work Assistance, Connectivity Assistance and
subcontractors, from the embarkation point to their respective Week, Flexible Work Hour, Work from Home (WFH) shared Remote Working Best Practices.
quarantine exit points. arrangements, and also assistance allowance to set up a home
office and connectivity fees were made available.

Emergency Assistance and Financial Support

• Extended financial support to vaccinated employees, and • Provided 200 emergency/non-emergency
International Assignees and their families who were returning to assistance to COVID-19 infected employees
Malaysia. via partnerships with the private medical
sector.
• Provided financial reimbursements to employees and families
based in PETRONAS operations across 30 countries for
vaccinations done at private hospitals and remote working
options for those obtaining vaccinations in their home countries
over two months.

Government Relations
• Collaborated with internal and external stakeholders, including • Pursued strong collaborations with the
the Ministry of Health (MOH), Ministry of International Trade and government, government agencies and
Industries (MITI), National Security Council (MKN), National state governments.
Our Sustainability Journey

Disaster Management Agency (NADMA), Department of

Occupational Safety and Health (DOSH), PETRONAS contractors
and joint-venture partners to further enhance our COVID-19
response.
 196 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 197

Positive Social Impact Positive Social Impact

Security Protective Security Monitoring Stakeholder Engagement

• Institutionalised real time monitoring for swifter security • Intensified stakeholder engagement, both locally and
Why is it important? What is our position?
analysis and business decision making. abroad. This included internal and external constituents,
Given the dynamic, volatile and asset- Safeguarding our people, information, for example enforcement and government agencies in
heavy nature of the energy industry, we property and operations wherever we • Extended information on timely travel security insights to Malaysia. The engagements largely focused on areas
remain susceptible to security exposures operate remains our fundamental heighten employees’ preparedness levels and shared such as potential room for collaborations to sharing on
which could impact our interests. Our priority as a vital business enabler. security acumens via onboarding sessions to improve good security best practices and security and human
extensive value chain is exposed to a Backed by our goal of positioning PETRONAS sponsored scholars’ security mindfulness. rights, as well as security incident management to
range of security externalities, from Group Security as a Centre of • Ensured uninterrupted business operations and provided uphold uninterrupted security operations.
protest and terrorism to crime, among Excellence, we focus on widening and
24/7 support to employees and contractors during the • Collaborated with the PETRONAS Pandemic
others. Unpredictability and adversaries improving our security ecosystem,
Minimum Security Standards (M2S2). To COVID-19 lockdowns. Preparedness and Response Team (PPRT) to conduct
affecting our Manufactured Capital, such pushing boundaries to close security
continuously enhance our robustness special awareness sessions entitled Safeguarding our
as onshore and offshore assets, gaps by deploying a suite of physical
throughout the energy value chain, we Frontliners – The Dynamics of Risks, Choices and
including oil rigs, platforms and and technological security solutions. At PETRONAS’ Security Frontliners
also implement targeted initiatives such Decisions amidst COVID-19 to curb transmission risk
refineries, may result in loss or the same time, enhancing our protective
as elevating compliance levels with the among our security frontliners and their family members.
operational disruption, thus affecting our monitoring and data analytics efforts to • Reviewed the roles of security frontliners and explored
ability to deliver optimum business and propel proactive readiness amidst fluid M2S2 and uptake of security
the potential of elevating in-house capabilities via the
stakeholder value. A strong and secured geopolitical environments. considerations, generating predictive
usage of drones and enhanced maritime security skills.
What did we achieve in 2021?
physical security landscape enables us security insights and pursuing remote
Awarded Honourable Mention under the (Remote
to operate in a safe environment. It To this end, we continuously fortify our crisis management measures, enhancing • Intensified patrolling of our assets in Malaysia, including
Resilience category) at the 2021 Duty of Care Awards.
enables smooth operations and physical security controls, supported by maritime security as well as paving the offshore and unmanned platforms.
uninterrupted productivity of our the right tools, practices and people. We way for accelerated skills and capability
• Stepped up our ability to better address emerging Security Governance and Assurance
infrastructure. More importantly, allowing are guided by laws and regulations of development in the niche domain of
physical security management. In security risks, among others deployed body worn
our people to achieve their truest the countries in which we operate,
addition to these, expanding the roles cameras for a pilot project at the PETRONAS Twin
potential wherever we operate. including internal governance
Towers.
• RM1 million cost savings achieved through
mechanisms such as the PETRONAS and coverage of our PETRONAS various negotiations of Price Agreement and fit-for-
Security Policy, Security Management Auxiliary Police – our pool of skilled • Enhanced security during the various containment purpose security solutions.
Systems (SeMS) and Mandatory frontliners. measures to protect PETRONAS’ interests, locally and
abroad.
Value Creation of Hybrid Emergency Response Exercise (HERE): Proactive Security Risk Management
Security Compliance Culture
Enhance capability,
Contribute to cost, Optimise overall competency and • 30 PETRONAS Auxiliary Police personnel and
and time savings by response management
Fortify security Strengthen security
knowledge through
• Enhanced Security Compliance culture groupwide, executives from Group Security were honed as
controls at PETRONAS readiness through premised on the “Security is Everyone’s Responsibility”
conducting virtual by having virtual targeted initiatives and part of a Train the Trainer programme to realise the
assets globally predictive inputs
drills security engagements awareness philosophy, where collectively more than 25 security Fit and Responsive aspiration.
programmes awareness programmes via webinars, engagements,
articles, videos and infographics were conducted.
• Held the PETRONAS Security Month 2021 in July to Security Protective Monitoring
What did we do in 2021? increase awareness on the importance of robust security
practices in delivering a reliable, uninterrupted energy
Security Governance and Assurance Proactive Security Risk Management • Successfully piloted an in-house real-time security
supply. Organised forums, centered on topics such as
Our Sustainability Journey

security behaviours, scams, substance misuse and monitoring to evaluate situational development in
• Completed the Safeguarding Operations, • Improved security governance through four Security Crisis the countries where we operate.
international security.
Assets and Resilience (SOAR) Project across Management Guidelines (SCMG), namely Demonstration and Protest,
214 assets, elevating compliance levels in Kidnapping, Piracy and Sea Robbery and Terrorism. • Conducted multidisciplinary engagements with non-
line with PETRONAS’ M2S2 standards. security practitioners to understand and address direct
• Nurtured dedicated subject matter experts through relevant skills and Stakeholder Engagement
• Deployed creative solutions to optimise competency development programmes in identified areas to shape a and indirect security exposures, including security
manpower, as well as accelerated schedules strong talent pool. governance stipulations from other parts of the business.
and processes to maximise value creation.
• Collaborated with PETRONAS Technical Training Sdn Bhd (PTTSB), to • Embarked on the Group Security’s three-pronged • Four Quarterly Security International Operations
strategy covering activities namely, an internal survey, Conclaves conducted, involving security personnel and
• Identified seven technology-driven initiatives develop targeted security capabilities modules for the energy sector.
targeted stakeholder engagements and a comparative decision-makers from PETRONAS’ global operations.
to drive security operational excellence.
• Progressed on establishing a Security Academy to provide learning
benchmarking exercise where improvement findings were • Inaugural mass virtual engagement also held within
opportunities in areas vital to physical security.
incorporated into the Five-year Group Security Blueprint. the Group Security fraternity with holistic
• Completed Phase 1 of digital security systems integration for participation by all levels of staff, for example Group
Malaysian operations. Phase 2 covering our international operations is Security Townhall as well as virtual health and
planned for execution in 2022. wellness programmes.
 198 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 199

Positive Social Impact Positive Social Impact

Human Rights We are guided by the following standards, policies and guidelines:

United Nations PETRONAS

Why is it important? Guiding Principles
PETRONAS Code
PETRONAS Contractors’ Code Health, Safety and
Anti-Bribery and
of Conduct and Corruption Policy
on Business and Human Rights of Conduct on Environment
Our commitment to social performance is managing impacts arising from areas of our business while contributing to the Business Ethics and Guidelines
Human Rights Commitment Human Rights Policy
society in a responsible, ethical and transparent manner, in accordance with recognised standards in compliance with (CoBE) (ABC Manual)
(UNGPs) (CoCHR)
applicable legislation. Our social performance framework governs how we manage impacts in the areas of environment,
health, safety, socio-economic and cultural.
Our human rights commitment applies to all employees of future in South Sudan is available in the Sustainability
Respecting human rights is a vital component of our Social Performance Framework and we have identified salient the Group of Companies, contractors, sub-contractors and section of the PETRONAS FLOW magazine, in the
human rights issues material to PETRONAS in these areas of our business where we operate: any third parties within PETRONAS’ premises or performing September and December 2021 issues. The information is
work and/or business for and on behalf of PETRONAS, in also featured on our corporate website.
line with the PETRONAS Contractors’ Code of Conduct on
Human Rights (CoCHR). As part of our ongoing efforts to reshape our portfolio and
Labour and Working Conditions Community Well-being redeploy capital to our identified areas of growth, we have
• Forced or trafficked labour in • Community health and safety. Our Due Diligence finalised our divestment in Myanmar. This was achieved
contractors’ and subcontractors’ • Access to natural resources for In ensuring we minimise risks to the communities where we after we conducted a social risk assessment and human
workforce. health, cultural needs and operate, we are governed by our due diligence technical rights due diligence for our operations there and also
• Child/minor labour. livelihood. standards and guidelines pertaining to human rights: social other sites. We have addressed matters identified from the
• Condition of employment and • Land acquisition and involuntary risk assessment, human rights due diligence, indigenous assessment and due diligence by strengthening our
work. resettlement with/without peoples assessment, cultural heritage assessment, land engagements with key stakeholders as well as formalising a
economic displacement. acquisitions and involuntary resettlement, as well as grievance management process. Good practices from other
• Discrimination in hiring and
grievance mechanism. These due diligence programmes are operations in Malaysia and Canada on engagements with
contractual terms. • Indigenous peoples.
led by our Social Performance technical practitioners where communities with regards to human rights and consistent
• Freedom of association and • In-migration.
potential human rights are identified, mitigated, tracked and monitoring of gap closure plans, have been shared with
collective bargaining.
monitored. Social Risk assessments are conducted other operations for mutual benefit.
• Workers’ health and safety.
• Workers’ camp conditions.
Human periodically in accordance to project phases, during
operational, decommissioning, as well as when there are Access to Remedy
significant changes in activities which may result in impact PETRONAS provides access to remedy through its grievance
Rights to community well-being, supply chain, security and labour
and working conditions. Human Rights Due Diligence is also
mechanism (GM). It plays a critical role in opening channels
for dialogue, problem-solving, investigation and providing a
conducted for potential mergers and acquisitions. remedy where required. GM enables workers and other
rights-holders to raise complaints freely, obtain effective and
Human rights is also fundamental to a just energy transparent solutions, and the pre-emptive action needed to
transition. The concept of Just Transition is to ensure that avoid recurrence. Employees can submit grievances through
as we decarbonise, we also create social value and ensure their trade union representative, line manager and Human
Supply Chain Responsible Security
progress for society that will offer better prospects for Resources representative for employment conditions
• Contractor/supplier performance • Use of force and conduct of more people, with the notion of leaving no one behind. complaints.
related to labour and working third-party security. As  part of Just Transition in realising our NZCE 2050
conditions, community well- • Human rights training for staff aspiration, the year 2021 saw PETRONAS strengthening our PETRONAS contractors must establish their own GM to
being and security. and third-party security. governance on our internal processes to establish Labour address their workers’ grievances. For example, in some of
Our Sustainability Journey

and Working Conditions (LWC) baseline by evaluating our our operations, such as offshore platforms, chemical plants,
compliance with labour and working conditions laws as an and project sites under construction, we have designated
integral part of fulfilling our sustainability objectives. personnel that manage HSE and social grievances by
employees and contractors. There are also community
What is our position? Our work in advocating human rights in supply chain liaison officers to address grievances from communities.
continues as per our reporting on page 203.
Our Commitment
Our GM system allows us to monitor the number and type
PETRONAS is committed to respecting human rights in areas of our operations, complying with its Code of Conduct and With our operations located in many countries around the of formal individual or collective appeals received periodically.
Business Ethics (CoBE) and all relevant legal requirements. Our responsibility is to uphold CoBE and ensure we comply world, local socio-political challenges can create complexity This helps us better understand the types of issues being
with human rights principles and laws, embedding industry best practices throughout PETRONAS’ Social Performance in managing human rights risks. Despite some challenges, raised, the effectiveness of our GM and methods to resolve
standards and guidelines, aligned with the United Nations Guiding Principles on Business and Human Rights (UNGPs). PETRONAS strives to uphold our commitment to respect issues that have been raised. The grievance data allows us to
We  apply integrated controls throughout PETRONAS’ systems and processes including areas of risk management, human rights and the UNGPs in compliance with CoBE and monitor salient problems and address root causes to prevent
procurement and supply chain, HSE, human resource management, business operations, legal and security. all other applicable requirements where we operate. More further grievances from being raised.
information on our efforts in building a sustainable energy
 200 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 201

Positive Social Impact Positive Social Impact

What did we do in 2021? What did we achieve?

Strengthened Engagements Assessments Strengthened Engagements Assessments

• Continued to engage with officials from the Legal Affairs • Assessments of internal processes were conducted to
Division of the Prime Minister’s Department and the establish a Labour and Working baseline based on the • Over 9,000 PETRONAS non-executive employees • The assessment on our internal processes indicated
were covered by collective bargaining agreements. no significant gaps in complying with requirements.
Human Rights Commission of Malaysia (SUHAKAM). nine LWC Principles: freedom of labour, child labour,
PETRONAS’ collective bargaining agreements We will continue to focus on capacity and awareness
wages and benefits, working hours, grievance
• Shaped PETRONAS’ leadership in business and human typically are for three years, with the latest renewed building, and engagements on labour and working
mechanism, non-discrimination, freedom of association,
rights by participating in the National Business and in 2021. conditions.
humane trademark as well as foreign and migrant
Human Rights Forum as a speaker.
workers. • More than 500 employees attended the
• Continued to engage with the Business Council for Technical Exchange session on Forced Labour and
Sustainable Development (BCSD) Malaysia, participating Masterclass session on Living Wage.
in forums and discussions related to human rights.

The assessment results show that PETRONAS’ internal processes comply with the Labour
The assessments of internal processes were conducted to our operations based on Labour and and Working Conditions (LWC) legal requirements where we operate
Working Condition Principles which has been mapped with legal requirements
United Kingdom Turkmenistan Responses
Principles Freedom Child Wages & Working Grievance Non- Freedom of Humane Foreign & Respondents
of Labour Labour Benefits Hours Mechanism discrimination Association Treatment Migrant
received
Canada Iraq
Workers Upstream 12
Downstream 13
Dubai Myanmar
Mauritius Malaysia G+NE 14
Mexico India
Downstream Gabon Brunei PD&T 22
Upstream Suriname Botswana Indonesia MISC 6
Namibia Lesotho KLCCH 3
PD&T
Total 70
Gas + New South Africa
Energy
KLCCH
Capability Enhancements
MISC

Indicator Remarks • 68 per cent of permanent employees completed the Human Rights Management e-learning module resulting in
Comply to the requirements growing awareness on human rights management.
• 10 human rights training sessions were conducted for 1,415 (82 per cent) Auxiliary Police in 2021 resulting in
Capability Enhancements Grievance Management upskilled security personnel in human rights legislation.

• Expanded pool of Social Performance practitioners to • Grievance mechanism module for employees:
address human rights risks at Group, Business, and – 1,440 employees completed Grievance
Our Sustainability Journey

operational levels. Grievance Management

Mechanism e-learning module.
• Enhanced capability development on human rights – 353 Grievance Focal, Community Liaison officers
Grievances received from 2019-2021 According to Human
management in LWC by conducting Technical Exchange who have been upskilled via GM training and GM • Received 49 grievances in 2021: Rights Elements in Business Context
sessions on Forced Labour and Masterclass sessions on online system workshops. – 21 grievances related to supply chain Community Well-being
Supply Chain
Living Wage. – 14 grievances on LWC Labour and Working Conditions
Responsible Security
• Conducted a Technical Exchange on the National Action – 14 grievances on community well-being.
Plan on Forced Labour with the Ministry of Human
Resources and SUHAKAM, rated effective by all
• 98 per cent of all grievances received were 148

addressed accordingly, while lessons learnt from the

participants.
issues raised have been identified to prevent future 57
67

recurrence. 0 23
12 14 14 21

2019 2020 2021

 202 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 203

Positive Social Impact Positive Social Impact

Supply Chain Management What did we do in 2021?

Digital Procurement

• Implemented a cloud-based procurement integrated platform, covering Procure-to-Pay processes across PETRONAS’
businesses.
• Established the Procurement Marketplace for low-value, high-volume material purchases.
• Infused analytics across our inventory management processes through Equipment Reliability-Based Stocking, leveraging
on materials management and plant maintenance data.
• Improved surplus visibility across Petroleum Arrangement Contractors (PACs) through Surplus Marketplace.
• Conducted further improvements to the PETRONAS Licensing Management System (PLMS) to continuously enhance
user experience.

Sustainable Supply Chain

• Addressed gaps in human rights risk management within the supply chain, which include a lack of understanding of
human rights and formalised grievance management to address grievances of their contractors and suppliers.
• From 2018 to 2021, PETRONAS conducted the PETRONAS Contractors Code of Conduct on Human Rights (CoCHR)
Self-Assessments with more than 6,000 registered contractors, out of which 4,600 are active contractors. 83
companies with more than 20,000 employees underwent the CoCHR Compliance Assessment.
• In 2021, 156 out of 298 contractors responded to the CoCHR Online Self-Assessment. We conducted dialogues with
22 identified contractors with elevated human rights risks.

About the Compliance Assessment Participation Rate of

CoCHR Online Self-Assessment
CoCHR Online Self-Assessment (active contracts)
Why is it important? What is our position? >6,000 873
registered contractors • Online surveys were disseminated via collaboration
As a large organisation that relies on various Our approach to contractor management is taken from the Labour and with Licensing and Registration.
products and services from external parties, it Working Conditions (LWC) lens, and is part of the company’s overall
• Participation is voluntary, 977 out of 1,657 contractors
is essential to build supply chain resiliency. effort to address adherence to health, safety and environment (HSE) 4,600 responded.
We ensure business continuity by managing standards. Under the PETRONAS Contractors Code of Conduct on active contractors
658
(75%) 486

our supply chain effectively, efficiently, and Human Rights (CoCHR), we require our contractors to respect • Based on the response received, some contractors were
298
sustainably. This includes looking into the internationally-recognised human rights and comply with PETRONAS contacted for compliance assessment.
163 156
lifecycle of our products, protecting workers’ Code of Conduct and Business Ethics (CoBE). PETRONAS expects our 22 identified contractors with (36%) (52%)

rights throughout the supply chain, and contractors and suppliers to adhere to LWC principles which are freedom elevated human rights risks 2019 2020 2021
ensuring the safety of our products and of labour, prevention of child labour, wages and benefits, working hours, Total Contractors Total Responded

solutions to stakeholders. We do this because establish grievance mechanism, non-discrimination, freedom of

Selection criteria: Contractors Assessed on
potential disruptions could impede operational association, humane treatment and foreign and migrant workers.
• Value of Contract awarded CoCHR Compliance
efficiency, business continuity, financial
performance and overall growth. To this end, Our procurement system is supported by digital and analytic insights to (>RM1 million).
our procurement practices are responsible, deliver value to our stakeholders, thus shaping a resilient and ethical • High risk activity (high HSE risks, CoCHR Compliance Assessment (on-site: 2018-2019 and
fair, ethical and transparent. supply chain ecosystem. It is guided by the PETRONAS Procurement involvement of subcontractors). virtual: 2020-2021)
Standard, PETRONAS Anti-Bribery and Corruption Manual, and the • 83 companies with more than 20,000 total workforce
Our Sustainability Journey

• Services rendered in remote 29

Given our long-standing experience in the oil PETRONAS Code of Conduct and Business Ethics (CoBE), ensuring our locations. assessed.
21 22
and gas industry, we continuously collaborate suppliers and contractors fulfil the requirements throughout the • Assessments included:
with relevant industry players to drive socio- procurement process. Our supply sources are from various geographical • Foreign and migrant workers 11
participation in business. – Site walkabout (before the pandemic)
economic growth through our supply chain. locations. We aim to responsibly manage our supply chain by – Interview with key personnel
Through our Vendor Development strengthening our digital solutions and continuously streamlining our – Documents review 2018* 2019 2020 2021
Programme (VDP), we promote the procurement systems to create a more resilient supply chain ecosystem. *pilot assessment

development of the Oil & Gas Services and

Equipment (OGSE) industry, as well as Small To improve our business practices, enhance productivity and optimise
and Medium Enterprises (SMEs), to build operations, we conduct capacity building and engagement initiatives for Ensuring Product Safety
strong relationships and create more local our suppliers and contractors. This is also in line with our high integrity
entrepreneurs. Over the longer term, this standards as we have zero tolerance for malpractices and non- • Improved raw material compliance management.
creates a ripple effect in the communities compliances. We also manage grievances via an integrated platform to • Successfully expanded the Raw Material Information Request (RAWMIR) programme due diligence on conflict minerals
around us as this maximises economic monitor and manage cases. Meanwhile, in terms of product groupwide in ensuring comprehensive raw materials HSE information being obtained from suppliers.
growth, creates more employment sustainability, we have established several initiatives to reduce our
opportunities and improves their livelihoods. environmental footprint across our value chain as part of our net zero
carbon emissions by 2050 (NZCE 2050) aspiration.
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Positive Social Impact Positive Social Impact

Product Stewardship

Why is it important?
Product Stewardship is an essential component at PETRONAS. It ensures we meet the demands for the delivery of safe,
compliant, sustainable and innovative products and solutions that address market needs and industry trends. It is
embedded under our research and development (R&D) and aligns with the United Nations Sustainable Development Goals
(SDGs). We do this because we believe that it is our responsibility to ensure the highest health and safety standards are
adhered to throughout our operations, public health is protected, and at the same time, business continuity is maintained.
By adopting a Life Cycle Thinking approach during product development, we are able to create products and solutions
that minimise our impact on the environment. Additionally, our listed subsidiary companies can provide greater disclosures
for the Dow Jones Sustainability Index (DJSI) and FTSE4Good on all environmental impact categories required for
products.

