Petronas Essay ⋆ Business Essay Examples ⋆ EssayEmpire

PETRONAS is an acronym for “Petroleum Nasional or National Petroleum” and the company is registered as Petroliam Nasional Berhad. It is located in the Petronas Twin Towers in Kuala Lumpur, Malaysia. Petronas is ranked 95th by Fortune for 2008. The CEO of the organization is Mohamed Hassan Marican and he leads 37,430 employees. The company Web site is www.petronas.com.my. In the fiscal year ending on March 31, 2008, Petronas had $66,218.2 million in revenue resulting in $18,118.4 million in profit.

Petronas was incorporated on August 17, 1974, under the Companies Act of 1965. The company made its first export of crude the next year. In 1981 Petronas set up the first petrol station in Taman Tun Dr Ismail, Kuala Lumpur. In 1983 its first refinery with 30,000 barrels per day capacity in Kertih, Terengganu, came online. In 1985 Petronas made its first liquefied petroleum gas (LPG) export. In 1993 Petronas first issued bonds and signed its first deep water contract with Mobil. In 1994 the marketing arm, Petronas Dagangan Bhd., became the first Petronas subsidiary listed on the Kuala Lumpur Stock Exchange (KLSE). That same year, the first of Petronas’s five LNG tankers, Puteri Intan, was delivered. 1994 was truly a milestone year as it saw Petronas open its first overseas retail station in Cambodia and begin overseas oil production from Dai Hung field in Vietnam. In 1995 Petronas began to sponsor the Red Bull–Sauber-Petronas Formula One Racing Team. In 1996 it issued its first US$1.9 billion global bond.

The company is wholly owned by the Malaysian government and is vested with the entire ownership and control of the petroleum resources in Malaysia through the Petroleum Development Act of 1974. Petronas has operations in over 31 countries including China, Sudan, Algeria, Vietnam and Iran, and has four subsidiaries. In 1998 it launched the first oil production of the Sirri field in Iran and in 1999 it had its first oil production export from Sudan.

In 2000 the company signed agreements for two oil and gas exploration blocks in Pakistan, the East Kadanwari Block and Mehar Block, and commenced construction of the 1,070-km pipeline for the ChadCameroon Integrated Oil Development and Pipeline Project. In 2001 the company rolled out its high-performance prototype “GP1” motorcycle engine at the Sepang F1 Circuit. In 2002, Petronas raised US$2.675 billion equivalent from a global bond issue, the largest corporate bond issue to have ever been concluded by an Asian corporation. That same year, the company received the delivery of its first natural gas from West Natuna, Indonesia.

In 2003 Petronas opened its first service station in Sudan, officially marking its entry into the retail marketing business in the country following its acquisition of the entire retail assets of Mobil Oil Sudan Ltd. Additionally, it signed a Letter of Intent with Petroplus International NV (Petroplus) to acquire 30 percent equity in Dragon LNG, a special purpose outfit established by Petroplus to develop a proposed LNG terminal and related facilities in Milford Haven, Wales, United Kingdom. Furthermore, Petronas launched its range of premium grade automotive engine oils in Indonesia, officially entering the country’s lubricants market. In 2005, Petronas commemorated 10 years of involvement in F1 racing.

In 1997 the company moved its headquarters to what were then the tallest buildings in the world: the 88-story Petronas Towers in Kuala Lumpur. Its business activities can be divided into three categories: International Operations, Downstream Activities, and Upstream Activities. Upstream activities consist of exploration, development and production of crude oil and natural gas. Downstream activities consist of refining, marketing, petrochemical business, and logistics and maritime business. Petronas has had indirect or direct business relationships with the following organizations at one time or another: BP Chemicals/BPCM Assets, Esso, Shell, and Mobil. As of January 2004, Malaysia had approximately 4.84 billion barrels of crude oil reserves and about 87.0 trillion standard cubic feet of gas reserves.

Currently, Petronas has 51 producing oil fields in Malaysia. These oil fields produce five different blends of crude: Tapis, Labuan, Miri, Bintulu, and Dulang. These blends are of high quality and generally command a premium price over benchmark Brent crudes on the world market. Petronas produces three types of automotive fuels, one type of aviation fuel, two types of gas fuels, and four types of industrial fuels. Furthermore, the company produces 11 types of gasoline engine oil, nine types of diesel engine oil, and a selection of other oils for a variety of uses.

In 2007 Financial Times dubbed Petronas one of the new “Seven Sisters,” the oil and gas giants that now dwarf their Western rivals.

Bibliography:

Carola Hoyos, “The New Seven Sisters: Oil and Gas Giants Dwarf Western Rivals,” Financial Times (March 11, 2007);
Cesar Pelli and Michael J. Crosbie, Petronas Twin Towers: The Architecture of High Construction (Academy Press, 2001);
“Petronas,” Global 500 2008, Fortune/CNN Money (July 21, 2008);
“Petronas,” Petronas Corporate Web site, www.petronas.com.my (cited March 2009);
Daniel Yergin, The Prize: An Epic Quest for Oil, Money and Power (Free Press, 1991).

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