PCSBLOA 25feb2002

PETRONAS CARIGALI SDN BHD
Limits of Authority (LOA)

February, 2002
-1-
TABLE OF CONTENTS
ITEM
SECTION
PART A
PAGE
GENERAL INFORMATION
1
Introduction
PETRONAS and PCSB Relationship
Delegation of Authority
The Company
Definition of Terms
The Principles of Delegation
PCSB Leadership Team Organisation Structure
PART B
4-5
6
KEY BUSINESS ACTIVITIES

1
Planning and Budgeting
7 - 11
Business Development
12 - 13
Exploration
14 - 15
Drilling
16 - 18
Development
19 - 22
Production Operations
23 - 27
Joint Ventures Participation
28 - 34
Health, Safety & Environment Quality Control
35 - 36
-2-
TABLE OF CONTENTS
ITEM
SECTION
PART C
PAGE
FINANCIAL AND ADMINISTRATIVE
Capital Expenditure
37 - 39
10
Procurement and Logistics
40 - 48
11
Disposal of Assets, Materials and Stock
49 - 52
12
Accounting and Financial Services
53 - 58
13
Banking Accounts and Banking Facilities
14
Borrowings
60 - 61
15
Insurance
62 - 64
16
General and Administrative
65 - 71
17
Legal Services
72 - 73
18
Information Technology
74 - 75
19
Management Agreement
76 - 77
-3-
59
TABLE OF CONTENTS
ITEM
SECTION
PAGE
ATTACHMENTS
Attachment I
LOA and Management Systems
78
Attachment II
Objective of LOA System
79
Attachment III
Delineation of Authorities for Various Levels in

PCSB
80
Attachment IV
Signature Authorisation Form
81
Appendix I
Methodology for Development of LOA System
82
Appendix II
Defining PCSB Business Scope
83
APPENDICES
Appendix III/1-6
Appendix IV
Business Chain Analysis

Business Profile
84 - 89
90
-4-
Part
Part A:
A: General
General Information
Information
PART A: GENERAL INFORMATION
1.0
INTRODUCTION
1.1
The objective of PETRONAS Carigali Sdn Bhds (PCSB) LOA is to facilitate timely, effective
and quality business decision-making in the company.
1.2
The LOA System is an integral part of the management system as shown in Attachment I. In
developing the LOA manual specific measures are taken to ensure a proper balance
between the need for timely, effective and quality business decision-making and appropriate
management control (see Attachment II).
1.3
The LOA as an authority framework, requires:
1.4
2.0
1.3.1
The proper execution of instruments of delegation.
1.3.2
Provision of clear guidelines and procedures for executing decisions.
The methodology for undertaking activities and transactions shall be embodied in the
relevant guidelines and procedures adopted by PCSB.
PETRONAS AND PCSB RELATIONSHIP

2.1
PETRONAS and PCSB are separate legal entities. The Board and the MD/CEO of PCSB are
wholly and exclusively responsible for the management and performance of PCSB. Their
roles are subject to the provisions of the relevant statutes and the companys Memorandum
and Articles of Associations.
2.2
As an independent legal entity, this LOA Manual shall govern all decisions made for the
company. PCSB may adopt all relevant PETRONAS policies, guidelines and procedures as its
own policies, guidelines and procedures to govern its business operations.
-5-
Part
Part A:
A: General
General Information
Information
3.0
4.0
DELEGATION OF AUTHORITY
3.1
The authority to commit any financial obligation or otherwise, solely, partially, directly or
indirectly on the account of PCSB lies wholly with PCSBs Board subject to the companys
Memorandum and Articles of Association. The MD/CEO is responsible for the management
and performance of PCSB.
3.2
The authority to make decisions is provided by the LOA Manual. The delegated authority
carries with it the obligation to the officer concerned to exercise sound discretion, good
business judgement and accountability. The respective authorities for the various levels in
PCSB are spelt out in Attachment III.
THE COMPANY
4.1
PCSB is incorporated on 11th May, 1978
4.2
Members of the PCSB Board who represent the shareholders are expected to protect the
shareholdersinterest in exercising their powers and authorities and in the use of discretion
in the Board in accordance with PCSBs current policies, procedures and guidelines.
4.3
The MD/CEO of PCSB is authorised to manage and conduct the business of the company
according to the best of his judgment and in this capacity he will report directly to the Board
subject to the provisions of the Memorandum and Articles of Association.
-6-
Part
Part A:
A: General
General Information
Information
5.0
DEFINITION OF TERMS
5.1
In the context of this Manual, unless otherwise defined elsewhere, the terms
5.1.1
Board means PCSB Board of Directors.
5.1.2
Chairman means the Chairman of PCSB.
5.1.3
MD/CEO means the Managing Director / Chief Executive Officer of PCSB.
5.1.4
CMC means the Management Committee of PCSB.
5.1.5
COC means the Operations Committee of PCSB.
5.1.6
HEAD means the Head, Domestic and SE Asia or Head, Africa, Asia, and Middle
East.
5.1.7
GM means General Manager, the authorised person responsible for the overall
planning, formulating, organisation, directing and control of the Division/Region.
5.1.8
K means thousand.
5.1.9
Mil means million.
5.1.10 M means Manager, the authorised person responsible for the planning, formulating,
organising, supervising and managing of the department, area of operation or
project.
5.1.11 OIC mean Officer-in-charge, the authorised person in charge of an installation
which includes Platform Superintendent, Site Superintendent, Terminal
Superintendent, Platform Supervisor and Base Superintendent and Office based
Executive.
5.1.12 SH means Section Head, the authorised person heading a section in a department
or division. Facilitators in Strategy and Planning, Resident Engineer and Team
Leader reporting to Manager carry the same authority as a Section Head.
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Part
Part A:
A: General
General Information
Information
6.0
THE PRINCIPLES OF DELEGATION

6.1
The delegation of authority is based on the following principles

6.1.1
The authority for approval is confined to the line function of an officers direct
responsibility.
6.1.2
An officer automatically carries the authority limits of his subordinate(s) in the same
line function.
6.1.3
Expenditure commitment must not be fragmented to avoid the limits imposed.
6.1.4
Authorities are vested in an office and shall be exercised by the incumbent either as
substantive or in an acting capacity.
6.1.5
Authorities specified in this Manual shall not be further delegated either in whole or
in part.
6.1.6
An officer, through consultation with his superior, may restrict the Limits of Authority
of his subordinate(s) by completing the Signature Authorisation Form (see
Attachment IV)
6.1.7
The approving authority who has vested business interests with third parties dealing
with PCSB shall not exercise his authority in any of the related business
transactions.
6.1.8
The CMC acts in an advisory capacity to the MD/CEO and the MD/CEO would
normally make his decision in consultation with the CMC.
6.1.9
In exercising the authority, all current policies, systems, procedures, guidelines,
criteria and standards governing a particular transaction must be adhered to.
6.1.10 Procurement of goods and services must be done in accordance with PCSBs
established procurement procedures and guidelines except for emergency supplies
and services. Procurement under emergency situation however, needs to be ratified
subsequently by the appropriate approving authority
6.1.11 Authority to place an officer temporarily to cover a position shall be exercised by one
level higher authority.
6.1.12 Except for the Chairman of the Board, no other person shall authorise his own official
expenditure relating to his position in PCSB or any expenditure in which he has a
personal interest.
6.1.13 Procedures and guidelines which are not mentioned in any of the section are to be
approved by General Manager.
-8-
Part
Part A:
A: General
General Information
Information
6.2
Level of reporting
All approval authorities as stipulated in this LOA Manual are accountable to a higher level of
authority and this is cascaded and applied down to various approval levels. This is denoted
in the level of reporting column in the respective sections and decision making items. The
intent of the level of reporting is to emphasize:
i.
The need to inform the superior of approval/review actions taken on matters

that are either sensitive in nature or that may have significant impact upon the
business, and
ii.
The need to ensure that the superiors are aware of the decisions made by their
respective subordinates to assist them in making informed decision in other related
areas.
For example, the Board has delegated specific authority to the MD/CEO for decision making.
Whilst he is empowered to make decisions on specific items as delegated by the Board, he is
not absolved from his accountability to the Board. Similarly, the Board is not absolved from
supervising the MD/CEO.
In operationalising the accountability framework, it is incumbent upon the approval
authorities and their respective reporting levels to take into account factors such as
practicality, flexibility, supervision and control. However, in cases of emergency as defined
within the context of this LOA, reporting and ratification are obligatory.
All reporting requirement to higher authority level under the various level of approval shall be
made on transaction basis or through monthly, quarterly, biannual or annual reports, as
applicable.
6.3
The interpretation of this Manual is delegated to GM, Commercial Services.
-9-
Part
Part A:
A: General
General Information
Information
PETRONAS CARIGALI SDN BHD

Leadership Team Organisation Structure
MD
Strategic
Planning
SP
XD
LCS
Exploration
Legal/Co.
Secretary
DD
HSE
Development
Managing Director/
Chief Executive Officer
PCSB
Health,
Safety &
Environment
DOM/
SEA
HRM
Human
Resource
Mgmt.
Domestic
& South
East Asia
- 10 -
AMA
TMU
Tech.
Mgmt.
Africa,
Middle
East &
Asia
CBD
CD
Business
Devt.
Commercial
Services
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 1: PLANNING AND BUDGETING
1.0
DEFINITION OF TERMS
(i)
Annual Business Plan
The detailed documents containing objectives and the

strategies and initiatives to realise those objectives to be
undertaken in the specific year and 4 years subsequently.
(ii)
Annual Budget
The financial projections to achieve the short and long

terms business goals of PCSB arising from the approved
annual plan. The projection include revenues and
profitability, Capex, Opex, cash flow and financing
requirements based on the approved Key Planning Budget
Inputs (KPBIs).
(iii)
Budget Category
The Annual Budget is categorised into two categories i.e.

Capital Expenditure (CAPEX) and Operating Expenditure
(OPEX) Budget.
(iv)
Budget Classification
The classification of the Budget Category into major

headings. Each of these major headings is a Budget
Classification.
(v)
Budget Item
The logical unit or set of expenditure which can easily be

identified, measured or controlled at the lowest level of the
organisation. For example, it can be asset or a project in
the Capex Budget or an item of expenditure in Opex Budget.
It is a subdivision to Budget Classification.
(vi)
Budget Revision
The revision to the Annual Budget resulting from an

approved change for the remaining period of the budget
year.
(vii)
Budget Transfer
The transfer of fund from one Budget item to another within

the same Budget Category and Classification. However, the
deletion of a Budget and its transfer within the same Budget
Category and Classification, should not result in any
material change in objective/scope or an increase in the
original approved budget amount for that category and
classification.
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Part
Part B:
B: Key
Key Business
Business Activities
Activities
1.0
DEFINITION OF TERMS
(viii) Capital Expenditure
(CAPEX)
The expenditure by the company that is capitalised as a

fixed asset and is intended for use on a continuous basis
and providing an enduring benefit beyond the current
financial year;
a) Capital projects
b)Acquisition of fixed assets and intangible assets
c) Upgrading or improvement on existing fixed assets all of
which are necessary to facilitate, maintain or increase
PCSBs earning capacity immediately or in the future
years.
(ix)
Fixed Asset
(x)
Intangible Asset
The asset having no physical existence, its value being

limited by rights and anticipated benefits that
possession confers upon PCSB. Example of Intangible
Assets are goodwill, patents, franchises, etc.
KPBIs are key budget assumptions used in preparing the

financial projects e.g. crude oil price, production volume
and exchange rate. It also serves as the basis for intercompany transactions.
(xi) KPBIs
The tangible asset intended for continuous holding or use

providing an enduring benefit beyond one financial year.
Examples of Fixed Assets are land, buildings and
structures, equipment, furniture and fittings, etc.
(xii) Operating Expenditure (OPEX) :
The spending of money for the acquisition of materials,

labour and services for the operational needs of PCSB and
the amount spent be charged to the profit and loss account
in the financial year within which it is incurred.
(xiii) Supplementary
Budget
The budget where capital and operating expenditure

classification/items were not budgeted for or
classification/items for which budget allocation is
inadequate in the Annual Budget and/or Budget Revision.
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Part
Part B:
B: Key
Key Business
Business Activities
Activities
1.0
DEFINITION OF TERMS
(xiv) Work Programme
and Budget (WPB)
Is a document prepared in accordance with the PSC setting

forth by quarterly period the Petroleum Operations to be
carried out an initiate during the ensuring calendar year and
showing details of the capital and operating expenditure
expected to be incurred including forecast yearly activities
and expenditures for four years immediately following
thereafter wherever applicable. The WPB shall be submitted
to the approving authority as specified in the PSC/JOA.
- 13 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
2.0
PRINCIPLES
(i)
Inclusion of capital project in the annual budget does not constitute final approval/sanction.
Project sanction by the approving authority must be sought before commencement of the
capital project.
(ii)
Annual Business Plan and Budget shall be approved by Board before commencement of a
new financial year.
(iii)
Budget Transfers between Budget Categories are not allowed.
(iv)
The authority to approve the appropriation of budget is vested within the budget holder
department.
3.0 AREAS OF DECISION