What is our position?

Comprehensive product stewardship
assessments, namely, Raw Material
Management, Life Cycle Assessment (LCA)
Shaping Homegrown OGSE Players What did we achieve?
and Product Safety Assessment are carried
Future-proof Digital Ecosystem out to ensure that future product risks are
• Contributed to national strategic initiatives by partnering
adequately managed. We also constantly
with government agencies through various programmes:
monitor our impact on the environment,
– JanaNiaga (JN) National Supply Chain Financing • Enabled three times shorter material ordering time
ensure our packaging remains within
(NSCF) initiative, in collaboration with the Ministry of through implementation of Procurement
regulatory boundaries, and communicate
Finance and Export-Import Bank of Malaysia Berhad Marketplace.
information on product hazards and risk
(EXIM Bank), to help alleviate issues related to cash • Optimised inventory level to less than one per cent management measures to stakeholders via
flow. leading to reduced working capital and non-moving our Product Safety Data Sheets (SDSs). We
– Malaysia Short-term Employment Programme stocks. also leverage emerging technologies and
(MySTEP), in collaboration with the Ministry of innovation as this allows us to penetrate new
• Doubled the surplus utilisation rate across
Finance, Ministry of Entrepreneur Development and markets, build customer loyalty and
Petroleum Arrangement Contracts (PACs),
Cooperatives and Social Security Organisation strengthen our position as a reputable
generating more than RM500 million in value.
(SOCSO) to drive apprentices and create more solutions partner.
employment opportunities within the oil and gas
industry. Our product safety assessments are carried
out in line with the requirements of the
• Coached 32 vendors via the Road to Bursa initiative to
PETRONAS Technology Management System
improve corporate governance standards and
Sustainable Supply Chain (PTMS) and Strategic Approach to
professionalism.
International Chemicals Management (SAICM),
• Strategically collaborated with various industry players to and Responsible Care Initiative. We are also
Our Sustainability Journey

assist vendors’ capabilities and growth via several • Identified improvements in supply chain grievance guided by the Raw Material Information
programmes, such as: management over the past two years (2019-2021) Request (RAWMIR) standards. This helps us
by guiding the contractors to comply with the nine identify the Substances of Very High Concern
– Sustaining Malaysia OGSE Circle (SMOC) to increase
Human Rights Principles outlined in the CoCHR, (SVHC) in our products and alleviate the use
access to government funding and technical support.
including freedom of labour and prevention of child of Conflict Minerals. Additionally, data and
– Embracing New Energy (EMNE) Webinar Series, in labour. information are also proactively shared with
collaboration with Sustainable Energy Development
• RM1.37 billion funds/loans approved to 243 relevant stakeholders, as required by the
Authority (SEDA), government agencies and financial
applications under the Vendor Financing Programme Globally Harmonised System of Classification
institutions (such as MIDF, CIMB, HSBC Bank Malaysia
since its inception in 2018. and Labelling of Chemicals. Meanwhile, LCAs
Berhad and Bank Muamalat).
are conducted according to international
– Going Global Programme, in collaboration with the standards and best practices.
Ministry of External Trade Development Corporation
(MATRADE).
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Positive Social Impact Positive Social Impact

What did we do in 2021? What did we achieve?

Employee Welfare and Fair Remuneration
Product Safety Product Safety
Why is it important? What is our position?
• Completed product stewardship assessments, including
the application-specific product safety tests, for all • 6 PETRONAS ETRO base oils series were We are committed to ensure fair employment, fair At PETRONAS, we strive to nurture an inclusive workplace
successfully registered with NSF, under the H1 and remuneration, and diversity best practices are carried out that values equal opportunities, diversity, talent, and overall
applicable product R&D projects.
HX-1 categories, which are lubricants and lubricant throughout our company and supply chain. We also employee well-being, and operate with a strong foundation
• Appointed and trained product stewardship focal points components respectively certified for incidental food provide our workforce with a competitive remuneration to of merit and equality, and our remuneration structure is
for each research cluster. contact. attract and retain a quality talent pool. At the same time, anchored on a pay-for-job principle, irrespective of gender,
we also look after their overall health and overall well- age, nationality, ethnicity, or religion. We adopt
• Obtained approval to establish an in-house toxicology • Assessed MG3DF and MG3DF75, which are
being as this helps ensure a healthy and productive differentiation in our total rewards strategy in creating the
laboratory to facilitate in-vitro ecotoxicity testing to synthetic base oils, for acute dermal irritation/
workforce. right environment that drives our diverse and changing
support R&D activities. corrosion hazard classification, through the
workforce towards a high-performance culture.
Organisation for Economic Co-operation and
We also take pride in promoting a diverse and inclusive
Development (OECD) Test Guideline No 404 for
workforce, as this allows us to harness various skills and We have established the PETRONAS Diversity and Inclusion
Testing of Chemicals, improving the products’
valuable experiences that promote an innovative culture (D&I) Council that oversees our efforts in four identified
hazard classification. The results were used for the
and positively impact business growth. That is why it is key areas, namely culture, multinationals, gender, and age;
read-across assessment of MG3DF90.
important that we cultivate the right environment that and a Wellness Steering Committee that oversees our
allows them to thrive and at the same time, achieve their efforts in safeguarding employees’ mental well-being.
true potential.

Raw Material Management Raw Material Management

PETRONAS’ D&I Focus Areas of Culture, Multinationals, Gender and Age
• Conducted Raw Material Information Request (RAWMIR)
assessments on selected PETRONAS Chemicals Group • 7 Substances of Very High Concern (SVHC)
Berhad’s (PCG) OPUs and oil field and production were identified via the RAWMIR initiative with plans
chemicals for domestic upstream assets. to phase out/substitute these substances.

• Introduction of new process to determine post • Completed conflict mineral due diligence for 400
consumer recyclable in packaging, Substances of Very raw materials among more than 250 vendors with Differences in Representation by Space for idea
Women in senior
High Concern (SVHC) in raw materials, and renewable no use of conflict minerals in PETRONAS raw perspectives are diverse nationalities generation from young
leadership roles
sources from selected vendors. material supply chain identified. respected and valued in leadership roles talent is enabled
Providing opportunities
Creating an environment Building and having Creating an innovative
for representation by
where people feel safe qualified local nationals organisation where
women in senior
and confident to speak to fill the majority of young talents feel
leadership positions.
up and put differing decision-making positions involved, respected and
PETRONAS aims to
Life Cycle Assessment Life Cycle Assessment views across, to foster in every country we connected, as well as
establish a pervasive
creativity and innovation. operate in and having inspired to contribute
culture where women
• Life Cycle Assessment (LCA) is a prominent method readily available local new ideas while
• Conducted a Life Cycle Assessment to help position can thrive and progress
used for determining the environmental impacts talents to take up encouraged to
Our Sustainability Journey

Hydrogen from PC Ethylene as a low-carbon with the Group, as we

occurring across the entire value chain of a product. In leadership roles globally. constantly explore new
build a strong talent pool
product and improve marketability. This was also ways of doing things.
PETRONAS, LCA’s are conducted adopting all the of qualified women.
externally verified by DNV.
necessary standards (ISO 14040/44) and international
best practices to support businesses address customer • 5 Carbon Neutral LNG cargoes successfully
requests, augment marketability of products and delivered to customers.
enhance brand value. A total of 37 product LCAs were
conducted this year supporting Upstream, Gas + New
Energy and Downstream businesses.
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Positive Social Impact Positive Social Impact

What did we do in 2021? What did we achieve?

• Introduced i-C4RE (Individualised Coaching for Resilience
Employee Benefits Employee Benefits Diversity and Inclusion
Enhancement), an interactive online programme that
• In addition to existing benefits covering Health and offers individualised coaching to enhance mental health
Well-Being, Time-Off and Special Paid Leave, Life resilience of employees. The e-learning course is • Female employees 28 per cent and male • Improved talent composition:
designed to equip participants with mindsets and skills to: employees 72 per cent who meet the stipulated
Insurance coverage, and others in 2021, we provided: – 28 per cent female
– Enhanced mental illness treatment provision that – Cope and thrive when faced with challenges or eligibility criteria are entitled to parental leave. – More than 100 different nationalities
allow mental illness related treatment beyond two adversities.
– Recover from failures and setbacks.
• In 2021 a total of 2,179 employees took – 41 per cent aged 35 and below.
years.
parental leave:
– FlexWear implementation that allows smart casual – Manage their resilience and mental health. • Improved Senior Management (VP and above)
– Maternity leave: 90 consecutive days composition which currently consists of 26 per
attire at office or work location.
Diversity and Inclusion – Paternity leave: 5 working days. cent female and 74 per cent male.
– COVID-19 immunisation benefits that provide special
paid leave for vaccination, booster shot, and • 96 per cent of those who took parental leave, • Won the LinkedIn Talent Award – Diversity
accompanying dependent children obtaining • A signatory to World Economic Forum’s Stakeholder
both male and female, returned to work. Champion (1,000 employee category).
vaccination, as well as travel reimbursement. Capitalism Metrics.
• Elevated PETRONAS’ reputation as a D&I advocate
– Support employees’ well-being with a Digital • A member of the World Business Council for Sustainable
in the global energy arena through participation in
Employee Assistance Programme (EAP 2.0) for Development (WBCSD) Business Commission to Tackle
various global forums.
preventive mental health management, and i-C4RE Inequality.
for mental resilience development.
• Guest speaker at the Women’s Global Leadership
– Provide financial and connectivity assistance Conference in Energy 2021.
allowance during remote working.
– Benefits for Employees with Special Needs Children. • Participated in 30 per cent Club talk during the
International Women’s Day Men-Who-Pause. Employee Welfare

Employee Welfare • Incorporated D&I as part of the long-term incentive plan

(LTIP) for Top Management for 2022. • 900 employees reached out to myFriends, • 840 participants have enrolled in the i-C4RE
• MIND-A-CARE training programme was established by which includes 811 digital coaching, 533 careline programme (Individualised Coaching 4 Resilience
• Improved talent composition, with more employees
Group HSE, in collaboration with INSTEP, and Malaysian calls, and 246 counselling sessions for both work Enhancement) through seven cohorts in 2021.
Psychiatric Association (MPA). consisting of different nationalities.
and non-work related issues. – Overall, 74 per cent of participants who
– This mental health training programme aims to train • Improved Senior Management composition in terms of completed the training modules showed improved
• 1,856 employees were briefed virtually on
PETRONAS employees to be certified MIND-A-CARE gender and nationality. resilience scores, and 25 per cent of all
MIND-A-CARE to create awareness on mental
Ambassadors and equip them with the skills necessary participants demonstrated higher resilience scores.
• D&I Council 2021 met five times throughout the year to health first aid.
to assist or refer affected colleagues for professional
solidify the approach and improve D&I immersion. – Handbooks, pocket guides and self-reading • The holistic mental health and well-being signature
assistance through the company’s Employee
Assistance Programme (myFriends). • Conducted Brown Bag internal communications series awareness materials were made available through programmes by PETRONAS have contributed to:
on D&I to improve awareness and importance of D&I. the myFriends page and accessible for all – 70 per cent improvement in Depression,
– PETRONAS targets to train 1,000 MIND-A-CARE
employees. Anxiety and Stress Scores
Ambassadors in the next three years. • Conducted various activities through PETRONAS Leading
– Successfully produced 19 certified MIND-A-CARE – 50 per cent improvement in body mass index
• Established the first comprehensive Psychosocial Risk Women Network (PLWN), including:
trainers in November 2021. (BMI) scores
Assessment (PsyRA) tools to assess Psychological Safety – Championed unconscious bias awareness, launched
at Work. the Bias Disruptors Communication Campaign, and – 1,409 employees participated in the Digital
Our Sustainability Journey

hosted quarterly inclusive talks with senior leaders Healthy Lifestyle Coaching (DHLC), which
• Continued to create a wholesome employee relations
and D&I advocates (male and female role models). exceeded our initial target of 1,000 participants.
experience for different talent segments via active
participations in existing internal bodies within – Commissioned PLWN D&I survey to address gender
PETRONAS, such as PETRONAS Young Professionals diversity.
Club, Association of Wives and Women Employees of – Advocated industry-wide partnerships on gender
PETRONAS (PETRONITA) and PETRONAS Sports & diversity and inclusion.
Recreation Club (KSRP). – Led and supported Malaysia’s Women in Energy
(MyWIE).
– Collaborated with other oil and gas companies to
support the industry (Baker Hughes Sustainability
session, Malaysian Gas Association Women in Energy
Transition).
 210 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 211

Positive Social Impact Positive Social Impact

Talent and Education While developing our internal

talent capabilities, we
continuously invest in
Why is it important? developing future talents to
People are our greatest assets and investing in human capital development at all levels will enable a continuous and meet our business and the
sustainable pipeline of a high-performing and skilled workforce. With the energy industry constantly evolving against a industry’s energy requirements.
backdrop of ongoing uncertainty, our long-term growth and sustainability depend on our ability to innovate, be agile, and In driving Malaysia’s energy
adapt to the changing business environment. sector, we invest in three key
areas of education:
This is why it is important that we constantly retool our human capital by providing the right environment, opportunities,
and experiences to encourage new skills, knowledge, and driven employees. Our aim is to enable our people with the
right capabilities and tools to always thrive on the job and are future-ready to achieve their potential over the long term.

Sponsorship Programmes Infrastructure

What is our position?
We focus our efforts on attracting, developing, deploying and retaining the best talents to deliver on the job and prepare
them to steer future progress that meet stakeholders’ expectations in an ever-changing business landscape. Our efforts
are focused on five key areas that are also designed to contribute to a just energy transition: What did we do in 2021?

Talent Education
Upskilling and Reskilling Existing Talents Enhancing Our Employee Value Proposition to
We focus on upskilling and reskilling our people to deliver on Attract and Retain the Best Talents • Invested in learning and development to build • Continued to sponsor students’ tertiary education via
our business strategies in the new energy landscape. This We continuously enhance our performance management in capabilities in leadership, innovation, and core skills to PETRONAS Education Sponsorship Programme (PESP)
means heavily investing in our people to become a highly- alignment with our strategic outcomes, focusing on become a highly skilled, high-performing, innovative, amounting to more than RM163 million.
skilled, innovative and agile workforce. We have been making performance and development, such as coaching talents to
and agile workforce. • Sponsored deserving students to study at Universiti
progress over the years to enhance our capability unlock their full potential. Our ongoing Human Capital
development programmes in upskilling and reskilling our transformation aims to redefine our talent experience • Enhanced our Employee Value Proposition to attract Teknologi PETRONAS (UTP) under the Tabung Amanah
talents in critical areas, such as leadership, innovation and towards an empowered, agile and enabled workforce. This new and retain the best talents by strengthening our Zakat UTP (TAZU) amounting to RM3.9 million.
core skills. transformation focuses on People (behaviour and mindset performance management in linking to business
shift), Processes (simplified and principle-based), and
• Continued to provide both industrial and technical
objectives with a focus on performance and trainings such as Graduate Employability Enhancement
Platforms (through analytics and artificial intelligence).
development including coaching to ensure talents Scheme (GEES), Vocational Institution Sponsorship &
achieve their full potential. Training Assistance (VISTA) and internship placements.
• Reviewed and simplified our processes to be principle- • Continued to promote awareness and interest in
based. Science, Technology, Engineering, and Mathematics
Agile Leadership Innovation Engine
We continue to evolve our leadership styles to better We are building a culture of innovation to drive new growth • Launched a new digital learning platform, myLearningX (STEM) via Petrosains outlets and the Discover
respond to the ever-evolving environment and industry opportunities and generate new revenue potential by using a that offers personalisation and flexible learning options PETRONAS @ School (DPS) programme.
volatility. Key efforts include upskilling the leadership teams think big, test small experimental approach. This method that allow talents to self-drive their own learning as and • Contributed to the construction of two MARA Junior
and employees with Agile methodology, promoting Agile will enable our people the tools and support to approach when they need to build their capabilities.
practice in the right way and increasing Agile awareness innovation through the customer lens, solutions, and business Science Colleges (MRSM) in Sabah and Sarawak, in
across the organisation. validation allowing them to explore non-traditional business • Continued to maintain the right environment for our collaboration with state governments and Majlis Amanah
areas and de-risk premature investments. people to thrive through: Rakyat (MARA) to promote STEM among students.
Our Sustainability Journey

– Groupwide engagements to further inculcate internal • Continued to offer learning opportunities to young
cultural beliefs talents in technical areas such as Nautical Studies and
– A more prominent agenda on Diversity & Inclusion. Marine Engineering at Akademi Laut Malaysia (ALAM),
• A core team was set up to promote the adoption of MISC, and Technical Energy Enrichment (TEP) at
Creating and Maintaining the Right Environment for Our People to Thrive Agile tools and ensure more pervasive agile ways of PETRONAS Petroleum Technology Institute (INSTEP).
Part of creating and maintaining the right environment is by embracing Diversity and Inclusion (D&I), which is vital for us to unlock working in the organisation.
or leverage the diverse strength of our talents. We continue to offer a wholesome employee relations experience for different • Commenced the pilot journey for Innovation Engine
segments of talents through various internal associations and bodies. The right environment would not be complete without the
right organisational culture; hence continuous efforts were made to ensure the internalisation of the refreshed PETRONAS Cultural
with the aim of building a sustainable innovation culture
Beliefs (PCB) and its alignment to our organisation’s objectives. that enables the creation of new opportunities and
revenue streams at pace across the organisation.
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Positive Social Impact Positive Social Impact

What did we achieve?

Community Engagement
Talent

• More than 150 Top Leaders were equipped to • The Agile Coaching Enablement Programme was
lead and navigate the business and the workforce launched to build a pipeline of Agile practitioners to
towards achieving organisational goals anchored on support Agile teams across PETRONAS.
PCB and Shared Values through several key • Commenced activities to codify Agile practices to
programmes such as Board Excellence, ease and streamline Agile adoption.
Ascend, and CEO 100 Days.
• Agile Leadership topics were discussed at
• Top Leaders were also consistently engaged via both internal and external thought leadership
Top Leaders Dialogue sessions, a platform programmes, for example Top Leaders Dialogue,
to converse key enterprise topics while shaping the Brownbag series, PETRONAS FutureTalks 2021,
organisational culture. IFTDO India etc.
• More than 300 Managers, Senior Managers, • Innovation Masterclass programme
and General Managers attended key commenced to upskill talents selected for the
in-role leadership programmes to ensure Innovation Engine pilot. The programme facilitated
sustainable bench strength for succession. the ideation process which resulted in several bold
upskilled to
• A pool of talents has been ideas being selected for incubation to unlock the
become catalysts for continuous potential value of each idea. The programme will
improvement (CI), innovation, and Agile continue as a permanent fixture to rally more
methodology in the organisation to maximise innovative ideas that could bring potential value to
operational cashflow and improve efficiency as well the organisation.
as to ideate, incubate, and scale new ideas and • Established the foundation to uplift innovation
deliver customer-focused solutions at pace. capabilities and create an ecosystem of innovators.
• myLearningX platform: Talents with various backgrounds and skills across
– More than 40,000 learners PETRONAS, including 65 per cent of PETRONAS’
top leaders have been immersed with innovation
– nearly 1 million accumulated interactions
methodologies through hands-on exposure.
– nearly 400,000 learning hours completed
• Successfully matured 3 growth opportunities
– 4.2/5 average rating of learning platform by
into new business ventures namely Circular
learners.
Economy, Advanced Material, and Carbon Capture Why is it important?
• Digital Academy was launched to upskill digital and Storage.
We are firm advocates for community empowerment, as we believe that the long-term success of our business is
capabilities that includes Citizen Analytics and Digital
contingent on the support of the communities we serve. As a nation-building organisation, community development is
Mastery. To date, 7,700 talents have been
essential to driving the nation forward and ensuring shared prosperity. Strong community engagement allows us to better
upskilled.
understand and address issues faced by our communities. Therefore, we continue to drive and advance our community
engagement programmes as it does not only make a difference in the lives of the people, but also deepens the trust
Our Sustainability Journey

levels. We focus on enriching lives and improving their quality and socio-economic outcomes as it allows us to unlock
Education their potential and enable them to earn and help stimulate economic recovery. Our employees are also encouraged to
take part in these initiatives as it gives them a sense of purpose and fulfilment.

