Introduction

PETRONAS, acronym for Petroliam Nasional Berhad, is a Malaysian owned oil and gas company that was founded on 17 August 1974. Wholly owned by the Government, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and adding value to these resources. PETRONAS is ranked among Fortune Global 500s largest corporations in the world. In 2007, its revenue was in excess of US$51 billion. Source: Wikipedia and Fortune Global 500 Since its incorporation it has grown to be an integrated international oil and gas company with business interests in 31 countries. As of the end of March 2005, the PETRONAS Group comprised 103 wholly owned subsidiaries, 19 partly-owned outfits and 57 associated companies. Together, these companies make the PETRONAS Group, which is involved in various oil and gas based activities. The Financial Times has identified PETRONAS as one of the new seven sisters: the most influential and mainly state -owned national oil and gas companies from countries outside the OECD. The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment. PETRONAS built the Petronas Twin Towers (opened 1998), the tallest twin towers and once the worlds tallest buildings, as its headquarters. PETRONAS vision was "To be A Leading Oil and Gas Multinational Company of Choice and it stated the globalization effort in 1994. PETRONAS global operation had extended to Africa countries, Confederate Independence of Soviet Union (CIS), Middle East and Asia Pacific countries. Some of the Africa countries included Sudan, South Africa (downstream Engen), Libya and Algeria. The investments in CIS were Turkmenistan and Kazarkstan. The investment in Middle East countries included Iran, Syria and Iraq. In the Asia Pacific, the oversea portfolios extended to Vietnam, Mynmar, China and Australia (both Upstream and downstream). The oversea upstream activities were undertaken by its subsidiary PETRONAS Carigali SdnBhd (PCSB) through its oversea subsidiary companies. When PETRONAS started its globalization efforts, the environmental factors were very much favorable. However, in 1 997 and 1998 there were adverse changed in these environmental factors and had affected PETRONAS globalization efforts. Some of these factors were the regional and world economic turmoil, regional financial and currency devaluation, slower economic growth, low demand of oil and gas, lower oil and gas price and lower prospectivity and commerciality of the oil and gas projects. This case study evaluated PETRONAS strategic position and the impact on the international portfolios and made recommendation relating to these strategic issues.

Problems encountered by the case. At the turn of the century, there have been intense cries for the human race to address the issue of global warming and the impending melt down of earth! Are these mere lip services or anybody, somebody yet nobodys issue? Are we doing our bit to save the environment? In relation to this, MPC undertakes the initiative to share, inform, update and remind ourselves of our responsibilities in taking care of Mother Nature and understanding the environment that we live in. The global focus is now on sustainable development. This is a crucial factor as we all strive for continuous productivity, quality and competitiveness. Sustainable development is pursued so that we all can have a preferable future that includes a cleaner environment, a sustained level of economic development without excessive waste and pollution, and the protection of natural resources and biodiversity. To achieve this, we need to develop a sense of citizenship in the sustainable development process through the delivery of quality education, a reappraisal of our core values systems, and the empowerment of communities to make their own decisions on the future that they want to see - both for ourselves and our children. At individual level, each one of us could contribute to a better environment such as taking public transport, cycling, walking, using energy efficient items, recycle wastes and changing our lifestyles! At the organization level, the ever-increasing demand for products and services is taking a toll on the environment. Exploitation of resources and manufacturing by-products are increasing the stress on the natural world. After 2013, in the next two years production issues will limit the company growth. The downstream segment was the major contributor to company revenue. Resource for production had been reduce because several factor. External factor effect the company production. Need to discover a new place for new oil resource to maintain the production. Spend more to maintain level of production as many of its oil fields are mature. PETRONAS has achieved the highest nine-months period as compared to any nine-months period profit thus far. This profit is achieved even though they are encountering problems with their production contract sharing partner (Murphy Oil Corp).The profit could be higher if they could tackle the problems their partner are having in Kikeh, offshore Sabah. Despite this, PETRONAS is still compensating Tenaga Nasional Bhd losses amounting to RM 1 billion to help the company to cope with losses incurred with gas shortages in Peninsular Malaysia. PETRONAS is awaiting a new formula of gas pricing mechanism from the National Economic Council for example the government with hope that this will bring a new light into the current issues inflicting PETRONAS. Basically PETRONAS is facing issue of mostly politically related.Even with the issues, PETRONAS still manage to prosper growth. The political issues in Sudan and Egypt. Ongoing war and economic instability also contributed .

