May 13, 2018 · 1 min read

Expect changes at Petronas, which answers to the Prime Minister

Tom KirkmanIndependent Project Manager

I fully expect some changes to be made to PETRONAS – Malaysia’s National Oil Company.

By law, PETRONAS is subject to the control and direction of the Prime Minister.

There is a new Malaysia Prime Minister.

And I suspect that Dr. Mahathir may want to exert a bit of control over the direction that PETRONAS is taking.

Excerpts below from Malaysia’s Petroleum Development Act 1974, for reference of the Prime Minister’s control over PETRONAS.

= = = = = = = =

Ownership

2. (1) The entire ownership in, and the exclusive rights, powers,liberties and privileges of exploring, exploiting, winning and obtaining petroleum whether onshore or offshore of Malaysia shall be vested in a Corporation to be incorporated under the Companies Act 1965 or under the law relating to incorporation of companies.
…

The Corporation

3. (1) Notwithstanding section 22 of the Companies Act 1965,relating to the names of companies, the Corporation shall be styled as the Petroleum Nasional Berhad or in short form PETRONAS.

(2) The Corporation shall be subject to the control and direction of the Prime Minister who may from time to time issue such direction as he may deem fit.

FROM THE THREAD

Tom's notes 8

Tom KirkmanMay 13, 2018
You can freely download Malaysia Petroleum Development Act 1974. I believe the latest revision to this Act was 2013.

https://www.google.com/url?sa=t&source=web&rct=j&url=http://www.agc.gov.my/agcportal/index.php%3Fr%3Dportal2/lom2%26id%3D239&ved=2ahUKEwiQ3bmdjILbAhWLro8KHeM4C70QFjAAegQIBxAB&usg=AOvVaw0ohgbXNx62a_tAVqE8VxPe
Tom KirkmanMay 13, 2018
Act 144 excerpt continued:
======================

(3) Notwithstanding the provisions of the Companies Act 1965 or any other written law to the contrary, the direction so issued shall be binding on the Corporation.
...

National Petroleum Advisory Council

5. (1) There shall be established a Council to be known as theNational Petroleum Advisory Council consisting of such personsincluding those from the relevant States as the Prime Minister mayappoint.

(2) It shall be the duty of the National Petroleum AdvisoryCouncil to advise the Prime Minister on national policy, interests and matters pertaining to petroleum, petroleum industries, energyresources and their utilization.
Tom KirkmanMay 13, 2018
Act 144 excerpt continued:
======================

Power to make regulations

7. The Prime Minister may make regulations for the purpose of carrying into effect the provisions of this Act and, without prejudiceto the generality of the foregoing, such regulations may, in particular,provide for -

(a) the conduct of or the carrying on of -

(i) any business or service relating to the exploration,exploitation, winning or obtaining of petroleum;

(ii) any business involving the manufacture and supplyof equipment used in the petroleum industry;

(iii) downstream activities and development relating to petroleum;
Tom KirkmanMay 13, 2018
Any hints about the person you had in mind, Amir?
Tom KirkmanMay 14, 2018
Amir, MM Jr. is an interesting choice. But he would certainly result in accusations of nepotism. Better to not have a son as head of Petronas, since Petronas is controlled by the Prime Minister. And to avoid even the *appearance* of impropriety.

Not saying that MM Jr. Isn't qualified. But the new leaders and new Prime Minister of Malaysia will already have an uphill battle fending off the election's losing coalition. They don't need the firestorm that would surely result if MM Jr. was made the head of Petronas by his Father the Prime Minister.
Tom KirkmanMay 14, 2018
Amir, let's let Dr. M sort things out first. The election was less than 1 week ago, and the new government has lots and lots to get done.
Tom KirkmanMay 14, 2018
An article from Platts regarding Petronas.

Please note that I disagree with the article title, and see the election results as strengthening Pertonas performance in the medium and long term, despite some short term anxiety caused by initial uncertainty after the election.

https://www.platts.com/latest-news/oil/singapore/analysis-malaysia-regime-change-heralds-risks-27978077
Tom KirkmanMay 15, 2018
I *disagree* with the assessment by this Interfax article. I believe the recent election will *strengthen* Petronas in the medium and long term, even if there are a few short term hiccups due to the *peaceful transition of power*.

http://interfaxenergy.com/gasdaily/article/30834/malaysias-election-marks-setback-for-petronas

The landmark result will raise challenges for Petronas and lead to more political risk for companies involved in the country.

The surprise victory of Mahathir Mohamad and his Pakatan Harapan coalition in Malaysia’s elections could lead to a greater strain on Petronas’s finances and see the company loosen its grip on key producing regions.

The losing Barisan Nasional party had been in power since in 1957, meaning Pakatan Harapan will face a significant challenge to manage the transition of power and deliver on its policies. As the state oil and gas company, Petronas is a major source of revenue for the government, and it will undergo..."

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