• 302 individuals were sponsored under PESP.

• 1,462 deserving UTP students benefitted from the sponsorship by TAZU.
• 3,111 individuals benefitted from various programmes such as GEES, VISTA, and internship.
• Received 128,000 visitors at Petrosains outlets nationwide and 4,161 participants at Discover PETRONAS @
School (DPS).
• 325 students enrolled in Diploma in Nautical Studies and Diploma in Marine Engineering at ALAM, MISC and
35 enrolments in Technical Energy Enrichment Programme (TEP) at INSTEP.
 214 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 215

Positive Social Impact Positive Social Impact

What is our position? What did we do in 2021?

Our work with communities focuses on deepening relationships, building trust and enhancing our reputation as a caring Education
corporate citizen. While the business divisions and other companies within the Group have their own community
engagement programmes, a large part of the PETRONAS’ Corporate Social Responsibility (CSR) programmes are driven by • Yayasan PETRONAS, in collaboration with the Ministry of Education, ramped up the implementation of Program Duta
Yayasan PETRONAS (the Foundation), with the mission to deliver sustainable impact, improve the quality of life and Guru (PDG), a nine-year programme to sustainably raise students’ Higher Order Thinking Skills (HOTS) and interest and
socio-economic outcomes for communities throughout Malaysia based on three key pillars – Education, Community competency in Science, Technology, Engineering and Mathematics (STEM), by empowering 4,500 STEM teachers across
Well-being and Environment. Malaysia. Through PDG, Yayasan PETRONAS aims to develop 4,500 highly competent STEM teachers by 2028,
impacting approximately 3.96 million students.
• In response to COVID-related school closures, Yayasan PETRONAS contributed 12,000 iPads equipped with one-year of
data connectivity worth over RM30 million to marginalised students in 82 schools across Malaysia, as part of the
Sentuhan Sentuhan Sentuhan nation’s CERDIK initiative. The contribution aims to enable students to access online learning during school closures
Ilmu Harapan Alam
and future digital learning experiences when schools reopen.

COMMUNITY WELL-BEING • Continued to support efforts to raise student enrollment and participation in schools through the Back To School
EDUCATION ENVIRONMENT
AND DEVELOPMENT Programme that provided 21,000 underprivileged students with essential school supplies, thereby lessening the financial
burden of B40 parents.

Promote the advancement Promote community well- Promote and advance the • Continued to support underperforming B40 SPM (the Malaysian Certificate of Education, a national examination taken
and development of human being and development preservation and conservation by all fifth-form secondary school students in Malaysia) students in Kedah to improve their academic performance and
OBJECTIVES

capital and capabilities in through long term sustainable of the environment in assist in tertiary education progression through the empowerNCER Academic programme, in partnership with the
Malaysia through the advancements in the areas of Malaysia and related study and Northern Corridor Implementation Authority (NCIA). In 2021, 750 participants sat for SPM 2020 while an additional
provision of education aid socio-economic developments, research 1,000 participants were onboarded to the programme in preparation for SPM 2021.
and training healthcare, safety and living
environments among the
communities in Malaysia

Contribute towards Community well- Reduce year-on-

GOALS

60:40 National being and year environmental

STEM enrolment economic growth impact

Yayasan PETRONAS is guided by the Constitution to manage and administer funds donated
and ensure the funds are spent to further its objectives.

From educational programmes, employment, including food and care packages to providing necessary infrastructure,
efforts were centred on transforming communities and improve their overall well-being. The Foundation also provided
COVID-19 relief efforts for those in the B40 (bottom 40 per cent of the Malaysian household income) families and those
affected by natural disasters with sustainable programmes. As result of our relentless groupwide efforts, we reached out
to over 175,500 beneficiaries (inclusive of individuals, institutions, households, communities), investing up to RM62.4
million across all key programmes, including COVID-19 and flood relief efforts.
Our Sustainability Journey

Community Well-being and Development

• Yayasan PETRONAS continues supporting B40 more than 1,900 participants, while MEKAR Phase 3
communities through its flagship Memampankan (Go-to-Market) in Kuala Nerus, Terengganu and Kapar,
Ekonomi Asas Rakyat (MEKAR) programme, together with Selangor, focus in business acceleration to enhance the
its strategic and implementation partners, with the aim skills of its 105 participants and help them gain market
to increase the income level of more than 2,000 B40 access. Yayasan PETRONAS is also committed to
communities across 12 districts in five states. continue its support for seven districts in Kedah and
Perak, benefiting 1,400 beneficiaries through partnership
• MEKAR Phase 2 programmes in NCER and ECER focus
with NCIA.
on skills and entrepreneurship development benefiting
 216 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 217

Positive Social Impact Positive Social Impact

• Apart from Skills and Entrepreneurship Development Hospital Canselor Tuanku Mukhriz (HCTM). These grants Our Achievements
Programme, MEKAR Phase 1 focuses on the provision of will drive new research to address cancer more
basic needs such as water and electricity, that reflects in effectively, from prevention to detection and treatment. Education
the two initiatives in Pitas, Sabah, and Kluang, Johor to
• Yayasan PETRONAS has committed to improve the
ensure sustainable supply of clean water and electricity
respectively benefiting about 1,000 members of the
health and livelihood of the vulnerable members of B40
communities with health issues, including AIDS,
750
community in six villages. SPM 2020 students supported
Thalassemia and Paediatric complications through the through the empowerNCER
• Yayasan PETRONAS also continues its support for cancer support of MyLady and SHAPE Programme with Malaysia Academic Programme.
research for the Asian population and paediatric patients, AIDS Foundation (MAF).
by funding Cancer Research of Malaysia (CRM) and * 99.5 per cent passed SPM 2020 with 7.9 per cent achieving 5As
or more.
* 100 per cent of 5A students and 67.8 per cent of students that
obtained 4As and below, secured placement in tertiary institutions.
Environmental Awareness

• Supported environmental conservation via the

PETRONAS Walk4Trees Challenge by planting trees at 14
sites across 11 states nationwide. 21,000 292 active participants and 160 School
• We also supported biodiversity conservation and carbon- primary schools from low-income Improvement Specialist Coaches (SISC+)
neutral programmes, such as rainforest conservation in households were provided with from 142 districts as Pembimbing Program
Imbak Canyon, Sabah; marine biodiversity restoration in personal hygiene kits and schools Duta Guru (PPDG) reached through PDG.
the Biodiversity, Environment and Conservation supplies under the Back To School * 92 per cent programme retention rate for Cohort 1, with Cohort 2
(BEACON) project in Sarawak; mangrove conservation Programme. achieving over 96 per cent.
* 9/10 average participant satisfaction scores across 2021.
and rehabilitation under PETRONAS Chemicals Group * 98 per cent of Pembimbing Duta Guru recognised positive
Berhad (PCG)’s ecoCare which has planted more than developments highlighted among PDG participants.
20,000 mangrove trees across 14,000 square metres. * 88 per cent of school principals recognised that PDG teachers
have brought positive impact through pedagogical approaches.

130,000
teachers, students, government officials
Contributed
reached through the Plastics,
Sustainability & You Module 12,000 devices worth a total of
education webinar series to realign
societal perceptions on plastics and RM30 million to enable
effective waste management. students gain access to home-based teaching and
learning (PdPR).

Community Well-Being and Development

Festive cheers were brought to more Key outcomes achieved:

Our Sustainability Journey

than 50,000 beneficiaries from • empowerNCER Skills and Entrepreneurship Programme:

underprivileged B40 families during – 78 per cent of participants achieved the target set on increase in
festive seasons under the Sentuhan income.
Kasih Festive programme. – 89 per cent of participants obtained job placements.
– 222 new jobs created.
Under the Memampankan Ekonomi
Asas Rakyat (MEKAR) Programme, • MEKAR Kuala Nerus, Terengganu Programme (Go-To-Market):
more than 2,000 families gained – 77 per cent have achieved their sales projection with 100 per cent
access to sustainable economic turnover from their start-up phase.
growth opportunities in both urban – 89 per cent collaborated with the MEKAR alumni community in their
and rural areas, with strong progress business operations.
seen in empowerNCER (Phase 2) – 89 per cent incorporated their business as a legal enterprise.
and MEKAR Kuala Nerus, Terengganu – 51 per cent developed high-quality products and services that is
(Phase 3). ready for the market; and
– 13 per cent secured contracts to market and supply their products.
 218 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 219

Five-Year Sustainability Key Performance Data Five-Year Sustainability Key Performance Data

GHG Emissions Reduction

Greenhouse Gas Emissions
Key Performance Indicators 2017 2018 2019 2020 2021

Total Greenhouse Gas (GHG) Emissions Annual GHG Emissions Reduction (million tCO₂e) 2.9 1.5 1.2 0.6 4.1
(million tonnes of carbon dioxide equivalent (tCO₂e))
Cumulative GHG Emissions Reduction
10.1 11.6 12.8 13.4 17.5
(million tCO₂e per annum)¹
2021 43.8 1.4 45.2
Note:
1 Since the establishment of PETRONAS Carbon Commitments in 2012, GHG emissions reduction has been recorded starting from 2013.
2020 46.3 2.0 48.3

2019 51.6 2.2 53.8 Solar PV Generation Reducing Scope 2 GHG Emissions

2018 48.1 2.0 50.1 Malaysia

2,000 1,400
1,238.6
2017 53.6 2.9 56.5 1,800
1,179.5
1,225

GHG Emissions Reduction (tCO₂e)

1,600
1,050
Malaysia¹ International

Energy Generated (MWh)

1,400
875
1,200

Note: 1,000 700

1 GHG emissions data from PETRONAS Refinery and Petrochemical Corporation (PRPC) Utilities and Facilities (UF) is included since 2019, hence
800
453.0 525
GHG emissions from Malaysia Operations has been restated for subsequent years. 378.6 383.3
600
350
400
GHG Emissions Breakdown by Scope and Gas 200
175
582.5 581.5 687.2 1,789.3 1,878.9
0 0
Key Performance Indicators 2017 2018 2019 2020 2021
2017 2018 2019 2020 2021
Total GHG Emissions (million tCO₂e) 56.5 50.1 53.8 48.3 45.2 Energy Generated (megawatt hour) GHG Emissions Reduction (tCO₂e)

Scope 1 GHG Emissions (%) 98.9 98.7 98.9 99.1 99.7

Scope 2 GHG Emissions (%) 1.1 1.3 1.1 0.9 0.3 International
Carbon Dioxide (%) 73.0 80.2 80.6 82.0 86.9 500 140
125.8
Methane (%) 26.8 19.5 19.1 17.6 12.7 450
114.2 120
Other GHGs (%) 0.2 0.3 0.3 0.4 0.4 109.4

GHG Emissions Reduction (tCO₂e)

400
100

Energy Generated (MWh)

350 92.8
Hydrocarbon Gas Flared
70.9 103.1 300
84.1
(million standard cubic feet per day (MMscfd))¹ 80
250
Note: 60
1 From Malaysia and international upstream operations only. 200

150 40

GHG Intensity¹ 100

Our Sustainability Journey

20
50
285.0 274.0 444.4 386.0 442.3
Key Performance Indicators 2017 2018 2019 2020 2021 0 0

GHG Intensity for Upstream (tCO₂e/kboe) 88.7 74.2 64.6 65.9 47.9 2017 2018 2019 2020 2021
Energy Generated (megawatt hour) GHG Emissions Reduction (tCO₂e)
GHG Intensity for Refineries (tCO₂e/bbl) 0.017 0.018 0.018 0.019 0.018

GHG Intensity for Petrochemicals (tCO₂e/tonnes)² 0.77 0.68 0.68 0.66 0.67
Cumulative Renewable Energy Installed Capacity
Note:
¹ All GHG intensity figures cover Malaysia operations only.
Key Performance Indicators 2017 2018 2019 2020 2021
² Figures have been restated in alignment with the new internal emissions management guideline.
Total Cumulative Renewable Energy Installed Capacity
10 10 10 644 851
(megawatt)
Malaysia (megawatt) 10 10 10 19 29
International (megawatt) n/a n/a n/a 625 822
 220 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 221

Five-Year Sustainability Key Performance Data Five-Year Sustainability Key Performance Data

Environment Key Performance Indicators 2017 2018 2019 2020 2021

Total man-hours worked

428 466 355 273 265
(million hours)
Total Freshwater Withdrawal
Employees
(million cubic metres per year) 138 130 133 120 118
(million hours)
Contractors
2021 1.3 58.2 10.8 0.9 71.2 290 336 222 153 147
(million hours)

2020 0.9 47.0 10.3 1.9 60.1 Fatal Accident Rate (FAR)
0.93 1.29 0.56 1.47 1.13
(Number per 100 million man-hours)
2019 0.7 46.8 10.8 2.0 60.3 Employees
0.00 0.00 0.00 0.84 0.84
(Number per 100 million man-hours)
2018 0.6 47.5 8.9 2.3 59.3 Contractors
1.38 1.79 0.90 1.96 1.36
(Number per 100 million man-hours)
2017 0.6 44.8 8.3 2.3 56.0
Lost Time Injury Frequency (LTIF)
0.17 0.09 0.11 0.10 0.14
(Number of cases per one million man-hours)
Upstream Downstream G+NE MISC and others Employees
0.18 0.12 0.08 0.09 0.10
(Number of cases per one million man-hours)
Contractors
0.16 0.08 0.12 0.11 0.17
(Number of cases per one million man-hours)
Key Performance Indicators 2017 2018 2019 2020 2021
Total Reportable Case Frequency (TRCF)
0.51¹ 0.38 0.34¹ 0.29¹ 0.42
Total Freshwater Withdrawal (million cubic metres per year) 56.0 59.3 60.3 60.1 71.2 (Number of cases per one million man-hours)
Malaysia (million cubic metres per year) 52.6 56.4 56.8 56.8 70.2 Employees
0.37 0.32 0.28 0.27 0.29
International (million cubic metres per year) 3.4 2.9 3.6 3.3 1.0 (Number of cases per one million man-hours)
Contractors
Discharges to Water (metric tonnes of hydrocarbon) 591 715 648 532 452 0.58 0.41 0.37 0.31 0.53
(Number of cases per one million man-hours)

Number of Hydrocarbons Spills into the Environment Total Recordable Occupational Illness Frequency (TROIF)
18 7 7 5 2 0.08 0.22 0.23² 0.39² 0.24
over One Barrel¹ (Number of cases) (Number of cases per one million man-hours – employees)

Total Sulphur Oxides Emissions (metric tonnes) 87,917 113,256 110,214 84,225 47,954 Notes:
¹ The updated TRCF numbers for 2017, 2019 and 2020 are due to internal data validation and exclusion of third parties.
Total Nitrogen Oxides Emissions (metric tonnes) 159,498 151,519 148,446 138,035² 133,962 ² The updated TROIF numbers for 2019 and 2020 are due to internal data validation.

Total Hazardous Waste Disposed (metric tonnes) 19,755 34,688 42,121 33,349 59,228
Notes:
Number of Tier 1 Process Safety Events
¹ One barrel is equivalent to 159 litres.
² Figure has been restated due to internal verification.
(Number of cases)

2021 10
Safety
2020 9
Number of Fatalities
Our Sustainability Journey

2019 9
(Number of cases)
2018 12
2021 1 2 3
2017 16
2020 1 3 4

2019 2 2
Note:
2018 6 6 A Tier 1 Process Safety Event is a Loss of Primary Containment (LOPC) with the greatest consequence as defined by API 754, Process Safety
Performance Indicators for the Refining and Petrochemical Industries. It is an unplanned or uncontrolled release of any material, including
non-toxic and non-flammable materials, from a process that results in one or more of the consequences as listed in the API 754. There is a
2017 4 4
restatement of figures following review of incidents of 2017-2020, in accordance with API 754.

Employees Contractors
 222 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 223

Five-Year Sustainability Key Performance Data Five-Year Sustainability Key Performance Data

Employees
Employees
Key Performance Indicators 2017 2018 2019 2020 2021

Total Number of Employees Employment Type (%)

Permanent 85 87 88 86 87
Contract 15 13 12 14 13
2021 46,884
Age Group (%)
Above 35 46 49 52 53 59
2020 48,679
Below 35 54 51 48 47 41
2019 47,669 Total Number of Union Members¹ 8,796 9,949 8,420 8,476 8,353
Note:
2018 48,001 ¹ Covers registered unions in Malaysia-based entities (excluding MISC Group).

2017 49,911
Gender Diversity
Key Performance Indicators 2017 2018 2019 2020 2021
Note: Breakdown of Employees by Gender (%)
Decrease in 2021 due to higher attrition from contract expiry and voluntary employee separation exercise, and reduction of recruitment activities in line with Female 28 27 27 28 28
business requirements. Male 72 73 73 72 72
Senior Management (%)
Female 11 11 15 19 26
Breakdown of Employees by Nationality (%) Male 89 89 85 81 74
Management Committee (%)
2021 80 20 Female 12 12 11 22 22
Male 88 88 89 78 78
2020 80 20
Board of Directors (%)
Female 21 20 14 25 30
2019 80 20
Male 79 80 86 75 70
2018 80 20 Female in Technical Position (%) 14 13 14 14 14

2017 80 20
New Hires
Key Performance Indicators 2017 2018 2019 2020 2021
Malaysian Other Nationalities
Total Number of New Hires (Core businesses in Malaysia) 2,409 2,512 3,498 2,160 2,172
Malaysian 1,982 2,098 2,989 2,003 1,982
Non-Malaysian 427 414 509 157 190
Breakdown of Employees by Region (%)

6.4 84.7 0.1 2.9 Total Number of New Hires Total Number of New Hires Total Number of New Hires
2021 2.4 in 2021 by Nationality in 2021 by Age in 2021 by Job Level
Our Sustainability Journey

1.2 2.3 Africa 1%

14% 14% 26%
6.7 84.6 0.1 2.7
Asia 31%
2020 2.1
1.4 2.4
Australia and New Zealand
6.8 84.8 0.1 2.6
2019 Commonwealth of
2.1
Independent States
1.5 2.1
8.1 84.3 0.1 2.5 Europe 69%
86% 59%
2018 1.4
1.4 2.2 Middle East
Malaysian Non-Malaysian 35 years old and below Non-Executive Executive
8.2 85.1 0.1 2.3
2017 1.2
North and South America Above 35 years old Middle Manager Senior Management

1.3 1.8
Note:
Scope/coverage represents 93 per cent of PETRONAS Group of Companies.
 224 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 225

Five-Year Sustainability Key Performance Data Five-Year Sustainability Key Performance Data

Employee Attrition Rate Number of Groupwide Technical Expertise

Key Performance Indicators 2017 2018 2019 2020 2021 Key Performance Indicators 2017 2018 2019 2020 2021
Employee Attrition Rate (%) 5.8 6.5 5.5 4.9 8.4 Technical Authorities (TA) 499 577 340 501 601
Female 6.8 7.3 1.8 1.3 2.8 Technical Professionals (TP) 860 941 1,028 1,173 1,281
Male 5.4 6.2 3.7 3.6 5.7 Technical Trade Specialists (TTS) 206 225 240 259 262
Notes:
Higher percentage in 2021 resulted from contract expiries and voluntary employee separation exercise.