The looming growth of globalisation and continuous development have resulted in a negative impact on the environment, which will be detriment to the survival of mankind and other living things on this planet if we do not take the necessary steps to reduce this impact. As for our planet, it has all the time in the world to regenerate itself, but we dont. The threat to our survival has become more apparent with the increasing number of environmental catastrophe such as earthquakes, flooding, drought, water shortage, depleting natural resources and ultimately the increase in Greenhouse Gases fueled by rapid development to meet the current population demands, which contributes to Global Warming. Global warming is the result of the constant increase in the level of carbon dioxide (CO2) in the atmosphere measured in parts per million (PPM). Scientists has revealed that if this measure reaches 450PPM, the world will be at the tipping point of its own survival, and this number is climbing fast. However, this can be mitigated through increasing awareness of how real the problem is, by the adoption of Environmental and Ecological Economics, alongside mainstream/neo- classical economics which takes into account the environmental impacts that economic growth promotes as well. One way of addressing this issue is through Sustainable Development (SD). According to The Brundtland Report (1987), Sustainable Development is the development that meets the needs of the present without compromising the ability of future generations to meet their economic needs (intergenerational equity). Mainstream economics measure a countrys development through demand and supply expressed in Gross Domestic Product. However, it does not take into account the depletion of natural, inadequate treatment of defensive expenditures i.e. pollution abatement and health protection costs, and fails to take into account the effects of environmental degradation. At the same time, we cannot forget or ignore the needs of the present (intergenerational equity).

Solution process for the problems. PETRONAS need to find alternative investment to cover up the losses Foreign investment is the best way Joint ventures with local related company PETRONAS are aiming to invest in India and Russia Venturing in Islamic countries are considered as an advantage. PETRONAS also has the advantage of corporate responsibility Oil and Gas (O&G) companies such as PETRONAS are often seen as one of the major contributors to the worlds polluters, directly and indirectly right down from exploration activities i.e. upstream activities, through to its downstream services or the refining, selling and distribution of oil and gas products. Conservationist and environmental activist will highly unlikely stop rallying against O&G companies even though some might prove, in the future, that they are able to minimize the impact of global warming. This is so because of the facade that they have built upon themselves since crude oil was discovered and the role they played in helping us pollute the world we live in, even though it contributed greatly to the development of human kind, economically and socially. This has since become the fate of the future of O&G companies, and the only hope is to find a solution that will someday rectify this detrimental belief, and we have to face the facts. One way of turning this image around is to show concern about the environment and taking measures to reduce the impact of businesses such as the one PETRONAS is operating, through SD. There is a growing number of oil companies that are revising its business strategy to include SD policy in order to tackle Global Warming. For example, Royal Dutch Shell is one of the first energy companies to acknowledge the threat of climate change and is constantly promoting its environmental policy to limit green house gas emissions through control of greenhouse gas emissions, investing in new technologies to produce renewable fuel which reduces the depletion of natural capital and reduce their carbon footprint. As mentioned earlier, PETRONAS is emerging as one of the top energy companies in the world. This is a good time and opportunity to revise its business strategy to include SD policy. In practice, this commitment requires PETRONAS to both delivery benefits and reduces its impacts. Importantly, it covers what is produced as well as how it is produced. Through PETRONASs portfolio and products, benefits are delivered by providing the modern energy that people need to prosper, and help reduce energys impacts by offering cleaner products like natural gas, better biofuels, and petrol and diesel that help customers drive more fuel efficiently. Through operations, PETRONAS should look to create lasting social benefits by employing local people, using local contracts and suppliers, and setting good example through its business practices and ethics.

To work to reduce environmental and social impacts out its operations by safeguarding the health and safety of its employees and neighbors, reducing disruptions to the community lowering its emissions including greenhouse gases, reducing its impact on biodiversity and depletion of natural capital through using less energy, water and other resources to produce the energy the world needs for development. There is no trade-off between being economically responsible (profitable) and socially and environmentally responsible. In fact, it is the combination of both that will make PETRONAS even more profitable. By adopting SD, the company is less seen as the big bad wolf. It will earn the license to operate and grow. By listening to the communities in which it exists and addressing their expectations, it significantly reduce the chance of project delays, approval failures or disruption in existing operations. These are significant risks to PETRONASs business. Contributing to SD also helps attract and retain staff, customers and business partners who are central to its business success and future growth. By being aware of emerging changes to its customers values and changes in regulatory requirements, it can develop products and services before competitors that meet its customers needs for clean, convenient and affordable energy. By adopting new or cleaner technologies it can improve the efficiency of its operations, reduce costs, avoid current and guture costs of emissions, and even create new income streams like carbon credits. Sustainability to PETRONAS means carrying out our business in a socially responsible and holistic manner. This is to ensure continued growth as well as success for the benefit of present and future generations where we operate. PETRONAS is committed to strengthening our sustainability agenda in line with industry and stakeholder expectations. We embrace responsible management and operational practices, policies and procedures that complement as well as accelerate business performance and delivery. Essentially, this is to create business value by effectively managing risks. PETRONAS is a member of several industry associations that collectively deliberate on best practices and experiences in response to business needs. This includes the ASEAN Council on Petroleum (ASCOPE), International Gas Union (IGU), International Petroleum Industry Environmental Conservation Association (IPIECA), Malaysian Gas Union (MGA), Malaysia Oil & Gas Services Council (MOGSC) and Petroleum Industry of Malaysia Mutual Aid Group (PIMMAG). Furthermore Response Limited (OSRL). Subscribing Member of the Oil Spill

Recommendations for the problems.

