KUALA LUMPUR, June 4 — Petronas has unveiled a new restructured board of directors and management committee to enhance its corporate governance.

The aim is also to steer the national oil corporation forward into behaving like a Fortune 500 company, its president and chief executive officer Datuk Shamsul Azhar Abbas said today.

Petronas is ranked 80th among the world’s top 500 companies.

Shamsul Azhar also unveiled plans to realign the company’s business operations in line with the changing environment in the global oil and gas industry.

In a briefing for editors, he said under its restructuring plan, Petronas had brought in external talents with abilities to infuse new ideas as the company needed them to be more competitive in years to come.

The briefing was also held in conjunction with the first 100 days of his appointment, having replaced Tan Sri Mohd Hassan Marican who ended his contract with the company effective Feb 10 this year.

In order to bring about a greater performance-based culture, Shamsul Azhar said the company needed a structure that promoted greater ownership and accountability for things to move quickly and efficiently.

He said that previously its board members came mostly from government departments.

This time around, Petronas has brought in directors with depth and breadth of experience in the oil and gas industry, he said.

“For that reason, we reconstituted the board (on April 28) and now it is a very active board as the members have posed questions that were sharp, insightful and bold. I have always believed that there ought to be checks and balances between the board and the management,” he said.

Petronas has four new independent directors from the private sector —Tan Sri Megat Najumuddin Megat Khas, Datuk Mohammad Idris Mansor, Datin Mah Siew Bee and Harry Menon.

Megat Najmuddin is well-known for his corporate governance and transparency stewardship while Mah, a senior lawyer, had joined Petronas in 1978 and played a major role in establishing the initial legal set-up.

Mohammad Idris, another alumnus of Petronas and a petroleum engineer by training, has returned to do “national service” with Petronas, while Menon, a chartered accountant, currently serves as a director on Petronas subsidiary Malaysian International Shipping Corporation Bhd and Putrajaya Holdings.

Shamsul Azhar said the board also approved the establishment of two new committees, namely the nomination and corporate governance committee and the remuneration committee.

The remuneration committee, to be mainly made up of independent directors, will decide and recommend to the board the appropriate remuneration packages and corresponding key performance index for all executive directors.

He also said the four executive vice-presidents would be empowered to make decisions for their business and portfolios that previously were the only within the president’s purview.

They are Datuk Anuar Ahmad (gas business), Datuk Wan Zulkiflee Wan Ariffin (downstream business), Datuk Wee Yiaw Hin (exploration and production business) and Datuk George Ratilal (finance), and they together with Shamsul Azhar will make up the executive commitee.

Shamsul Azhar said the executive committee would provide clarity on issues of leadership development and senior succession planning, adding that if he were to retire in the future, his successor would come from the committee’s ranks.

Commenting on the business realignment, he said Petronas had in recent years spread itself too thin across too many focus areas in exploration and production.

Petronas, he said, did the opposite in 2009 when most oil companies scaled back investments in upstream to face challenges from an anticipated prolonged period of reduced growth.

As such, he added, there was a need for the company to move away from drilling dry holes and pushing the boundaries in high-risk frontier areas.

He also said Petronas must be more accountable for those risks that did not pay off and there should be more respect for the bottomline.

He said the company would have to refocus on its upstream operations and give more focus to development and production, adding that this could be achieved by acquiring proven fields and “squeezing out” more from proven domestic fields.

To be able to do this, there was a need for Petronas to re-strategise and use new technology to go into unworked high temperature and high pressure areas in local fields, Shamsul Azhar said.

He said the refocus on domestic fields would also provide impetus to the government’s New Economic Model with spin-offs for local businesses, especially contractors and service providers.

Stating that Petronas needed a more robust structure to face the “ups and downs” in the oil and gas industry, he said the company had to review its non-core areas like property and hospitals and, if necessary, carve them out for greater operational efficiency.

However, he said Universiti Teknologi Petronas has a direct relevance to the company’s businesses as it provided trained personnel.

He also said that Petronas would have to look at its remuneration package for skilled employees as a result of poaching from companies in the Gulf.

Referring to the joint development of petroleum resources with Brunei at Blocks CA1 and CA2 in the South China Sea, he said Petronas had set up a team which started negotiations with Brunei to work out the terms for the commercial arrangement.

He said while the initial agreement for the joint development of oil and gas reserves was for 40 years, there would be negotiations to extend the tenure. — Bernama