MAKING
3.1 Procedures and

guidelines
3.2 Plan
(i) Long term
objectives and
strategies
(ii)
Annual Business
Plan
LEVEL OF APPROVAL
REPORTING
GM
REMARKS
Refers to
procedures and
guidelines that
involves cross
functional issues
Board
Board
3.3 Budget
(i) Annual budget
(ii) Budget revisions
(iii) Supplementary
budget
(a) CAPEX
Unbudgeted
- Above RM5
Mil
- Up to RM5
Mil
Budgeted
- Above 10%
- Up to 10%
- Up to 5%
(b) OPEX
Budgeted
- Above 10%
- Up to 10%
- Up to 5%
Board
Board
Board
HEAD
MD/CEO
Board
HEAD
GM
MD/CEO
Subject to Project
being approved.
Refer to Section 9
(CAPEX) Item 3.2
For each
classification of
expenditure
Board
HEAD
GM
- 14 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING
3.4 Budget transfer

(i) Between budget
classification
within the same
budget category
(ii) Between budget
items within the
same budget
classification
3.5 Work Programme Budget
(WPB)
3.6 Financial performance
Submission to Board
Submission to
shareholders
LEVEL OF APPROVAL
GM
REPORTING
REMARKS
Based on
procedures and
guidelines
Board
MD/CEO
MD/CEO
- 15 -
Prior review by
CMC
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 2: BUSINESS DEVELOPMENT
1.0
2.0
DEFINITION OF TERMS
(i)
Opportunities
Project Acquisition (acreage and assets), Corporate

Acquisition, Partnership Management and/or Asset
Restructuring (Contract areas/Equity) that are being
evaluated for PCSBs interest.
(ii)
Evaluation
A study that is conducted by a team of technical personnel

that may comprise, but not limited to, the following
disciplines Geological & Geophysical (G&G), Formation
Evaluation, Reservoir Engineering, Production Technology,
Economics, Surface Engineering and Facilities, which is
necessary to facilitate, maintain or increase the
companys earnings.
(iii)
Resources
A team of technical personnel that may comprise, but not

limited to the following disciplines G&G, Formation
Evaluation, Reservoir Engineering, Production Technology,
Economics, Surface Engineering and Facilities.
Principles

MAKING
LEVEL OF APPROVAL
3.1 Procedures and

Guidelines
GM
3.2 CBDs plan for reserves

and targets
GM
3.3 Selection of
Opportunities:
Evaluation and
allocation of resource
HEAD
REPORTING
REMARKS
In consultation with
MD/CEO
- 16 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 2: BUSINESS DEVELOPMENT

MAKING
3.4 Extension of
exploration PSC
3.5 Approve
acquisition/assignment
of Opportunities
3.6 Bidding terms
LEVEL OF APPROVAL
REPORTING
REMARKS
MD/CEO
Board
MD/CEO
- 17 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 3: EXPLORATION
1.0
2.0
DEFINITION OF TERMS
(i)
Authorisation for
Expenditure (AFE)
The approval by a named authority delegated with the

power to commit companys funds from an approved
budget and to commence a specific project related
operation (e.g. Tender for Project Management
Consultancy). AFE also caters for management of cash
calls and monitoring status of CAPEX budget. AFE form is
used for this purpose.
(ii)
Evaluation
This is a process to assess exploration viability and

determine hydrocarbon potential in the area/block of
interest.
(iii)
Exploration Strategy
A formulation which involves a sound integrated technical

and commercial evaluation of exploration interest
in line with overall corporate objective.
(iv)
Well Proposal
A proposal to drill highly ranked and economically viable

prospects determined by a thorough evaluation of a
given block. The well proposal includes identification of
well location and drilling programme.
PRINCIPLES
Exploration being Key Business Activities of PCSB, the inclusion of its expenditure in budget
proposal require no prior approval by Main Board.
- 18 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 3: EXPLORATION

MAKING
3.1 Procedures and

guidelines
LEVEL OF APPROVAL
REPORTING
Refers to
procedures and
guidelines that
involves cross
functional issues
GM
3.2 Evaluation and

planning
(i) Purchase of
exploration data
Above RM5 Mil
Up to RM5 Mil
Up to RM1 Mil
Up to RM200 K
(ii) Evaluation results
MD/CEO
GM
M
SH
GM
3.3 Formulation of
exploration strategies
(i) Objectives
(ii) Operate fields
Board
Board
REMARKS
Subject to
maximum of
approved budget
3.4 Survey proposal

programme/revision
GM
3.5 Specialized studies

programme
GM
MD/CEO
- 19 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 4: DRILLING (EXPLORATION/DEVELOPMENT/WORK-OVER)
1.0
2.0
DEFINITION OF TERMS
(i)
Authorisation For : The approval by a named authority delegated with the power to commit
Expenditure
companys funds from an approval budget and to commence a specific
project related operation (e.g. Drilling a well). AFE also caters for
management of cash calls and monitoring status of CAPEX budget.
AFE form is used for this purpose.
(ii)
Priority Group
: Priority in loading of equipment and materials to drilling site(s)

Loading.
(iii)
Well Proposal
: A proposal to drill highly ranked and economically viable prospects

determined by a thorough evaluation of a given block. The well
proposal includes identification of well location and drilling
programme.
(iv)
Well Termination
: Drilling operations on a well is ceased for whatever reasons with the

objective, as specified in the approved Notice of Operations, not being
met.
(v)
Well Abandonment : Permanent sealing or plugging of a well.
(vi)
Well Suspension
: Temporary cessation of drilling/completion activities (pending final

completion or abandonment)
PRINCIPLES
Standard technical terms prevalent in the E&P business are used in this LOA where
relevant/appropriate. Such technical terms when used shall have the same meaning assigned to it
as in the E&P business.

MAKING
3.1 Procedures and

guidelines
3.2 Well proposal
(i) Exploration well
location/objectives/
revision
(ii) Development well
revision
(iii) Work over well
revision plan
LEVEL OF APPROVAL
REPORTING
GM
GM
M
GM
GM
- 20 -
REMARKS
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING
3.3 Integrated drilling and

barge sequence
/revision
3.4 Authorization for
expenditure (AFE)
(i) AFE for exploration
drilling
Above RM30 Mil
Up to RM30 Mil
(ii) AFE overruns for
exploration
drilling
Above RM3 Mil
10% or up to
RM3 Mil
(iii) AFE for
development
drilling
Above RM30 Mil
Up to RM30 Mil
(iv) AFE overruns for
development
drilling
Above RM3 Mil
10% or up to
RM3 Mil
(v) AFE for work-over
Above RM5 Mil
Up to RM5 Mil
(vi) AFE overruns for
work-over
Above RM500 K
10% or up to
RM500 K
3.5 Well site operations
(i) Programme
deviation
(ii) Well termination
(iii) Well
abandonment/
suspension
3.6 Well completion report
LEVEL OF APPROVAL
REPORTING
REMARKS
HEAD
MD/CEO
For short/long term

drilling sequence
Per AFE Basis

GM
M
HEAD
GM
Whichever lower
M
SH
Batch of maximum
of 5 wells
GM
M
Whichever lower
M
SH
GM
M
Whichever lower
GM
M
GM
GM
HEAD
- 21 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING
3.7 Certification of work in

progress
3.8 Drilling programme
(i) Well programme
/revision
(ii) Notice of
operations
(iii) SIPROD & SISO
LEVEL OF APPROVAL
OIC
REPORTING
REMARKS
Officer-in-charge
M
M
other relevant
depts.
3.9 Priority group loading
OIC
Drilling
Superintendent
3.10 Spudding of well
OIC
Drilling Supervisor
- 22 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 5: DEVELOPMENT
1.0
DEFINITION OF TERMS
(i)
Authorisation for
Expenditure (AFE)

(ii)
Certification of
Work in Progress
The certification of document issues by the contractor

stating progress of work or services rendered up to
cut-off date as agreed by PCSB.
(iii)
Design Basis
Memorandum
A detailed plan for implementing a specific major facility

related to developing the field it includes
Platform size and location.
Pipeline size and length.
Listing of major systems on platform such as

separator and power generation.
(iv)
Facility
The platform, topside, structure, pipeline, storage, handling

and despatch tanks, auxiliaries utilities, communication
system, submarines cable, onshore works and any item
incorporated therein which are designed for the
development of the oilfield.
(v)
Field Development
Plan (FDP)
A document which describes the overall plan for developing

an oil or gas field. The FDP would include a Plan (FDP)
listing of the major facilities required but would not include
the exact size of such facilities. Also included are.
Field area extent, type of reservoir, estimated

hydrocarbon in place and recoverable, producing
rate, quantity of wells to be drilled.
Whether reservoir pressure maintenance is

necessary and, if so, what type.
Number (quantity) of platforms to be installed.
Number of pipelines.
Means of getting hydrocarbon to market.
Expected schedule for field development.
- 23 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
1.0
DEFINITION OF TERMS
A study which considers alternative methods for developing
a petroleum field and recommends the optimum overall plan
for field development. The study would consider the
viewpoint of economics, operations, and overall company
benefits.
2.0
(vi)
Final Facility
Acceptance by PCSB that work for a particular scope has

been completed and all remedial works as Acceptance
warranted have been completed by contractor. Final
acceptance normally takes place upon completion of
warranty period or extension thereof.
(vii)
Initial Facility

been completed in accordance with the Acceptance
requirements of the contract.
(viii) Mechanical
Acceptance
Accepting a document by which the contractor has

completed, inspected and conducted final test of the
facilities.
(ix)
Project :
The undertaking of a specific work with a defined scope,

requiring a concerted effort to achieve specific objectives
within a defined period of time. It requires a plan of
activities necessary to achieve the said objectives and
allocation of resources to implement the plan, which may
result in the acquisition of new/additional facilities all of
which are necessary to increase or maintain PC SBs
earnings. Once the project is completed, it may be
transferred to Fixed Asset or charged partly or wholly
against profit for the year.
(x)
Project Execution
Plan
A detailed plan for undertaking the project covering all

phases of the project until roll-over to production
operations.
PRINCIPLES
The inclusion of project CAPEX in the Annual Business Plan and Budget must be in accordance
with procedures and guidelines and it should obtain Boards prior approval.
- 24 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING
3.1 Procedures and

guidelines
3.2 Field Development

(i) Field Development
Plan (FDP)
(ii) Revision
Change of
objectives
No change of
objectives
3.3 Design basis
memorandum (DBM) or
revision
3.4 Authorisation for
expenditure (AFE)
(i) AFE project
Above RM50 Mil
Up to RM50 Mil
(ii) AFE project
overruns
Above RM5 Mil
10% or up to
RM5 Mil
3.5 Project execution plan
3.6 Conceptual and detailed
design, onshore
fabrication, installation,
hook-up and
commissioning
(i) Scope of work,
work schedule
(ii) Acceptance of
work completed
LEVEL OF APPROVAL
GM
REPORTING
REMARKS
Refers to
procedures and
guidelines that
involves cross
functional issues
MD/CEO
For deliberation by
CMC
MD/CEO
Head
GM
M
SH
GM
M
Whichever lower
GM
Including revision
- 25 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING
3.7 Acceptance test

(i) Mechanical
acceptance
(ii) Initial facility
acceptance
(iii) Final facility
acceptance
progress
3.9 Site completion
certificate
LEVEL OF APPROVAL
REPORTING
SH
SH
GM
Refer to Officer-in
Change
OIC
Applicable for
handover at different
stages of the project
3.10 Overall Project close

out Report
GM
3.11 Operations Reference

Plan
GM
3.12 Asset Integrity

Management Plan
GM
3.13 Reservoir Management

Plan
GM
REMARKS
- 26 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 6: PRODUCTION OPERATIONS
1.0
DEFINITION OF TERMS
(i)
Authorisation for
Expenditure (AFE)

(ii)
Certificate
A document or official paper giving a statement by an

authorised person that a fact or facts are true.
(iii)
Certification of Work
in Progress
The certification of a document issues by the contractor

(iv)
Operating Philosophy
Describes how the resources are allocated for operations in

achieving optimisation of usage of these
resources (e.g. logistic support, manning).
(v)
Operating Procedures
It is a set of procedures to be followed by all operations

related personnel in order to operate the plant in the
safest, most efficient and orderly manner. It provides the
operation personnel a thorough guideline, step-bystep action on what to do under normal and emergency
situations.
(vi)
Permit
A written order giving permission for an activity to take

place at PCSBs controlled installation.
(vii)
Production Programme
Planning and scheduling of production operations to meet

business requirements and in accordance with
approval production level.
Shutdown of either one of major process units and/or

portion of the transmission pipelines and facilities.
Complete stoppage of total plan operations and/or
transmission pipelines and facilities.
Shutdown due to identification of unforeseen technical
problems that are deemed to result shutdown in
damages or substantial adverse effects on operation,
facilities and/or personnel on site.
Shutdown due to identification of unanticipated problems
that require stoppage to enable shutdown maintenance or
rectification to be conducted.
(viii) Shutdown
a) Partial shutdown
b) Total shutdown
c) Emergency
d) Unplanned
Shutdown
- 27 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
1.0
DEFINITION OF TERMS
(viii) Shutdown
(e) Planned shutdown
(f)
2.0
Non-effective Idle
: Shutdown due to scheduled/anticipated maintenance or

equipment installation purposes as demanded/required by
statutory or operational requirements/procedures.
: Non-effective idle is defined as strings that will not result
in near term net incremental production at field/complex
level if restored.
PRINCIPLES
(i)
Production activities are in compliance with PETRONASE&P guidelines
(ii)
Strict adherence to Health, Safety and Environment Management System (HSEMS)
requirements
(iii) Observation of good oil field practice

