PETROLIAM NASIONAL

BERHAD (PETRONAS)
EBM 2163 CORPORATE RISK MANAGEMENT GROUP ASSIGNMENT
Group Name: The Royals
Cennyson Sapon 51388 Ong Choon Siong 53538
Chuah Yee Lyn 51528 Tan Su Yi 54033
Lai Kwan Yew 52202 Tey Kai Wen 54087
 BACKGROUND OF COMPANY
• Petroliam Nasional Berhad (PETRONAS) established in 1974, is Malaysia’s fully integrated
oil and gas multinational ranked among the largest corporations on FORTUNE Global 500
• Petronas which is wholly owned by the government – vested with the entire oil and gas
resources in Malaysia
• Revenue in 2016 – RM204.9 billion (Majority generated from petroleum products)
• Total employees – 51,034 (84.0% Malaysia)
• Operates all around world – 7 Geographical Segments
• Has 3 major but partially-owned subsidiary which are:
Petronas Chemicals Group Bhd
Petronas Gas Berhad
Petronas Dagangan Berhad
 RISK IDENTIFICATION
OPEC RISK GEOGRAPHICAL RISK

POLITICAL RISK FUNDAMENTAL RISK

SAFETY RISK REGULATORY RISK

OPERATIONAL RISK INHERENT RISK

TECHNOLOGY RISK RESOURCE RISK

RISK MATRIX

ASSESSMENT
• Petronas has multiples business units, projects
and portfolios to manage, it increases the
complexity of the operation, thus Petronas
Group are prone to more operational risks
which can affect the entire business
• Human resource
• Maintenance of pressure vessel
• Safety aspect – explosion – insufficient pipeline
OPERATIONAL RISK
RESPONSE
• RISK REDUCTION
• Rectify and upgrade the plant and facilities
which have direct impact on the product
delivery and quality
• Inspection of the pipeline system in a
timely basis - Pipeline Integrity
Enhancement Program.
• Implement a streamline work procedure
with higher operating discipline

ASSESSMENT
• Dealing with serious safety and integrity
issues throughout its offshore
• An oil tanker which caught fire and
exploded at the jetty of Petronas Chemicals
Methanol Sdn Bhd – caused by lightning
strike
• Petronas gas process plant in GPP Complex
A in Kerteh was rocked by two explosion –
a worker died & 23 injured
SAFETY RISK
RESPONSE
• Petronas should used risk reduction in mitigate
the risk related to safety risk. For example,
natural disaster could not be prevented but what
Petronas can do is implement disaster risk
management (DRM) to prevent greater losses
and alleviate the impacts of disasters.
• To improve safety and reliability of asset
management, Petronas has implement ISA100
Wireless safety system operating on an offshore
oil platform with remote wireless monitoring.
 OPEC RISK

ASSESSMENT RESPONSE
• Controls 80% of world oil reserves. 2/3 of that • RISK REDUCTION
number is owned by the 6 Middle Eastern
members (Iran, Iraq, Kuwait, Qatar, Saudi • Streamline value chain – invest in better
Arabia, and the United Arab Emirates) drilling technology, more efficient refining
• 2010s oil glut – prices of Brent crude fell to techniques, lay off underperforming
below USD40/barrel from June to December employees.
2014.
• Because of OPEC’s reluctance to cut
production, oil prices have been in a downward
spiral from mid-2014 to end-2016, cutting
deeply into Petronas’ revenues.

ASSESSMENT
• New legislation and regulation change –
new taxation scheme – Canada government
– uncertainty and doubt – investment
decision
• Local opposition – environmental and
native activists – filed a lawsuit – claiming
environmental certificate was invalid
• Middle East tension – civil war and
unstable government – Iraq – key player of
geographical region
POLITICAL RISK
RESPONSE
• RISK RETENTION AND REDUCTION
• Alliance with the strongest partner – strong
influencing force & good relationship with
government – in the operating countries. Exp:
China National Offshore Oil Corporation
• Importance of communication – negotiate –
seeking consult – before final decision made
• Ability to manage their private security
effectively – risk management
 TECHNOLOGY RISK

ASSESSMENT
• invention of alternative fuel
• Alternative – exposure of hybrid vehicle –
diminished demand
• ethanol is widely used as additives into
gasoline
• reduction of consumption of gasoline
through dilution of pure gasoline into
mixed fuel
RESPONSE
• RISK RETENTION & REDUCTION
• Collaborate or form strategic alliance with
innovative partner
• Conduct R&D into renewable fuel to gain
market share
 DIVERSIFICATION STRATEGY – CURRENT

INTERNATIONAL Fertilizer & Urea

EDUCATION
DIVERSIFICATION Production
• Presence more than 65 • Producing granular urea • Provide education
countries for agricultural sponsorships/loans
industries - Kedah • Universiti Teknologi
Petronas (UTP)
 DIVERSIFICATION STRATEGY – CURRENT
MOTORSPORT PROPERTY INVESTMENT
- Main sponsor (Mercedes Grand Prix - Development & management of
team) the KLCC project (Ex: Twin Towers,
KLCC Park, etc)
 DIVERSIFICATION STRATEGY – FUTURE

DIVERSIFY TO INNOVATIVE GREEN TECHNOLOGY

 Promote  Converting plastic  Turning garbage to
environment status waste, waste water, energy (Form
& preservation gutter oil to fuels partnership with
TNB)