Key Performance Indicators 2017 2018 2019 2020 2021

Attrition Rate in 2021 Attrition Rate in 2021 Attrition Rate in 2021
by Nationality by Age by Job Level Number of PETRONAS Scholars Recruited 337 262 206 219 220
4% Recruited by PETRONAS (%) 48 63 67 61 66
14%
28% Recruited by Others (%) 52 37 33 39 34
22% 41%
Number of Scholarships Awarded to Malaysians 387 329 399 370 302
International Universities (%) 45 49 46 25 34
Malaysian Universities (%) 55 51 54 75 66

Number of Scholarships Awarded to Non-Malaysians

118 88 78 42 41
at Universiti Teknologi PETRONAS
72%
86% 33%

Malaysian Non-Malaysian 35 years old and below Non-Executive Executive

Above 35 years old Middle Manager Senior Management Human Rights

Notes: Key Performance Indicators 2017 2018 2019 2020 2021

Scope/coverage represents 93 per cent of PETRONAS Group of Companies.
Security personnel trained in human rights policies or
n/a 210 161 913 1,415
procedures

Talent and Education

Fair Employment
Key Performance Indicators 2017 2018 2019 2020 2021
Key Performance Indicators 2017 2018 2019 2020 2021
Training days per employee 7 7 7 5 4
Employees taking parental leave (Number of employees) n/a n/a n/a n/a 2,179
Training investment per employee (RM) 3,353 6,649 6,543 3,588 2,386
Notes:
Average total hours of training per employee • Parental leave covers maternity and paternity leave only.
56 52.8 53.6 36 30 • Scope/coverage represents 81 per cent of PETRONAS Group of Companies.
(person hours)

Note:
Reduction from pre COVID-19 due to travel and physical attendance restrictions.
Our Sustainability Journey

Average Total Hours of Training per Employee Average Total Hours of Training per Employee
in 2021 by Gender in 2021 by Job Level
0 40 35.3 35.3 40 40 35.6 35.1 35.6 35.1
5 35 35 35
0 30
27.1 27.1 30 30
5 25 25 20.5
25 20.5 21.7 21.7
0 20 20 20
5 15 15 15
0 10 10 10
5 5 5 5
0 0 0 0
Male Male Female Female Non-Executive Executive
Non-Executive Executive
Middle Manager Middle
Senior Manager Senior
Management Management
 Commitment The PETRONAS Leadership Team
and our commitment to good
to Governance corporate governance

Recharge
to Safeguard
228 Board Composition
229 Profile of Board of Directors
239 Profile of Company Secretaries
Good Practices 241 Profile of Executive Leadership Team
245 Corporate Governance at PETRONAS
 228 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 229

Board Composition Profile of Board of Directors

As of 28 February 2022

Experience Skills

Age:
4 Strategy 5 67 years
Oil & Gas

Engineering/Technical/
Public sector 3 2
Operations

Property 4 Economic 1 Gender:

Male
Consultancy 4 Finance/Audit 4
Reputation/Branding/
1
Communication
Nationality:
Human Resource 1 Malaysian

Date Appointed
Board at a Glance Gender to the Board:
18 June 2019

2
Executive
4 Directors
Independent
Non-Executive 3 Tan Sri Dato’ Seri Mohd Bakke Salleh
Directors Female Non-Independent Non-Executive Director/Chairman
4
• Council Member of Yayasan Sime Darby
Non- 7 Academic/Professional Qualifications
Independent • Chairman, Malaysian Palm Oil Board
Male
Non-Executive • Fellow of Institute of Chartered Accountants in England • Chairman, Bank Islam Malaysia Berhad
Directors and Wales • Non-Executive Director, Eastern & Oriental Berhad
• Member of the Malaysian Institute of Accountants • Group Managing Director and Chief Executive Officer,
• Bachelor of Science (Economics), London School of Lembaga Tabung Haji
Economics, United Kingdom • Director, Property Division of Pengurusan Danaharta
Nasional Berhad
Past Appointments/Experiences • Managing Director, Syarikat Perumahan Pegawai Kerajaan
Age Diversity Tenure Sdn Berhad
Held key positions in a number of Government-linked
• Group General Manager, Island & Peninsular Berhad
1 companies and local corporations:
• Pro Chancellor of Universiti Putra Malaysia
40-49 2 • Chairman, Telekom Malaysia Berhad
years < 1 Year • Chairman, Federal Land Development Authority (FELDA)
2 Other Current Appointments
Commitment to Governance

50-59 • Group President and Chief Executive Officer, Felda

years Global Ventures Holdings Berhad • Chairman, Yayasan PETRONAS
8 • Group Managing Director, Felda Holdings Berhad • Honorary Council Member of Malaysian Palm Oils
> 1 Year Associations (MPOA)
7 • Chairman, Yayasan FELDA
60> years • Executive Deputy Chairman and Managing Director, Sime
Darby Plantation Berhad
• President and Group Chief Executive, Sime Darby Berhad

Board Committee:

Chairman of Committee Member of Audit Member of Risk Member of Nomination and

AC RC NRC
Member of Committee Committee Committee Remuneration Committee
 230 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 231

Profile of Board of Directors Profile of Board of Directors

As of 28 February 2022 As of 28 February 2022

Age: Age:
48 years 62 years

Gender: Gender:
Male Male

Nationality: Nationality:
Malaysian Malaysian

Date Appointed Date Appointed

to the Board: to the Board:
15 October 2018 15 May 2018

Datuk Tengku Muhammad Taufik Ainul Azhar Ainul Jamal AC NRC

Executive Director, President and Group Chief Executive Officer Independent Non-Executive Director

• Chief Financial Officer for two public listed companies, • Held directorships at several private companies and was
Academic/Professional Qualifications Academic/Professional Qualifications
responsible for financial and management reporting, an Independent Non-Executive Director as well as
• Fellow of the Institute of Chartered Accountants in merger and acquisition activities, as well as developing • Advanced Finance, IMD Lausanne, Switzerland Chairman of the Risk Committee at a public listed
England and Wales and implementing key stakeholder engagement • Emerging Leaders Program, Daniel Business School, company in Malaysia.
• Member of the Malaysian Institute of Accountants strategies University of Denver, Colorado, United States of America
• Bachelor of Arts (Honours) (Finance and Accounting), • Director, MISC Berhad • Bachelor of Electrical Engineering, University of Sussex, Other Current Appointments
University of Strathclyde, United Kingdom • Director, KLCC Property Holdings Berhad
United Kingdom
• Chairman of Audit Committee, PETRONAS
Past Appointments/Experiences Other Current Appointments • Member of Nomination and Remuneration Committee,
Past Appointments/Experiences
• Experienced in strategic planning, finance, and business • Chairman of National Trust Fund PETRONAS
strategy development with a focus on the oil and gas • Chairman of Audit Committee for East Coast Economic • Joined Schlumberger Limited in 1984. Spent over 32 • Member of the Student Development Advisory Council,
and energy industry Region Development Council (ECERDC) and Northern years with Schlumberger with vast experience in oilfield Universiti Teknologi PETRONAS, Malaysia
• Areas of expertise include developing and steering key Corridor Implementation Authority (NCIA) services and technologies. Held various key positions
business strategies, organisational transformation, and • Chairman of CEO Action Network around the world including:
• Member of World Economic Forum (WEF) Industry
Commitment to Governance

financial and risk management – Managing Director for Malaysia, Brunei, Philippines
• Advocate of a just and responsible energy transition by Action Group and WEF Oil and Gas Governors Forum and Singapore
promoting regional partnerships to shape policy and • Council Member of World Business Council for – Reservoir Group HR Director
catalyst innovation Sustainability Development (WBCSD) – Treasurer of Schlumberger Foundation
• Executive Vice President and Group Chief Financial • Member of Asia-Pacific Economic Cooperation (APEC)
– Vice President Global Accounts
Officer, PETRONAS Business Advisory Council (ABAC)
– Chairman for Asia Pacific
• Partner at PricewaterhouseCoopers (PwC) Malaysia • Member of National Employment Council (NEC)
• Council Member of ECERDC and NCIA
• Member of Board of Trustees of the Merdeka Award
Trust
• Member of the Board of various PETRONAS companies
• Pro-Chancellor of Universiti Teknologi PETRONAS (UTP)
Board Committee: Board Committee:

Chairman of Committee Member of Audit Member of Risk Member of Nomination and Chairman of Committee Member of Audit Member of Risk Member of Nomination and
AC RC NRC AC RC NRC
Member of Committee Committee Committee Remuneration Committee Member of Committee Committee Committee Remuneration Committee
 232 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 233

Profile of Board of Directors Profile of Board of Directors

As of 28 February 2022 As of 28 February 2022

Age: Age:
62 years 67 years

Gender: Gender:
Male Male

Nationality: Nationality:
Malaysian Malaysian

Date Appointed Date Appointed

to the Board: to the Board:
17 August 2020 24 September 2021

Dato’ Razali Mohd Yusof NRC Thayaparan S. Sangarapillai RC AC

Independent Non-Executive Director Independent Non-Executive Director

Academic/Professional Qualifications Other Current Appointments Academic/Professional Qualifications Other Current Appointments
• Master of Science (Engineering Management), University • Chairman of Nomination and Remuneration Committee, • Fellow of the Institute of Chartered Accountants in • Chairman of Risk Committee, PETRONAS
of Missouri, United States of America PETRONAS England & Wales • Member of the Audit Committee, PETRONAS
• Bachelor of Science (Mining Engineering), University of • Director, Intralink Properties Sdn Bhd • Member of the Malaysian Institute of Certified Public • Director/Chairman, the Audit Committee of Axiata Group
Missouri, United States of America • Director, Urban Terrace Sdn Bhd Accountants Berhad and its subsidiary
• Diploma in Petroleum and Natural Gas Engineering, • Director, Bagus Tioman Sdn Bhd • Chartered Accountant, Malaysian Institute of Accountants • Director, Celcom Axiata
University of Technology, Malaysia • Chairman, Robi Axiata
Past Appointments/Experiences • Director, Sime Darby Berhad
Past Appointments/Experiences • Chairman of Audit Committee and Member of
• Possesed strong audit and business advisory background.
• Held several key roles in private and multinational • His extensive experience and wide-ranging expertise Risk Committee, Sime Darby Berhad
companies in Malaysia: spans over 35 years in areas that include financial • Director, AIG (Malaysia) Berhad
reporting, internal controls and Initial Public Offerings. • Chairman of Audit Committee and Risk Committee,
– Managing Director/Shareholder, Datasonic Group
AIG (Malaysia) Berhad
Commitment to Governance

Berhad • Began his career with PricewaterhouseCoopers (PwC) in

– Managing Director, Sarku Engineering Services Sdn Bhd Kuala Lumpur in 1983 and retired as a Senior Partner in
– Chairman, OMNI Petromaritime Sdn Bhd 2015.
– Director, Marine & General Berhad
– Project Engineer/Project Manager, Pahang Investment
& Industrial Co. Ltd
– Operations Contract Engineer and Underwater
Operations Engineer, Sarawak Shell Berhad

Board Committee: Board Committee:

Chairman of Committee Member of Audit Member of Risk Member of Nomination and Chairman of Committee Member of Audit Member of Risk Member of Nomination and
AC RC NRC AC RC NRC
Member of Committee Committee Committee Remuneration Committee Member of Committee Committee Committee Remuneration Committee
 234 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 235

Profile of Board of Directors Profile of Board of Directors

As of 28 February 2022 As of 28 February 2022

Age: Age:
71 years 63 years

Gender: Gender:
Male Male

Nationality: Nationality:
Malaysian Malaysian

Date Appointed Date Appointed

to the Board: to the Board:
19 January 2022 17 August 2020

Datuk KY Mustafa YB Dato Haji Ibrahim Haji Baki RC

Non-Independent Non-Executive Director Non-Independent Non-Executive Director

Academic/Professional Qualifications Other Current Appointments Academic/Professional Qualifications Other Current Appointments
• Bachelor of Arts in Anthropology and Sociology from • Chairman of the State Sabah Public Service Commission • A Barrister-at-Law and a member of Lincoln’s Inn • Chairman, Daya Builders Sdn Bhd, a Government Linked
the University of Malaya • Director, Suria Capital Holdings Berhad • Honours Degree in Law Company
• Director, Sabah Ports Sdn Bhd • Chairman/Shareholder, Supreme Consolidated Resources
Past Appointments/Experiences • Director, Sawit Kinabalu Sdn Bhd Past Appointments/Experiences Berhad
• Served the Sabah State Government for 33 years from • Director, Borneo Samudera Sdn Bhd • Served as City Councillor and active in social welfare • Chairman, Redpyne Sdn Bhd
1974 to the year 2007 and charitable organisations • Chairman/Shareholder, IBA Holdings Sdn Bhd
• Permanent Secretary to the Ministry of Infrastructure in • Former Executive Chairman/Shareholder, Hubline Berhad • Chairman, Lestari Asiabina Sdn Bhd
1996 • Director/Shareholder, Gegasan Abadi Properties Sdn Bhd • Chairman/Shareholder of two newspapers, the New
• State Secretary to the State Government of Sabah in • Chairman/Shareholder, Warisan Kenyalang Sdn Bhd Sarawak Tribune and Suara Sarawak
2000 and held the position until his retirement in 2007 • Chairman/Shareholder, IBZ Corporation Sdn Bhd • Member of Risk Committee, PETRONAS
• Head of the State Public Service and Secretary to the • Chairman, Layang-Layang Aerospace Sdn Bhd
Commitment to Governance

State Cabinet • Managing Director, Gegasan Sdn Bhd

• Member of the Royal Commission of Inquiry on • Commission Member of Registrar of Companies Malaysia
Immigrants in Sabah from 2012 to May 2014 (Companies Commission of Malaysia)

Board Committee: Board Committee:

Chairman of Committee Member of Audit Member of Risk Member of Nomination and Chairman of Committee Member of Audit Member of Risk Member of Nomination and
AC RC NRC AC RC NRC
Member of Committee Committee Committee Remuneration Committee Member of Committee Committee Committee Remuneration Committee
 236 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 237

Profile of Board of Directors Profile of Board of Directors

As of 28 February 2022 As of 28 February 2022

Age: Age:
54 years 69 years

Gender: Gender:
Female Female

Nationality: Nationality:
Malaysian Malaysian

Date Appointed Date Appointed

to the Board: to the Board:
15 October 2018 17 August 2020

Zakiah Jaafar AC RC Tan Sri Zaharah Ibrahim AC NRC

Non-Independent Non-Executive Director Independent Non-Executive Director

• Former Deputy Secretary General (Macro) of the Ministry

Academic/Professional Qualifications Academic/Professional Qualifications Other Current Appointments
of Economic Affairs (MEA), responsible for the
• Premier Executive in Advanced Development preparation of medium- and long-term macroeconomic • Bachelor of Laws (Honours) (LL.B), University Malaya • Member of Audit Committee, PETRONAS
Programme, Razak School of Government, Canberra, framework for the Malaysian economy and also oversees • Member of Nomination and Remuneration Committee,
Australia the policy directions for the manufacturing and services Past Appointments/Experiences PETRONAS
• Advanced Management and Leadership Programme, sectors; science, technology and innovation;
• Held key positions in the Judicial and Legal Services and
University of Oxford, United Kingdom environment economics as well as knowledge-based
the Judiciary in Malaysia:
• Postgraduate Diploma in Public Administration, National economy
– Chief Judge of Malaya
Institute of Public Administration (INTAN), Malaysia
– Federal Court Judge, Federal Court, Putrajaya
• Master of Social Science (Economics), University of Other Current Appointments
– Court of Appeal Judge, Court of Appeal, Putrajaya
Birmingham, United Kingdom
• Member of Audit Committee, PETRONAS – High Court Judge, High Court of Malaya (Shah Alam
• Bachelor of Science (Honours) (Economics), University of
• Member of Risk Committee, PETRONAS and Kuala Lumpur)
Warwick, United Kingdom
• Deputy Secretary General (Policy) for the Ministry of – Judicial Commissioner, High Court of Malaya (Kuala
Commitment to Governance

Finance, Malaysia Lumpur and Shah Alam)

Past Appointments/Experiences
• Director, Pengurusan Aset Air Berhad – State Legal Advisor, Selangor
• Former Deputy Secretary General (Investment) for the • Director, Employees Provident Fund – Parliamentary Draftsman, Attorney General’s Chambers
Ministry of Finance, Malaysia, responsible for • Director, Bintulu Port Holdings Berhad of Malaysia
coordinating, monitoring and updating policies, – Director, Intellectual Property Division, Ministry of
regulations, Acts and strategies to government Domestic Trade and Consumer Affairs
investment companies, statutory bodies, public assets – Magistrate in Melaka
and strategic public investments • Chairman, Prasarana Malaysia Berhad

Board Committee: Board Committee:

Chairman of Committee Member of Audit Member of Risk Member of Nomination and Chairman of Committee Member of Audit Member of Risk Member of Nomination and
AC RC NRC AC RC NRC
Member of Committee Committee Committee Remuneration Committee Member of Committee Committee Committee Remuneration Committee
 238 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 239

Profile of Board of Directors Profile of Company Secretaries

As of 28 February 2022 As of 28 February 2022

Age: Age:
51 years 49 years

Gender: Gender:
Female Female

Nationality: Nationality:
Malaysian Malaysian

Date Appointed Date Appointed

to the Board: to the Board:
1 June 2021 1 June 2018

Liza Mustapha Intan Shafinas (Tuty) Hussain

Executive Director, Executive Vice President & Group Chief Financial Officer Company Secretary

Academic/Professional Qualifications Other Current Appointments Academic/Professional Qualifications Other Current Appointments
• Fellow of the Association of Chartered Certified • Chairman, Energas Insurance (L) Ltd • Certificate in Legal Practice, Legal Profession Qualifying • Head, Group Secretarial and Board Governance,
Accountants (FCCA) • Director, MISC Berhad Board, Malaysia PETRONAS
• Advance Management Program at Harvard Business • Director, KLCC Property Holdings Berhad • Bachelor of Laws (Honours), University of Leicester, • Director, Malaysian Jet Services Sdn Bhd
School, United States of America • Director, KLCC REIT Management Sdn Bhd United Kingdom
• Member of the Malaysian Institute of Accountants • Director, PETRONAS Carigali Sdn Bhd • Graduate Diploma in Law, University of Western
• Bachelor of Science Degree in Economics, majoring in • Director, PETRONAS International Corporation Ltd Australia, Australia
Accounting and Finance from The London School of • Licensed Company Secretary
Economics and Political Science, University of London
Past Appointments/Experiences
Past Appointments/Experiences
• Joined PETRONAS in 2001 and has over 21 years of
• Vice President, Group Procurement, Project Delivery and extensive experience in legal, corporate governance and
Commitment to Governance

Technology, PETRONAS company secretarial matters

• Chief Financial Officer, Upstream Business, PETRONAS • Previously served as the Joint Company Secretary of
• Chief Financial Officer, PETRONAS Gas Berhad PETRONAS Gas Berhad and Head of Legal of PETRONAS
• Head, Group Financial Control Department, PETRONAS Gas Berhad
• Head, PETRONAS Group Treasury, where she led the • Other portfolios held include Legal Counsel of Legal
centralisation of PETRONAS’ treasury management. Corporate Services, PETRONAS Chemicals Group Berhad,
• Finance Executive, PETRONAS Carigali Sdn Bhd Corporate Services and Technology as well as
Petrochemical Business of PETRONAS

Board Committee:

Chairman of Committee Member of Audit Member of Risk Member of Nomination and

AC RC NRC
Member of Committee Committee Committee Remuneration Committee
 240 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 241

Profile of Company Secretaries Profile of Executive Leadership Team

As of 28 February 2022 As of 28 February 2022

Age:
Datuk Tengku
We believe that sustained value creation is
49 years
Muhammad Taufik built on ethical leadership. The calibre of our
President and Group
Chief Executive Officer
leadership across our business is embodied in
the commitment, experience and diversity of
Gender:
Female
our Executive Leadership Team (ELT).

