Investing in Oil Sector Capacity Building: PETRONAS Case Study on Education

Presentation to Good Governance of the National Petroleum Workshop 2 London, United Kingdom September 21-23, 2005

PRESENTATION OUTLINE

The Corporation Vision and Mission Shared Values Guideline for Business Conduct Corporate Sustainability Framework and 7 Key Results Areas Case Study Social Investment in Education

THE CORPORATION
PETRONAS is the national oil corporation of Malaysia. PETRONAS was incorporated on 17th August 1974 under the Malaysian Companies Act of 1965. The Malaysian Petroleum Development Act 1974 vested upon PETRONAS the exclusive rights to explore, develop and produce petroleum resources within Malaysia. In the downstream sector of the petroleum industry, PETRONAS competes with other multinational oil companies operating in Malaysia. Since its incorporation PETRONAS has evolved into a fully integrated multinational oil and gas company.

PETRONAS - AN INTEGRATED PETROLEUM COMPANY

PETRONAS is a fully integrated petroleum company involved in exploration & production, PETRONAS is a fully integrated petroleum company involved in exploration & production, refining, gas processing and transmission, gas liquefaction, manufacturing of petrochemical refining, gas processing and transmission, gas liquefaction, manufacturing of petrochemical products, marketing and trading, and integrated logistics. products, marketing and trading, and integrated logistics.
CRUDE CRUDE OIL OIL MARKETING MARKETING FACILITIES FACILITIES REFINING REFINING

OIL

G G G G G G G

CRUDE OIL LPG GASOLINE JET FUEL DIESEL FUEL OIL CONDENSATES

PETROLEUM PETROLEUM PRODUCTS PRODUCTS AROMATICS AROMATICS PETROCHEMICAL PETROCHEMICAL

CONDENSATES CONDENSATES EXPLORATION & PRODUCTION

LPG LPG

SALES GAS SALES GAS PROCESSING PROCESSING

G G G G G G G G G

GAS
FERTILISERS FERTILISERS

MTBE ETHYLENE POLYETHYLENE PROPYLENE POLYPROPYLENE METHANOL AMMONIA VCM ETHYLENE DERIVATIVES

LIQUEFACTION LIQUEFACTION

LNG

LNG LNG

G PIPED GAS G LNG

Supported by R&D, Technical Services, Education and Training. Supported by R&D, Technical Services, Education and Training.

The Corporation

ORGANISATIONAL STRUCTURE OF PETRONAS

BOARD OF DIRECTORS

BOARD AUDIT COMMITTEE MANAGEMENT COMMITTEE PRESIDENTS OFFICE LEGAL AND CORPORATE AFFAIRS REGIONAL OFFICES

PRESIDENT AND CHIEF EXECUTIVE CORPORATE HSE INTERNAL AUDIT CORPORATE SECURITY

E&P BUSINESS

OIL BUSINESS

GAS BUSINESS

PETROCHEMICAL BUSINESS

CORPORATE PLANNING & DEVELOPMENT DIVISION

EDUCATION DIVISION

FINANCE DIVISION

HUMAN RESOURCE DIVISION

TECHNICAL SERVICES DIVISION

The Corporation

PETRONAS GROUP COMPRISES 120 DIRECT SUBSIDIARIES AND 57 ASSOCIATES

Financial Year Ended 31 March 2005

Wholly Owned Subsidiaries

Partly Owned Subsidiaries

Associated Companies

101
Overseas Domestic

19
Overseas Domestic

57
Overseas Domestic

57

44

16

29

28

International Operations

PETRONAS HAS INTERESTS IN 31 COUNTRIES WORLDWIDE

Upstream Algeria Angola Benin Equatorial Guinea Ethiopia Gabon Iran Mauritania Morocco Myanmar Mozambique Niger Pakistan Turkmenistan Yemen

Financial Year Ended 31 March 2005

Upstream & Downstream Chad Cameroon Egypt Indonesia Philippines Sudan Vietnam

Downstream Australia Argentina Cambodia China India South Africa Switzerland Thailand United Kingdom

The Corporation

MANPOWER GROWTH : 1974-2005

Including MISC & Engen

35,000

33,944 30,634 28,378 25,733 23,450

30,000

25,000

20,000

15,000

13,136 8,107

10,000

6,715
5,000

15
0

2,116

1974

1980

1985

1990

1995

2001

2002

2003

2004

2005

Financial Year Ended 31 March 2005

GROUP FINANCIAL HIGHLIGHTS FOR FY 2004/05

Revenue Profit Before Tax Profit After Tax Total Assets Shareholders Funds

: : : : :

USD 36, 070 million USD 15, 273 million USD 9, 358 million USD 33, 997 million USD 34, 053 million

VISION: A LEADING OIL AND GAS MULTINATIONAL OF CHOICE

MISSION
We are a business entity Petroleum is our core business Our primary responsibility is to develop and add value to the national resource Our objective is to contribute to the well being of the people and the nation

