PETRONASAnnualReport2012 PDF

ANNUAL REPORT 2012
reimagining energy TM
OUR BUSINESS
Crude Oil Natural Gas

A
C
B D
F G H I J
A Exploration, Development F Petroleum Products Transportation Sector

and Production -Diesel, Gasoline, Jet Fuel and Lubricants
Industrial Sector
B Rening G Petrochemical Plant
-Ethylene, Methanol, MTBE, Polyethylene, Propylene, Urea and VCM
C Processing H Liqueed Petroleum Gas (LPG) Residential; and Commercial Sectors
D Liquefaction I Processed Gas / Peninsular Power Sector

Utilisation (PGU) System Industrial Sector
E Liqueed Natural Gas (LNG)
J Regasication Terminal Export Sector
Our Presence
E&P
Gas & Power
Downstream
Exploration & Production (E&P)

Africa Algeria Development Cameroon Exploration & Development Chad Development & Production
Egypt Exploration, Development & Production Mauritania Exploration & Production Mozambique Exploration
Republic of South Sudan Exploration, Development & Production Republic of Sudan Exploration, Development & Production
Sierra Leone Exploration
Asia Pacific Australia Exploration, Development & Production Brunei Exploration Indonesia Exploration, Development & Production
Malaysia Exploration, Development & Production Malaysia-Thailand Joint Development Area Exploration, Development & Production
Myanmar Exploration, Development & Production Vietnam Exploration, Development & Production
Central Asia Turkmenistan Exploration, Development & Production Uzbekistan Exploration, Development & Production
Latin America Cuba Exploration Venezuela Development
Middle East Iraq Exploration, Development & Production Oman Exploration & Development
North America Canada Development & Production
Gas & Power

Africa Egypt LNG
Asia Pacific Australia LNG & Infrastructure Indonesia Infrastructure Malaysia LNG, Infrastructure, Utilities & Power, Trading
Singapore Power Thailand Infrastructure
Central Asia Uzbekistan Gas-to-Liquid
Europe Ireland Infrastructure United Kingdom Infrastructure, Utilities & Trading
North America Canada LNG
Downstream*
Africa Botswana Oil Business Burundi Oil Business Democratic Republic of the Congo Oil Business Gabon Oil Business
Ghana Oil Business Guinea Bissau Oil Business Kenya Oil Business Lesotho Oil Business Malawi Oil Business
Mauritius Oil Business Mozambique Oil Business Namibia Oil Business Runion Oil Business
Rwanda Oil Business Swaziland Oil Business South Africa Oil Business Republic of South Sudan Lubricants & Oil Businesses
Republic of Sudan Lubricants & Oil Businesses Tanzania Oil Business Zambia Oil Business Zimbabwe Oil Business
Asia Pacific China Lubricants & Petrochemical Businesses India Lubricants & Petrochemical Businesses
Indonesia Lubricants, Oil & Petrochemical Businesses Malaysia Lubricants, Oil & Petrochemical Businesses
Philippines Lubricants, Oil & Petrochemical Businesses Thailand Lubricants, Oil & Petrochemical Businesses
Vietnam Lubricants, Oil & Petrochemical Businesses
Europe Austria Lubricants Belgium Lubricants Denmark Lubricants France Lubricants Germany Lubricants
Italy Lubricants Netherlands Lubricants Poland Lubricants Portugal Lubricants Spain Lubricants
Turkey Lubricants United Kingdom Lubricants
Latin America Argentina Lubricants Brazil Lubricants
North America United States of America Lubricants
*Includes Engen subsidiaries and marketing and trading offices.

2013 PETROLIAM NASIONAL BERHAD (PETRONAS)
All rights reserved. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or
otherwise) without the permission of the copyright owner. PETRONAS makes no representation or warranty, whether expressed or implied, as to the accuracy or completeness of the facts
presented. PETRONAS disclaims responsibility from any liability arising out of reliance on the contents of this publication.
PETRONAS ANNUAL REPORT 2012 reimagining energy

3
Table of Contents
Our Business 68 Technology & Engineering
3 Our Presence 76 Our People
5 Corporate Statements 84
Health, Safety &
Environment (HSE)
6 Corporate Profile
40
Exploration & 90 Awards & Recognitions
Production
8 Board of Directors
96
Corporate Social
Responsibility
14 Executive Committee
1
02 Main Events
15 Management Committee
1
08 Glossary
16 Vice Presidents
113 Financial Statements