2 3

Nationality:
Malaysian Adnan Zainol Abidin Liza Mustapha
Chief Operating Officer and Executive Vice President and
Executive Vice President and Group Chief Financial Officer
Chief Executive Officer,
Gas Business
Date Appointed
to the Board:
28 October 2021
4 5

Adif Zulkifli
Nur Ashikin Khalid Datuk Sazali Hamzah
Executive Vice President
Company Secretary and CEO Upstream
Executive Vice President and
CEO Downstream

Academic/Professional Qualifications Other Current Appointments

• Master of Laws in Legal Aspects of Marine Affairs, • Head, Secretarial & Governance, Group Secretarial and
University of Wales, Cardiff, United Kingdom Board Governance, PETRONAS 6 7
• Bachelor of Laws (Honours), University of Wales, Cardiff, • Secretary, PETRONAS Executive Leadership Team
United Kingdom
Mazuin Ismail Razman Hashim
• Licensed Company Secretary
Senior Vice President, Senior Vice President and
Corporate Strategy Group General Counsel,
Past Appointments/Experiences Group Legal

• Joined PETRONAS in 1996 and served in various

positions in PETRONAS with exposure in various fields of
law
• Previously served as Head of Legal and Company 8 9
Commitment to Governance

Secretary of PETRONAS Dagangan Berhad

• Other portfolios held include Head of Legal for the Bacho Pilong Farehana Hanapiah
MLNG Group of Companies, Legal Counsel for Senior Vice President, Senior Vice President,
PETRONAS Gas Berhad and Head of Gas Management Project Delivery and Group Human Resource
Technology Management
in Legal Upstream, Group Legal
• Areas of expertise include company law, company
secretarial and corporate governance
 242 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 243

Profile of Executive Leadership Team Profile of Executive Leadership Team

As of 28 February 2022 As of 28 February 2022

1 Datuk Tengku Muhammad Taufik 2 Adnan Zainol Abidin 3 Liza Mustapha 4 Adif Zulkifli 5 Datuk Sazali Hamzah 6 Mazuin Ismail
President and Group Chief Operating Officer and Executive Vice President and Executive Vice President and Executive Vice President and Senior Vice President,
Chief Executive Officer Executive Vice President and Group Chief Financial Officer Chief Executive Officer, Upstream Chief Executive Officer, Downstream Corporate Strategy
Chief Executive Officer,
Age/Gender/Nationality: Gas Business Age/Gender/Nationality: Age/Gender/Nationality: Age/Gender/Nationality: Age/Gender/Nationality:
48/Male/Malaysian 51/Female/Malaysian 51/Male/Malaysian 55/Male/Malaysian 54/Male/Malaysian
Age/Gender/Nationality:
Date Appointed: 60/Male/Malaysian Date Appointed: Date Appointed: Date Appointed: Date Appointed:
15 October 2018 1 April 2019 1 January 2022
1 July 2020 16 April 2016
Date Appointed:
Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications:
1 February 2022 Academic/Professional Qualifications: Academic/Professional Qualifications:
• Fellow of the Institute of Chartered • Master of Business Administration, • Chartered Fellow of the Institution of
Accountants in England and Wales • Fellow of the Association of Chartered Kellogg School of Management, Chemical Engineers (IChemE) • Master of Business Administration
• Member of the Malaysian Institute of Academic/Professional Qualifications: Certified Accountants (FCCA) Northwestern University • Bachelor of Chemicals Engineering, (Advance), University of Adelaide,
Accountants • Bachelor of Science in Chemical • Advance Management Program at • Bachelor of Science (Honours) in Lamar University, United States of Australia
• Bachelor of Arts (Honours) (Finance Engineering, University of Leeds, Harvard Business School, United States Petroleum Engineering, Colorado America • Bachelor of Science (Civil and
and Accounting), University of United Kingdom of America School of Mines • Advanced Management Programme, Structural Engineering), University of
Strathclyde, United Kingdom • Member of the Malaysian Institute of The Wharton School, University of Bradford, United Kingdom
Past Appointments/Experiences: Accountants Past Appointments/Experiences: Pennsylvania, United States of America
Past Appointments/Experiences: • Joined PETRONAS in 1984 • Bachelor of Science Degree in • Joined PETRONAS in 1993 • Senior Management Programme, Past Appointments/Experiences:
• Accumulated more than 20 years of • Possesses more than 38 years of Economics, majoring in Accounting • Has almost 30 years of experience in London Business School, London, • Joined PETRONAS in 1991
experience in the fields of finance and experience in the oil and gas industry and Finance from The London School the oil and gas industry in the fields United Kingdom • Has 30 years of experience in
business investment • Other key positions currently held of Economics and Political Science, of petroleum engineering, operations, PETRONAS covering project execution
• Experienced in strategic planning within the Group: University of London strategic planning, corporate Past Appointments/Experiences: and engineering, internal audit,
investment valuations, developing – Chairman, PETRONAS Gas Berhad transformation, petroleum economics, • Joined PETRONAS in 1990 governance, and business
entry strategies for businesses and – Chairman, Malaysia LNG Sdn Bhd Past Appointments/Experiences: mergers and acquisitions, and business • Has 32 years of experience in the oil development. He had also held
structuring fit-for-purpose funding – Chairman, Malaysia LNG Dua Sdn • Joined PETRONAS in 1995 development and gas industry in the fields of leadership roles in petroleum
requirements Bhd • Has more than 25 years of experience • Other key positions currently held petroleum refining, petrochemicals, management, strategic planning and
• Areas of expertise include financial within the Group: technical and engineering services and
– Chairman, Malaysia LNG Tiga Sdn in PETRONAS covering finance at change management
reporting, project analysis, feasibility – Chairman, PETRONAS Energy project delivery.
Bhd business and corporate • Other key positions currently held
reviews, capital projects structuring Canada Ltd • Other key positions currently held
– Chairman, Malaysia LNG 9 Sdn Bhd • Other key positions currently held within the Group:
and risk management, with primary – Director, PETRONAS Carigali Sdn within the Group:
focus on the oil and gas industry – Chairman, PETRONAS LNG Sdn Bhd within the Group: Bhd – Chairman, Pengerang Refining – Chairman, PETRONAS Digital Sdn
• Executive Vice President and Group – Chairman, PETRONAS Canada LNG – Chairman, Energas Insurance (L) Ltd. – Director, PETRONAS International Company Sdn Bhd Bhd
Chief Financial Officer, PETRONAS Limited – Director, KLCC Property Holdings Corporation Ltd – Chairman, Pengerang Petrochemical – Chairman, Petroleum Research Fund
• Partner at PricewaterhouseCoopers – Director, PETRONAS Carigali Sdn Berhad (KLCCP) – Trustee of the Abandonment Cess Company Sdn Bhd – Chairman, International Conference
(PwC) Malaysia Bhd – Director, KLCC REIT Management Fund – Director, PETRONAS Chemicals and Exhibition Professionals (iCEP)
• Chief Financial Officer for two public – Director, PETRONAS International Sdn Bhd (KLCCRM) • Other key positions previously held Group Berhad – Director, Malaysian Industry-
listed companies, responsible for Corporation Ltd – Director, MISC Berhad within the Group: – Director, PETRONAS Refinery and Government Group for High
financial and management reporting, – Director, LNG Canada Development – Director, PETRONAS Carigali Sdn – Chairman, PETRONAS Gas Berhad Petrochemicals Corporation Sdn Bhd Technology (MIGHT)
merger and acquisition activities, as Inc Bhd – Chairman, PETRONAS Research – Director, PETRONAS Carigali Sdn Bhd – Director, Institute of Technology
well as developing and implementing • Other key positions previously held – Director, PETRONAS International Fund – Director, PETRONAS International PETRONAS Sdn Bhd
key stakeholder engagement strategies within the Group: Corporation Ltd – Executive Vice President, Corporation Ltd – Director, PETRONAS Carigali Sdn
• Member of the Board of MISC Berhad – Executive Vice President, • Other key positions previously held Gas + New Energy • Other key positions previously held Bhd
• Director, KLCC Property Holdings Gas + New Energy within the Group: – Senior Vice President, Development within the Group: – Director, PETRONAS International
Berhad – Senior Vice President, Project – Vice President, Group Procurement and Production Upstream Business – Senior Vice President and Managing Corporation Ltd
Delivery and Technology – Group Financial Controller – Senior Vice President, Corporate Director/Chief Executive Officer, – Director, PTV International Ventures
Other Current Appointments: – Vice President, LNG Assets – Chief Financial Officer, Upstream Strategy PETRONAS Chemicals Group Berhad Ltd
• Chairman of Audit Committee for East – Vice President, Malaysia Petroleum – Managing Director and Chief
– Vice President, Global LNG Projects Business • Other key positions previously held
Coast Economic Region Development Management Executive Officer, Malaysia Refining
– Senior General Manager, Group within the Group:
Council (ECERDC) and Northern – Head, Strategy and New Ventures Company Sdn Bhd
Commitment to Governance

Other Current Appointments: Treasury – Senior Vice President of Project

Corridor Implementation Authority Division in Exploration & Production – Managing Director and Chief
(NCIA) • Co-Chairman, Self Regulation Policy – Chief Financial Officer, PETRONAS Business Executive Officer, PETRONAS Delivery and Technology
• Chairman of National Trust Fund Directive Council Gas Berhad Technical Sdn Bhd – Vice President of Technical Global
• Council Member of ECERDC and Other Current Appointments: – Head, Group Project Management (PETRONAS)
NCIA Other Current Appointments: • Chairman of the Society of Petroleum and Delivery, PETRONAS
• Member of Asia-Pacific Economic • Member of Board Audit Committee, Engineers, Asia Pacific Advisory – Head, PETRONAS Group Technical Other Current Appointments:
Cooperation (APEC) Business Advisory MISC Berhad Council Services • Nil
Council (ABAC) • Member of Audit Committees of • Vice Chairman of International – Various senior management positions
• Member of Board of Trustees of the KLCCP and KLCCRM Petroleum Technology Conference in the refinery and petrochemical
Merdeka Award Trust • Member of Nomination and Board of Directors business within PETRONAS
• Member of National Employment Remuneration Committees of KLCCP • Executive Committee Co-Chair of
Council (NEC) and KLCCRM International Petroleum Technology Other Current Appointments:
• Member of the Board of various • Treasurer of Malaysian Petroleum Club Conference 2021 (Kuala Lumpur) • Member of the International Advisory
PETRONAS companies • Advisory Committee Member of the Panel for C-THRU Research Project
• Member of World Economic Forum Offshore Technology Conference Asia
(WEF) Industry Action Group and WEF (Kuala Lumpur) 2022
Oil and Gas Governors Forum
• Chairman of CEO Action Network
 244 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 245

Profile of Executive Leadership Team Corporate Governance at PETRONAS

As of 28 February 2022

Board Governance and Structure

7 Razman Hashim 8 Bacho Pilong @ Pelu 9 Farehana Hanapiah
Senior Vice President and Senior Vice President, Senior Vice President,
Group General Counsel, Group Legal Project Delivery and Technology Group Human Resource Management “In 2021, PETRONAS had demonstrated resilient performance amidst the difficult global business
environment. The significant economic contraction triggered by COVID-19 has been a real test of
Age/Gender/Nationality: Age/Gender/Nationality: Age/Gender/Nationality: corporate governance in practice across organisations around the world. At PETRONAS, the focus has
48/Male/Malaysian 57/Male/Malaysian 54/Female/Malaysian
consistently been to apply the best practice of corporate governance principles throughout the Group.
Date Appointed: Date Appointed: Date Appointed: In building a sustainable business, the Board is cognisant of its accountability to the shareholders and
1 July 2021 1 August 2021 1 January 2020 various stakeholders of PETRONAS. To this end, the Board resolutely ensures that it demonstrates
Academic/Professional Qualifications: Academic/Professional Qualifications: Academic/Professional Qualifications:
effective leadership and promotes unequivocally high ethical standards in its decision-making process.”
• Bachelor of Laws and Shariah from • Bachelor of Chemical Engineering • Bachelor of Commerce and
International Islamic University from Cockrell School of Engineering, Administration (Accountancy), Victoria PETRONAS is led by a Board whose Directors are collectively responsible for creating and delivering long-term sustainable
Malaysia University of Texas, Austin, United University of Wellington, New Zealand value for the business. A key responsibility of the Board is to balance the interests of the Group and our stakeholders
• Licensed Company Secretary States of America • Advanced Management Programme,
• Senior Management Development Harvard Business School
including employees and the wider communities we serve. Our governance structure ensures role clarity by clearly
Past Appointments/Experiences: Program, INSEAD, Singapore delineating roles and areas of accountability and recognises the independent roles and duties required to effectively
• Joined PETRONAS in 1998 • Advanced Management Program, AMP Past Appointments/Experiences: govern the Company. The governance structure aims to promote strategic alignment across the Group whilst facilitating
• Has more than 24 years of experience 65, The Wharton School, University of • Joined PETRONAS in 1990 efficient decision-making at all levels.
in the legal and secretarial fields. Pennsylvania • Has more than 31 years of experience
• Other key positions previously held in corporate functions
within the Group: Past Appointments/Experiences: • Other key positions currently held GOVERNANCE STRUCTURE
– Head of Legal Upstream, PETRONAS • Joined PETRONAS in 1992 within the Group:
– General Counsel, Legal Upstream • Has more than 31 years of experience – Chairman, PETRONAS Management BOARD OF DIRECTORS
International, Legal Upstream in the oil and gas industry Training Sdn Bhd
– Company secretary to PETRONAS • Other key positions currently held – Chairman, PETRONAS Technical Non-Executive Chairman Independent Non-Executive Directors President and Group Chief
Carigali Sdn Bhd and PETRONAS within the Group: Training Sdn Bhd • Leads the Board and ensures it • Provide independent judgment, external Executive
International Corporation Ltd – Chairman, PETRONAS Research Sdn – Chairman, Dana Asy-Syakirin operates effectively perspective and objectivity to the Board’s • Day-to-day management of the
– Directors of various entities within Bhd – Chairman, PETRONAS Lubricants • Maintains a culture of openness deliberation business and implementation of
Upstream business – Chairman, PETRONAS Technical International Sdn Bhd’s Nomination and debate • Contribute to deliberations and discussions policies, strategies and decisions
– Member of Joint Management Services Sdn Bhd and Remuneration Committee with a broad range of experience and expertise approved by the Board
Committee of Garraf Operations, – Chairman, Institute of Technology – Director, Institute of Technology
Iraq PETRONAS Sdn Bhd PETRONAS Sdn Bhd
– Director, PETRONAS LNG 9 Sdn – Director, PETRONAS Digital Sdn Bhd
Other Current Appointments: Bhd – Director, PETRONAS Lubricants AC Audit Committee NRC
Nomination and Risk Committee
RC
Remuneration Committee
• CEO, Kulliyyah, Ahmad Ibrahim – Director, UTP FutureTech Sdn Bhd International Sdn Bhd
Kulliyyah of Laws, International Islamic – Board of Trustees, Dana Asy-Syakirin • Other key positions previously held
Assists the Board in fulfilling its oversight Responsible for assessing the Responsible for the review of principal
University Malaysia • Other key positions previously held within the Group: functions in relation to the Company’s performance of the Board, as well as risks, and oversees the adequacy and
within the Group: – General Manager, Group Strategic internal controls and financial reporting identifying and nominating new effectiveness of the risk assessment and
– VP Malaysia Assets, Upstream Planning to safeguard PETRONAS’ assets. The Directors. The Committee also supports risk management system for the
– VP International Assets, Upstream – Head, Commercial Development & Committee provides the Board with the Board on the implementation of a PETRONAS Group. The Committee also
– SGM, Petroleum Operations JV Formation of Petronas Refinery quality and reliability assurance of the succession plan for the Board, President reviews and recommends to the Board
Management, Malaysia Petroleum & Petrochemical Corp financial information reported by the and GCEO, and Top Management as the appropriate corporate governance
Management, Upstream – Head, Human Capital Expertise, Company, while promoting efficiency well as Top Management’s policies and procedures in accordance
– Head, Special Projects, Corporate Group HRM and good governance practices. appointments/renewals. The Committee with good governance standards and
recommends to the Board the best practices.
Strategic Planning – Head, Human Capital Management,
remuneration policy for the Non-
– President, Sudd Petroleum Group HRM Executive Directors and Top
Operating Company – Chief Executive Officer, PETRONAS Management.
Commitment to Governance

– President, White Nile Petroleum Management Training Sdn Bhd

Operating Company The Committee also reviews the annual
– General Manager, Exploration & Other Current Appointments: President and GCEO’s Performance
Production, Greater Nile Petroleum • Council Member of the Global CHRO Scorecard for the year.
Operating Company Council – The Conference Board
– GM, PETRONAS Carigali Sdn Bhd
– Sarawak Operations For more information about the
For more information about the Audit Nomination and Remuneration For more information about the Risk
Committee, please refer to page 252. Committee, please refer to page 253. Committee, please refer to page 254.
Other Current Appointments:
• Nil

President and Group CEO

Executive Leadership Team
The ELT was established to assist the President and GCEO in managing the business affairs of the Company and is responsible for
providing a holistic approach to all business strategies as well as high impact and high value investments including mergers and
acquisitions. The ELT has Focused ELT Meetings to discuss specific matters which include HSSE, Technology and People Development.
 246 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 247

Corporate Governance at PETRONAS Corporate Governance at PETRONAS

Board Leadership During 2021, the Board met on 24 occasions of which

almost all meetings were conducted virtually. Although the
Board Roles and Attendance
The Board provides effective stewardship and is responsible
quorum for the Board meeting is two, majority of the
for the Group’s strategic direction and control of the
Board meetings were attended by all Directors. Whilst a
Company. The Board exercises this control by way of a
decision of the Board only requires a majority of votes of Chairman President and GCEO
governance framework, effective delegation, risk
the Directors, all decisions were made on consensus basis.
management and a system of assurances regarding
financial reporting and internal controls. The Board is Responsible for the effective running of the Responsible for all executive management
Each Director has full access to the services of the
accountable to its shareholders and towards a wider range
Company Secretaries, who play an advisory role to the Board and ensures that the Board plays a full matters affecting the Company and/or the
of stakeholders such as employees, suppliers, community
Board by providing guidance on corporate governance, and constructive role in the development and Group and leads the Executive Leadership Team.
and the Government.
ethical business practices, compliance to the Company’s determination of the Company and the Group’s Responsible for developing and recommending
Constitution, policies and procedures and the relevant strategy and overall commercial objectives.
Each Director has the duty to act in good faith and in the the long-term strategy and vision for the
regulatory requirements, guidelines and legislation.
best interest of the Company. In discharging its roles and Leads the Board in setting the values and ethical Company and/or the Group.
duties effectively, the Board is guided by the Board standards of the Company.
The Board may from time to time and if deemed Fosters a corporate culture that promotes
Charter, a document which sets out the authority,
appropriate, consider and approve urgent matters via Promotes the highest standards of integrity and ethical practices, encourages individual integrity
responsibilities and operations of the Board.
Directors’ circular resolution. All circular resolutions passed corporate governance at the Board level. and the fulfilment of the Company’s corporate
by the Board are tabled at the next Board meeting for social responsibilities.
The differing roles of the Chairman and the President and
notation.
Group Chief Executive Officer (President and GCEO) are Champions the Company’s values and
acknowledged and set out in the Board Charter. The behaviours across the whole Group.
The Board practises active and open discussions at its
Chairman of the Board is not a member of any of the
meetings so as to ensure that opportunities are given to all
Board Committees.
Directors to participate and contribute to the decision-
making process. Robust discussions and vigorous
The Board exercises collective oversight at all times. In
deliberations at the Board meetings ensure that the
delegating its authority to the Board Committees, the
process of effective and healthy dialogue is achieved.
Board does not abdicate its responsibilities. The Board
further ensures that such delegation does not hinder or Non-Executive Directors Company Secretary
The respective Chairmen of the Audit Committee,
reduce the Board’s ability to discharge its functions. In this
Nomination and Remuneration Committee, and Risk
regard, the Board clearly sets out the division of Provide alternative insights and constructively Facilitates the effective operation of the Board
Committee provide regular updates to the Board
responsibilities in the respective Terms of Reference (TOR) challenge proposals to ensure all relevant and ensures that the Directors receive accurate,
subsequent to the proceedings of their respective
of the Board Committees.
Committee meetings. matters are objectively considered by the Board. timely and clear information to enable them to
Oversight on the performance of the discharge their responsibilities.
Together with Management, the Board upholds good
All proceedings of Board meetings are duly minuted and
corporate governance culture within the Company by Management and monitors the delivery of Group Provides support and advice to the Board in
signed. Minutes of each Board meeting accurately reflect
ensuring ethical leadership, prudent and professional strategy within the risk and control environment respect of governance matters and ethical
the deliberations and decisions of the Board, including any
behaviour in the conduct of its business and in all aspects set by the Board. business practices.
dissenting views and if any Director had abstained from
of its operations.
voting or deliberating on a particular matter. Minutes of Bring independent judgment and scrutiny to the
the Board meetings are properly kept by the Company decisions taken by the Board.
Secretary.
How the Board Functions
The Board meets regularly, and additional meetings are
arranged as and when circumstances dictate. Each meeting Matters Reserved for the Board
is conducted in accordance with a formal and structured
Commitment to Governance