Goal-Setting The purpose of goal-setting is to clarify the vision for your business. This stage consists of identifying three key facets: First, define both short- and long-term objectives. Second, identify the process of how to accomplish your objective. Finally, customize the process for your staff, give each person a task with which he can succeed. Keep in mind during this process your goals to be detailed, realistic and match the values of your vision. Typically, the final step in this stage is to write a mission statement that succinctly communicates your goals to both your shareholders and your staff.

Analysis Analysis is a key stage because the information gained in this stage will shape the next two stages. In this stage, gather as much information and data relevant to accomplishing your vision. The focus of the analysis should be on understanding the needs of the business as a sustainable entity, its strategic direction and identifying initiatives that will help your business grow. Examine any external or internal issues that can affect your goals and objectives. Make sure to identify both the strengths and weaknesses of your organization as well as any threats and opportunities that may arise along the path.

Strategy Formulation The first step in forming a strategy is to review the information gleaned from completing the analysis. Determine what resources the business currently has that can help reach the defined goals and objectives. Identify any areas of which the business must seek external resources. The issues facing the company should be prioritized by their importance to your success. Once prioritized, begin formulating the strategy. Because business and economic situations are fluid, it is critical in this stage to develop alternative approaches that target each step of the plan.

Strategy Implementation Successful strategy implementation is critical to the success of the business venture. This is the action stage of the strategic management process. If the overall strategy does not work with the business' current structure, a new structure should be installed at the beginning of this stage. Everyone within the organization must be made clear of their responsibilities and duties, and how that fits in with the overall goal. Additionally, any resources or funding for the venture must be secured at this point. Once the funding is in place and the employees are ready, execute the plan.

Evaluation and Control Strategy evaluation and control actions include performance measurements, consistent review of internal and external issues and making corrective actions when necessary. Any successful evaluation of the strategy begins with defining the parameters to be measured. These parameters should mirror the goals set in Stage 1. Determine your progress by measuring the actual results versus the plan. Monitoring internal and external issues will also enable you to react to any substantial change in your business environment. If you determine that the strategy is not moving the company toward its goal, take corrective actions. If those actions are not successful, then repeat the strategic management process. Because internal and external issues are constantly evolving, any data gained in this stage should be retained to help with any future strategies.

SD in PETRONAS

Clearly, by adopting SD, not only will PETRONAS gain the competitive advantage that most energy companies require at this important stage in time, it will also ensure the protection that the environment needs for us to co-exist a little bit longer on this planet and safeguard the future of our generations. However, one must be wary of the fact that the sentiment of some group of people i.e. environmental activists, will not diminish entirely and will take a very long time for this to change. One must also be wary of the term Greenwashing i.e. not walking the talk, which can ultimately hinder the turnaround of energy companies negative image that they have been carrying all these years. For example, Chevron had been accused of Greenwashing because they claimed that they are taking all the steps necessary to go green, but at the same time dumping toxic waste as well as violating human rights in Ecuador and other parts of the world.

Conclusion Climate change and the protection of the environment continues to be among key sustainable development issues in the oil and gas industry. The industry is focused on efficient use of natural resources, the reduction of carbon emissions, and mitigating the impact on the environment while meeting the worlds growing energy needs. PETRONAS endeavours to use resources such as energy and water responsibly in all our operations and we aim to reduce our carbon footprint through new and ongoing initiatives. As the corporation explores new and unconventional opportunities to supply energy for ongoing socio-economic growth, PETRONAS will continue to balance socio-economic and environmental requirements as we address these emissions challenges.In addition, PETRONAS Working Groups for Carbon and Water have performed baseline assessments and have identified opportunities for immediate savings. Overall, our technical experts in Carbon management across PETRONAS assessed the corporations performance and made recommendations for improvements across the business, including assessing opportunities from its carbon stock.Efficient use of water has become a key sustainable development issue globally, and is an essential resource in our operations. We have taken proactive steps to manage supply risk and minimise the use of fresh water in our operating units by reducing, reusing and recycling this natural resource where possible. During the year in review, PETRONAS has completed a biodiversity risk assessment at all our areas of operation, and we have taken the necessary measures to mitigate the impact of our activities on surrounding areas. As we operate in mega-biodiverse countries, we take a riskbased approach and have completed a desktop assessment to identify high risk areas. We endeavour to minimise the effect of our activities on biodiversity at all our operational sites. It is imperative that PETRONAS take the necessary actions to operate a sustainable business and be mindful of the impacts on the environment. There are steps that can be implemented immediately so it will not lose out on its competitive advantage. Changes must take effect from the top level management and instilled right down to the people working on the ground level. Leaders should first to make the move so there will be less resistance to change. Bringing about changes to PETRONASs business strategy to include SD will not be easy, and greenwashing should be avoided. However, when done properly, the company will not only thrive but also looked upon as an eco-friendly greenie rather than a master-less genie.