18 President &
Group CEO Message
50 Gas & Power
22
Statement of Corporate
Governance
The Group changed its
26
Statement of Anti- financial year in 2012 from
Corruption March to December, making it
a nine month reporting period
27
Statement on
from 1 April to 31 December.
To allow for meaningful
Internal Control
comparison, comparatives
for the twelve month ended
32 Financial Results 31 December 2011 has been
included, where relevant.
58 Downstream
4 PETRONAS ANNUAL REPORT 2012

Vision
To Be A Leading
OIL AND GAS MULTINATIONAL
OF CHOICE
Mission Shared Values
We are a business entity Loyalty
Loyal to the nation and corporation
Petroleum is our core business
Integrity
Our primary responsibility is to develop and Honest and upright
add value to this national resource
Professionalism
Our objective is to contribute to the well-being Committed, innovative and proactive and
of the people and the nation always striving for excellence
Cohesiveness
United in purpose and fellowship

5
Company Profile
Petroliam Nasional Berhad is Malaysias National Petroleum
Corporation wholly-owned by the Malaysian Government.
Established in 1974, PETRONAS is now ranked among the largest
companies in the world with a proven track record in integrated oil
and gas operations spanning the entire hydrocarbon value chain.
PETRONAS business activities include (i) the of petrochemical products; (vi) the trading of
exploration, development and production of crude oil, petroleum, gas and LNG products
crude oil and natural gas in Malaysia and overseas; and petrochemical products; and (vii) shipping
(ii) the liquefaction, sale and transportation of and logistics relating to LNG, crude oil and
Liquefied Natural Gas (LNG); (iii) the processing petroleum products. Committed to ensuring
and transmission of natural gas, including power business sustainability, PETRONAS also strives to
generation, and the sale of natural gas products; responsibly manage natural resources in a way
(iv) the refining and marketing of petroleum that contributes holistically to the well-being of
products; (v) the manufacturing and selling the people and nations wherever it operates.
Exploration &
Production
PETRONAS Exploration & Production (E&P) aims
for Safe and Profitable Growth through effective
domestic resource management and highgrading
and acquiring assets/ventures across the
exploration, development and production value
chain.
The Petroleum Management Unit of PETRONAS

manages domestic oil and gas assets, by
pioneering innovative solutions to drive business
growth in the Malaysian oil and gas industry.
This includes Enhanced Oil Recovery, small field
development and intensifying exploration activities.
Its E&P subsidiary, PETRONAS Carigali Sdn

Bhd (PCSB) is a hands-on operator with an
established track record of successful oil and development projects. These include deepwater
gas developments. Actively strengthening the and unconventional resources.
nations upstream resource base and production,
PCSB works alongside a number of petroleum PETRONAS continues to harness and implement
multinational companies through Production new technologies to reap the benefits of every
Sharing Contracts to explore, develop and produce hydrocarbon molecule recovered in its vision to
oil and gas in Malaysia. Abroad, PETRONAS become a leading global E&P player.
continues to build on its E&P portfolio, securing
new acreages while undertaking various

Gas & Power
PETRONAS is positioning itself to be a The Infrastructure, Utilities & Power
leading gas, Liquefied Natural Gas (LNG) business is focused on ensuring long-term
and power player through two major security, sustainability, and utilisation of
portfolios under its Gas & Power business; natural gas in Malaysia while continuing to
Global LNG business and Infrastructure & expand its portfolio of infrastructure and
Utilities business. power in various international markets.
This encompasses gas processing,
PETRONAS Global LNG business transportation, regasification as well as
commands a significant international equity participation in power generation.
market share; owing to three decades
of experiences and proven capability Since the 1980s, the Peninsular Gas
along the LNG value chain. PETRONAS Utilisation pipeline system has been
is committed to continue strengthening delivering gas to the power and non-
its market position and preserve its power sectors in Peninsular Malaysia as
reputation as a preferred LNG supplier well as to the power industry in Singapore.
distinctive for its quality and reliability In addition, gas processing has also
through strategic expansion projects, spurred Malaysias petrochemical industry.
venturing into unconventional plays in PETRONAS is committed to continue
Australia and Canada, as well as growing growing its infrastructure and power
its international LNG trading portfolio. business including renewables power
business.
Downstream lubricants manufacturing and marketing
Business arm of PETRONAS, with presence in more