The Board has an approved and documented schedule of

agenda and Board papers are circulated on time to ensure
matters reserved for its decision as follows:
that Directors are well-informed and that debates and
decisions are constructive and robust. 1. Strategy and Management – Strategy, policies,
annual budgets and major investment decisions which
Access to Board papers by the Board members is carried include capital projects, mergers and acquisitions, and
out online through a collaborative software, with the aim funding requirements.
of enhancing the efficiency of the Board process. Going
digital allows the Directors to access, read and review the 2. Financial, Governance and Risk – Financial reporting
Board papers, as well as enabling the Board members to and control, and risk management.
confer with each other and with the Company Secretaries,
electronically. Board Papers and presentations by the 3. Corporate Matters – Reputation and stakeholder
Management to the Board are prepared and delivered in a management, Health, Safety, Security and Environment
manner that ensures clarity and provide sufficient (HSSE), Board and Board Committees’ memberships,
understanding of the subject matter. and Directors’ remuneration and succession planning.
 248 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 249

Corporate Governance at PETRONAS Corporate Governance at PETRONAS

Attendance at Meetings
Board Balance and Effectiveness
The prolonged COVID-19 pandemic continued to affect the Board’s ability to hold physical Board meetings. Nonetheless,
the Board had successfully navigated the crisis during the year under review by conducting most of its meetings virtually.
The Directors’ commitment to carry out their duties and responsibilities is affirmed by their attendance at the Board Board Balance and Composition Diversity
meetings held as set out below. A total of twenty-four Board meetings were held during the year under review.
As at the date of this report, the Board of Directors of The Board recognises the importance of diversity and the
The number of meetings of the Board and Board Committees during the year ended 31 December 2021, together with a PETRONAS comprises ten members; the Non-Executive value it brings to the PETRONAS Group. Diversity promotes
record of the attendance is detailed in the table below: Chairman, two Executive Directors and seven Non- the inclusion of different perspectives, raising the standards
Executive Directors (NEDs), out of which four are of good practice in Board leadership and enhancement of
Nomination and
Independent Non-Executive Directors (INEDs). The valuable insights in business judgment. Diversity is also
Directors Audit Remuneration Risk
biographical details of the Directors are set out on pages important to ensure the Company remains relevant,
as at 28 February 2022 Board Committee Committee Committee
229 to 238. resilient and sustainable in the rapidly transforming and
Tan Sri Dato’ Seri Mohd Bakke Salleh 23/24* 3/3 – 4/4 evolving business environment.
Chairman/Non-Independent Non-Executive Director The size and composition of the Board is fundamental to
Datuk Tengku Muhammad Taufik 24/24 – – – its success in providing strong and effective leadership. The Whilst it is important to promote diversity, the normal
Executive Director/President and Group Chief presence of Non-Executive Directors ensures that no selection criteria of a Director based on an effective blend
Executive Officer individual or small group of Directors are able to dominate of competencies, skills, experience and knowledge in areas
the decision-making process and that the interests of identified by the Board remains a priority so as not to
Zakiah Jaafar 21/24 5/6 – 5/7
shareholders and stakeholders are protected. compromise the effectiveness in carrying out the Board’s
Non-Independent Non-Executive Director
functions and duties. The Board is committed to ensure
Dato Haji Ibrahim Haji Baki 22/24 – – 6/7 During the year under review, the Board saw some that its composition not only reflects diversity but will also
Non-Independent Non-Executive Director changes and new appointments to its composition. have the right mix of skills and balance to contribute to
Tan Sri Zaharah Ibrahim 24/24 6/6 8/8 – the achievement of the Company’s goals and objectives.
Independent Non-Executive Director In view of the retirement of Tan Sri Ahmad Nizam Salleh
effective 1 August 2021, Tan Sri Dato’ Seri Mohd Bakke
Dato’ Razali Mohd Yusof 24/24 – 8/8 –
Salleh was appointed as the new Chairman of PETRONAS
Independent Non-Executive Director
effective 1 August 2021. With this appointment, Tan Sri
Ainul Azhar Ainul Jamal 24/24 6/6 8/8 – Dato’ Seri Mohd Bakke’s status has been re-designated as
Independent Non-Executive Director Non-Independent Non-Executive Director (NINED).
Liza Mustapha 16/16 – – –
Executive Director/Group Chief Financial Officer The Board wishes to record its appreciation and gratitude
(Appointed w.e.f 1.6.2021) to Tan Sri Ahmad Nizam Salleh during his tenure as
Chairman of the Board.
Thayaparan S. Sangarapillai 8/8 2/2 – 2/2
Independent Non-Executive Director
The Board also welcomed Thayaparan S. Sangarapillai as
(Appointed w.e.f 4.9.2021)
an INED and Datuk KY Mustafa as a NINED on the
Datuk KY Mustafa – – – – PETRONAS Board effective 24 September 2021 and 19
Non-Independent Non-Executive Director January 2022, respectively.
(Appointed w.e.f 19.1.2022)

* Tan Sri Dato’ Seri Mohd Bakke Salleh was excused from attending a Special Board meeting in 2021 which was held for the purpose of appointing him The current composition of the Board has a blend of skills,
Commitment to Governance

as Chairman of the Board. experience and knowledge enabling them to provide

effective oversight, strategic guidance and constructive
challenge, review and deliberation on the Management’s
Nomination and proposals.
Director Audit Remuneration Risk
who has retired in 2021 Board Committee Committee Committee The NRC is responsible for reviewing the composition of
Tan Sri Ahmad Nizam Salleh 12/12 – – – the Board and assessing whether the balance of skills,
(Retired w.e.f 1.8.2021) experience, knowledge and independence is appropriate to
enable the Board to operate effectively.
 250 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 251

Corporate Governance at PETRONAS Corporate Governance at PETRONAS

Board Independence Board Onboarding and Professional Development Programme

The Board assesses the independence of its NEDs annually. The independence assessment takes into account whether The Board recognises the importance of ensuring that new Directors have a complete introduction to the business so
the NEDs have demonstrated an independent state of mind and objective judgment in their deliberations and decision- that they are able to make a full and meaningful contribution to the Board. To that end, the Board has adopted a
making process. The assessment on the independence of the NEDs may be undertaken in the following circumstances: comprehensive and extensive onboarding programme for new Directors, including meetings with key senior leadership
team, bespoke training on relevant regulatory and legal obligations and onboard procedures and processes.
Prior to the Appointment of Notice of Change of
1 2 Annual Review 3
Non-Executive Directors Circumstances
Directors will have full access to roundtable discussions, seminars and other events, covering topics relevant to the Group
Prior to the appointment of NEDs, the The Board determines the Each NEDs has an affirmative obligation and their roles. The Company provides Directors with the necessary resources to update their knowledge and capabilities
independence of each individual candidate independence of each NEDs annually, to notify the NRC of any change in throughout the year.
will be reviewed and determined by the based on the recommendations from circumstances that may affect his/her
Board based on the recommendations the NRC per the PETRONAS independence status. Once notified, the
from the NRC upon reviewing his/her Independent Directors Guidelines. NRC shall re-evaluate the independence A suite of development programmes, known as the PETRONAS Board Excellence tailor-made to the requirements of
criteria per the PETRONAS Independent status and make the necessary Directors across the Group, has been in place since 2016 to chart the Directors’ development plans in a structured
Directors Guidelines. recommendations to the Board. manner.

The INEDs have been appointed for their specific experience and expertise and are independent of management and free Suite PETRONAS BOARD EXCELLENCE (PBE)
from any business or other relationship which could materially interfere with the exercise of their independent judgement.
NEDs may serve on the boards of other companies provided this does not involve a conflict of interest and that the Continuous
Solution Onboarding Foundational* Advanced Conference
appointment does not restrict their ability to discharge their duties to PETRONAS in any way. Education

In line with the exemplary practices of corporate governance, the Board has adopted a tenure policy whereby an INED’s Best
Onboarding
total tenure on the Board is capped at nine years. As at the date of this Statement, none of the INEDs has served the Essentials Practices Strategy for Audit
Programme Rising Round Updates on Directors
Board more than nine years. Programme for for Board Stakeholder Committee
for New Above 2 Table trends Conference
Directorship Excellence Management Forum
Directors
(Advanced 1) (Advanced 2)
Conflict of Interest
In ensuring transparency and integrity of the decision-making process as well as to prevent any conflict of interest, a E-Learning (5 Critical Legal Areas, Code of Conduct, Anti Corruption, Data Privacy)
Continuous
declaration of interest by Directors is a fixed agenda item at the start of every Board meeting. A Director who has direct Programme
or indirect interest in a transaction shall recuse himself/herself when required and abstain from deliberations and voting Board Assessment (Observation, Interview and Digital)
to allow unbiased and free discussions and decision-making. Disclosure of the nature and extent of the Directors’ interest
and abstention from decision-making proceedings are recorded in the minutes of the Board meetings. The Principles of * The Foundational programmes only apply to the directors who are employees of the PETRONAS Group, thus, the PETRONAS Directors, upon their
onboarding, will attend the Advanced programmes of the PBE.
Directorship for the PETRONAS Group was established to govern the way Directors conduct themselves in a conflict of
interest situation, which corresponds with the Companies Act 2016 and the Code of Conduct and Business Ethics (CoBE)
of the Company. Board Evaluation

The Directors are also required to declare their interests annually, in line with the requirements on the disclosure of The Board, through the NRC, endeavours to conduct annual performance evaluation of the Board and its Committees,
Director’s interests in the Company’s Audited Financial Statements. facilitated by the Company Secretary. Evaluation results are reported to the NRC. Individual Director’s evaluation results
are made available to the NRC Chairman and reported directly to the Chairman of the Board. The Chairman of the Board
will then conduct feedback sessions through peer-to-peer meetings.
Board Remuneration Policy
Commitment to Governance

Given the highly competitive market, PETRONAS designed a robust fee structure to attract, retain and appropriately
compensate the diverse and internationally experienced NEDs. The fee framework is illustrated below:

Annually Per Meeting

PETRONAS Non-Executive Directors
Retainer Fees: Remuneration Framework Attendance Allowance
Board and Board
Committees Special Fee*
Benefits

* Only for eligible Non-Executive Directors.

 252 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 253

Corporate Governance at PETRONAS Corporate Governance at PETRONAS

Board Commitment to Sustainability Internal Control and Audit Activities Audit review on the commercial trading and
marketing activities of key accounts within the various
The AC deliberated and endorsed internal audit reports
businesses in Malaysia and selected international
The Board acknowledges that the well-being of the employees, customers, suppliers and other stakeholders as well as which included opinions on the adequacy and
offices.
the environment and the society at large is central to sustaining our long-term performance and continued relevance. effectiveness of governance and internal controls, audit
Careful consideration of the needs of a broader universe of stakeholders ultimately drives value for the shareholders. findings’ root causes and implications and the Audit review on shareholders of selected joint venture
recommended corrective actions to be undertaken by companies.
The heightened materiality of sustainability to the business requires the Board to factor in these sustainability components, the Management. The internal audit exercises include
Applicable policies, procedures, laws and regulations
risks and opportunities into its strategies at all times. The Board being the highest authority in sustainability governance, audit on the following key areas (but not limited to):
are complied with.
takes full responsibility in the establishment of the Company’s sustainability agenda and road map. Business and operational activities are carried out
effectively and efficiently. The AC also reviewed and endorsed the
The full report on Sustainability Governance is found on pages 170-173 of this Report. comprehensiveness of the Annual Audit Plans developed
Delivery of selected ongoing projects focusing on
based on the enterprise business risks, strategies, audit
project management activities, reliability of reporting
history results and stakeholder feedback, overall
and compliance to the applicable regulatory and
performance of Group Internal Audit and audit
procedural requirements.
Board Committees operations and enhancement and clarity of Audit Rating.
Efficiency and effectiveness of operations Updates on Agreed Corrective Actions arising from audit
management, the existence of internal controls and assignments are also reviewed on a quarterly basis to
safety management as well as accuracy, reliability and ensure the proposed audit activities are carried out as
Audit Committee timely reporting on selected domestic and per emerging and relevant risks as well as business
international assets. strategies.
Ainul Azhar Ainul Jamal – Chairman Thayaparan S. Sangarapillai Efficiency and effectiveness of selected ongoing
(Appointed w.e.f. 24.9.2021) The AC together with the external auditors, reviewed the
AC Tan Sri Zaharah Ibrahim initiatives within the Group.
results of the statutory audit and the audit report. The
Zakiah Jaafar Tan Sri Dato’ Seri Mohd Bakke Salleh
AC also reviewed the proposed fees for the statutory
(Resigned w.e.f. 24.9.2021)
audits and limited review fees for PETRONAS and
selected subsidiaries.

The AC continued to play a key role in assisting the Board in fulfilling its oversight responsibilities in ensuring the
effectiveness of financial reporting, systems of internal control and the internal and external audit functions.
Nomination and Remuneration Committee
The AC discharges its responsibilities through its scheduled meetings during the year in accordance with its fixed agenda
which covers the matters under the purview of the AC. The AC met 6 times in 2021.
Dato’ Razali Mohd Yusof – Chairman Tan Sri Zaharah Ibrahim
NRC
For more information about the AC’s attendance, please refer to page 248. Ainul Azhar Ainul Jamal

Key Matters in 2021

Financial
The NRC carries duties and responsibilities in relation to the nomination and remuneration matters with strict adherence
Commitment to Governance

During the year under review, the AC reviewed the quarterly financial results and the financial performance of to the principles of good corporate governance.
business segments and of the PETRONAS Group, and also its report for the financial year ended 31 December 2021
to ensure that they were prepared in compliance with the relevant regulatory requirements and guidelines. The NRC is responsible in assisting the Board in ensuring that the Board and Board Committees retain an appropriate
structure, size, balance of skills and experience, as well as independence and diversity required to meet PETRONAS’
The AC also reviewed the effects of the application of accounting judgments and estimates on impairment strategic objectives. The NRC is also responsible to review, prior to the Board’s approval, the appointments and
assessment and provision for decommissioning, dismantling, removal and restoration (DDRR). succession planning of PETRONAS’ Top Management.

The NRC discharges its responsibilities through its scheduled meetings during the year in accordance with its fixed
agenda which covers the matters under the purview of the NRC. The NRC met 8 times in 2021.

For more information about the NRC’s attendance, please refer to pages 248.
 254 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 255

Corporate Governance at PETRONAS Corporate Governance at PETRONAS

Key Matters in 2021 Compliance

The NRC reviewed and made recommendations to the Board on the status of independence of the Non-Executive
Directors (“NEDs”) of PETRONAS in line with the requirements of the PETRONAS Independent Directors Guidelines
on the annual review of independence of the NEDs. PETRONAS has consistently championed compliance culture guided by the principles of its Shared
The NRC reviewed PETRONAS’ Top Management appointments, contract renewals and contract cessations, as well Values and Statement of Purpose. Based on these principles, the compliance culture in the 5 Critical
as succession planning and development opportunities.
Legal Areas (5CLAs) is inculcated among PETRONAS employees through the embedment of a robust
During the year under review, the NRC had reviewed and endorsed the establishment of a Chief Operating Officer compliance programme, coordinated and managed by Group Legal via the Legal Compliance Framework
(COO) position and the assignment of the role to the existing Executive Vice President, Gas + New Energy
Business, as well as the establishment of a succession plan for the President and Group CEO. In addition, the (LCF). The components of LCF which include the 5 Key Compliance Areas (5KCAs) are our key focus in
NRC had also endorsed the appointment of the Chief Sustainability Officer to orchestrate PETRONAS’ roadmap for strengthening the compliance culture, supported with consistent messaging from the PETRONAS Board
PETRONAS’ net zero carbon emissions by 2050 aspiration. and Management.
The NRC reviewed and endorsed the enhanced guidelines based on pay-for-job principle for the appointment of
Top Management (which includes appointment to higher position) and management of employment contracts.
The NRC reviewed and endorsed the establishment of Top Management Performance Measurement (“TMPM”) and 5 Key Compliance Areas
enhancement of Top Management Incentive Plan i.e. Short-Term and Long-Term Incentive Plans to encourage
desired leadership behaviours to successfully deliver PETRONAS’ long-term ambition, which includes the
incorporation of the ESG weightage of 20 per cent into the Top Management’s Long-Term Incentive Plan.
The NRC also reviewed and endorsed the establishment of the 2021 President and Group CEO’s Performance
Measurement to balance between Perform and Transform objectives with emphasis on enterprise outcomes and
promote desired behaviours. 1

Governance 2
and Risk
Training
Risk Committee Assessment
and
Awareness
Thayaparan S. Sangarapillai – Chairman Zakiah Jaafar
RC (Appointed w.e.f. 24.9.2021) Tan Sri Dato’ Seri Mohd Bakke Salleh
5
Dato Hj. Ibrahim Hj. Baki (Resigned w.e.f. 24.9.2021) LCF’s
Monitoring 5KCAs
and 3
Assurance
The RC supports the Board in reviewing principal risks, oversees the adequacy and effectiveness of risk assessment and Due
risk management system for PETRONAS Group. The Committee also deliberates on risk mitigation strategies and Diligence and
measures, review investment proposals that are significant from the risk perspective as well as monitor the activities on Contractual
integrity-related initiatives for the PETRONAS Group.
Obligations
4
The RC discharges its responsibilities through its scheduled meetings during the year in accordance with its fixed agenda
which covers the matters under the purview of the RC. The RC met 7 times in 2021. Business
Practice
Commitment to Governance

For more information about the RC’s attendance, please refer to page 248.

Key Matters in 2021

The Committee assisted the Board in deliberating the PETRONAS Group’s Corporate Risk Profile and Risk Appetite
on a quarterly basis. Additionally, revisions to Risk Appetite were recommended by the Committee and approved In operationalising and ensuring global and groupwide compliance, the compliance management team is structured to
by the Board for adoption in line with the requirement of the business objectives and strategies. serve the business sectors at headquarters, with regional offices in Asia Pacific, Europe, Middle East and Americas to
The Committee also played its oversight role in reviewing risks related to strategic and high impact business cover all countries PETRONAS operates in. Through a risk based and “adopt-or-adapt” approach, the regional compliance
matters such as investment decisions for key projects during the year. management offices support the implementation of Group positions and enterprise controls, and conduct compliance
programme and activities that adhere to and are in line with local laws and regulations. Frequent meetings and
The Committee appraised the performances and activities of Group Integrity on a quarterly basis and was also
updated on the progress of the Group’s integrity and governance programmes. discussions are held to ensure alignment of compliance practices and that regional activities are connected and
communicated regularly with the headquarter.
The Committee also reviewed the report and activities of the Company’s Portfolio Commodity Hedging
programmes on a quarterly basis.
 256 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 257

Corporate Governance at PETRONAS Corporate Governance at PETRONAS

1 Governance and Risk Assessment 4 Business Practice

PETRONAS establishes various governance documents such as policies, standards, guidelines, frameworks and PETRONAS reviews its policies and guidelines on a regular basis and endeavours to ensure these policies and
procedures which are the foundation for carrying out internal controls in relation to the 5CLAs. The relevant guidelines are effectively updated and in line with any changes in the 5CLAs. This review is undertaken for
governance documents are continuously enhanced and improved throughout the year, and required to be adopted continuous improvements and putting in place pre-emptive measures to safeguard PETRONAS from breaching the
and implemented by PETRONAS entities across the Group. 5CLAs.