MAKING
3.1 Authorization for
expenditure (AFE)
(i) AFE
Above RM5 Mil
Up to RM5 Mil
(ii) AFE overruns
Above RM500 K
10% or up to
RM500 K
3.2 Provision of project
support
(i) Operating
/maintenance
philosophy
(ii) Manpower for
operational phase
(iii) Stock of operating
spares
(iv) Operating
procedures
LEVEL OF APPROVAL
REPORTING
REMARKS
M
SH
Refers to Asset
Manager
GM
M
Whichever lower
HEAD
MD/CEO
GM
M
GM
Refers to operating
procedures that
involves cross
functional issues
- 28 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING

support
(v) Acceptance of
facilities
(iv) Acceptance of
wells
3.3 Operating budget
implementation
(i) Activity plan
(ii) Deferment of
activities plan
(iii) Budget utilization
3.4 Planned schedule
production levels
(i) Long-term
production
forecast
(ii) Yearly production
plan
(iii) Quarterly
production plan
(iv) Monthly
production plan
(v) Daily production
plan
(vi) Monthly well
production report
(vii) Monthly
production
volume for
billing purposes
LEVEL OF APPROVAL
REPORTING
REMARKS
GM
Refers to handover
of facilities and
wells from project
to operation
Subject to approval
of overall work
programme &
budget
M
GM
M
GM
GM
GM
M
SH
M
M
- 29 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING
3.5 Oil and gas operations

(i) Annual operation
and maintenance
schedule
(ii) Opening and
closing well
(a) Normal
operation
(b) During
emergency
(c) Non-effective
idle
(iii) Activity
programmes
Offshore /
Onshore
facilities
and terminal
(iv) Certificates
(v) Permits
(vi) Abandonment of
wells
3.6 Production/maintenance
activities
(i) Operating
procedures
(ii) Scope of work
(iii) Procedure for
simultaneous
operation
(iv) Completed work
(v) Contract close out
(vi) Mechanical
Acceptance
3.7 Sub-surface services
(i) Specialised studies
(ii) Well servicing
(iii) Operating
procedures
LEVEL OF APPROVAL
REPORTING
REMARKS
In line with
PETRONAS E&P
objectives
GM
SH
OIC
M
SH
SH
OIC
GM
other relevant asset
manager
Subject to PSC
requirement
Prior review by
Manager of
Technical Services
Dept.
SH
M
M
SH
SH
OIC
GM
GM
M
SH
M
- 30 -
Prior review by
Regional Head of
Safety
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING

progress
3.9 Shutdowns
(i) Partial shutdown
Emergency
reasons
Planned
Unplanned
(ii) Total shutdown
Emergency
reasons
Planned
Unplanned
3.10 Abandonment of
facilities/fields
LEVEL OF APPROVAL
REPORTING
OIC
REMARKS
Officer-in-charge
OIC
M
SH
GM
M
OIC
HEAD
M
GM
HEAD
Board
- 31 -
In accordance with
Operating
Procedures
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 7: JOINT VENTURES PARTICIPATION (PCSB AS A NON-OPERATOR)
1.0
DEFINITION OF TERMS
(i)
Authorisation for
Expenditure (AFE )

(ii)
Bidders List
The document containing an exposition of project or

contract needs, national policies and PCSB
preferences as well as the contract provisions covering all
technical, legal and commercial aspect in a clear
and precise manner meant to solicit bids.
(iii)
Budget Exposure
Items
Expenditure items required to be expended by Joint Venture

Operators (of which PCSB is participating) which are
not budgeted for, but are necessary to ensure JV operations
are not interrupted. Non approval of this expenditure by
PETRONAS will render the cost as non-recoverable for cost
oil recovery.
(iv)
Certification Work
in Progress
The certification of a document issued by the contractor

stating progress of work or services rendered up to cut-off
date as agreed by PCSB.
(v)
Contract
The signed agreement concluded between two parties

arising out of an offer by the party and a an acceptance by
the other with agreement on all the applicable terms and
conditions. The contract is to be in writing as required
under Tender and Contracts guidelines.
(vi)
Contracting Strategy
The detailed description of the division and/or grouping of

related services works and supplies required for a
project implementation into various contract packages,
together with justifications. Implications and tendering
award plans, in the case of simple, straightforward and nonproject purchase, its strategy may contain justifications and
tendering award plans.
- 32 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
1.0
DEFINITION OF TERMS
(vii)
Design Basis
Memorandum
A detailed plan for implementing a specific major facility

related to developing the field It includes.
a)
b)
c)
Platform size and location.

Pipeline size and length.
Listing of major systems on platform such as
separator and power generation.
(viii) Emergency Supplies

and Services
An urgency arising out of unplanned situation outside the

control of user department and that a delay in delivery will
have safety or large financial implication such as disastrous
threat to life and life support system, stoppage or
production, a complete shutdown or closure of operations.
(ix)
An approach which describes the overall plan for

developing an oil or gas field. The FDP would include a
listing of the major facilities required but would not include
the exact size of such facilities. Also included are:
Field Development
a)
b)
c)
d)
e)
Field area extent, type of reservoir, estimated

hydrocarbon in place and recoverable, producing
rate, quantity of walls to be drilled.
Whether reservoir pressure maintenance is
necessary and, if so, what type.
Number (quantity) of platforms to be installed.
Means of getting hydrocarbon to market.
Expected schedule for field development.
A study which considers alternative methods for developing

a petroleum field and recommends the optimum overall plan
for field development. The study would consider the
viewpoint of economies, operation, and overall company
benefits.
(x)
Final Facility
Acceptance

been completed and all remedial works as warranted have
been completed by contractor. Final acceptance normally
takes place upon completion of warranty period of
extension thereof.
(xi)
Initial Facility
Acceptance

been completed in accordance with the requirement of the
contract.
- 33 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
1.0
DEFINITION OF TERMS
(xii)
The list comprises of bidders to be issued with ITB and who

have been pre-qualified or assessed to have necessary
experiences and resources to execute the scope of services,
work and/or supplies requested for (in the ITB).
(xiii) Mechanical
Acceptance
Accepting a document by which the contractor has

completed, inspected and conducted final test of the
facilities.
(xiv) Operating Philosophy
Describes how the resources are allocated for operations in

achieving optimisation of usage of these resources (e.g.
logistics support, manning).
(xv)
It is a set of procedures to be followed by all operations

related personnel in order to operate the plant in the
safest, most efficient and orderly manner. It provides the
operation personnel a thorough guideline, step-bystep actions on what to do under normal and emergency
situations.
(xvi) Purchase Order (PO)
The legal document, when accepted, that represents the

contractual commitment with the vendor for the purchase of
materials and services.
(xvii) Production Programme
Planning and scheduling of production operations to meet

business requirements and in accordance with approved
production level.
(xviii) Project Execution Plan
A detailed plan for undertaking the project covering all

phases of the project.
(xix) Shutdown
a) Partial shutdown
Shutdown of either one of major process units and/or

portion of the transmission pipelines and facilities.
Complete stoppage of total plan operations and/or
transmission pipelines and facilities.
Shutdown due to identification of unforeseen technical
problems that are deemed to result in damages or
substantial adverse effects on operation, facilities
and/or personnel on site.
Shutdown due to identification of unanticipated problems
that require stoppage to enable maintenance
or rectification to be conducted.
Shutdown due to scheduled/anticipated maintenance or
equipment installation purposes as demanded/
required by statutory or operational requirements/
procedures.
(xx)
List of Short-listed
Bidders
Operating Procedures
b)
Total shutdown
c)
Emergency
shutdown
d)
Unplanned
shutdown
e)
Planned
shutdown
Survey Proposal
(xxi) Well Proposal
Activities carried out to establish regional trend and

delineate areas for drilling activities.
A proposal to drill highly ranked and economically viable

prospects determined by a thorough evaluation of
a given block. The well proposal includes identification of
well location and drilling programme.
- 34 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 7: JOINT VENTURE PARTICIPATION (PCSB AS A NON-OPERATOR)
2.0
PRINCIPLES
(i)
The decision made by the approving authority is subject to the compliance of the relevant
PSC/JOA

MAKING
3.1 Procedures and

guidelines
3.2 Assignment of contract

areas/equity
LEVEL OF APPROVAL
GM
GM
3.4 Survey proposal

/programme/revision
3.5 Specialised studies

programme
3.7 Well site operations

(i) Programme
deviation
(ii) Well termination
(iii) Well abandonment
/suspension
3.8 Drilling programme
(i) Well programme
(ii) Notice of
operations
REMARKS
Refers to
procedures and
guidelines that
involves cross
functional issues
Board
3.3 Work programme and

budget
3.6 Well proposal

(i) Well location
/objectives/revision
REPORTING
MD/CEO
M
M
M
M
M
GM
GM
- 35 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING
3.9 Field Development

(i) Field Development
Plan (FDP)
(ii) Revision
Change of
objectives
No change of
objectives
3.10 Design Basis
Memorandum (DBM) or
revision
3.11 Authorisation For
Expenditure (AFE)
(i) AFE
Above RM5 Mil
Up to RM5 Mil
(ii) AFE overruns
Above RM500 K
10% or up to
RM500 K
LEVEL OF APPROVAL
REPORTING
GM
HEAD
GM
HEAD
GM
In accordance to
WP&B guidelines
M
SH
HEAD
GM
M
Whichever lower
3.12 Project Execution Plan
GM
3.13 Contracting
strategy/ITB/bidders
list/Bid evaluation
criteria/Solicit price
quotation
GM
GM
3.14 Contract/purchase
(i) Contract/purchase
awards
(ii) Contract/purchase
change orders
(iii) Contract
extension/renewal/
suspension/
termination
REMARKS
M
M
- 36 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING
LEVEL OF APPROVAL
REPORTING
3.15 Signing of commitment

document on approved
transactions (letters,
telexes of award/intent,
letter of understanding)
GM
3.16 Emergency supplies

and services
GM
3.17 Budget exposure items

Above RM1 Mil
Up to RM1 Mil
3.18 Releasing of cash call
payment to Joint
Venture Partners
(i) Pending signed
agreement
(ii) With signed
agreement
support
(i) Operating
/maintenance
philosophy
(ii) Manpower for
operational phase
(iii) Stock of operating
spares
(iv) Operating
procedures
(v) Acceptance of
facilities and wells
3.20 Operating budget
implementation
(i) Annual activity
plan
(ii) Budget utilization
REMARKS
HEAD
GM
Subject to Joint
Operations
Agreement
M
GM
SH
GM
M
SH
M
M
Subject to approval
of overall Work
Programme &
Budget
M
M
- 37 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities

MAKING
3.21 Production
/maintenance activities
(i) Operating
procedures
(ii) Scope of work
(iii) Contract close out
3.22 Sub-surface services
(i) Specialized studies
(ii) Well servicing
(iii) Operating
procedures
3.23 Shutdowns
(i) Partial shutdown
Emergency
reasons
Planned
Unplanned
(ii) Total shutdown
Emergency
reasons
Planned
Unplanned
3.24 Abandonment of
facilities/fields
LEVEL OF APPROVAL
REPORTING
REMARKS
M
SH
SH
M
M
M
SH
SH
SH
M
M
M
M
M
GM
MD/CEO
- 38 -
In accordance
with operating
procedures
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 8: HEALTH, SAFETY AND ENVIRONMENT QUALITY CONTROL
1.0
2.0
DEFINITION OF TERMS
(i)
HSE Plan
: A plan of HSE activities in order to achieve excellence in

HSE matters.
(ii)
HSE Programme
: A detailed programme of HSE activities to include safety

training, HSE audits and inspections and appropriate
awareness campaigns on specific occupational health,
safety and environmental subjects.
(iii)
Health, Safety and

Environment Management
System (HSEMS)
: A compilation of text that addresses standards and

procedures required to control health safety and
environment related matters throughout PCSB operations.
(iv)
HSE manual
: A document related to HSE matters which details in a

concise manner the PCSB HSE requirements to be
followed throughout PCSB operations.
(v)
Crisis management plan
: A detailed set of procedures and actions to be implemented

by appropriate personnel when the company is
in crisis, this shall include emergency response and
business resumption plan.
(vi)
Operating procedures
: A set of procedures to be followed by all operations related

personnel in order to operate any plant of facility
in a safe and cost effective manner. These procedures shall
provide operating personnel with clear step by
step actions on what to do under normal operating and
emergency situations.
PRINCIPLES
For the preparation of all health, safety and environment related plans, programmes, procedures
etc. reference must be made to the guidelines and procedures issued by the HSE Department,
Headquarters.