than 50 countries and five continents.
PLI is responsible in setting PETRONAS
PETRONAS ambitious downstream global lubricant strategic direction and
expansion through its integrated growth with a product range that includes
operations in refining & trading, marketing lubricants and functional fluids for both
& retailing as well as in the petrochemicals the automotive and industrial markets as
sector plays a strategic role to increase well as a range of car care products.
the value of every molecule extracted
through its exploration activities. The integrated development of Malaysias
petrochemical industry is expected
PETRONAS owns and operates three to promote the development of the
refineries in Malaysia, two in Melaka and countrys industrial base, especially the
another in Kertih. The PETRONAS refining plastics and chemical based component
portfolio is also complemented by its manufacturing industry. The Companys
refining presence in Africa through its consolidated petrochemical business
80% owned subsidiary, Engen Petroleum under the PETRONAS Chemicals
Limited, a leading African refining and Group Berhad is the largest integrated
marketing company which owns and petrochemical producer in Malaysia and
operates a refinery in Durban, South among the largest in South East Asia.
Africa.
PETRONAS robust development of its
In the Malaysian market, PETRONAS downstream portfolio is expected to
Dagangan Berhad manages all domestic further enhance Malaysias economic,
marketing and retailing activities for a wide industrial and knowledge base. In the
range of petroleum products. PETRONAS long-term, this augurs well to support
also operates service stations in various Malaysias growth agenda and the
international markets such as South Companys integrated plan to become a
Africa and Sudan. PETRONAS Lubricants key downstream player in the region.
International Sdn Bhd (PLI) is the global

7
Board of Directors
Datuk Manharlal Ratilal Tan Sri Mohd Sidek Hassan Datuk Anuar Ahmad Tan Sri Dato
Executive Director Chairman of Executive Director Shamsul Azhar Abbas
the PETRONAS Board President &
Group Chief Executive Officer
* Tan Sri Dr Mohd Irwan Datuk Muhammad Ibrahim Datin Yap Siew Bee Tan Sri Dato Seri Hj
Siregar Abdullah Non Independent Independent Non Executive Director, Megat Najmuddin
Non Independent Non Executive Director Chairperson of the PETRONAS Datuk Seri Dr Hj Megat Khas
Non Executive Director Remuneration Committee Independent Non Executive Director,
Chairman of the PETRONAS Board
Governance & Risk Committee
* Tan Sri Dr Wan Abdul Aziz Wan Abdullah retired from the PETRONAS Board on 28 November 2012

Datuk Mohd Omar Mustapha Krishnan CK Menon, FCA Dato Wee Yiaw Hin Faridah Haris Hamid
Independent Independent Executive Director Company Secretary
Non Executive Director Non Executive Director,
Chairman of
the PETRONAS Board
Audit Committee
Datuk Wan Zulkiflee Tan Sri Amirsham A Aziz Dato Mohamad Idris Mansor Abdul Rahman Musa @ Onn
Wan Ariffin Independent Independent Joint Company Secretary
Executive Director Non Executive Director Non Executive Director
& Chief Operating Officer