PETRONAS SHARED VALUES

Loyalty
Loyal to the nation and corporation

Professionalism
Committed, innovative and proactive and always striving for excellence

Integrity
Honest and upright

Cohesiveness
United in purpose and fellowship

PETRONAS GUIDELINES FOR BUSINESS CONDUCT

General Business Principles Business Integrity HSE Quality Human Rights Commitment to Community Employment Practice Compliance with local law Review & Audit

CORPORATE SUSTAINABILITY FRAMEWORK

Shareholder Value

ECONOMIC

Energy Use

Societal Needs

SOCIAL

Product Stewardship

Health, Safety & Environment

Biodiversity Climate Change

ENVIRONMENT

7 KEY RESULTS AREAS

AREAS
Shareholder Value

DESCRIPTION
Sustaining the company as a profitable going concern through value creation and efficient extraction and manufacturing processes Making available oil & gas products at reasonable market prices, promoting efficient use of these natural resources and supporting the use of renewable energy Preventing & eliminating injuries, health hazards and damage to property and conserving and preserving the environment Ensuring products are of the required quality, conform to HSE standards and meet the needs of society Safeguarding universal human rights within our sphere of influence , contributing to community needs, arts and sports, investing in training & education and conducting our business in a transparent manner. Limiting emissions of greenhouse gases into the atmosphere Ensuring projects and operations do not have significant impact on the diversity of human, animals & plants

Energy Use

Health, Safety and Environment Product Stewardship Societal Needs

Climate Change Biodiversity

Role of Education Division in Supporting PETRONAS Groups Overall Operations

ORGANISATIONAL STRUCTURE OF PETRONAS EDUCATION GROUP

VICE-PRESIDENT VICE-PRESIDENT OF OF EDUCATION EDUCATION VICE-PRESIDENTS OFFICE VICE-PRESIDENTS OFFICE

UTP UTP

PETROSAINS PETROSAINS

PMTSB PMTSB

PeLSSB PeLSSB

ALAM ALAM

PERMATA PERMATA

INSTEP INSTEP

EDUCATION SPONSORSHIP EDUCATION SPONSORSHIP UNIT UNIT

PETROLEUM RESOURCE PETROLEUM RESOURCE CENTRE CENTRE

EVOLUTION OF UNITS UNDER PETRONAS EDUCATION GROUP

EDUCATION SPONSORSHIP UNIT (ESU) ESU 1975

EDUCATION SPONSORSHIP UNIT (ESU)

To provide education sponsorship for intellectual capital development in line with PETRONAS interests, vision and mission.

PETRONAS Sponsorship programme includes;

I

Major sponsorship to deserving students to pursue degree courses in overseas, local private and public tertiary educational institutions (IPTA/IPTS) and International students in Malaysia (UTP & UIA) Minor grant to Form 1 to Form 6 students

EDUCATIONAL SPONSORSHIP TREND (1975-2005)

Number of Scholars

1600 1400 1200 1000 800 600 400 200 0

19 7 19 5 76

DIRECT PRE-U OVERSEAS PROGRAMME

UTP REPRESENTS MORE THAN 50% OF THE LOCAL PROGRAMME

Overseas Local
6124

ECONOMIC DOWNTURN ECONOMIC DOWNTURN

38%
10009

62%

78

80

84

82

86

88

90

92

94

96

98

00

02 20

Total number of scholars = 16,133 Total amount awarded = RM 1.4 bil

20 0 20 4 05

19

19

19

19

19

19

19

19

19

19

19

20

DISTRIBUTION OF PETRONAS ACTIVE SCHOLARS

Major Sponsorship Programme
LOCATION/ PROGRAMS Australia UK USA New Zealand Japan France Egypt UTP UTPInternational IPTA/IPTS Pre-U in Malaysia Malaysia Branch Campus Chartered Accountancy Programme TOTAL NO. OF STUDENTS 208 152 97 64 9 10 1 2888 302 527 360 20 64

Minor Grant
LOCATION/ PROGRAMS Malaysia Southern Thailand TOTAL NO. OF STUDENTS 2932 209 3,141

Total: 7,843 scholars

4,702

EVOLUTION OF UNITS UNDER PETRONAS EDUCATION GROUP

INSTITUT TEKNOLOGI PETROLEUM PETRONAS (INSTEP)

INSTEP ESU

1975

1982

EVOLUTION OF UNITS UNDER PETRONAS EDUCATION GROUP

Facilitate technical skills and pre-employment

EVOLUTION OF UNITS UNDER PETRONAS EDUCATION GROUP

PETRONAS MANAGEMENT TRAINING CENTRE (PERMATA)

PERMATA INSTEP ESU

1975

1982

1989

EVOLUTION OF UNITS UNDER PETRONAS EDUCATION GROUP

Facilitate soft skills or non-technical courses

EVOLUTION OF UNITS UNDER PETRONAS EDUCATION GROUP

UNIVERSITI TEKNOLOGI PETRONAS (UTP)

UTP PERMATA INSTEP ESU

1975

1982

1989

1997

TO BE A LEADER IN TECHNOLOGY EDUCATION & CENTRE FOR CREATIVITY AND INNOVATION

UTP MISSION UTP is an institute of higher learning. We provide opportunities for the pursuit of knowledge and expertise for the advancement of engineering, science and technology to enhance the nations competitiveness. Our objective is to produce well-rounded graduates who are creative and innovative with the potential to become leaders of industry and the nation. Our aim is to nurture creativity and innovativeness and expand the frontiers of technology and education for the betterment of society.

