Thursday, February 04, 2010

Verdict On New Petronas CEO

It was going to be a critical decision, although nobody in the mainstream media would dare to admit the repercussions and consequences if we made a not so "correct" choice. Petronas is not just a company, it basically sustains a large portion of the country's fortunes and livelihood. Imagine if we were not oil rich or Petronas was just one tenth the size it is now - I wonder where would we fund our infrastructure and fiscal budget.

Mahathir threw a spanner into the works when he said that the new Petroliam Nasional Bhd (Petronas) chief executive officer (CEO) must be from within the conglomerate to ensure continuity - strong words coming from the company's adviser. He added that this was also necessary because the new CEO would be familiar with the operations. “Most importantly, we have done business with so many countries. We know heads of governments and an entirely new person will find difficulty in establishing contact with the people we are doing business with,” he added.

Tan Sri Hassan Marican’s tenure as chief executive officer of Petronas is over. He will be replaced next week by Datuk Shamsul Azhar Abbas, a surprise choice given that he, like Hassan, is 57 years old and was not one of the senior Petronas officials identified as part of the succession planning. Besides Shamsul, also considered were Petronas stalwarts Datuk Wan Zulkiflee Wan Ariffin, Anuar Ahmad and Ahmad Nizam Salleh.

By appointing Shamsul, who has had a long history in Petronas, the government will hope to minimise some of the criticisms that could come their way over the manner in which Hassan’s position has been handled. Shamsul retired last January as managing director of MISC, a Petronas subsidiary. Among the senior positions held in Petronas, Shamsul had been vice-president in the petrochemical, oil exploration and production, as well as logistics and maritime businesses. He joined Petronas in 1975, and had served previously as executive assistant to former chairman Tan Sri Azizan Zainal Abidin, who died in 2004.

My verdict on the choice of the new CEO, excellent - judging from his stint at MISC, diligent, professional and astute. Although I wished Hassan Marican could have been engaged to sign on for another 5 years. I think he was one of the best CEOs among all the top oil companies, and this is not just my view but just ask around the industry. He has shored up the reserves and gone into strategic joint ventures to ensure Malaysia's future is secure (to an extent). For all his contribution, I think the government could have treated the non-renewal of his contract a lot better. He certainly deserves to be treated a lot better.

Many of the brickbats thrown at Petronas were unwarranted. People have to learn to distinguish Petronas' role as a custodian, they do not set the prices at the gas pump. If there had been an inefficient allocation and management of resources, blame the right parties, not Petronas. Its like you have a bank account, and then frivolously took the funds out and spent it all "ineffectively", then had the gall to go to the bank and blame the bank for allowing you to spend it all.

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