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UNIVERSITI PUTRA MALAYSIA

A CASE STUDY ONPETRONAS CARIGALI SDN BHD

(Facing the International Challenges)

WAN ZAINUDDIN HJ WAN MUDA

GSM 1997 7


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'ESIA CE STUDY ON

PETRON CG SDN BH

(Facing the Interaional Chalenges)

Y

W ZDDIN HJ W MUD

MATC NO. : 45161

E O UIE ADINITIO

YS GDUATE SCHOOL OF GEME

UI PUR Y

SEG

SEGOR DmUL EHAN

DECEBER, 1997


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A Case Study OnPetronas Carigali dn Bhd

(Facing The Intenatina Chaenges)

y

Wan Zainuddn Hj Wan Muda

Matre No. : 45161

This Case Study i ubmtted i paial ent of the

Ieqement fo e Maste of Business Amniaton,Maaysian Grduate School of Managemen Unvety PutMalaysia Sedang, Seango Dal Ehsan.


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Confdentiali tatement

The Case Study is puely an academic execse undeaken by he

author. The case erewih contains cetain inomation that shal

not be disclosed to the pblc Thus no part of this document is o

be eproduced in any om and e used in any manner without

pior witten pemission fom the autho


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cknwledgementFirs, I u like t eten my eepes gratitue an appreiatin

t my Supersr, Prfessr DrMh Ismail Ahma fr s

gane ents an valule suggestins uring the urse f

preparng ths ase tuy A big thank yu an re sha as be

given t all leturers thrughut the hle MBA prgramme fr

their interesting leture h makes a f us mre lear an

unerstaning n the business nept an strate hih is

imprant fr tay's mpetitive business enirnment

A r f ha sha as g my ie an ren h pre

me a valuable inpiratin an have been the mst patient

unerstaning supprtive an enuraging fr taking this urse

Withut them the mpletin f ts ase stuy an the MBA

prgramme nt have been pssible

Tha yu s muh - I lve yu all


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riginalitof the DocumenI, Wa Znudn HjWaMuda, Matc No.: 45161 a nal year

udent of te MAproae at the Uversity Ptra Malaysia,

Serdang, Selangor Da Eahereby cormed that the case

prepared for the ove proae is pely te sole eo of my

gooe

Name:ldn

HjWa

MudaDate 1998


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PART I


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PT I - CASE

al f ntnt

cn scrpn g

Die

10 Introducton 4

20 Background 6

21 PON 6

2. son & Mssion Statement 212 Shared Values 1 1

22 PON CG SN BHD (PCSB) 1 222 1 Vision Statement 1 3222 Business Objecves 1 4

30 PCSB Organisation Stcture 1 5

40 PCSB Milestones 1 8

41 Doestic 1 8

42 Inteational 1 9

50 Coe Business Aces 1 9DomescInteaonal

6.0 Market Trendi Oil and Gas Indust 25

70 Manpower / Wororce Management 28

80 Oranisational Efectiveness Study (OES) 3 1

9.0 Fnancial Situation 32

oe 34


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PT - CASE YSIS

le of ontent

econ Descrpon age

10 ecu Summa 35

20 Problems d Oppounities 37

3.0 PCSB Vsion Statement alysis 38

4.0 alysis and Discussions 4 1

41 Situaon alysis 4 1a) Nature of demandb) end of demdc) Nature of compeond) vronmental cimatee) Sklls of the compy

Distbuon B Promoon

42 Financial alis 52

43 OT alis 59

44 SPACE alis 76

50 Strate teas 8 1

51 Exsion Strate 8 1

52 Combinaon Strate 84

6.0 trategies Implementaon 86

7.0 Conclusion 9 1

References


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Fie 1 -

Fie 2 -

e -

re 4 -

re 5 -

re 6 -

e 7 -

re 8

e 9

e 1 -

e 11

Tble 1

Tle 2

Tle 3.0

Tle 4

Tble 5

Appen I -

Appn u-

Lst of usaos

FigesPEONAS Grp f Cmpe

PEONAS Orgsin Sce

PCSB Orgsin Sce

PCSB Biness Aciis Deic

PCSB Bsinss Acies Inenn

PCSB Biness Aciies Fc Ces

PCSB Mnpwer Diin

PCSB ver

PCSB Pr er T

Prcess f Inernin Mrkeing re

SPACE M

Tales

Glb Oil Demnd & Spply

Wrld Cde O Pce

i O nd Gs dcn

Brd Ce fr CAy

PCSB nnci Snng Su

pndicesPCSB nncil emen

SWOT lysis Tbl

- Tle 1 Exernl (Ind) ysis

Tble 2 Inern Anysis

Tbl SWOT M


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PT 1 - CASE

PTRON C.GA - Facig e Interaon Chenges

Dialoge

Yg at Bhoat Dato' /, e Mag Deor of PCSB kept on

pond loog at e blue out of e test bg i e rld, e

Peon To He o on e e of e mp Hag n

e compy evice ts ipon, he ndedie compy cod ep

pace w e ct compe biess oent. mt e ct

eed economc probl ed w c probl g by e

nao he ought at he ought to do someg do

pondg e te.

e ped up hphone d cup hseet I

Rg ....Rg..Rg ...