9
Board of Directors
Tan Sri Mohd Sidek Hassan Tan Sri Dato Shamsul Azhar Tan Sri Dr Mohd Irwan Datuk Muhammad Ibrahim
Chairman of the Board Abbas Serigar Abdullah Non Independent Non Executive Director,
Tan Sri Sidek Hassan was President & Non Independent Member of the PETRONAS Board Audit
appointed to the PETRONAS Group Chief Executive Officer Non Executive Director Committee and Board Governance & Risk
Board on 1 July 2012. He has held Tan Sri Dato Shamsul Azhar Abbas Dato Sri Dr. Mohd Irwan Serigar Committee
various senior positions within the was appointed to the PETRONAS Abdullah was appointed to the Datuk Muhammad Ibrahim was
government namely as Malaysias Board on 10 February 2010, PETRONAS Board in November appointed to the PETRONAS
Trade Commissioner in Sydney, and is currently the President & 2012. He is currently the Secretary Board in April 2010. He is
Minister Counselor of Economic Group Chief Executive Officer of General of Treasury at the Ministry currently the Deputy Governor of
Affairs in Washington D. C. as PETRONAS. He began his career of Finance Malaysia. His tenure Bank Negara Malaysia. His areas
well as Deputy Secretary-General with PETRONAS in 1975 and prior at the Ministry of Finance has of expertise include financial
(Trade) and Secretary-General to his current appointment held seen him hold key positions in markets, foreign exchange,
of the Ministry of International numerous senior management its Economic Division, Economic banking and insurance.
Trade and Industry. Prior to joining positions within the Group. Tan Sri Analysis and International Division He also sits as a member of
PETRONAS, he was the Chief Dato Shamsul is also Chairman and as the Deputy Secretary the Banks Monetary Policy
Secretary to the Government of of the Board of PETRONAS General (Policy). Dato Sri Dr. Committee and Financial Stability
Malaysia from 2006 to 2012. At Carigali Sdn Bhd, the Groups Mohd Irwan Serigar Abdullah also Committee. He is a trustee of
present, he is also the President of wholly-owned exploration and serves as a Board member of the Tun Ismail Ali Chair Council,
the International Islamic University production arm. He also serves notable organisations including a former commissioner of
Malaysia. as Chairman of the National Trust the Malaysia Airline System the Securities Commission of
Fund of Malaysia. On 2 June 2012, Berhad (MAS), Felda Global Malaysia and Senior Associate of
he was conferred the Darjah Ventures Holding Berhad (FGVH), the Institute of Bankers Malaysia.
Panglima Setia Mahkota (PSM) Padiberas Nasional Berhad He sits on the Board of the
which carries the title Tan Sri by (BERNAS), Syarikat Jaminan Retirement Fund Incorporated
His Majesty the Yang Di-Pertuan Pembiayaan Perniagaan Berhad and is a member of the Malaysian
Agong. (SJPP), Malaysia Deposit Insurance Institute of Accountants and
Corporation (PIDM) and Lembaga member of the Investment Panel
Kemajuan Tanah (FELDA). He is of National Trust Fund. He is a
also the Chairman of Kumpulan board member of the SEACEN
Wang Amanah Persaraan Research and Training Centre
Diperbadankan (KWAP), Lembaga and chair of the senate for
Hasil Dalam Negeri (LHDN) and International Centre for Education
Cyberview Sdn. Bhd. in Islamic Finance [INCEIF]. He is
On 1 June 2013, he was conferred also the Chairman of Irving Fisher
the Darjah Panglima Setia Committee on Central Bank
Mahkota (PSM) which carries the Statistics, Bank for International
title Tan Sri by His Majesty the Settlement. On 2 June 2012,
Yang Di-Pertuan Agong. he was conferred the Darjah
Panglima Jasa Negara (PJN)
which carries the title Datuk by
His Majesty the Yang Di-Pertuan
Agong.

Tan Sri Amirsham A Aziz Tan Sri Dato Seri Krishnan CK Menon, FCA Datin Yap Siew Bee
Independent Non Executive Director, Hj Megat Najmuddin Independent Non Executive Director, Independent Non Executive Director,
Member of the PETRONAS Board Datuk Seri Dr Hj Megat Khas Chairman of the PETRONAS Board Chairperson of the PETRONAS
Governance & Risk Committee Independent Non Executive Director, Audit Committee and Member of the Remuneration Committee
Tan Sri Amirsham A Aziz was Chairman of the PETRONAS Board PETRONAS Board Governance & Risk Datin Yap Siew Bee was appointed
appointed to the PETRONAS Governance & Risk Committee Committee to the PETRONAS Board in April
Board in October 2011. He Tan Sri Megat Najmuddin was Krishnan CK Menon was 2010. She is currently Consultant
joined the Maybank Group in appointed to the PETRONAS appointed to the PETRONAS to the firm of Mah-Kamariyah &
1977 and has held various senior Board in April 2010. He is Board in April 2010. He is a Fellow Phillip Koh. She has advised as
positions within the Group. He currently the President of both of the Institute of Chartered legal counsel on significant oil
served as President and Chief the Federation of Public Listed Accountants in England and and petrochemical projects in
Executive Officer of Maybank for Companies Berhad (FPLC) and the Wales, a member of the Malaysian Malaysia and has extensive oil and
a period of 14 years from 1994 Malaysian Institute of Corporate Institute of Accountants and the gas advisory experience including
to 2008. He was Chairman of Governance (MICG). He currently Malaysian Institute of Certified negotiation of international oil
the National Economic Advisory serves as the Non-Executive Public Accountants. He is and gas ventures on behalf of
Council (NEAC) and served as the Chairman of several public currently Chairman of SCICOM PETRONAS. Her areas of expertise
Minister in the Prime Ministers listed companies and is active in (MSC) Berhad, KLCC Property include mergers and acquisitions,
Department in charge of the non-governmental organisations Holdings Berhad and KLCC corporate finance, corporate
Economic Planning Unit and the (NGOs). (Holdings) Sdn Bhd. He is a non- restructuring and commercial
Department of Statistics in 2008 executive director of MISC Berhad ventures.
to 2009. He is a member of the and is also the Chairman of the
Malaysian Institute of Certified Board Audit Committee in MISC
Public Accountants (MICPA) and Berhad.
is a non-executive director on the
Boards of international companies
such as Lingui Developments
Berhad, Samling Global Limited,
and CapitaMall Asia Limited.