MAKING
3.1 Health and safety
(i) HSE plan
(ii) HSE programmes
(iii) Health Safety and
Environment
(HSEMS)
(iv) HSE manual
(v) Crisis management
plan
(vi) Operating
procedures
(vii) Site specific
operating
procedures
LEVEL OF APPROVAL
MD/CEO
GM
MD/CEO
REPORTING
REMARKS
As recommended
by Manager of
HSE
HEAD
MD/CEO
GM
Refers to
operating
procedures that
involves cross
functional issues
- 39 -
Part
Part B:
B: Key
Key Business
Business Activities
Activities
SECTION 8: HEALTH, SAFETY & ENVIRONMENT QUALITY CONTROL

MAKING
3.2 Reports and

Recommendations
(i) Third parties
(ii) Internal
(iii) JV Partners
(iv) Government
authorities
LEVEL OF APPROVAL
HEAD
GM
GM
GM
REPORTING
REMARKS
Subject to legal
review
- 40 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 9: CAPITAL EXPENDITURE
1.0
DEFINITION OF TERMS
(i)
Authorisation for
Expenditure (AFE)

(ii)
Capital Expenditure
(CAPEX)
The expenditure by the company that is capitalised as a

fixed asset and is intended for use on a continuous basis
and providing an enduring benefit beyond the current
financial year;
a) Capital projects
b) Acquisition of Fixed Assets and Intangible Assets
c) Upgrading or improvement on existing fixed assets all of
which are necessary to facilitate, maintain or increase
PCSBs earning capacity immediately or in the future
years.
(iii)
Certification of Work
in Progress
The certification of a document issues by the contractor

(iv)
Equity Investment
The investment in other companies including Subsidiaries

by way of acquiring existing or new issues of ordinary
and/or preference shares but excluding trading in
marketable stocks and shares.
(v)
Fixed Asset
The tangible asset intended for continuous holding or use

providing an enduring benefit beyond one financial year.
Examples of Fixed Assets are land, buildings and
structures, equipment, furniture and fittings, etc.
- 41 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
1.0
DEFINITION OF TERMS
(vi)
Intangible Asset
The asset having no physical existence, its value being

limited by rights and anticipated benefits that possession
confers upon PCSB. Example of Intangible Assets are
goodwill, patents, franchises, etc.
(vii)
Project
The undertaking of specific work with a defined scope,

requiring a concerted effort to achieve specific objectives
within a defined period of time. It requires a plan of
activities necessary to achieve the said objectives and
allocation of resources to implement the plan, which would
result in the acquisition of new/additional facilities all of
which are necessary to increase or maintain PCSBs
earnings. Once the project is completed, it may be
transferred to Fixed Asset or charged partly and wholly
against profit for the year.
The business proposition prepared for management

consideration in a summary form on the possibility of
undertaking a project. The proposal among other things
highlights the objectives, scope, expected benefits and the
estimated feasibility study and project costs so as to enable
the management to decide whether to proceed and agree on
the form and content of the feasibility study or/and the
project.
(viii) Project Proposal
2.0
PRINCIPLES
(i)
Authorisation for Expenditure (AFE) on CAPEX must be against approved CAPEX budget.
Authorisation for Expenditure on CAPEX against non-approved project or budget is
unauthorised.
(ii)
All CAPEX shall comply with the Capital Budgeting and Accounting Procedures and
Guidelines.
- 42 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.1 Procedures and
guidelines
3.2 Project investment

decision
(i) Project proposal
(ii) Project feasibility
study
- Above RM2 Mil
- Up to RM2 Mil
- Up to RM1 Mil
(iii) Project approval
(implementation)
3.3 Equity investment
3.4 Authorisation for
Expenditure (AFE)
(i) AFE land and/or
building
(ii) AFE OPERATION
CAPEX
- Above RM5 Mil
- Up to RM5 Mil
(iii) AFE OVERRUNS

- Above 10%
or RM500 K
- 10% or up to
RM500 K
progress
LEVEL OF APPROVAL
REPORTING
REMARKS
GM
MD/CEO
Consistent with
PCSBs
procedures and
guidelines.
Refers to
procedures and
guidelines that
involves cross
functional issues
GM
The proposal is to
be endorsed by
CMC/Investment
Review Panel
Board
HEAD
GM
The study has to

be endorsed by
CMC/Investment
Review Panel
Board
Board
i)
AFE on motor
vehicle to be
approved by
HEAD
ii) Subject to
PCSBs
guidelines
and
procedures
M
SH
GM
M
Whichever lower
OIC
- 43 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 10: PROCUREMENT AND LOGISTICS
1.0
DEFINITION OF TERMS
(i)
Bidders List
The list comprises of bidders to be issued with ITB and who

have been pre-qualified or assessed to have necessary
experiences and resources to execute the scope of
services,work and/or supplies requested for (in the ITB).
(ii)
Contract
The signed agreement concluded between two parties

arising out of an offer by the party and an acceptance
by the other with agreement on all the applicable terms and
conditions. The contract is to be in writing as
required under Tender and Contracts guidelines.
(iii)
Contracting Strategy
The detailed description on the division and/or grouping of

related services, works and supplies required for
a project implementation into various contract packages;
together with justifications, implications and
tendering award plans. In the case of a simple, straight
forward and non-project purchase, its strategy may
contain justification and tendering award plans.
(iv)
Emergency Supplies
And Services
An urgency arising out of unplanned situation outside the

control of user department and that a delay in delivery will
have safety or large financial implication such as disastrous
threat to life and life support system, stoppage of
production, a complete shutdown or closure of operations.
(v)
Invitation to Bid
Document (ITB)
The document containing a exposition of project or contract

needs, national policies and PETRONAS/PCSB preferences
as well as the contract provisions covering all technical,
legal and commercial aspect in a clear and precise manner
meant to solicit bids.
- 44 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
1.0
DEFINITION OF TERMS
(vi)
Proprietary
This is a situation where a particular item or services is only

available from a particular source such as a specific
component of a manufactured equipment which is not
interchangeable with similar item of another
manufacturer or a peculiar service provided by a certain
professional organisation. The solicitation of more
than one bid or quotation is not practicable. The calling of
any bid or quotation from the proprietor of the item
or services does not fall under the strict definition of singlesourcing provided has been dully approved
previously or when such materials or services have been
accepted by Company standard and the initial
award was a result of a competitive bidding.
(vii)
Price Agreement (PA)

contractual commitment with the vendor for
repeated purchase of materials over a specified volume
and/or value and/or period of time.
(viii) Service Agreement (SA)

contractual commitment with the vendor for the
procurement of services over a specified value and/or
period of time.
(ix)
Service Order (SO)

procure of services on once off basis.
(x)
Purchase Order (PO)

purchase of materials and services.
(xi)
Single Source
This is a situation where competitive bids or quotations are

available from more than one source but due to
specific justification such as technical preference,
commercial considerations or real urgency of delivery in
an emergency situation does not warrant the solicitation of
bids or quotation from more than one bidder or
when the exercise of calling for competitive bids does not
bring additional benefits to the companys end-use value.
- 45 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
1.0
DEFINITION OF TERMS
(xii)
Stock
(xiii) Tender Committee (TC)
2.0
Item kept in any storing facilities to meet daily operations or

for future use.
The formation and composition of a group of staff to

administer the tendering exercise for a specific project.
PRINCIPLES
(i)
The general term and conditions of the contract must be consistent with PCSBs
approved contracting policies, guidelines, terms and conditions and practices.
(ii)
PCSB is required to seek prior concurrence from Ministry of Finance (MOF) before awarding
tenders of value to be determined by MOF from time to time.
(iii)
Where the approving authority disagrees with a Tender Committees recommendation, the
authority to award is automatically transferred to the next higher level to make the final
decision.
(iv)
The approving authority has to be at least one level higher than the Chairman of the Tender
Committee.
(v)
All procurement must be made against either approved capital or operating budgets and are
required to confirm to Tenders and Contracts guidelines before approval is sought from the
relevant approving authorities.
(vi)
Inventory costs should be kept to the minimum.
(vii)
The approving authority to award goods and services acquired for PSC operators shall follow
the limit set for procurement of such goods and services.
- 46 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.1 Procedures and
guidelines
3.2 Formation of Tender

Committee
- Establishment of
TC
- Appointment of
TC members
3.3 Contracting
list/bid evaluation
criteria/solicit price
quotation
- Above RM15 Mil
- Up to RM15 Mil
- Up to RM5 Mil
- Up to RM2 Mil
- Up to RM500 K
- Up to RM5 K
LEVEL OF APPROVAL
GM
REPORTING
REMARKS
Consistent with
PCSBs policies
and guidelines.
Refers to
procedures and
guidelines that
involves cross
functional issues
In accordance
with tenders and
contract policies
and procedures.
Based on
recommendations
by CMC
MD/CEO
MD/CEO
MD/CEO
HEAD
GM
M
SH
OIC
In line with
recommendation
of relevant tender
committee
- 47 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.4 Contract/Purchase
Awards
i)
Competitive bid
- Above RM15 Mil
- Up to RM15 Mil
- Up to RM10 Mil
- Up to RM5 Mil
- Up to RM2 Mil
- Up to RM500 K
- Up to RM5 K
ii)
Single source
- Above RM2 Mil
- Up to RM2 Mil
- Up to RM500 K
- Up to RM250 K
- Up to RM50 K
LEVEL OF APPROVAL
REPORTING
REMARKS
In accordance
with tenders
and contract
policies and
procedures
Board
MD/CEO
HEAD
GM
M
SH
OIC
Board
MD/CEO
HEAD
GM
M
In accordance
with tenders
and contract
policies and
procedures
- 48 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
LEVEL OF APPROVAL
Awards
iii) Proprietary
- Above RM5 Mil
- Up to RM5 Mil
- Up to RM1 Mil
- Up to RM150 K
- Up to RM50 K
- Up to RM5 K
MD/CEO
HEAD
GM
M
SH
OIC
3.5 Signing of contracts,

PA, SA, SO, PO, work
order, indent and any
subsequent
amendments
- Above RM25 Mil
- Up to RM25 Mil
- Up to RM15 Mil
- Up to RM5 Mil
- Up to RM500 K
- Up to RM50 K
MD/CEO
HEAD
GM
M
SH
OIC
REPORTING
REMARKS
In accordance
with tenders and
contract policies
and procedures
Any amendments
which results in
changes in
values, to refer to
item (3.6) subject
to approval of
award and vetting
by Legal
Department
- 49 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
Change Orders Award
- Above RM5 Mil
- Up to RM5 Mil
- Up to RM1 Mil
- Up to RM150 K
- Up to RM50 K
LEVEL OF APPROVAL
REPORTING
REMARKS
Per change order

basis.
MD/CEO
HEAD
GM
M
SH
Approval of single
Change Order (CO)
is subject to the
respective LOA
provided that the
value of single CO is
less or equal to 10%
of the original value,
otherwise it will be
subject to the next
higher authority
If the single CO is
less that 10% but
cumulatively exceed
10% of the original
contract value, then
it is subject to the
next higher level
than original
approving authority
- 50 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.7 Contract
extension/renewal/
suspension/ termination
- Above RM15 Mil
- Up to RM15 Mil
- Up to RM10 Mil
- Up to RM5 Mil
- Up to RM2 Mil
- Up to RM500 K
LEVEL OF APPROVAL
REPORTING
REMARKS
Board
MD/CEO
HEAD
GM
M
SH
Termination
should be
exercised only
after seeking legal
advice

transactions (letter,
telexes of award/intent,
Letter of
Understanding)
OIC
Signing authority
is limited up to
two levels below
the approving
authority
3.9 Emergency supplies

and services
OIC
3.10 Miscellaneous port,

demurrage, transport,
shipping, rental and
other miscellaneous
charges
- Above RM150 K
- Up to RM150 K
- Up to RM50 K
3.11 Custom duties, state
dues, import and export
taxes
GM
GM
M
SH
M
- 51 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
LEVEL OF APPROVAL
3.12 Requisition for

additional helicopter
flight/ vessel movement
GM
3.13 Scheduling for

helicopter/vessel
OIC
3.14 Stock proposal

3.15 Stocking
i)
Assignment
/deletion of stock
status
ii) Reorder
level/revision
iii) Goods Received
Note (GRN)
iv) Materials Issue
Voucher (MIV)
v) Materials Return
Voucher (MRV)
vi) Materials
Movement Voucher
(MMV)
3.16 Inter-base transfer
3.17 Loan of stock materials

to third parties
- Above RM20 K
- Up to RM20 K
REPORTING
REMARKS
In consultation
with Manager
Subject to
stocking policies
and procedures
SH
OIC
OIC
OIC
OIC
GM
GM
M
HEAD
GM
- 52 -
Loan to JV
partner is
governed by JOA
agreement
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 11: DISPOSAL OF ASSETS, MATERIALS AND STOCK
1.0
DEFINITION OF TERMS
(i)
Assets
Companys properties which have been accounted for
(ii)
Materials
Physical form of all items which have been purchased or

acquired by the company.
(iii)
Obsolete
Those materials, equipment, accessories and parts which

are no longer usable in a service for which the were
originally acquired or made, which cannot be utilised safely
or economically for any other purpose at any location within
the company. These items may no longer be in production
or sale and can no longer obtain any replacement and
maintenance service.
(iv)
Scrap
Remnants from any process of those materials, equipment,

accessories and parts which are damaged and beyond
repair or those items which have deteriorated and in their
existing conditions are beyond any economic use due to
prolonged storage, misuse, abuse or improper maintenance
and handling.
(v)
Stock
Items kept in any storing facilities to meet daily operations

or for future use.
(vi)
Surplus
That portion of materials, equipment and parts in excess of

operating, maintenance, repair or spare requirements at a
specific location, which no longer have any foreseeable use
within a certain time period. These are further identified by
their condition of being good and can sufficiently perform
its intended functions or other economic uses.
(vii)
Used
Items which have been put into practical use after a time
period and are still in good, usable condition but
are no longer required due to the acquisition of new
replacements resulting from modification or upgrading
exercises.
- 53 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
2.0
PRINCIPLES
(i)
Where the asset is related to petroleum operations as defined under PSC, the required
approvals are to be sought from the relevant authorities as per established procedures.
(ii)
For assets, limits are based on net book value.
(iii)
For materials and stock, limits are based on estimated cost price and weighted average price
respectively.
(iv)
Classification of materials into unused/surplus, used/obsolete and scrap and disposal of

assets, materials and stock are based on recommendation of Tender Committee which shall
include cost of disposal, where applicable. Subject to procedures on disposal of assets.
(v)
The authority sanctioning the write off carries the authority to dispose based on disposal
procedures and guidelines.