Mage

YADato'

Mage

YADato

: Ho, what c / do for you Dato'?

: Mage, c you sede a bod meeg on day, 2 8

Jy 97at 9:0 i e Bod Meeg room ?

Cy c Dato Do ou t e bod of eo to

ad e meeg?

: Yes, plee c e bod of ecto e E J, Dr.

Kd E. Td Dr. H. T at ey amt

come to t meeg.

Te acters oe e pely ous d does not resemle of y re peopleeither vg or dead.

- 1 -


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Mage

YADato'

: Vez l, I o em ght ay Dato Is ere g you

t me to do ?

: t lMage, you

On Tda 0 Sept. 1997 e Bod Meeg Room

YADato'

E/a

DrK

YADato'

Dr K

: Good mog gem I have been g hd at

pondeg how PSB cod cope t e ct compeve

be d econoc aon A ght ect o

be, I w od do someg more at what w

have done to s e bess T, I hope meeg c

proe a t step to devopg e appropate

st to be adopted by e compy y suggeson om

e m ?

: WeDato I aee tyou at ct aon cy J

e o bess Wat more at we e o d g

d whe w need gh vest, -te eqpmt,

d ee to n e d

: But what c do? Uw depd soi e o d g

resoces domescl w def be eed by e ct

econoc siaon Uess w d o bess oue

Maia

: You me, wgo teaonly ?

: Yes Dato It a d ese da at m coes d

e bess outside e o coes

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E Ta

Dr. H

E Ta

DrK

YADato'

Dr.K

YADato'

:

:

:

:

at a good dea. Dowhave ough resoes d prepe

to go itaonJy?

C you orate a b more what do you me by at ?

W.....what Ime at dowhave e ght people to look

for itaon bie aes. We need eence

people cp.

Ineed to add someg ... p om ese resoes, wo

need to look at o faoiww to get ito iteaon

bess lpoc aon, e, e,

econoc d my more.

: Dr.K, c you prepe repo o e ct compy

poce d aon borews on e n

coe of on.

Icay c Dato I ppe d p to Jbod

m whwmeet a i e foght.

: Tmeeg dy good step to plg

stcJy for e o of e comp We c

bto ag i e n meeg.

(r K, E. , E a &Dr H oy aeed

wtDato dea.)

Uere no more qeson,wadjo e meeg d meet

ag e n we sa on e 5tut, 1997 t

e se e.

********* d of Daoge *********

- 3


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1.0 NTRODUCTION

It was esaged that globalisation of the world economy in tes of trade

ad ivestmet would become more edent th rapid adcemets i

transpo, commuicatio and infoatio techologies. A the

twentyt centu approaches, the wod would undergoing eoous

change, a process of great upheal and great possibility I just a few

sho yea, we have tnessed the da of post-industal society, the

advet of the ifoation age, the sh to computesation and therefore

itensity copetio

Te increasing trend towards regionalism in trade ad economical

relatioships would make it more impera for small ope economies

like Malaysia to adapt eecvely and speedily to the coseqet

challeges to maitain their comparave posio Inteatioal

competiveess would be a mog target Hower, it has the

udeiing objecve of maxmising ad icreasig producty as well

as eciency

Busiess eroment has gro dramatically more intense including in

alaysia, and competition has become more global ad more eergised

d techology races on No longer could business safely igore their

customer's wats ad needs No loger could personal relaoships be

grated No loger could so much human creatity go so scadalously

utapped

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PERUSTAKAAN SULTAN ABDU SAMA

UNIVRSTI UTRA MAYIA

Malaysia was a unique count in te sense tat it was one of te few

countes n te word wic as, thin te span of o decades

succeeded in bnging about a socio-economic transfoation of socet

wch enabled Malaian om all of life to gain benet of

development and enjoy a better quality of life Vision 2020 tat pad te

way for meaningl gro and ordey development would oer st

oppounies and callenges for Malaysian industes paculay in the oil

and gas industes. te world of rapid and profod cange, te role of

a mulnational in te oil and gas indust was still one of te connuing

and increasing contbuon to te development of naonal economies and

to te improvement of te ality of life of te communities in wic we

operated and wom we sared a common ture. (1)

a signicant contbutor to te naon's groh as well as major eo

eaer and contbutor to te national revenue te oil and gas indust as

played a key role in the nation industalisaon jouey towards attaining a

lly delop naon status by te year 2020. Being te leading integrated

Multinaonal Petroleum Cooration PEONA would continue to

spearead te development of te oil and gas ndust d contbute to

te nation throug ongoing technology transfer and tecnical slls

tg gain n vaous projects undeaken. In order to realise te above,

te key to PEONA ture gro and success was troug te market

globalisation suc as ventung business actities in te inteational

arena. Recognising tis, te cooration as embarked on a globalisation

programme to expand its operation into it's cosen strategic market

around te world.