UNDERGRADUATE ACADEMIC PROGRAMME

Foundation Programme Engineering IT/IS

ENGINEERING AND TECHNOLOGY PROGRAMME

BACHELOR OF ENGINEERING (Honours) Degree in Chemical Engineering Degree in Civil Engineering Degree in Electrical and Electronics Engineering Degree in Mechanical Engineering BACHELOR OF TECHNOLOGY (Honours) Degree in Information Technology Degree in Systems Technology

POSTGRADUATE PROGRAMMES Master/PhD in Chemical Engineering Master/PhD in Mechanical Engineering Master/PhD in Electrical/Electronics Engineering Master/PhD in Civil Engineering Master/PhD in Information Technology Master in Process Integration (UMIST) Master in Petroleum Management (Harriot Watt)

EDUCATIONAL THRUST

Academic Excellence Industry Relevance State-of-the art facilities 8-months Internship Multiple Mode-Delivery External Linkages (Industry and Universities) International Faculties and Standards Conducive Environment

STUDENTS POPULATION AT UTP

6000

5000 4018

4857

4000

3859 3500

3000 1967 2000 1144 1000 150 0 1996 1997 1998 1999 2000 346 735

2725

2001

2002

2003

2004

2005 (Sept)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Cambodia Chad Egypt Equatorial Guinea India Indonesia Iran Mozambique Myanmar Pakistan South Africa Sudan Thailand Timor Laste Turkmenistan Vietnam Yemen Total

17 10 20 14 1 23 26 13 15 17 47 50 31 7 52 47 5 395

Local

International

Total Number of stud ents

International Students as at 1 September 2005

EVOLUTION OF UNITS UNDER PETRONAS EDUCATION GROUP

AKADEMI LAUT MALAYSIA (ALAM)

ALAM UTP PERMATA INSTEP ESU

1975

1982

1989

1997

1998

AKADEMI LAUT MALAYSIA (ALAM)

VISION Towards a World Class Maritime Academy

MISSION To facilitate value added learning via a conducive environment to our clients in the maritime industry

ALAM STRATEGIC COOPERATION

LOCAL Universiti Teknologi Malaysia Universiti Teknologi PETRONAS SEQU Offshore Training SRIBIMA Training Centre PERMATA INTERNATIONAL World Maritime University, Sweden Institute of Chartered Shipbrokers, UK South Tyneside College, UK Maritiem Training Centrum, Holland

TRAINING PROGRAMMES OFFERED BY ALAM

PRE-SEA Degree in Maritime Transportation Diploma in Nautical Studies Diploma in Marine Engineering MARINE SAFETY AND OPERATIONS

POST-SEA Nautical Studies Marine Engineering and Technology

SHIPPING BUSINESS AND MANAGEMENT

MARINE ELECTRONICS AND COMMUNICATIONS

TECHNICAL AND SUPPORT SERVICES RATINGS TRAINING (DECK, ENGINE & CATERING)

EVOLUTION OF UNITS UNDER PETRONAS EDUCATION GROUP

PETROSAINS
PETROSAINS

ALAM UTP PERMATA INSTEP ESU

1975

1982

1989

1997

1998

1999

PETROSAINS, THE DISCOVERY CENTRE

Create awareness and interests in Science & Technology Contribute to the development of Science & Technology literate society Seeding platform for future scientist & technologists

EVOLUTION OF UNITS UNDER PETRONAS EDUCATION GROUP

PETRONAS eLEARNING SOLUTIONS

PeLSSB
PETROSAINS

ALAM UTP PERMATA INSTEP ESU

1975

1982

1989

1997

1998

1999

2004

PETRONS eLEARNING SOLUTIONS - A CENTRE FOR ONLINE TRAINING AND PROFESSIONAL DEVELOPMENT
PeLSSBs primarily role is to provide eLearning Services to the PETRONAS Group in the form of: Courseware subscription Courseware Development System Customisation, and eLearning Advisory Services PeLSSB also develops, manages and operates several eLearning Centers (eLCs) across the nation. Todate, PeLSSBs offer more than 500 online courses which includes Oil and Gas Technical Courses, Management Courses, IT Courses, English Courses and Bespoke (courses customized to client's requirements) Courses.

IMPACT OF HUMAN CAPITAL INVESTMENT

Human capital investment is key to sustainable development Contribution to national development and Malaysias Vision of becoming a developed nation by 2020 in terms of: Knowledge economy Education from primary to tertiary level Global Information Communication Technolgy hub - MSC Science & Technology Employment Technical and Management professionals Maritime and automobile professionals Research and Development