MAKING
3.1 Procedures and
guidelines
LEVEL OF APPROVAL
REPORTING
GM
3.2 Disposal of assets,

materials & stock
(i) Classification of
materials into
unused/surplus,
used/obsolete
and scrap
(ii) Award of sale of
assets, materials
& stock
Above RM10 Mil
Up to RM10 Mil
Up to RM5 Mil
Up to RM1 Mil
Up to RM100 K
Board
MD/CEO
HEAD
GM
M
3.3 Write-off
(i) Fixed assets
Above RM1 Mil
Up to RM1 Mil
Up to RM100 K
MD/CEO
HEAD
GM
REMARKS
Refers to procedures
and guidelines that
involves cross
functional issues
GM
MD/CEO
Board
- 54 -
Subject to prior
review and
recommendation by
relevant
department/division
responsible over the
materials
i)
Based on net
book value
ii) Based on
recommendation
of Tender Comm.
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.3 Write-off
ii) Materials and
stocks (inventory &
non-inventory)
a) Unused
/obsolete items
which are
surplus to
requirement and
no longer
economical to
store
- Above RM10 Mil
- Up to RM10 Mil
- Up to RM5 Mil
- Up to RM1 Mil
b) Used/obsolete
no longer
required
- Above RM10 Mil
- Up to RM10 Mil
- Up to RM5 Mil
- Up to RM1 Mil
c) Assets, materials
and stock due to
loss or
untraceability
- Above RM10 Mil
- Up to RM10 Mil
- Up to RM5 Mil
- Up to RM1 Mil
d) Donation for
non-operational
uses
- Above RM100 K
- Up to RM 100K
e) Donation for
non-profit
organization
- Above RM50 K
- Up to RM50 K
LEVEL OF APPROVAL
REPORTING
REMARKS
i)
MD/CEO
HEAD
GM
M
Board
MD/CEO
HEAD
GM
M
Board
MD/CEO
HEAD
GM
M
Board
HEAD
GM
MD/CEO
HEAD
GM
M
HEAD
GM
- 55 -
Materials are
based on
estimated cost
price
ii) Stocks are
based on
weighted
average price
iii) Based on
recommendation
of Tender
Committee
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.4 Transfer of assets
outside PSC contract
areas
LEVEL OF APPROVAL
REPORTING
REMARKS
GM
HEAD
Subject to prior
consultation with
the relevant
department
manager whose
function and
responsibilities
are affected by
such transfer and
PETRONAS
- 56 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 12: ACCOUNTING AND FINANCIAL SERVICES
1.0
2.0
DEFINITION OF TERMS
(i)
Credit Note
The document issued by PCSB to third parties, Joint

Venture Partners or PETRONAS/PCSBs Subsidiaries
for accounting adjustments or correction of charges made
previously.
(ii)
Debit Note
The document issued by PCSB to third parties, Joint

Venture Partners of PETRONAS/PCSBs for charging
of services rendered and materials supplied.
(iii)
Early Payment
Payment made within 50% of the contractual credit period.
(iv)
Journal Voucher
The accounting document which describes the accounting

entries for each transaction and is used as an input
document for updating relevant accounting records.
(v)
Payment Voucher
The accounting document used to initiate and support

payment transaction. It is also used to record approval for
release of payment and to explain the nature of transaction.
PRINCIPLES
(i)
All transactions are to be executed and documented in accordance with the generally
accepted accounting principles, practices and procedures.
(ii)
All limits are per transaction basis.
- 57 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 12: ACCOUNTING & FINANCIAL SERVICES

MAKING
3.1 Procedures &
guidelines
3.2 Accounting codes

i) Chart of accounts
structure
ii) Addition and
deletion to
accounts
codes
3.3 Accounting
documents/entries
i) Debit note
- Above RM1 Mil
- Up to RM1 Mil
ii) Credit note
- intercompany
adjustments
- third party
adjustments
iii) Routine journal
vouchers
iv) Payment voucher
v) Signing of official
receipt
- Above RM1 Mil
- Up to RM1 Mil
LEVEL OF APPROVAL
REPORTING
GM
REMARKS
Refers to
procedures and
guidelines that
involves cross
functional issues
GM
M
M
SH
M
GM
SH
OIC (Officer-in-charge)
OIC (Cashier & Dept Mgr)

OIC (Cashier & Officer-incharge)
- 58 -
Joint signatories
Joint signatories
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
LEVEL OF APPROVAL
REPORTING
REMARKS
3.4 Releasing of payment on

approved transaction
(including staff
advances/ claims)
i) With adequate
documentation
- Above RM5 Mil
- Up to RM5 Mil
ii) Without adequate
documentation
- Above RM1 Mil
- Up to RM1 Mil
iii) Early payment
against approved
invoices to
purchases, indents
and contracts
- Above RM250 K
- Up to RM250 K
iv) Advance contract
payment
v) Early payment
discount
3.5 Petty cash

i) Establishment of
petty cash float
- Above RM50 K
- Up to RM50 K
ii) Reimbursement of
petty cash float
To be verified and
authorised for
payment by
appropriate
authority. Subject
to satisfactory
contractual
performance
M
SH
GM
M
Only to be
exercised in
exceptional
circumstances
and supported by
i) Official
request for
early
payment from
contractor
stating
reasons
ii) Request by
sponsor
department
stating
justifications
GM
M
MD/CEO
M
GM
M
OIC
- 59 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
iii)
Releasing of
payment from petty
cash
a) Advance for the
purchase of
and/or to pay for
sundry
goods/services
- Above RM1 K
- Up to RM1 K
- Up to RM0.5 K
- Up to RM0.3 K
b) Advance to staff
for business
travel
- Above RM2 K
- Up to RM2 K
- Up to RM1 K
- Up to RM0.5 K
c) In exchange for
staffs personal
cheques
- Above RM2 K
- Up to RM2 K
- Up to RM1 K
- Up to RM0.5 K
d) Staff claims
/reimbursement
- Above RM2 K
- Up to RM2 K
- Up to RM1 K
- Up to RM0.5 K
LEVEL OF APPROVAL
REPORTING
REMARKS
Petty cash
payments must
not be fragmented
to avoid the limits
No limit subject to
petty cash
procedure in force
GM
M
SH
OIC
GM
M
SH
OIC
GM
M
SH
OIC
GM
M
SH
OIC
- 60 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.6 Provision for
i)
Doubtful accounts
ii) Obsolescence of
materials &
stocks
iii) Diminution in value
of fixed assets
3.7 Write-off
i)
Investment
ii) Bad debts and
irrecoverable
charges
- Above RM10 K
- Up to RM10 K
3.8 Joint venture
i)
Exclusion of costs
from PSC
recovery claim
- Above RM1 Mil
- Up to RM1 Mil
ii)
Settlement of
disputed joint
operating costs
iii)
Audit programmes,
reports and
finding
LEVEL OF APPROVAL
REPORTING
GM
GM
REMARKS
In consultation
with relevant
department
GM
Board
The authority to
write off carries
with it the
authority to
dispose
Board
HEAD
MD/CEO
HEAD
GM
Does not include

costs which are
already addressed
in PSCs
MD/CEO
GM
- 61 -
Based on
deliberations by
CMC
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.9 Releasing of financial
information
i)
External parties
ii) Inter/intracompany
iii) Statutory
requirements
LEVEL OF APPROVAL
REPORTING
REMARKS
GM
M
M
3.10 Appointment/removal
of PSC auditors/tax
consultant
GM
3.11 Appointment/removal
of statutory auditors
Board
In accordance
with statutory
provision
- 62 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 13: BANKING ACCOUNTS & BANKING FACILITIES
1.0
2.0
DEFINITION OF TERMS
(i)
Banking accounts
: The investment, collection and disbursement banking

accounts opened with commercial banks, both locally
and overseas.
(ii)
Banking facilities
: The facilities granted by a bank in the form of letter of

guarantee, letter of credit, trust receipt, outstation
cheques purchase etc. but excludes overdraft facilities.
PRINCIPLES
(i)
Limits for banking accounts and banking facilities are based on per transaction and per
facility
(ii)
All transactions are to be carried out in compliance with accounting standards, the
Companies Act and PCSBs accounting guidelines

MAKING
3.1 Procedures and
guidelines
LEVEL OF APPROVAL
GM
3.2 Banking accounts

(i) Opening/closing of
bank account
(ii) Operations
OIC
3.3 Banking facilities

(i) Establishment of
banking
facilities/loans and
borrowing
Above RM1 Mil
Up to RM1 Mil
(ii) Operations
Board
GM
OIC
3.4 Requisition for transfer

of funds
(i) Fund transfer
between
PETRONAS &
PCSB
(ii) Fund transfer
between PCSB &
its regional offices
Above RM1 Mil
Up to RM1 Mil
REPORTING
REMARKS
Refers to
procedures and
guidelines that
involves cross
functional issues.
As per Board
Resolution
GM
As per Board
Resolution
M
SH
- 63 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 14: BORROWINGS
1.0
DEFINITION OF TERMS
(i)
2.0
Borrowings
: Indebtedness for money borrowed, to include but not limited

to term loans, overdrafts, private and public debt
securities, leases (operating and finance) hire purchase.
Such aforementioned facilities of borrowed monies are
collectively referred to as Debt.
PRINCIPLES
(i)
All Borrowings are contemplated and undertaken with the primary objectives of
economically preserving PCSBs liquid assets, to take advantage of favourable terms of
external sources of financing and financing techniques that would reduce the project risks
and enhance profitability.
(ii)
Borrowings are to be in consultation with PETRONAS Group Finance and to be made in

accordance with the approved procedures and guidelines.
(iii)
All Borrowings and management of existing Debts should be made in accordance with the
approved procedures and guidelines.

MAKING
3.1 Procedures and

guidelines
LEVEL OF APPROVAL
REPORTING
REMARKS
MD/CEO
Board
Refers to
procedures and
Guidelines that
involve cross
functional issues.
Including
refinancing and
subject to Bank
Negara Malaysias
and Ministry of
Finances prior
approval where
required
3.2 Borrowings Proposals
MD/CEO
Board
3.3 Selection of types of

borrowings and lenders
MD/CEO
Board
- 64 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 14: BORROWINGS

MAKING
3.4 Selection and
Appointment of
Manager (Lead and
Co-Managers),
Commissioned Banks
Underwriters, Legal
Counsel and other
relevant parties
3.5 Final terms and
conditions of
borrowings
LEVEL OF APPROVAL
REPORTING
MD/CEO
Board
REMARKS
Board
3.6 Prepayment
MD/CEO
Board
3.7 Execution of the

necessary
agreements/documents
for the approved
borrowings
MD/CEO
Board
3.8 Transactions on duly

approved and executed
borrowings
GM
Board
- 65 -
Subject to Bank
Negara Malaysias
and Ministry of
Finances
approval where
required.
Confirmed by
payment
instruction letter
signed by
authorised
signatories
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 15: INSURANCE
1.0
DEFINITION OF TERMS
(i)
Administration
: To include matters relating to settlement of claims and

approval of premium charges for payment.
(ii)
Discharge voucher
: The written statement issued by the insurer to the insured

requiring the latter to certify that the former upon
payment of full claim will be discharged of any further
liability/obligation under the policy.
(iii)
Insurance programme/
: The type of insurance programme to be purchased which

comprises amongst others the following elements
(a) Terms of coverage (comprehensive or restricted).
(b) Sum insured/limits of liability.
(c) Excess/deductibles.
package
2.0
(iv)
Non-tariff rated policy
: Those which are custom-made to the requirement of the

insured. The premium payable varies for different
insurance companies and not subject to pre set tariff rate.
Examples are transit cover, physical damage and
construction all risk for onshore and offshore facilities.
(v)
Tariff rated policy
: Those whose premium are governed by rates, terms and

conditions set by the General Insurance Association
and remain the same for all insurance companies.
Examples are motor, houses and offices.
PRINCIPLES
Insurance is being handled by PETRONAS Group Insurance, excluding administrative matters.

MAKING
LEVEL OF APPROVAL
REPORTING
REMARKS
3.1 Procedures and

guidelines
GM
PETRONAS Group
Insurance.
Refers to procedures
and guidelines that
involve cross
functional issues
3.2 Formulation of
selection of insurance
programmes/package
GM
PETRONAS Group
Insurance
- 66 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.3 Selection of
broker/insurance
i) Non-tariff rated
a) Bidders list for
tendering of
insurance
programs
/packages
b) Award of
insurance
programs/
packages based
on premium)
ii)
REPORTING
REMARKS
GM
Tariff rated
a) List of
insurance
companies
b) Award of
insurance
programs/
packages
(based
on premium)
3.4 Renewal of insurance

with incumbent
broker/insurer
i)
Non-tariff rated
a) Proposal to
renew
b) Award to
renewal policy
ii)
LEVEL OF APPROVAL
In consultation
with PETRONAS
Group
Insurance
GM
Tariff rated
a) Proposal to
renewal
b) Award to
renewal policy
- 67 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.5 Administration of
insurance policies
i)
Payment
authorization of
insurance premium
debit note
- Above RM10 Mil
- Up to RM10 Mil
- Up to RM5 Mil
ii) Agreement of claim
recovery
- Above RM15 Mil
- Up to RM15 Mil
- Up to RM5 Mil
- Up to RM500 K
iii) Signing of
discharge voucher
LEVEL OF APPROVAL
REPORTING
REMARKS
GM
M
SH
HEAD
GM
M
SH
M
Subject to
compliance of 3.5
(i) and (ii) above
- 68 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 16: GENERAL AND ADMINISTRATIVE
1.0
2.0
DEFINITION OF TERMS
(i)
Gifts
: Things generally given as momento, without payment in recognition of

collaboration, cooperation or services received or for the promotion of
PCSBs image. It excludes gifts given out as sales promotion.
(ii)
Petty Purchase
: Applies to purchases of items with limits as specified in the

purchasing procedures.
PRINCIPLES
(i)
Before any authorised person could incur any expenditure, he must ensure that it is
identified specifically as an item of expenditure in the approved budget.
(ii)
All proposals for donations of any value should be forwarded to PETRONAS Legal and
Corporate Affairs Division (LCAD) for review. All recommendations for donations be directed
to the authorising authority for approval.
(iii)
For the purpose of LOA, Head of Administration, Planning and HSE who reports direct to GM
shall have the authority of a Manager except items 3.9 and 3.10 of Section 16.