11
Board of Directors
Dato Mohamad Idris Datuk Mohd Omar Datuk Wan Zulkiflee Datuk Anuar Ahmad
Mansor Mustapha Wan Ariffin Executive Director
Independent Non Executive Director, Independent Non Executive Director, Executive Director & Datuk Anuar Ahmad is a member
Member of the PETRONAS Board Member of the PETRONAS Chief Operating Officer of the PETRONAS Board,
Audit Committee and the PETRONAS Remuneration Committee Datuk Wan Zulkiflee Wan Ariffin Executive Committee and
Remuneration Committee Datuk Mohd Omar Mustapha is a member of the PETRONAS Management Committee. He
Dato Mohamad Idris Mansor was appointed to the PETRONAS Board, the Executive Committee, is the Executive Vice President
was appointed to the PETRONAS Board in September 2009. He Management Committee and of Gas & Power Business. Prior
Board in April 2010. He has is the Founder and Chairman serves on various Boards of to this appointment, he served
extensive experience in the oil and of Ethos & Company, a leading several Joint Ventures and as Vice President of Human
gas industry, having held various Malaysian-based management subsidiary companies in the Resource Management Division
senior management positions consulting firm and a General PETRONAS Group. He is currently and, earlier, as Vice President of
within the Group including as Partner of Ethos Capital, a the Chief Operating Officer Oil Business. He also sits on the
Senior Vice President, Exploration regional private equity fund. He and Executive Vice President of Board of several companies within
& Production Business. He is a is an independent director of Air Downstream Business. He is the the PETRONAS Group.
Board member of PETRONAS Asia Berhad and Symphony House Chairman of two of PETRONAS
Carigali Sdn Bhd. He was also the Berhad, an Eisenhower Fellow, a public listed subsidiaries namely
International Business Advisor to founding member of the World PETRONAS Chemicals Group
PTT Exploration and Production Islamic Economic Forums Young Berhad and PETRONAS Dagangan
Company of Thailand prior to his Leaders Roundtable and a YGL Berhad. He is a Board Member of
current appointment. member of the World Economic Johor Petroleum Development
Forum in Davos. Corporation Berhad.

Board of Directors
Dato Wee Yiaw Hin Datuk Manharlal Ratilal Faridah Haris Hamid Abdul Rahman Musa @ Onn
Executive Director Executive Director Company Secretary Joint Company Secretary
Dato Wee Yiaw Hin was Datuk Manharlal Ratilal is a Faridah Haris is the Head of Abdul Rahman Musa @ Onn is
appointed to the PETRONAS member of the PETRONAS Finance & Corporate Secretariat currently the Head of Corporate
Board in May 2010. He is the Board, Executive Committee and (Legal) PETRONAS. She holds a Secretariat & Compliance, Legal
Executive Vice President of Management Committee. He Law Degree from the University Division. He joined PETRONAS
Exploration & Production is the Executive Vice President of London and Postgraduate in 1981 and has been with the
Business. He is also a member of Finance. He also sits on the Diploma in Shipping Law from Company for over 30 years.
of the Executive Committee, Board of several subsidiaries of the University College, London He is the Joint Secretary to the
Management Committee and PETRONAS. He joined PETRONAS University. She spent 10 years in PETRONAS Board of Directors
serves on various Boards of in 2003. He previously served banking at Bank Pembangunan effective 5th July 2012 and is also
subsidiary companies in the as Managing Director of an before she joined PETRONAS in the Secretary to the Executive
PETRONAS Group. Previously, investment bank involved in 1992. In March 1993, she was Committee of PETRONAS.
he worked in Talisman and Shell corporate finance, mergers and transferred to Corporate Finance His areas of legal expertise
where he held various senior acquisitions, and the capital Department and rejoined the include corporate law, company
management positions. markets. Legal Fraternity in 1997 following secretarialship and corporate
the Legal Restructuring. governance and compliance.