Governance Documents for 5CLAs a) Enhancement to PETRONAS Group Privacy Notice

Ethics and Integrity Data Privacy Sanctions and Export Controls Competition The PETRONAS Group Privacy Notice is intended to clearly inform individuals on how PETRONAS collects and
processes personal data. The enhancement of the PETRONAS Group Privacy Notice includes the expansion of
• PETRONAS Code of • PETRONAS Corporate • PETRONAS Economic • PETRONAS Competition categories of personal data collected and processed by PETRONAS Group, adding specific sections on processing
Conduct and Business Privacy Policy Sanctions and Export Law Guidelines a minor’s personal data and information for data subject in the UK and the EU on the lawful basis for processing
Ethics • PETRONAS Master Control Policy & • PETRONAS Competition personal data as required under General Data Protection Regulation (GDPR).
• PETRONAS Anti-Bribery Guidelines to the Guidelines Law Compliance
and Corruption Manual PETRONAS Corporate • PETRONAS Sanctions Protocols:
• PETRONAS Privacy Policy Breach Protocol – Merger and Acquisition b) Enhancement to the PETRONAS Competition Law Guidelines
Whistleblowing Policy • PETRONAS Data Transactions Protocol The PETRONAS Competition Law Guidelines was established to outline the main competition law principles
• PETRONAS Raid Protocol Protection Impact – Meetings and
• PETRONAS Human Assessment Guidelines information Sharing
applicable in all jurisdictions where PETRONAS Group operates to build the compliance culture, hence ensuring
Rights Commitment • PETRONAS Personal Protocol that all employees strictly comply with these rules in their day-to-day business. However, with the continuous
Data Breach Protocol evolution in the competition/anti-trust laws, an enhancement of the PETRONAS Competition Law Guidelines is
essential in making sure it remains relevant and applicable to PETRONAS operations in Malaysia and globally. The
revised guidelines include relevant scenarios leveraging from practical business experiences to guide PETRONAS
employees when dealing with actual or potential competition issues.

c) Establishment of PETRONAS Data Protection Impact Assessment Guidelines

2 Training and Awareness
The PETRONAS Data Protection Impact Assessment (DPIA) Guidelines is a high-level universal guideline designed
to ensure the necessary data protection controls are incorporated in the identified processes for the purpose of
PETRONAS continues to deliver enterprise or customised training and awareness programmes for its employees and
compliance with the PETRONAS Corporate Privacy Policy and local data protection legislation.
Directors to ensure firm understanding of the 5CLAs through various digital and communication platforms. Online
courses, webinars and virtual trainings were the primary methods used in light of the prolonged COVID-19 pandemic.
d) Establishment of PETRONAS Personal Data Breach Protocol
These methods have enabled PETRONAS to accelerate the training completion by all PETRONAS employees as part
of its continuous efforts to instill the 5CLAs compliance culture across PETRONAS Group. Throughout 2021, more Personal data protection laws continue to evolve in Malaysia and other countries. It is expected that more
than 90 per cent of PETRONAS employees group wide had completed the 5CLAs online courses. countries will enact or revise their data privacy laws to require notification to data privacy authorities and the
individuals affected in the event of a personal data breach. Thus, the Personal Data Breach Protocol was
established with the objective of providing a high-level process flow in the event of a potential or actual breach
of personal data to expedite effective action to prevent or minimise any adverse implications to PETRONAS
Group.
3 Due Diligence and Contractual Obligations
e) Establishment of PETRONAS Sanctions Breach Protocol
Commitment to Governance

PETRONAS manages its third-party risks through PETRONAS Third Party Risk Management (TPRM), a robust due PETRONAS Group may encounter situations or issues involving sanctions due to its operations in various
diligence process to safeguard PETRONAS Group from any exposure to the 5CLAs in the event of misconduct by jurisdictions. Some of these situations require swift action in a particular manner consistent with the applicable
third parties (e.g. partners, contractors, vendors, suppliers, distributors, agents). laws and PETRONAS governance processes. In light of this, the Sanctions Breach Protocol was established with
the objective of providing specific actions to be taken in an efficient and effective manner, if any of these
PETRONAS TPRM, which applies to all businesses, enable PETRONAS to detect possible red-flags of potential third situations occur.
parties prior to any formal engagement or during the business relationship with such third parties, and to provide the
necessary mitigation or contractual safeguard against any risks of legal, financial or reputational damage that may be f) Enhancement to PETRONAS Third Party Risk Management
caused toward PETRONAS.
As part of the continuous improvement to manage PETRONAS’ third-party risks, the KYC Questions and
compliance clauses on the 5CLAs in the TPRM are further revised and strengthened based on the experience of
in-house counsels in dealing with various third parties and compliance issues. A simplified KYC Questions
document and compliance clauses were also established for third parties under special categories that pose a
lower risk to PETRONAS.
 258 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 259

Corporate Governance at PETRONAS Corporate Governance at PETRONAS

5 Monitoring and Assurance Sustainability Governance

PETRONAS ascertains the effectiveness of control established through rigorous monitoring and assurance activities.
The control oversight and monitoring of the 5CLAs’ compliance are achieved through a structured compliance
Board Commitment to Sustainability
assessment undertaken by PETRONAS entities annually in accordance with the PETRONAS Integrated Assurance
Program. In addition to the compliance assessment, the on-going evaluations by Group Legal and periodic reviews The Board acknowledges that the well-being of the employees, customers, suppliers and other stakeholders as well
and audits by Internal Audit enable the effective identification, assessment and necessary intervention action to as the environment and the society at large is central to sustaining PETRONAS’ long-term performance and
address potential areas of non-compliances and unsound practices, as well as the identification of new or existing continued relevance. The Board is mandated to provide direction for PETRONAS and its Group in steering the
controls to be developed or enhanced to continuously improve the legal compliance posture of PETRONAS Group. delivery of its goals and targets while adapting to long-term structural changes in the energy industry that are to a
large extent driven by sustainability-related themes.

The heightened materiality of sustainability to the business demands the Board and the Management to intensify
PETRONAS Commitment to Integrity
efforts in making sustainability central to PETRONAS’ strategy and priorities, as well as creating the structure that
PETRONAS adopts zero tolerance to any forms of bribery With heightened expectation for organisations to elevate enables, formal oversight to sustainability by the Board. Being the highest authority in sustainability governance, the
and corruption. The PETRONAS CoBE, PETRONAS Anti- integrity and transparency in all dealings, and PETRONAS’ Board takes full responsibility in institutionalising the Company’s sustainability agenda, road map and initiatives.
Bribery and Corruption Manual and PETRONAS own demonstrated commitment and leadership in the
Whistleblowing Policy are in place to guide PETRONAS ethics and compliance sphere, PETRONAS has further
The full report on Sustainability Governance is found on pages 170-173 of this Report.
employees and third parties when dealing with potential or strengthened its presence by becoming a member of
actual bribery and corruption situations in the course of Partnering Against Corruption Initiative (PACI), a group
their day-to-day activities. These governance documents under World Economic Forum (WEF). PACI serves as a
form part of the controls established under the PETRONAS platform for PETRONAS to continuously strive to enhance
Integrity Compliance Framework (PICF). PICF is the its knowledge and capability building by collaborating with
overarching framework in shaping integrity and compliance other reputable members from other oil and gas
posture and propagation of integrity and business ethics companies and cross-industry community and participating
within PETRONAS Group. in various experts' discussion and sharing of best practices.

The programmes planned and developed under PICF are With this participation in PACI, PETRONAS will be able to
coordinated and monitored by the PETRONAS Integrity enhance its visibility and branding as an organisation that
Awareness Committee (PIAC) to ensure that they are upholds strong corporate governance with robust anti-
implemented in an effective, integrated, and structured corruption programmes and promotes PETRONAS’ visibility
manner. In 2021, the composition of PIAC members were in upholding good corporate governance and ethical
expanded to include key representatives from Corporate business practices.
Centre and Business Divisions across PETRONAS Group to
enhance ownership and accountability as well as to ensure
direct and effective implementation of ethics and integrity
controls and initiatives within PETRONAS Group.
Commitment to Governance

PETRONAS Whistleblowing Policy and Procedures

The PETRONAS Whistleblowing Policy and procedures are available on PETRONAS’ corporate website:

https://www.petronas.com/whistleblowing

* All disclosures will be treated in the strictest confidence

 Financial Review An overview of our
financial performance and
and Other other relevant details
Information

Recharge
for Resilience
262 Group Financial Results and Position
262 Analysis of Financial Results
269 Analysis of Financial Position
271 Analysis of Cash Flow
274 Five-Year Key Financial Indicators
276 Appendix
279 Glossary of Terms
 262 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 263

Group Financial Results and Position Group Financial Results and Position

Analysis of Financial Results Revenue by Products

Consolidated Statement of Profit or Loss and Other Comprehensive Income or Loss The Group’s total revenue was RM248.0 billion, primarily contributed by petroleum products and LNG which accounted
for 36 per cent and 23 per cent of revenue, respectively.
Financial Year ended
31 December

In RM million 2021 2020 8%

RM20.3 billion
Revenue 247,962 178,741 36%
9% RM89.2 billion
Cost of revenue (158,646) (134,958)
RM22.5 billion
Gross profit 89,316 43,783
Selling and distribution expenses (9,423) (8,174)
Administration expenses (11,536) (9,675)
Total Petroleum Products
11%
RM248.0 LNG
Net impairment write-back/(losses)¹ 2,307 (32,681) RM27.7 billion
billion Crude Oil & Condensates
Other expenses (3,136) (5,871)
Other income 4,904 4,102 Natural & Processed Gas
13% Petrochemicals
Operating profit/(loss) 72,432 (8,516)
RM30.8 billion Others*
Financing costs (5,069) (4,133) 23%
Share of profit after tax and non-controlling interests of equity accounted associates 1,882 328 RM57.5 billion
and joint ventures

Profit/(Loss) before taxation 69,245 (12,321)

Tax expense (20,645) (8,708)

PROFIT/(LOSS) FOR THE YEAR 48,600 (21,029) Petroleum Products LNG Crude Oil & Condensates
(RM billion) (RM billion) (RM billion)
Other comprehensive income/(loss)
Items that will not be reclassified subsequently to profit or loss
57.5
Net changes in fair value of equity investments at fair value through other 639 13 89.2 30.8
comprehensive income (OCI)
23.7
Items that may be reclassified subsequently to profit or loss 62.7 37.7
Net movements from exchange differences 3,533 (452)
Cash flow hedge (174) (1,447)
Others 170 28 42% 53% 30%

Total other comprehensive income/(loss) for the year 4,168 (1,858)

2020 2021 2020 2021 2020 2021
Financial Review and Other Information

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 52,768 (22,887)

Profit/(Loss) attributable to:

Shareholders of the Company 41,792 (23,851) Natural and Processed Gas Petrochemicals Others*
Non-controlling interests 6,808 2,822 (RM billion) (RM billion) (RM billion)

PROFIT/(LOSS) FOR THE YEAR 48,600 (21,029)

27.7 22.5
20.3
Total comprehensive income/(loss) attributable to: 22.3 18.1
Shareholders of the Company 45,010 (25,019) 14.2
Non-controlling interests 7,758 2,132

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 52,768 (22,887) 24% 58% 12%

1
Includes certain amount relating to loss on remeasurement of finance lease receivables and write-off of assets.
2020 2021 2020 2021 2020 2021

* Others mainly comprise Maritime and Logistics, Services and Property.

 264 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 265

Group Financial Results and Position Group Financial Results and Position

Revenue by Geographical Trade Group Cost

(RM billion)
Group cost stood at RM204.4 billion, a slight increase against last year by RM0.2 billion, mainly due to higher price-
2021 88.5 93.7 65.8 248.0 sensitive expense items by RM35.7 billion.

2020 58.0 66.3 54.4 178.7

PETRONAS Group
2019 75.4 85.8 79.1 240.3 Total Cost Anaylsis Breakdown
2018 80.3 98.9 71.8 251.0
Revenue (in RM billion) 248.0 178.7
2017 73.3 88.3 62.0 223.6
Variance
FY2021 vs
International Operations Exports Domestic
In RM billion FY2021 FY2020 FY2020
• The Group recorded higher revenue for all categories of its geographical trade in 2021 as a result of significantly Strategically Actionable Costs 159.5 163.2 (3.7)
higher product prices. Product costs 86.8 63.6 23.2
• Revenue from exports at RM93.7 billion remained as the major contributor to the Group’s revenue, which accounted Tax Expenses, Sales Tax & Duties and Cash Payments 33.5 21.0 12.5
for 38 per cent of total Group revenue. The exports revenue recorded during the year was 41 per cent higher as
compared to 2020 mainly attributed to higher sales volumes and upward trending of key benchmark prices for major Price-Sensitive Expense Items 120.3 84.6 35.7
products. Depreciation, Amortisation, Write-Off & Write-Down 34.6 36.0 (1.4)
• Meanwhile, international operations revenue which accounted for 36 per cent of the Group’s total revenue recorded an Net Impairment on Assets 0.2 35.2 (35.0)
increase of 53 per cent as compared to FY2020, also resulted from higher sales volume following improvement of Others (Forex, Finance Cost, etc) 4.4 7.4 (3.0)
travel restrictions as well as upward trending of key benchmark prices.
Operationally Actionable Costs 44.9 41.0 3.9
• Domestic operations recorded an increase of 21 per cent during the year primarily attributed to higher key benchmark Production and transportation expense, purchase services, materials & 26.8 23.9 2.9
prices for major products, mainly petroleum and petrochemical products.
supplies
Revenue by Geographical Segments Others (HR cost, rental, leases, utilities, G&A etc) 18.1 17.1 1.0

TOTAL GROUP COSTS 204.4 204.2 0.2

D
Group Cost to Revenue Ratio (%) 82% 114%

K F
G J
B H

A
E Operating Costs
C
(RM billion)
L
The Group recorded a slight
Financial Review and Other Information

I
increase of operating cost by
A B C D 0.1 per cent despite an increase
Malaysia Africa Singapore Europe 0.1%
Sale of petroleum Sale of petroleum Sale of LNG and Sale of petroleum products, of revenue by 39 per cent. This
products and sales
27% products and crude oil
12% petroleum
12% LNG, natural gas and crude
9% resulted in a lower Group Cost
gas and condensates products oil and condensates 41.0 44.9 to Revenue ratio by 32 per cent
aligned with the rigorous
E Japan
F China
G America measures to reduce costs.
Sale of LNG 8% Sale of LNG, petrochemical 7% Sale of crude oil and condensates, maritime and 5%
products and petroleum products logistic business, petroleum products and natural gas Strategically Actionable
Cost

H Thailand I Australia & Oceania J Korea K India Operationally Actionable

163.2 159.5
Sale of crude oil and Sale of crude oil and Sale of Sale of crude oil and Cost
condensates, petrochemical
4% condensates, LNG and
3% LNG
2% condensates and
2%
products and LNG petroleum products petroleum products

L Indonesia Rest of Asia Rest of the world

Sale of petrochemical products, Sale of petroleum products, crude Sale of crude oil and condensates, 2020 2021
petroleum products and crude oil
2% oil and condensates and
5% natural gas and petroleum products
2%
and condensates petrochemical products
 266 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 267

Group Financial Results and Position Group Financial Results and Position

Profit/(Loss) After Tax Segment Earnings

(RM billion)
The Group operates three core business segments, namely Upstream, Gas + New Energy and Downstream. Corporate
and Others, which complements our core businesses, comprising primarily logistic and maritime segment; property
segment and central treasury; as well as project delivery and technology function.
PAT movement during the year
(excluding impairment)

69.3 (29.4)
Upstream
50.4 (1.8) 48.6 PAT/(LAT) Upstream
During the year, the Upstream segment recorded a PAT of RM34.5 billion as
compared to LAT of RM10.2 billion for the same period in 2020 primarily driven
by higher revenue and net impairment write-back as compared to net
10.5 impairment losses reported in the prior year. This was partially offset by higher
(RM10.2)
31.5 taxation as well as product costs and cash payments in line with higher prices.
billion
FY2020 The increase in Upstream revenue was mainly attributable to higher average
(21.0) realised prices for crude oil and condensates and natural gas as well as higher
>100%
LAT Net PAT FY2020 Higher Higher PAT FY2021 Net PAT
natural gas sales volume.
FY2020 impairment excluding revenue other costs² excluding impairment FY2021 RM34.5
losses impairment impairment losses billion Total daily production average of 2,275 thousand barrels of oil equivalent (boe)
FY2020¹ FY2021¹ per day in 2021, increased from 2,209 thousand boe per day in 2020 and was
FY2021
mainly due to higher crude oil production from international operations coupled
with higher natural gas production contributed by stronger demand for both
1 Includes write-off of exploration expenditure under intangible assets, loss on remeasurement of finance lease receivables and provision for contracts
Malaysia and international operations.
exposure and net of deferred tax Further details on Upstream’s operational performance can be found on pages 136-140.
2 Other costs mainly comprise of lower product costs

Excluding impairment, PETRONAS Group recorded PAT of RM50.4 billion for the year ended 2021, an increase of more
than 100 per cent compared to RM10.5 billion in FY2020 mainly contributed by higher revenue realised, partially offset by
slightly higher cost. Gas + New Energy
PAT/(LAT) Gas + New Energy Gas + New Energy recorded a PAT of RM15.0 billion in contrast to a LAT of
During the year, minimal net impairment on assets reported by PETRONAS as compared to last year was consistent with RM10.0 billion in corresponding year mainly contributed by higher revenue
most oil majors following rising oil prices and growing demand recovery. coupled with lower impairment losses on assets partially offset by higher
Financial Review and Other Information

product costs.

(RM10.0) Higher sales gas performance for the year compared to the same period last
billion year, contributed by higher demand from the power sector. PETRONAS has
FY2020 also secured up to 697 million standard cubic feet per day (MMscfd) of natural
gas supply deals from new and existing customers.
>100% More information on Gas + New Energy’s operational performance is available on pages 144-151.

RM15.0
billion
FY2021
 268 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 269

Group Financial Results and Position Group Financial Results and Position

Analysis of Financial Position

Downstream Consolidated Statement of Financial Positions

PAT/(LAT) Downstream
The Downstream business also recorded a PAT of RM0.7 billion against a LAT As at As at
of RM3.5 billion in the previous year, higher by RM4.2 billion mainly contributed In RM Mil 31.12.2021 31.12.2020
by improved petrochemicals and refining margins, and offset by higher
impairment losses on assets. ASSETS
(RM3.5) Property, plant and equipment 282,898 291,717
billion Investment properties and land held for development 13,167 13,454
During the year, Downstream business recorded stable operations with Overall
FY2020 Equipment Effectiveness (OEE) sustained at 93.3 per cent, on the back of Investments in associates and joint ventures 9,229 12,599
strong asset reliability. Intangible assets 19,394 20,044
>100% Long-term receivables 33,751 21,232
RM0.7 Petroleum products sales volume was 262.4 million barrels, higher by 0.6 Fund and other investments 2,955 1,009
billion million barrels following increased trading activities. Crude oil sales volume was Deferred tax assets 20,983 20,622
109.7 million barrels, lower by 27.7 million barrels mainly due to lower
FY2021 TOTAL NON-CURRENT ASSETS 382,377 380,677
marketing volume. Petrochemical products sales volume was comparable at 8.2
million metric tonnes. Trade and other inventories 14,477 12,491
More information on Downstream’s operational performance is available on pages 152-159. Trade and other receivables 48,324 40,583
Fund and other investments 10,479 9,779
Cash and cash equivalents 164,556 130,523

237,836 193,376
Assets classified as held for sale 14,791 18

TOTAL CURRENT ASSETS 252,627 193,394

Corporate and Others
TOTAL ASSETS 635,004 574,071
PAT/(LAT) Corporate and Our Corporate and Others business recorded a LAT of RM1.3 billion, as
Others compared to FY2020’s PAT of RM0.2 billion.
EQUITY
Share capital 100 100
Loss recorded in 2021 was mainly due to higher operating expenditure partially
cushioned by lower impairment losses and favourable foreign exchange gain Reserves 350,756 330,521
RM0.2 due to the strengthening of the US Dollar against the Ringgit. Total equity attributable to shareholders of the Company 350,856 330,621
billion Non-controlling interests 53,484 50,413
FY2020 MISC Berhad (MISC) and KLCC Property Holdings Berhad (KLCCP) were the
two major contributors to this segment. MISC recorded a PAT of RM1.7 billion TOTAL EQUITY 404,340 381,034

88% during the year, mainly from the deliveries of Very Large Ethane Carriers LIABILITIES
Financial Review and Other Information

(VLECs), Dynamic Positioning Shuttle Tankers (DPSTs) and construction profit Borrowings 86,619 76,808
(RM1.3) for FPSO Project in Brazil. KLCCP’s PAT increased to RM0.5 billion as compared Deferred tax liabilities 9,543 8,455
billion to RM0.4 billion in the previous year mainly due to lower operating expenses Other long-term liabilities and provisions 50,620 51,056
FY2021 incurred coupled with lower tax expense.
TOTAL NON-CURRENT LIABILITIES 146,782 136,319
Further information is provided in MISC’s and KLCCP’s 2021 annual reports.
Trade and other payables 51,825 43,728
Borrowings 21,212 11,421
Taxation 6,913 1,569

79,950 56,718
Liabilities classified as held for sale 3,932 –

TOTAL CURRENT LIABILITIES 83,882 56,718

TOTAL LIABILITIES 230,664 193,037

TOTAL EQUITY AND LIABILITIES 635,004 574,071

 270 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 271

Group Financial Results and Position Group Financial Results and Position

Total Assets Analysis of Cash Flow

(RM billion)
Consolidated Statement of Cash Flows
14.5 14.8
Financial Year ended
31 Dec 2021 302.3 178.0 48.3 33.8 43.3 635.0 31 December

In RM Mil 2021 2020

31 Dec 2020 311.8 141.3 40.6 46.7 574.1
Cash flows from operating activities
12.5 21.2
Profit/(Loss) before taxation 69,245 (12,321)
PPE & Intangible Assets Cash & Fund Investments Trade & Other Receivables Adjustments for non-cash items 32,655 69,840
Trade & Other Inventories Long Term Receivables Assets Classified as Held for Sale Net changes in working capital (8,813) (4,197)
Others
Cash generated from operations 93,087 53,322
Interest expenses paid (3,584) (2,689)
Total Liabilities Interest income 2,998 4,838
(RM billion) Taxation paid, net of refund (13,904) (14,726)