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2.0 BACKGROUD

1 PETRON

e rst commercial oil development in Malaysia dated back as early as

9 when the glo-Son etroleum Company, forenner of the

present day Sarawak Shell, developed the Mi oileld in Sawak.

Beeen that peod and Apl 975, oil companies in Malaysia was

operated under the Concession Stem for exploitaon of the

hydrocarbon. Under the Concession System, oil compaes had te

exclusive ght to elore and produce oil and gas elds. olty and

tes were paid to the respective state/federal govement.

n ctober 974 the etroleum Development Act (DA) was enacted in

parliament. Under the DA, the enre oership and exclusive ghts,

powe, libees and plege of explong, eloing and obtaining te

oi and gas in either onshore or oshore Malaysia were vested in a

cooon called etroleum Nasional Berhad. (2

N, the acronym for etroliam asional Berhad, was the naonal

petroleum cooration wholly oed by the govement of Malaysia

Since its incooration in 974 which has been vested th the

entire oership and control of the countrs oil and gas resources under

the etroleum Development Act, 974 has gro to become a lly

integrated petroleum cooration, dirsing rapidy om its upstream

actities into the dostream sectors.

- 6


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PEONA has made tremendous progress since its inception in 914 to

gain a favourable reputation inteationally. Today, PEONA ha gro

into an integrated oil and gas company operating beyond national

boundaes

Cuenty, PEONA business acty for both domesc and inteational

level was undeaken by the ous group of companies. e PEONA

Group of companies consisted of 41 wholy oed subsidiaes, 20 paly

oed subsidiaes and 21 associated companies. Figure 0 ilustrated

PEONA Group of Companies Meanwhile, Figure 2.0 ilustrated

PEONA Organisaon Stctures and busness actes at the cooate

lel

- 7


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wLL Y-D UBIDARE- c_ R L_- c W)S _ 0 8hr (0_-c _ *_

cS_ Co ( ' f MG _ - -f C-I_ ___r " Po..T _

fT-I_ P_P18_ Is_$ 8_r o

"b_

- F Tb N_ "SA . P l

. loC

PAR YWED UBIDRE

OPT - r B ()

Il1 I-Uo_( HER CPAN

, s _ _ (: ' IU N C ,, .S s f- f .B_(1

y)

_

.,.(3)a_ PT F Ii,

GURE 1.0 EROA GROU O COMAE

- 8


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1

AGENCMIEEOPPVBUCAFARS

L OFCS IOAY SECEA GSRCS

OPlANG ISES PMN

BRD OF DIRECTORSPRESEN CO : TO' M. SMERCN . .III

BRAITCOMMr

Ae

I D

HELT, SF &R

CO DV

TO . INCE SE U RESRCS & REIG' AGEM SE TOR MKNEI


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PEONA was now a ll-edged oil and gas company which engaged in

a de range of acties coveng petroleum eloraon d production

oil rening markeng trading and distbuon of cde oil and petroleum

products natural gas processing transmission and distbuon natural

gas liqefacon and markeng oil liqeed natural gas and manufactung

and markeng of petrochemicals and felisers. Due to the govement's

depleon policy oil producon in the count was levelled o between

600000 bopd to 650000 bopd.

Today thin a strong foothold in the count while building on to its

domesc operaons PEONA was acvely expanding into the global

market forging towards its sion of becoming a mulnational petroleum

cooraon. A PEONA President says .. .. " e most ccal challenge

would be to achie and keep our compettve edge in the inteaonal

arena where we would be up against the most established and eeence

playe. I order to realise the above we need to rexae oels

id cOuously pve 01 eg wdo in order to achieve the

most cost eectiveness ecient utilisaon of our resources .... we must

continuously seek improvement in our organisaon and respond posively

to the constant changes in the damic business enronment that we

t " (3)opera e . . . .

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2 . 1 . 1 SON STATEMENT" MSSON STATEMENT

PEONA, hang consolidated its posion at home and th the

exese and owledge acquired or the span of 20 years of its

estence, was spreading its ng d ventung abroad to pursue its

"dreams". order to realise organisaonal goals, PEONA has recently

launched the long te Vsion Statement as well as creating a Mission

Statement to benchmark and eluate organisaon success.