MAKING
3.1 Procedures and

guidelines
3.2 Authorisation for office

renovation, upgrading
of office facilities and
bulk purchase of office
furnishing and
equipment
Above RM1 Mil
Up to RM1 Mil
Up to RM250 K
Up to RM50 K
LEVEL OF APPROVAL
GM
REPORTING
REMARKS
Refers to
procedures and
guidelines that
involves cross
functional issues
Any overrun
exceeding 10% of
the original value to
seek approval from
the next higher
authority
HEAD
GM
M
SH
- 69 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.3 Materials and services
requisition (MSR)
- Above RM5 Mil
- Up to RM5 Mil
- Up to RM1 Mil
- Up to RM150 K
- Up to RM50 K
3.4 Work
completed/delivered
i) Certify work in
progress
ii) Receipt of
goods/services
3.5 Approval for payment
i) With adequate
documentation
- Above RM10 Mil
- Up to RM10 Mil
- Up to RM1 Mil
ii) Without adequate
documentation
- Above RM1 Mil
- Up to RM1 Mil
3.6 Petty purchase
transactions (except
those documents
mentioned under
Section 10 item 3.9)
LEVEL OF APPROVAL
REPORTING
REMARKS
HEAD
GM
M
SH
OIC
OIC
Admin Supervisor
has the authority
of an Officer-incharge
OIC
GM
M
SH
HEAD
GM
M
OIC
- 70 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
LEVEL OF APPROVAL
3.8 Gifts
i) Policy
ii) Standard and types
of corporate
gifts
iii) Gifts other than
item (ii) above
- Above RM1 K
- Up to RM1 K
- Up to RM0.5 K
- Up to RM0.2 K
Board
MD/CEO
HEAD
GM
3.9 Entertainment
- Above RM20 K
- Up to RM20 K
- Up to RM10 K
- Up to RM5 K
- Up to RM0.5 K
Board
MD/CEO
HEAD
GM
M
3.10 Business functions

- Above RM50 K
- Up to RM50 K
- Up to RM20 K
- Up to RM5 K
- Up to RM1 K
Board
MD/CEO
HEAD
GM
M
REPORTING
REMARKS
Board
Board
Per recipient
Per occasion
- 71 -
i)
To include official
ceremonies e.g.
signing
ceremony,
reception of
dignatories, high
ranking business
associates or
visitors, major
company
events /
achievements or
similar occasions
ii) Per occasion
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.11 Travel and
accommodation
i) Appointment of
travel agency
panel
ii) Business related
travel
a) Outside Asean
b) Malaysia /
Asean/IndoChina
LEVEL OF APPROVAL
REPORTING
REMARKS
GM
For Malaysia only

i) For visit to offshore
rigs, approval must
be sought from
Manager of Drilling
Department.
ii) For visit to
production
platforms, approval
must be sought
from Area
Operations
Manager
GM
M
iii) Training related

travel
Subject to prior
approval by HRM on
training
iv) Personnel related

travel
In accordance with
HRM policies and
guidelines
v) Accommodation
(include credit
facilities)
OIC
vi) Sign air travel

request
3.12 Transport
i) Kilometer/mileage
claim
ii) Equivalent airfare
Approval must be
sought for other than
panel accommodation
OIC (Supervisor)
M
M
- 72 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.12 Transport
iii) Transport
requisition for
conveyance of
materials and
company personnel
iv) Open credit
facilities for petrol
purchase
/maintenance
v) Issuance of credit
slip for drawing
of petrol
vi) Vehicle
maintenance job
order
- Above RM1 K
- Up to RM1 K
3.13 Use, lease or manning
of property/ facilities
by/to third parties
i) Production facilities
ii) Training facilities,
transportation/
logistics & office
space/warehouse
space/yard space
a) Third parties
b) Joint venture
partners
3.14 Organizational changes
i) Division
/region/department
ii) Section and below
LEVEL OF APPROVAL
REPORTING
REMARKS
OIC
SH
OIC
M
OIC
HEAD
GM
GM
GM
Board
In consultation
with CDU/CPDD
MD/CEO
- 73 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.15 Staff advances/claims
i) Approval of staff
advances/claims
- Above RM50 K
- Up to RM50 K
- Up to RM10 K
ii) Staggered
repayment of
advances
taken by staff
3.16 Overtime claim

- Above 120
hours/staff per
month
- Up to 120
hours/staff per
month
3.17 Leave
i) Annual, sick and
compassionate
leave and
unrecorded
ii) Other types of leave
e.g. maternity,
haj leave, unpaid
leave (up to 6
months only) etc.
LEVEL OF APPROVAL
REPORTING
REMARKS
i)
As per HRM
Policies and
Guidelines. Petty
cash advances
must be in
accordance with
accounting
procedures and
guidelines
ii) Subject to 2
months
requirements for
advances
iii) The claimant is
fully
responsible for
accuracy for
his/her claim
GM
M
SH
GM
Only to be exercised in
cases of demonstrated
hardship and shall be
supported by the
following:
i) Official request
from
staff stating
reasons
ii) Endorsement by
relevant
Department
Manager
Subject to statutory
requirements
M
SH
Subject to terms and

condition of services
Approval by HRM
Manager
- 74 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE

MAKING
3.18 Public Affairs
i) Promotional
Brochures
a) Advertising
space
b) Publication of
corporate and
promotional
brochures, inhouse
newsletters
c) Distribution of
corporate and
promotional
materials
ii) Conferences /
Seminar/
Exhibitions
a) Participation in
conferences
and seminars as
panel member
or presenter
b) Participants
conference
papers, reports,
magazines
write-up, scripts
etc.
c) Participation in
exhibitions
iii) Press Release &
Media
a) Press Releases &
Media
Programmes
LEVEL OF APPROVAL
REPORTING
MD/CEO
In consultation
with PETRONAS
LCAD
MD/CEO
GM
MD/CEO
MD/CEO
MD/CEO
MD/CEO
Board
GM
MD/CEO
3.19 Fines/Penalty
GM
3.20 Requisition for cash call

advance
SH
b) Briefing, talks
and plant visits
REMARKS
- 75 -
In consultation
with PETRONAS
LCAD
Fines/Penalty
limited to
statutory only
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 17: LEGAL SERVICES
1.0
DEFINITION OF TERMS
i)
ii)
2.0
Panel solicitors
Litigation
:
:
A list of law firm from whom legal opinion may be sought.

Any court or arbitration proceeding involving PCSB.
PRINCIPLES
i)
ii)
All corporate dealings must be based on sound and proper legal basis.
All departments must consult company advisor on legal advice and legal issues affecting
their department and dealings.

MAKING
3.1 Conclude and sign legal
document
3.2 Panel solicitors
LEVEL OF APPROVAL
REPORTING
REMARKS
MD/CEO
i) Prior review by Legal

Department and
Finance & Accounts
Department.
Authority may only
be further delegated
under MD/CEOs
discretion
ii) This is for other than
contract document
referred to under
Procurement &
Logistics Section 10
of this manual
In consultation with the

Legal and Corporate
Affairs Division of
PETRONAS
- 76 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 17: LEGAL SERVICES

MAKING
3.3 Appointment of
solicitors/ advocates for
non litigation matters
(i) Legal firm from
approved list of
panel solicitors
(ii) Legal firm not
listed in panel of
solicitors
(iii) Legal fees and
terms
3.4 Appointment of
solicitors/ advocates for
litigation matters
(i) Legal firm from
approved list of
panel solicitors
(ii) Legal firm not
listed in panel of
solicitors
3.5 Legal Action
(i) Initiate legal action
(ii) Filling or appeal of
litigation by or
against company
(iii) Initiate, settle or
compromise on
litigation
(iv) Terminate/
conclude legal
proceedings
(v) Negotiate and
accept settlement
with external
lawyers
LEVEL OF APPROVAL
REPORTING
MD/CEO
MD/CEO
Board
MD/CEO
Board
MD/CEO
MD/CEO
Board
Board
MD/CEO
Board
MD/CEO
Board
MD/CEO
- 77 -
REMARKS
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 18: INFORMATION TECHNOLOGY
1.0
DEFINITION OF TERMS
i)
2.0
Information Technology
Technology for capturing, organizing, storing/retrieving,

manipulation/calculation , sharing and communicating the
various forms of information like text, images, voice, etc .
which encompass software, electronic and mechanical
devices/hardware, transmission medium as well as structure
to mount equipment.
PRINCIPLES
i)
ii)
iii)
iv)
v)
All IT initiatives must be consistent with Group Practices and Standards.

Authorization for Expenditure (AFE) on CAPEX must be against approved CAPEX budget.
All CAPEX shall comply with the capital Budgeting and Accounting Procedures and
Guidelines .
IT Planning and development of systems and telecommunication & networks are executed
centrally .
Operation and Maintenance of the delivered system and telecommunication & networks
infrastructure are carried out by regional IT function.

MAKING
3.1 Procedures and
Guidelines
3.2 Formulation of
information Technology
(IT) Strategy and
Operational Plans
i) Initiative/
opportunity
identification and
request for system
and
telecommunication
& network
ii) Planning
Assumptions and
Guidelines
iii) Divisional IT Plan
Exploration
Development
Production
Commercial
Services
iv) IT strategy and Plan
LEVEL OF APPROVAL
REPORTING
REMARKS
GM
In Consultation with
PETRONAS Group
Information
Resources
Management
GM
GM
GM
HEAD
GM
MD/CEO
- 78 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 18: INFORMATION TECHNOLOGY

MAKING
3.3 Undertaking of
system/application,
telecommunication &
network development
i)
Project Initiation
ii) Resources
requirements
iii) Functional
requirements
iv) Conceptual Design
v) Technical Design
options
vi) Detailed Design
vii) Implementation
plan
3.4 Selection and
acquisition of system
hardware/software,
telecommunication &
networks
i)
Mainframe
ii) Minicomputer
iii) Telecommunication and
networks
iv) Personal computer,
workstation ,
related peripherals
and accessories
v) Communication
Equipment and
System software &
Utilities
3.5 Repairs & maintenance
of hardware
i)
Vendor Selection
ii) Replacement of
spare parts
iii) Repair
3.6 IT Operating &
Maintenance Manual
LEVEL OF APPROVAL
REPORTING
REMARKS
Consistent with
PETRONASGroup
Information
Resources
Management
Procedures and
Guidelines
GM
GM
M
M
M
Require
endorsement from
IT dept
M
M
MD/CEO
GM
GM
GM
Subject to Tenders
and Contract
procedures and
endorsement from
IT dept
GM
M
SH
OIC
M
- 79 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 19: MANAGEMENT AGREEMENT
1.0
2.0
DEFINITION OF TERMS
i)
Joint Account
ii)
Operations Committee :
The account showing the charges and credits accruing because of

the Joint Operations and which are to be shared by the Parties.
Committee set up essentially to allow the non-operating parties a
say in the running of the Joint Venture and of the approval l of
major items of expenditure as well as the annual or such other
periodic budgets and work programmes.
PRINCIPLES

MAKING
3.1 Joint Operating

Agreement (JOA)
i) Appointment of
Operations
Committee
Members
ii) Release of data or
information
iii) Procurement of
additional
insurance not
chargeable to Joint
Account
iv) Institution of legal
proceedings
including
settlement of claims
or litigation
3.2 Services under TOSA
(Technical & Operating
Services Agreement)
i) Technical Advice,
Service &
Facilities
a) Annual list of
Technical Advice
and Services
b) Estimated annual
cost for providing
Technical Advice
and Services
LEVEL OF APPROVAL
MD/CEO
REPORTING
REMARKS
PETRONAS Group
Public Affairs
Division.
MD/CEO
PETRONAS Group
Insurance
MD/CEO
MD/CEO
HEAD
HEAD
- 80 -
PART
PART C:
C: FINANCIAL
FINANCIAL AND
AND
ADMINISTRATIVE
ADMINISTRATIVE
SECTION 19: MANAGEMENT AGREEMENT

MAKING
c) List of report and

newsletter
d) Appointment of a
PCSB
representative to
sit on JV
Partners Tender
ii) Provision of JV
Staff
a) List of position to
be filled, the
duties,
responsibilities
and authorities of
such position
and the period of
secondment
b) Acceptance
and rejection of
personnel
dominated ,
together with
their training
programmes and
commencement
date of
secondment of
the personnel
c) Removal or
replacement of
JV seconded
personnel from
PCSB
iii) Training of PCSB
Personnel by JV
a) On-the -job
Training
b) Formal Training
c) Withdrawal of
PCSB personnel
from receiving
further training
under iii(a)and
iii(b) above
3.3 Memorandum of
Understanding/
Letter of Intent
LEVEL OF APPROVAL
REPORTING
REMARKS
GM
GM
GM
GM
HEAD. Authority to
accept nominated
personnel carries with
it the authority to
approve the already
identified courses
GM
MD/CEO
GM
relevant Department
Managers
HRM to be kept
informed
GM
GM
GM
MD/CEO
- 81 -
ATTACHMENT
ATTACHMENT II
LOA AND MANAGEMENT SYSTEMS
Memorandum and articles of

association
Corporate objective
IN EXECUTING BUSINESS
DECISIONS IN ACCORDANCE
WITH AUTHORITY IN THE LOA
ALL EXISTING ELEMENTS OF
MANAGEMENT CONTROLS
HAVE BEEN ADHERED TO AS
ILLUSTRATED
Policies
Strategies
Corporate structure
Management systems
LOA system
Operational and administration

procedures/guidelines and
criteria
Techniques and and standards
Approved plans and budget
Execution of business
decisions
- 82 -
ATTACHMENT
ATTACHMENT IIII
OBJECTIVE OF LOA SYSTEM