Net cash generated from operating activities 78,597 40,745

31 Dec 2021 Cash flows from investing activities (29,504) (32,914)
51.8 107.8 6.9 64.2 230.7
Cash flows from financing activities (16,056) (17,467)
31 Dec 2020 43.7 88.2 1.6 59.5 193.0 Net increase/(decrease) in cash and cash equivalents 33,037 (9,636)
Decrease/(Increase) in cash and cash equivalents restricted 304 (322)
Net foreign exchange differences 1,692 (1,752)
Trade & Other Receivables Borrowings Taxation
Others
Cash and cash equivalents at beginning of the year 128,141 139,851

Cash and cash equivalents at end of the year 163,174 128,141

Cash and cash equivalents

Movement in Cash and Fund Investments Cash and bank balances and deposits 164,556 130,523
(RM billion) Bank overdrafts (2) (698)
Less: Cash and cash equivalents restricted (1,380) (1,684)
RM Bil 78.6
26.0%
163,174 128,141

0.2 178.0 Free Cash Flow Analysis

(30.5) 13.4
Financial Review and Other Information

(RM billion)
141.3
67.9
(25.0) The Group generated free cash flow of RM48.1 billion during the
>100%
year, increasing by RM40.8 billion or more than 100 per cent as
48.1 compared to RM7.3 billion in 2020 mainly due to increased funds
60.1
from operations in line with increase in profits. This was partially
offset by lower interest income received from funds and other
investments following lower overall interest.
110.1

81.2

7.3
31 Dec 2020 CFFO Capital Dividends Net financing Others 31 Dec 2021
investments repayment

FY2020 FY2021
Mainly comprising remaining funds of non wholly-owned subsidiaries and trust funds within the Group
Funds of wholly-owned subsidiaries and PETRONAS’ portion of non wholly-owned subsidiaries
 272 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 273

Group Financial Results and Position Group Financial Results and Position

Capital Investments Capital Investments

Domestic and International Capital Investments Breakdown Segment Capital Investments
(RM billion)
Aligned with PETRONAS’ Three-Pronged Growth Strategy, we continue to strengthen our core-business and pursue
growth, by upholding strict capital discipline. We intensified our capital allocation exercise, to ensure sufficient allocation
2021 15.0 15.5 30.5 for our core cash-generating assets, and increased allocation for investments in growth or, what we call Step-Outs. Over
the next five years, starting from 2022, we have allocated about circa 20 per cent of total planned CAPEX, for Step-Outs.
2020 17.5 15.9 33.4
Upstream
2019 24.7 23.1 47.8
• Capital investment for the Upstream business accounted for 48 per cent of the Group’s total capital investment with a
2018 25.3 21.6 46.9 total spending of RM14.7 billion, an increase of RM0.3 billion as compared to the preceding year which reflected the
Group’s deliberate action to strengthen our core-business and pursue growth despite the prolonged movement
2017 36.9 8.1 45.0 restriction orders.
• The capital investments for 2021 were predominantly spent in exploration, development and production activities aimed
Domestic International at sustaining and growing production in Malaysia and international operations.
• About RM8.1 billion or 54 per cent of Upstream total capital investment was spent mainly for development of new
fields. Amongst others, key projects in Malaysia include Kasawari Gas Field Development, Bakau Gas Field Development,
* The figure has been restated to include cost of acquisition of subsidiaries and investment in associates and joint ventures. Limbayong Gas Field Development and Pegaga Gas Field Development.
• Meanwhile, a total of RM6.6 billion was allocated towards international portfolio investments; key countries include
During the year, while we continued investing, many projects were affected by the prolonged movement restriction order, Argentina, Azerbaijan, Canada and Iraq. The highlights of the investments include Upstream acquisition of 10 per cent
coupled with supply chain interruptions Both our domestic and international projects, experienced delays and deferments, participating interests in North Montney Joint Venture (NMJV) from Japan Petroleum Exploration Co Ltd (JAPEX) and
resulting in lower overall CAPEX spent during the year, which is RM30.5 billion and lower by RM2.9 billion, compared Argentina La Amarga Chica mainly drilling activities.
with RM33.4 billion in FY2020. Notwithstanding, close to RM1.0 billion was spent on Stepping Out, mainly on the
renewables energy space. Gas + New Energy
• Gas + New Energy accounted for 23 per cent of the Group's total capital investment and incurred a total spending of
RM7.1 billion in FY2021.
Segment Capital Investments • Capital investments for FY2021 were predominantly spent on international ventures particularly for the LNG project in
Canada.
Capital investments by Business Segments in FY2021 Capital
13% Investments by Geographical Segment FY2021
Upstream • Meanwhile, New Energy investments closer to home under PETRONAS New Energy includes solar panel installation at
RM4.1 billion 54%
Universiti Teknologi PETRONAS (UTP), Perak, Institute Teknologi Petroleum PETRONAS (INSTEP) in Terengganu and
3% 13% RM8.1 billion Upstream
RM4.1 billion Pengerang Integrated Complex in Johor.
RM0.8 billion 54%
RM4.8 RM4.8 4% RM8.1 billion
billion RM14.7 3%
billion RM14.7 RM1.1 billion RM0.8 billion Downstream
billion billion Total
4% 49% • The Downstream business utilised capital investment of RM3.9 billion during the year or 13 per cent of the Group's
11% RM1.1RM30.5
billion RM15.0 overall capital investment allocation.
Gas +
billionTotal
RM3.5 billion billion 49% • The spending made during the year was mainly allocated towards operational project as well as turnaround activities
RM3.9 New Energy
Financial Review and Other Information

RM3.9 RM30.5 from PCG, PDB and MRC. Other investments were mainly related to Pengerang Integrated Complex (PIC) which is
billion Total Total 11% 13% RM15.0
Gas +
billion RM3.5 billion billion
RM2.0 billion
RM30.5 RM30.5 billion New Energy targeted to be operationalised in 2022.
billion Downstream 13%
billion 20% 23% RM2.0 billion
RM6.0 billion Corporate and Others
RM3.4 billion
Downstream • Businesses under Corporate and Others spent RM4.8 billion during the year which was lower by RM1.6 billion as
20%
Corporate and Others 23%
RM7.1 RM7.1 RM6.010%billion compared to 2020 with MISC accounting for 73 per cent of the total spending.
RM3.4 billion
billion billion RM1.5 billion • During the year, MISC’s significant investments were mainly from the deliveries of five units of Very Large Ethane
Corporate and Others
10% Carriers (VLEC) of RM1.5 billion and petroleum newbuild vessels of RM1.4 billion, in which MISC contributed to PAT of
RM1.5 billion RM1.7 billion.

Upstream Upstream Malaysia

Gas + New Energy Gas + New Energy Canada
Downstream USA Malaysia
Downstream
Corporate & Others Iraq Canada
Corporate & Others
Argentina USA

Rest of the World Iraq

Argentina
Rest of the World
 274 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 275

Group Financial Results and Position Group Financial Results and Position

Five-Year Key Financial Indicators PAT Margin Return on Total Assets (ROTA)
(%) (%)
Revenue EBITDA
(RM billion) (RM billion) 11.8
10.7 11.2
22.0
116.5 20.3 19.6 8.6
16.9
251.0 248.0 100.5
240.3 92.0 96.3
223.6

178.7
55.3

(2.3)
(11.8)
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
2017 2018 2019 2020 2021 2017 2018 2019 2020 2021

Return on Average Capital Employed (ROACE) Debt/Assets Ratio

(%) (x)
Profit/(Loss) After Tax Cash Flows from Operations (CFFO)
(RM billion) (RM billion) 12.0
10.8 0.17x
9.8 0.15x
0.11x 0.11x 0.11x
55.3 8.7
48.6 90.8
45.5 86.3
40.5 75.7 78.6

40.7

(4.1)

(21.0) 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021

2017 2018 2019 2020 2021 2017 2018 2019 2020 2021

Gearing Ratio* Dividend Payout Ratio

Financial Review and Other Information

(%) (%)
Net Cash Position Total Assets
(RM billion) (RM billion) >100 >100 >100
23.1 93
21.3
110.2
16.4 69
636.3 622.4 635.0 16.0
599.8
574.1
81.6
12.7
71.8
67.2

52.1

2017 2018 2019 2020 2021 2017 2018 2019 2020 2021

2017 2018 2019 2020 2021 2017 2018 2019 2020 2021
• G
 earing ratio is calculated as adjusted total debt (total debt including financial guarantees) divided by adjusted total equity (total equity
plus deferred tax liabilities and minus capitalised interest) and adjusted total debt. Gearing ratio for corresponding period has been
restated to conform with this formula.
 276 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 277

Appendix Appendix

Non-Financial Content Index

Content WEF GRI Ipieca Page
The results of our Materiality Assessment helped determine the non-financial topics covered in this report. This index
Value We Create
includes references to the World Economic Forum's Stakeholder Capitalism Metrics, the Global Reporting Initiative
Standards (2021) and the Ipieca/API/IOGP Sustainability reporting guidance for oil and gas industry. The guidelines are Our Integrated Approach to Setting purpose GOV-1 76-77
available at weforum.org, globalreporting.org and ipieca.org. Value Creation

Our Key Capitals Setting purpose GOV-1 78-79

Content WEF GRI Ipieca Page
Value Creation Model Setting purpose, Economic GOV-1 80-81
Our Sustainability Agenda Setting purpose GOV-1, CCE-1, 04-05 contribution, Financial investment
CCE-2 contribution
What’s Inside Performance by Capital
About This Report 2-1, 2-2, 2-3, 08-09 Engaging with Stakeholders Material issues impacting 2-29 SOC-6, SOC-9 88-95
2-5, 2-14 stakeholders
PETRONAS in 2021 Because We Care
Our Shared Values | Setting purpose GOV-1 14 Strategic Progress
Cultural Beliefs
The World In 2021
Competitive Advantage Setting purpose GOV-1 15
Material Topics Material issues impacting CCE-1, CCE-3 108-116
Key Highlights stakeholders
Financial Highlights Risks Linked to Creating Integrating risk and opportunity into CCE-1 117-131
Value business process
Business Highlights
Strategic Performance Review
Sustainability Highlights
Business Review
Awards and Recognitions
Upstream Financial investment contribution
Event and Conference
Highlights Gas + New Energy Financial investment contribution
Business Snapshots Downstream Financial investment contribution
Our Integrated Value Chain 2-6 CCE-3 30-31 Project Delivery and Total R&D expenses
Technology
PETRONAS Around the World 2-1 32-33
Our Sustainability Journey
Corporate Structure
Financial Review and Other Information

Sustainability Governance Anti-corruption, Protected ethics 2-12, 2-17, 2-28 GOV-1, CCE-1 170-173
Key Messages
advice and reporting mechanisms
Letter from the Chairman Anti-corruption, Protected ethics 2-22 48-55 TCFD implementation
advice and reporting mechanisms
Safeguard the Environment
Letter from the President and Anti-corruption, Protected ethics 2-22 56-61
Climate Change and GHG Greenhouse gas (GHG) emissions, GOV-2, CCE-1, 174-177
Group Chief Executive Officer advice and reporting mechanisms
Emissions TCFD implementation CCE-2, CCE-3,
Letter from the Executive Economic contribution 203-1 GOV-4 62-67 CCE-5, CCE-7
Vice President and Group
Responsible Waste 306-1, 306-2, GOV-2, ENV-7 178-179
Chief Financial Officer
Management 306-3, 306-4
Letter from the Vice Anti-corruption, Protected ethics 69-73
Environmental Quality Water consumption and withdrawal 303-1, 303-2 GOV-2, ENV-1, 180-183
President and Chief advice and reporting mechanisms
in water-stressed areas ENV-2, ENV-6,
Sustainability Officer
ENV-8

Biodiversity Land use and ecological sensitivity 304-1 GOV-2, ENV-3 184-185
 278 Integrated Report 2021 Petroliam Nasional Berhad (PETRONAS) 279

Appendix Glossary of Terms

Content WEF GRI Ipieca Page Abbreviation Full Term/Definition Abbreviation Full Term/Definition
2C Contingent Resources ESG Environmental, social and governance
Positive Social Impact
2P Petroleum Reserves EV Electric Vehicle
Health and Safety Health and safety 403-1, 403-2, GOV-2, SHS-1, 186-192
3R Reduce, reuse, recycle FAR Fatal Accident Rate
403-4, 403-5, SHS-2, SHS-3,
403-6 SHS-4, SHS-6 AC Audit Committee FID Final Investment Decision
ASEAN Association of Southeast Asian Nations FLNG Floating Liquefied Natural Gas
COVID-19 Response Economic contribution 403-6, 203-1 GOV-2, SHS-2 193-195
B40 Bottom 40 per cent of income earners FY Financial Year
Security GOV-2, SHS-7 196-197
bbl Barrel GCEO Group Chief Executive Officer
Human Rights Risk for incidents of child, forced or 2-23, 2-25, GOV-2, SOC-1, 198-201 bboe Billion barrel of oil equivalent G+NE Gas + New Energy
compulsory labour 2-30 SOC-2, SOC-3,
SOC-4, SOC-8, BCM Business Continuity Management GEES Graduate Employment Enhancement
Scheme
SOC-12 BCP Business Continuity Plan
GHG Greenhouse gas
Supply Chain Management Risk for incidents of child, forced or 2-23, 414-2 GOV-2, SOC-2, 202-204 BES Biodiversity and Ecosystem Services
GRI Global Reporting Initiative
compulsory labour SOC-14 Bio-MEG Bio-Monoethylene Glycols
GW Gigawatt
Product Stewardship GOV-2, SHS-5 205-206 Board Board of Directors
HERE Hybrid Emergency Response Exercise
boe Barrel of oil equivalent
Employee Welfare and Fair Pay equality, Diversity and inclusion 403-6 GOV-2, SOC-5 207-209 HOTS Higher Order Thinking Skills
Remuneration C3 Corporate Command Centre
HRM Human Resource Management
CAPEX Capital Expenditure
Talent and Education Training provided, Economic 404-2 GOV-2, SOC-7 210-212 HSE Health, Safety and Environment
contribution CCS Carbon capture and storage
HSSE Health, Safety, Security and Environment
CFO Chief Financial Officer
Community Engagement Economic contribution 203-1, 203-2 SOC-9, SOC-13 213-217 IFRS International Financial Reporting
CFFO Cash Flows from Operations
Five-Year Sustainability Key Greenhouse gas (GHG) emissions, 2-4, 2-7, 2-8, CCE-4, CCE-7, 218-225 Standards
CIMS Crisis and Incident Management System
Performance Data Water consumption and withdrawal 305-1, 305-2, ENV-1, ENV-2, IIRC International Integrated Reporting
in water-stressed areas, Diversity and 305-4, 305-5, ENV-5, ENV-6, CM Crisis Management Council
inclusion, Health and safety, Training 305-7, 306-5, ENV-7, SHS-3, CO₂ Carbon dioxide INED Independent Non-Executive Director
provided, Absolute number and rate 303-3, 306-3, SHS-6, SOC-3,
CoBE Code of Conduct and Business Ethics INSTEP Institut Teknologi Petroleum PETRONAS
of employment 403-9, 403-10, SOC-5, SOC-6,
401-1, 401-3, SOC-7, SOC-15 CoCHR Contractors Code of Conduct on ISO International Organisation for
404-1, 405-1, Human Rights Standardisation
410-1 CoE Centre of Excellence JTC Joint Technical Committee
Commitment to Governance COP26 United Nations Climate Change kboe Kilo barrels of oil equivalent
Conference
kg Kilogramme
Board Composition Governance body composition 405-1 GOV-1 228 COVID-19 2019 novel coronavirus (or 2019-nCoV)
Financial Review and Other Information

LAT Loss After Tax

Profile of Board of Directors Governance body composition 2-9, 2-11 229-238 CSO Chief Sustainability Officer
LBV LNG bunkering vessel
Profile of Company Governance body composition CSR Corporate Social Responsibility
LCA Life Cycle Assessment
Secretaries CERDIK An initiative fully funded by Government
LNG Liquefied Natural Gas
Linked Companies (GLCs), Government
Profile of Executive Governance body composition Linked Investment Companies (GLICs), LOPC Loss of Primary Containment
Leadership Team and the private sector. Announced in
LTIF Lost Time Injury Frequency
the Budget 2021, it provides digital
Corporate Governance at Anti-corruption, Protected ethics 2-9, 2-10, 2-15, GOV-1, GOV-3 245-259 access including distribution of laptops, LTIP Long-term incentive plan
PETRONAS advice and reporting mechanisms 2-20, 2-26, tablet computers, data connectivity, and
205-2 MBR Malaysia Bid Round
an e-learning platform to B40 students
MEKAR Memampankan Ekonomi Asas Rakyat
Group Financial Results and D&I Diversity and Inclusion
Position MCO Movement Control Order
DOSH Department of Occupational Safety and
Health MFRS Malaysian Financial Reporting Standards
Analysis of Financial Results 201-1
EBITDA Earnings Before Interest, Tax, mmBtu Million British thermal units
Analysis of Financial Position Economic contribution, Financial Depreciation and Amortisation MMscfd Million standard cubic feet per day
investment contribution, Total tax 262-275
Analysis of Cash Flow ELT Executive Leadership Team MMT Million metric tonnes
paid
ERM Enterprise Risk Management MOH Ministry of Health
Five-Year Financial Indicators
 280 Integrated Report 2021

Glossary of Terms

Abbreviation Full Term/Definition Abbreviation Full Term/Definition

MPM Malaysia Petroleum Management PV Photovoltaic
mtpa Metric tonnes per annum R&D Research and Development
MW Megawatt RC Risk Committee
MWh Megawatt-hour RMC Risk Management Committee
MyPet My Personnel e-Tracker RM Ringgit Malaysia
NADMA National Disaster Management Agency ROVR An innovative service which allows for a
seamless and safe refuelling experience
NCIA Northern Corridor Implementation
for both the commercial and everyday
Authority
drivers, beyond conventional petrol
NEDs Non-Executive Directors stations
NGOs Non-government organisations SAF Sustainable aviation fuel
NINED Non-Independent Non-Executive SDG Sustainable Development Goal
Director
SEED.Lab Social Enterprise Education Lab
NZCE 2050 Net zero carbon emissions by 2050
SME Small and Medium Enterprise
O&G Oil and gas
STEM Science, Technology, Engineering and
OEE Overall Equipment Effectiveness Mathematics
OEM Original Equipment Manufacturer SOP Standard Operating Procedure
OGSE Oil & Gas, Services and Equipment TCFD Task Force on Climate-related Financial
OPEC+ Organisation of the Petroleum Exporting Disclosures
Countries Plus tCO₂e Tonnes (t) of carbon dioxide (CO₂)
OPEX Operating Expenditure equivalent

OPU Operating Unit The Board Petroliam Nasional Berhad (PETRONAS)

Board of Directors
PAC Petroleum Arrangement Contract
The Group Petroliam Nasional Berhad (PETRONAS)
PAT Profit after tax and its subsidiaries
PCB PETRONAS Cultural Beliefs tpa Tonnes per annum
PCC PETRONAS Carbon Commitments TRCF Total Reportable Case Frequency
PCG PETRONAS Chemicals Group Berhad TROIF Total Recordable Occupational Illness
PD&T Project Delivery and Technology Frequency

PDB PETRONAS Dagangan Berhad UK United Kingdom

PDR Product Delivery Reliability UN United Nations

Financial Review and Other Information

PESP PETRONAS Education Sponsorship UNGPs United Nations Guiding Principles on

Programme Business and Human Rights

PETRONAS Petroliam Nasional Berhad (PETRONAS) UPC Unit Production Cost

Group and its subsidiaries USA United States of America
PIC Pengerang Integrated Complex USD US dollar
PGB PETRONAS Gas Berhad UTP Universiti Teknologi PETRONAS
PGU Peninsular Gas Utilisation VDP Vendor Development Programme
PLC PETRONAS LNG Complex VISTA Vocational Institution Sponsorship and
PLI PETRONAS Lubricants International Training Assistance

PPRT Pandemic Preparedness and Response VPS Virtual Pipeline System

Team WBCSD World Business Council
PPV Pusat Pemberian Vaksin for Sustainable Development

PPVIN Pusat Pemberian Vaksin Industri WEF World Economic Forum

PRPC PETRONAS Refinery and Petrochemicals WFH Work from home

Corporation Sdn Bhd
PSC Production Sharing Contract