PEON VON STA

" To be a Leading Oil and Gas Mulnaonal of Choice "

PON MSON STA

" We are a business enty,

Petroleum was our resources

Our pma objecti was to develop and add lue to this naonal

resources,

Our objective was to contbute to the well being of the people and the

naon"

21 2 SED VALUES

In addion to hang both Vsion and Mission Statement, PEONA also

launched organisational "Shared alues" to enhance organisational

objective in achieng the goals.

- II


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Ly

Pofessiona -

Iteg

Cohevess

Loyalty to the Nation & Cooraon

Committed, Innove and Proacve and

wa Stng for cellence

Honest d Upght

United in Puose and Feohip

With the above ion, Mission Statement a wel as establihing "Shared

Value" statement, it s ensaged that PEON employee could foster

a better teamwork, qality product d sece which could prode

competve edge, d hence woud poray PEON image, reputation

and success of the organisaon not only at home but also at the

nteational arena.

. PETRON CJGA SDN BD

PEON CGA SN B (SB) was one of the PEON wholly

oed subsidiaes incoorated on a May 978 With the increase

business actities in the exloraon and producon of o and as and

good potential for indust development, SB has been entsted by

PON to spearheaded the challenge in the oil and gas exloraon,

development and producon not only locally but also at the inteational

arena To date, SB as the operator of more than elds, prodcng

about one third of the counts total oil and gas production. e eld

operated by PCSB locally are uyong, ulang, Bekok, Tapis and Pulai in

Penslar Malaysia, the Tembungo and Samarang in Sabah, nine oileld in

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Baram Delt area in Srwak. Meanwle, e teaonal area pSB

was oertig Dai Hug in Vietnam, and few los i the Casi sea

which undergoig develomet hases

Cuetly PCSB hs bee invoved in a umber of rojects teolly

og the itetiol rojects udeke by PCSB was i the ia

region suc s Tild Piliie, em, Bu, Indoesi Idi; i

the Middle Est such s i I, Iq, Sa i Easte Euroe such as

reist, Uzbest, erbija; i Ac such as in Sudan ad

many more rough the ye, PCSB ket o vetung ito new

cocession area and aggressively acite in the teaonal aren to

her stregthe its business (4)

2.2.1 PCSB SION STATEMENT

My mulol comies set log te orgisational objectives or

goals o s sio statemet Lkese, as business cties were

fig s challege i todas global mrket enronmen PCSB has

lso estblished comy sio realising its goals d objectives With

tevsion, pSB s exected to ehance its cabilities PCSB sio ws

"T BeAMultatial E & P CmpY fCice, Creatg Value

ugh COuous Iprvemet & Gw ".

13


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2.22 PCS BUSNESS OJECVES

One could argue that it was ually impossible for an organisation to

nction thout hang establish some business goals or objectis.

objecve set a ture target or end result that an organisation shes to

achie. It also set a direction where the organisation was heading

towards achieng its dream. pa of globalisaon eo to purse its

business aces, PCSB has set few organisaonal objecves to

spearhead the challenge of the oil d gas indust that was ve

compe pacularly in the inteaonal arena. PCSB business

objecves were ;

o To avy ppate i e loon of peolew soes for e

mw bt of e peopJe

o To al opon d tec e ough mpo

devopmt d e of teolo i e oest pole

e

o To aeve adate produon lev so to mt e naon tot

de o d g ouut

o To e m Ma vt a d

seg of aproducon fas d proon of d

suppove sces i e o d g id

Te above business objectives were in line th PEONA President

shes who said that" .. Te most ctical challenge would be to achieve and

keep our coetitie edge in the inteational arena where we would be

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up against the most established and eeenced players. In order to be

compe we need to constantly re-ae oelves id

Ctbuously Ipove Oi evebg we do in order to achieve cost

eecness ecient ulisation of our resources..... we must connuously

seek improvement in our organisation and respond positively to the

constant chges in the damic business enronment that we operate

1(m.... .

3.0 PCSB ORGISATION STRUCTU

Hang diiing its business aces outside the domesc

enronment PCSB basically adopng nconal concept of the

organisaon stcture. Cuent PCSB organisaon stcture composed of

essenaly (5) main disions that were poration Deveopment

Commercial Seces Domesc Operaon and nteational Operaon.

Each of these disions was headed by the General Manager who repoed

directly to the Managing Director/Chef ecuve Ocer. Exploraon

dision focus on nding new oil and gas rese that could prode

substana retu to the company. Wener ploration teams nd new

o and gas rsee the ed dveopment s then be the responsiiity

of the Deveopment dision to her study how to produce hydrocarbon

om ohore Development dision composed of Petroeum Depament

Dlling epament Design Depament Constction Depament and

Seces Depament that specialise in ceain work scope. Commercial

Seces Dision mnly focused on a contractual matters peaining to

the project delopment and eoraon aces Meanwhile for both

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