OBJECTIVE OF
LOA SYSTEM
TIMELY
DECISION AND
ACTIONS
MANAGEMENT
CONTROL
BALANCE
CORPORATE
STRUCTURE
BUSINESS SCOPE
PRINCIPLES OF
DELEGATION
& CONTROL
BUSINESS
PROCESS
KEY FACTORS
FOR SUCCESS
DECISION CHAIN
CORPORATE
LEVELS
AND ROLE
TYPE OF
DECISIONS
POSITION AND
SCOPE
CORPORATE LOA SYSTEM

APPROVING AUTHORITY
DECISION
OVERALL POLICIES AND STRATEGIES

OVERALL MANAGEMENT AND
PERFORMANCE
BD
MD/CEO
HEAD
GM
MGRS
SHDS
OTHER
STAFF
XXX
XX
XX
XXX
XXX
XX
XX
OPERATIONAL
Specialist
XX
XX
XXX
XX
TECHNICAL
Skilled
XXX
XX
ADMINISTRATIVE
Routine
XXX
XXX
CAPITAL INVESTMENT
DECISIONS
X
: Low concentration
XX : Medium concentration
XXX : High concentration
TRANSACTIONAL
DECISIONS
DYNAMIC AND EFFECTIVE

DECISION MAKING
- 83 -
ACTIVITY DECISIONS
ATTACHMENT
ATTACHMENT III
III
DELINEATION OF AUTHORITIES FOR

VARIOUS LEVELS IN PCSB
LEVEL OF HIERARCHY
ROLE
FINANCIAL
AUTHORITY
ACTIVITY
AUTHORITY
Board
Overall corporate policies,

strategies, plans and
budgets
NL
NL
CEO/HEAD
Overall management and

performance
Yes
Yes
Management Committee
Consultation
No
No
General Manager
Management of Division
Yes
Yes
Manager
Management of Activities
and Performance
Yes
Yes
Section Head
Management of Business
Operations
Yes
Yes
Note: NL = No limit
- 84 -
Department
Approved by
(Signature/Date)
Position Title
ATTACHMENT IV
IV
ATTACHMENT
Incumbents
Signature
SIGNATURE AUTHORISATION
AUTHORISATION FORM
FORM
SIGNATURE
SIGNATURE AUTHORISATION FORM

Division/operations
Incumbents Name
1. _____________________________________________________________
2. _____________________________________________________________
Description
Special Limits/Comments
3. _____________________________________________________________
Authority
Section
Item
- 85 -
APPENDIX
APPENDIX II
METHODOLOGY FOR DEVELOPMENT OF

LOA SYSTEM
Define
Components of
Business
Scope
Develop
Profiles of
Each
Business
Component
Planning
Development
Implementation
Objectives
Key Factors
for Success
Focal Points
Define
Business
Scope
Input
Process
Output
Steps
Develop
Decision
Inventory for
Each
Business
Component
Strategic
Operational
Administrative
Why Done
Apply
Criteria
for
Recommending
Authority
Decision Hierarchy
Span of
Accountability
Work Distribution
Model
Financial Control Vs
Operating Flexibility
Review
and
Recommend
CDU
OPU
Management
MD/CEO
How Done
1.
Define business
scope
To delineate PCSBs
business in the PETRONAS
Group and outline its key
business process
This is achieved through developing an input-output

model based on the following steps:
- Identify output required to fulfill corporate objectives
- Identify input required to achieve output
- Outline process required to convert input into output
2.
Establish
business
components
To trace the major

components or chain of
business; management,
operational and
administrative activities of
the processes and present
them as a continuum
A thorough research and review on the business

processes is required to be done. Management dialogue
should be initiated on the process segment of the inputoutput model developed in Step 1
Key activities are functionally categorised and established
in sequence leading to achievement of corporate
objectives (These processes must be congruent with the
business scope identified in Step 1)
3.
Develop profile of
each business
component
To understand the critical

elements of the decisionmaking process in each
phase of the business
Managers should establish the objective of each key

business component, identify key success factor in
making effective decisions, key players in the organisation
and business chain, and the position responsible for it
4.
Develop decision
inventory for each
business
component
To complete the decision

column of the LOA table.
Decision type is identified
to relate decisions to
appropriate corporate level
to achieve effective
delegation
This is achieved by breaking down each business

components into logical sequence of decisions and
classifying them into strategic, operational and
administrative type of decisions
5.
Apply criteria for

recommending
authority
To match each decision

item to the relevant
Approving Authority
Analyses need to be done to match types of decision with

the relevant organisation hierarchy. In doing so, the
following criteria are taken into account for developing the
LOA matrix:
- Decision hierarchy, span of accountability, Paretos
principle, financial control versus operating flexibility,
and competence and know-how
6.
Review and
Recommend
To ensure all decisionmakers agree on the most

practical and effective LOA
matrix
The draft LOA manual is reviewed and refined by seeking

inputs from the management within the OPU (i.e. the
managers, senior managers, GMs, Heads and MD/CEO)
- 86 -
APPENDIX
APPENDIX IIII
DEFINING PCSB BUSINESS SCOPE
Inputs
Process
Carigali
acreages
Exploration
activities
Exploration
data
New areas for
development
Relinquished
and producing
fields
Production
obligations
Crude and gas
demand
Joint ventures
Safety
standards
PCSB
aspirations
Outputs
Key
Key business
business activities
activities
Planning
Planning and
and budgeting
budgeting
Business
Business Development
Development
Exploration
Exploration
Drilling
Drilling
Development
Development
Production
Production operations
operations
JV
JV participation
participation
Health,
Health, safety
safety &
&
environment
environment quality
quality control
control
Financial
Financial &
& Administration
Administration
Capital
Capital expenditure
expenditure
Procurement
Procurement &
& logistics
logistics
Disposal
Disposal of
of assets,
assets,
materials
materials &
& stock
stock
Accounting
Accounting &
& finance
finance
services
services
Banking
Banking Accounts
Accounts &
&
banking
banking facilities
facilities
Borrowings
Borrowings
Insurance
Insurance
General
General &
& administration
administration
Legal
Legal services
services
Information
Information technology
technology
Management
Management agreement
agreement
Additional
reserves
Produce oil and
gas adequately
Develop new
fields
Operationship
Purchase
materials
Undertake
inventory
management
Implement
transfer of
technology
programmes
Personal
expertise and
competence
Self-financing
HSE compliance
- 87 -
APPENDIX
APPENDIX III/1
III/1
BUSINESS CHAIN ANALYSIS KEY

BUSINESS ACTIVITIES
From PCSBs business scope as described in Step 1, the main key business components and
sub-components can be defined as follows:
Business
process
Plan
Plan
Main
business
components
Section
Section11
Planning
Planningand
and
Budgeting
Budgeting
Key subbusiness
components
3.1
3.2
3.5
Work
Work
programme
programme
budget
budget
Business
Business
Development
Development
Section
Section22
Business
Business
Development
Development
3.3
Procedures
Procedures
and
and
guidelines
guidelines
Plan
Plan
Financial
Financial
performance
performance
3.2
3.1
Exploration
Exploration
Drilling
Drilling
Section
Section44
Drilling
Drilling
3.1
Procedures
Procedures
and
and
guidelines
guidelines
3.1
Procedures
Procedures
and
and
guidelines
guidelines
3.6
Well
Well
completion
completion
report
report
3.3
CBD
CBDPlans
Plansfor
for
Reserves
Reservesand
and
targets
targets
Procedures
Proceduresand
and
guidelines
guidelines
3.5
Selection
Selectionof
ofOpportunities
Opportunities
for
forevaluation
evaluationand
and
allocation
of
allocation ofresource
resource
3.6
Approve
Approve
acquisition
acquisitionof
of
opportunities
opportunities
Extension
Extensionof
of
exploration
explorationPSC
PSC
Section
Section33
Budget
Budget
transfer
transfer
Budget
Budget
3.6
3.4
Exploration
Exploration
3.4
3.2
Bidding
BiddingTerms
Terms
3.3
Evaluation
Evaluation
and
andPlanning
Planning
3.2
Formulation
Formulation
of
ofexploration
exploration
strategies
strategies
3.4
3.5
Survey
Survey
Proposal
Proposal
Programme
Programme//
revision
revision
3.4
3.3
Well
Well
proposal
proposal
Integrated
Integrateddrilling
drilling&&
barge
bargesequence
sequence//
revision
revision
3.8
3.7
Certification
Certification
of
ofwork
workin
in
progress
progress
- 88 -
Drilling
Drilling
programme
programme
Specialised
Specialised
studies
studies
programme
programme
3.5
Authorization
Authorizationfor
for
expenditure
expenditure
3.9
Priority
Priority
group
group
loading
loading
3.10
Spudding
Spudding
of
ofwell
well
Wellsite
Wellsite
operations
operations
APPENDIX
APPENDIX III/2
III/2

BUSINESS ACTIVITIES
Business
process
Development
Development
Main
business
components
Section
Section55
Development
Development
Key subbusiness
components
3.1
Procedures
Procedures
and
and
guidelines
guidelines
3.2
3.6
Operations
Operations
Reference
Reference
Plan
Plan
Production
Production
Section
Section66
Production
Production
Operation
Operation
3.1
Authorization
Authorization
for
for
expenditure
expenditure
(AFE)
(AFE)
3.7
Sub-surface
Sub-surface
services
services
Joint
JointVenture
Venture
Section
Section77
Joint
JointVenture
Venture
Participation
Participation
3.1
Procedures
Procedures
and
and
guidelines
guidelines
3.7
Wellsite
Wellsite
operations
operations
3.23
Shutdowns
Shutdowns
3.9
Project
Project
execution
execution
plan
plan
3.10
Site
Site
completion
completion
report
report
Certification
Certification
of
ofwork
workin
in
progress
progress
Overall
Overall
Project
ProjectCloseCloseout
outReport
Report
3.13
Reservoir
Reservoir
Management
Management
Plan
Plan
Asset
AssetIntegrity
Integrity
Management
Management
Plan
Plan
3.2
3.3
Provision
Provisionof
of
project
project
support
support
3.8
3.4
Operating
budget
implementation
3.9
Certification
Certification
of
ofwork
workin
in
progress
progress
3.2
Assignment
of contract
areas/ equity
3.8
Shutdowns
Shutdowns
Work
Work
programme
programme
and
andbudget
budget
Field
Field
development
development
AbandonAbandonment
mentof
of
facilities/
facilities/
fields
fields
- 89 -
Operating
Operating
budget
budget
implementaimplementation
tion
Specialized
Specialized
studies
studies
programme
programme
Production/
Production/
maintenance
maintenance
activities
activities
Project
Project
execution
execution
plan
plan
3.17
Emergency
Emergency
supplies
suppliesand
and
services
services
3.21
Well
Well
proposal
proposal
3.12
AuthorisaAuthorisation
tionfor
for
expenditure
expenditure
(AFE)
(AFE)
3.16
Signing
Signingof
of
commitment
commitment
document
document
3.20
3.24
Production/
Production/
maintenance
maintenance
activities
activities
3.6
3.11
Design
Designbasis
basis
memoranmemorandum
dum
3.15
Contract/
Contract/
Purchase
Purchase
Provision
Provisionof
of
project
project
support
support
Oil
Oiland
andgas
gas
operations
operations
3.5
Survey
Survey
proposal
proposal
programme/
programme/
revision
revision
3.10
3.14
3.19
3.6
Abandonment
Abandonment
of
offacilities/
facilities/
fields
fields
3.4
3.9
Drilling
Drilling
programme
programme
3.5
Planned
Planned
schedule
schedule
production
production
levels
levels
3.10
3.3
Contracting
Contracting
list/bid
list/bidevaluation
evaluation
criteria
criteria
Releasing
Releasingof
of
cash
cashcall
call
payment
payment
3.8
3.12
3.5
Authorization
Authorization
for
forexpenditure
expenditure
(AFE)
(AFE)
Design
Designbasis
basis
memorandum
memorandum
AcceptanAcceptance
cetest
test
3.13
3.18
3.4
3.7
CDD,
CDD,O/S
O/Sfab,
fab,
instl.,
instl.,hook-up,
hook-up,
commissioning
commissioning
3.11
3.3
Field
Field
development
development
plan
plan
Budget
Budget
exposure
exposure
items
items
3.22
Sub-surface
Sub-surface
services
services
APPENDIX
APPENDIX III/3
III/3

BUSINESS ACTIVITIES
Business
process
Safety
Safety
Main
business
components
Key subbusiness
components
Section
Section88
Health,
Health,Safety
Safety
and
and
environment
environment
quality
qualitycontrol
control
3.1
Health
Healthand
and
safety
safety
3.2
Reports
Reportsand
and
recommenrecommendation
dation
- 90 -
APPENDIX
APPENDIX III/4
III/4
BUSINESS CHAIN ANALYSIS FINANCIAL

