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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.
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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 *********
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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.
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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
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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
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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.
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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 ".
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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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