AND ADMINISTRATIVE
Business
Business
Process
Process
Main
Main
Business
Business
Compone
Compone
nts
nts
Key
Keysub-business
sub-business
components
components
3.1
Implementation
Implementation
3.2
Procedures
Procedures
and
and
guidelines
guidelines
Section
Section99
Capital
Capital
expenditure
expenditure
3.1
3.3
3.11
Misc.
Misc.port,
port,demurrage,
demurrage,
transport,
transport,shipping,
shipping,
rental
&
other
rental & othercharges
charges
Section
Section11
11
Disposal
Disposalof
of
assets,
assets,
materials
and
materials and
stock
stock
3.1
3.1
Section
Section12
12
Accounting
Accounting
and
andfinancial
financial
services
services
3.6
3.3
Disposal
Disposalof
of
assets,
assets,
materials
materials
and
andstock
stock
Scheduling
Schedulingfor
for
helicopter/
helicopter/
vessel
vessel
Stock
Stock
Proposal
Proposal
3.4
Write-off
Write-off
3.3
3.8
Write-off
Write-off
- 91 -
Transfer
Transferof
of
assets
assets
outside
PSC
outside PSC
contract
contractareas
areas
3.4
Accounting
Accounting
documents/
documents/
entries
entries
Accounting
Accounting
codes
codes
3.7
Provision
Provision
3.14
3.13
Requisition
Requisitionfor
for
additional
additional
flight/vessel
flight/vessel
Loan
Loanof
ofstock
stock
material
materialto
to
third
parties
third parties
Inter-base
Inter-base
transfer
transfer
3.2
Procedures
Procedures
and
and
guidelines
guidelines
3.12
Emergency
Emergency
supplies
suppliesand
and
services
services
3.17
3.2
Procedures
Procedures
and
and
guidelines
guidelines
Sign
Signof
ofcontracs
contracs
PA,
PA,SA,
SA,SO,
SO,PO,
PO,
WO
WO
3.9
Signing
Signingof
ofcommitment
commitment
document
documenton
onapproved
approved
transaction
transaction
Custom
Customduties,
duties,
state
statedues,
dues,import
import
&&export
exporttaxes
taxes
3.16
Stocking
Stocking
3.5
Contract/
Contract/
Purchase
Purchase
Awards
Awards
3.8
Contract
Contractext./
ext./
renewal/suspenrenewal/suspension/termination
sion/termination
3.10
Certification
Certification
of
ofwork
workin
in
progress
progress
3.4
3.7
Contract/
Contract/
Purchase
PurchaseChange
Change
Order
OrderAward
Award
3.5
Authorization
Authorization
for
for
expenditure
expenditure
(AFE)
(AFE)
Contracting
Contractingstrategy/
strategy/
ITB/bidders
ITB/bidderslist/
list/bid
bid
evaluation
criteria/
evaluation criteria/
solicit
price
quotation
solicit price quotation
Formation
Formation
of
oftender
tender
committee
committee
3.6
3.15
3.4
Equity
Equity
investment
investment
3.2
Procedures
Procedures
and
and
guidelines
guidelines
Section
Section10
10
Procurement
Procurement
&&logistics
logistics
3.3
Project
Project
investment
investment
decision
decision
Releasing
Releasingof
of
payment
paymenton
on
approved
trans.
approved trans.
3.9
Joint
Joint
venture
venture
3.5
Releasing
Releasing
of
offinancial
financial
information
information
Petty
Pettycash
cash
3.10
Appointment/
Appointment/
removal
removalof
ofPSC
PSC
auditors/tax
auditors/taxcon.
con.
3.11
Appointment/
Appointment/
removal
removalof
of
statutory
statutory
auditors
auditors
APPENDIX
APPENDIX III/5
III/5

AND ADMINISTRATIVE
Business
Business
Process
Process
Implementation
Implementation
Main
Main
Business
Business
Compone
Compone
nts
nts
Section
Section13
13
Banking
Banking
accounts
accountsand
and
banking
banking
facilities
facilities
Key
Keysub-business
sub-business
components
components
3.1
3.2
Procedures
Procedures
and
and
guidelines
guidelines
3.1
Section
Section14
14
Borrowings
Borrowings
3.3
Banking
Banking
accounts
accounts
3.3
Procedures
Procedures
and
and
guidelines
guidelines
3.1
3.7
3.13
3.4
3.3
3.4
Materials
Materials&&
services
services
requisition
requisition
3.9
3.10
3.15
3.6
Approval
Approval
for
forpayment
payment
Petty
Petty
purchase
purchase
3.11
Business
Business
function
function
3.16
Staff
Staff
advance/cla
advance/cla
ims
ims
Organisatio
Organisatio
nal
nalchanges
changes
Adm.
Adm.Of
Of
insurance
insurance
policies
policies
3.5
Work
Work
completed/
completed/
delivered
delivered
EntertainEntertainment
ment
Gifts
Gifts
3.5
Renewal
Renewalof
ofins.
ins.
with
withincumbent
incumbent
broker/insurer
broker/insurer
Selection
Selectionof
of
broker/insurer
broker/insurer
Authorization
Authorization
for
foroffice
office
renovation
renovation
3.14
3.19
Transaction
Transactionon
onduly
duly
approved
approvedand
and
executed
borrowings
executed borrowings
3.3
Formulation
Formulationof
of
selection
selectionof
of
insurance
insurance
programmes
programmes
3.8
Use,
Use,lease
lease
or
ormanning
manning
of
property
of property
3.12
Travel
Traveland
and
accommodation
accommodation
3.17
Overtime
Overtime
claim
claim
Transport
Transport
3.18
Public
Public
affairs
affairs
Leave
Leave
3.20
Fines
Fines
/penalty
/penalty
Section
Section17
17
Legal
Legal
services
services
3.2
Signing
Signingof
of
commitcommitment
ment
document
document
Final
Finalterms
terms&&
conditions
conditionsof
of
borrowings
borrowings
3.8
Execution
Executionof
ofthe
thenecessary
necessary
agreements/documents
agreements/documentsfor
for
the
approval
borrowings
the approval borrowings
3.2
Procedures
Procedures
and
and
guidelines
guidelines
Section
Section16
16
General
Generaland
and
administraadministrative
tive
Selection
Selection&&
appointment
appointment
of
ofmanager
manager
3.7
3.1
3.5
3.4
Selection
Selectionof
of
types
typesof
of
borrowings
borrowings
&&lenders
lenders
Borrowings
Borrowings
Proposals
Proposals
Prepayment
Prepayment
Section
Section15
15
Insurance
Insurance
Requisition
Requisition
for
fortransfer
transfer
of
offund
fund
Banking
Banking
facilities
facilities
3.2
Procedures
Procedures
and
and
guidelines
guidelines
3.6
3.4
3.1
Requisition
Requisition
for
forcash
cashcall
call
advance
advance
3.2
Conclude
Conclude
and
andsign
sign
legal
legal
document
document
3.3
Panel
Panel
solicitors
solicitors
- 92 -
Appointment
Appointmentof
of
solicitors/
solicitors/
Advocates
Advocatesfor
for
Non-Litigation
Non-Litigation
3.4
Appointment
Appointmentof
of
solicitors
solicitors//
Advocates
Advocates
Litigation
LitigationMatters
Matters
3.5
Legal
Legalaction
action
APPENDIX
APPENDIX III/6
III/6

AND ADMINISTRATIVE
Business
Business
Process
Process
Main
Main
Business
Business
Compone
Compone
nts
nts
Key
Keysub-business
sub-business
components
components
3.1
Implementation
Implementation
Section
Section18
18
Information
Information
technology
technology
Procedures
Procedures
and
and
Guidelines
Guidelines
3.5
3.2
3.3
Form.
Form.of
ofIT
ITstrategy
strategyand
and
operational
operationalplans
plans
Undertaking
Undertakingof
ofsystem
system
/application,
/application,telecom.
telecom.
&&network
networkdevt
devt
3.6
Repairs
Repairsand
and
maintenance
maintenance
of
hardware
of hardware
3.1
Section
Section19
19
Management
Management
agreement
agreement
Joint
Joint
operating
operating
agreement
agreement
IT
IToperating
operatingand
and
maintenance
maintenance
manual
manual
3.2
3.3
Services
Services
under
underTOSA
TOSA
- 93 -
Memo
Memoof
of
understanding/
understanding/
letter
letterof
ofintent
intent
3.4
Select
Select&&acquisition
acquisitionof
of
system,
system,h/ware,
h/ware,s/ware,
s/ware,
telecom.
telecom.&&networks
networks
APPENDIX
APPENDIX IV
IV
BUSINESS PROFILE
Key business
components
Planning and
budgeting
Business
development
Exploration
Drilling
Development
Production
operations
Joint venture
participation
Health, safety
& environment
quality control
Profile
Objective
To develop
To integrate
realistic plan
effective
and
capture of
strategies
business
which will
opportunitie
enable the
s/ acreage
company to
successfully
achieve all
its short
term and
long term
objectives
To explore
To provide a To plan and To optimise
and appraise
conduit for
full develop
production
commercial
transports of
the ultimate
at lowest
reserves at
oil/gas from
recovery for
production
lowest
the reservoir
maximum
cost in
finding cost
to the
production
safest
surface
at lowest life
manner
cycle cost
Key success
factor
Good
Data bank
historical
quality
data
Competent
Clear
technical
business
personnel
strategies
Access to
Sound cost
capital
and planning
(internal
tools
funding)
Good
environment
scanning
Data bank
quality
Local expert
G/G
interpreting
skills
Risk profile
(safety)
Safety risk
assessment
Number of
wells
Access to
capital
(internal
funding)
Cost of data
(Selsmic
geological)
Oil price
Operating
expenses
Acreage
costs
Fiscal
regime
(foreign tax)
Functional
responsibility
Commercial
services
division
Exploration
Business
division
development
department
To enhance
values
through
smart
partnership
To ensure
engineering
integrity and
safety of
operations
and
personnel
Well-planned
drilling
activities/
programmes
Low drilling
costs
Competent
technical
personnel
Efficient
well-site
operations
Rig
availability
Surface/subsurface
technology
G/G
interpreting
reservoir
skills
Forecasting/
modeling
skills
Assessing
data need
Economic
translation
Project
management
Surface/subsurface
technology
Number of
platforms
Drilling
costs
Fabrication
costs
Hook-up
costs
Commission
ing costs
Tendering
costs
Reservoir
management
/ well
profiling
Downtime/
maintenance
/ materials
Application
of economic
translation
Number of
wells
Extraction
rate
Manned vs.
unmanned
platforms
Maintenance
/ parts costs
Logistic
costs
Labor costs
Low
business
risk
Availability
of resources
to be
committed
to JV
operation
Business
fit/synergy
Competency
of partner
Well
documented
procedures
and
guidelines
Regular
audit and
inspection
Regular
training on
safety and
fire fighting
Regular
emergency
exercise
Development
division
Development
division
Production
division
Development
division
HSE
- 94 -

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PETRONAS CARIGALI SDN BHD

Limits of Authority (LOA)

PETRONAS and PCSB Relationship

The Principles of Delegation

PCSB Leadership Team Organisation Structure

KEY BUSINESS ACTIVITIES

Planning and Budgeting

Joint Ventures Participation

Health, Safety & Environment Quality Control

FINANCIAL AND ADMINISTRATIVE

Procurement and Logistics

Disposal of Assets, Materials and Stock

Accounting and Financial Services

Banking Accounts and Banking Facilities

General and Administrative

LOA and Management Systems

Objective of LOA System

Delineation of Authorities for Various Levels in

Signature Authorisation Form

Methodology for Development of LOA System

Defining PCSB Business Scope

Business Chain Analysis

PART A: GENERAL INFORMATION

The LOA as an authority framework, requires:

The proper execution of instruments of delegation.

Provision of clear guidelines and procedures for executing decisions.

PETRONAS AND PCSB RELATIONSHIP

PART A: GENERAL INFORMATION

PCSB is incorporated on 11th May, 1978

PART A: GENERAL INFORMATION

Board means PCSB Board of Directors.

Chairman means the Chairman of PCSB.

MD/CEO means the Managing Director / Chief Executive Officer of PCSB.

CMC means the Management Committee of PCSB.

COC means the Operations Committee of PCSB.

Mil means million.

PART A: GENERAL INFORMATION

THE PRINCIPLES OF DELEGATION

The delegation of authority is based on the following principles

PART A: GENERAL INFORMATION

The need to inform the superior of approval/review actions taken on matters

The interpretation of this Manual is delegated to GM, Commercial Services.

PETRONAS CARIGALI SDN BHD

SECTION 1: PLANNING AND BUDGETING

Annual Business Plan

The detailed documents containing objectives and the

The financial projections to achieve the short and long

The Annual Budget is categorised into two categories i.e.

The classification of the Budget Category into major

The logical unit or set of expenditure which can easily be

The revision to the Annual Budget resulting from an

The transfer of fund from one Budget item to another within

SECTION 1: PLANNING AND BUDGETING

The expenditure by the company that is capitalised as a

The asset having no physical existence, its value being

KPBIs are key budget assumptions used in preparing the

The tangible asset intended for continuous holding or use

(xii) Operating Expenditure (OPEX) :

The spending of money for the acquisition of materials,

The budget where capital and operating expenditure

SECTION 1: PLANNING AND BUDGETING

Is a document prepared in accordance with the PSC setting

SECTION 1: PLANNING AND BUDGETING