13
Executive Committee
Tan Sri Dato Shamsul Azhar Abbas

President & Group Chief Executive Officer
Datuk Wan Zulkiflee Datuk Anuar Ahmad Dato Wee Yiaw Hin Datuk Manharlal Ratilal
Wan Ariffin Executive Director Executive Director Executive Director
Executive Director
& Chief Operating Officer
Faridah Haris Hamid Abdul Rahman Musa @ Onn

Joint Company Joint Company Secretary
Secretary

Management Committee
Tan Sri Dato Shamsul Azhar Datuk Wan Zulkiflee Datuk Anuar Ahmad Dato Wee Yiaw Hin
Abbas Wan Ariffin Executive Vice President Executive Vice President
President & Group Chief Executive Chief Operating Officer & Executive Gas & Power Business Exploration & Production Business
Officer Vice President Downstream Business
Datuk Manharlal Ratilal Ramlan Abdul Malek Dr Colin Wong Hee Huing Md Arif Mahmood
Executive Vice President Vice President Vice President Vice President
Finance Petroleum Management Technology & Engineering Corporate Strategic Planning
Mohamad Rauff Nabi Bax Raiha Azni Abd Rahman Datuk Nasarudin Md Idris Dato Mohammad Medan
Vice President Vice President President/CEO Abdullah
Legal Human Resource Management MISC Berhad Senior General Manager
Group Corporate Affairs
Hazleena Hamzah
Secretary

15
Vice Presidents
1 2 3 4 5 6 7 8
1 Effendy Cheng Abdullah 3 Ramlan A Malek 5 Pramod Kumar 7 Juniwati Rahmat Hussin
Vice President & Vice President Karunakaran Vice President &
Chief Executive Officer Petroleum Management Vice President Venture Director of Pengerang
PETRONAS Exploration Infrastructure & Utilities Intergrated Complex
2 Datuk Abdullah Karim 4 Adnan Zainol Abidin 6 Amir Hamzah Azizan 8 M Farid Adnan
Vice President Vice President Vice President Vice President
LNG Projects-Domestic Global LNG Downstream Marketing Refining & Trading

9 10 11 12 13 14 15 16
9 Ir Kamarudin Zakaria 11 Nuraini Ismail 13 Dr Colin Wong Hee Huing 15 Md Arif Mahmood
Vice President Vice President Vice President Vice President
Downstream Operation Treasury Technology & Engineering Corporate Strategic Planning
10 Datuk M Anuar Taib 12 M Rashid Yusof 14 Raiha Azni Abd Rahman 16 Mohamad Rauff Nabi Bax
Vice President & Vice President Vice President Vice President
CEO of PETRONAS Supply Chain & Risk Human Resource Management Legal
Development & Production Management

17
TAN SRI DATO SHAMSUL AZHAR ABBAS
President & Group CEO
In 2012, despite huge

challenges, we found the extra
push to perform and deliver
As the custodian of Malaysias hydrocarbon resources, PETRONAS
upholds that responsibility with diligence and emphasis on long-
term value creations. The duty to ensure availability of energy supply
has always been firmly balanced against the stringent requirement of
commercial returns from all our investments. More importantly too,
we aim to achieve them all with sound commitment of transparency
and good corporate governance, safe operations, and overall ethical
business conduct.

During the Financial Year 2012, contributed RM100 million per year
PETRONAS has weathered through up until 2009, and contributed RM500
varied geopolitical outlook and uneven million in 2010. From 2011 onwards,
recovery of the global economy, and PETRONAS changed the mechanism
concluded strong financially and to reflect the average annual oil price
operationally; with sound balance which had resulted to a contribution
sheet, conservative gearing, and solid of RM1 billion for the year. For 2012,
cash standing for capital investments PETRONAS contributed a total of RM2
and dividend distribution. billion into the fund; RM1 billion over
and above the contribution in the
Group Revenue for the year stood at previous year.
RM291 billion, up 1% from Calendar During the Financial
Year (CY) 2011 of RM288.5 billion. Regulated gas pricing had also resulted
Earnings Before Interest, Tax, in PETRONAS foregoing a significant Year 2012, PETRONAS
Depreciation & Amortisation (EBITDA) amount of RM27.9 billion, which
sustained at about RM120 billion, otherwise would have been a direct
has weathered through
despite the operational challenges contribution to our revenue for the varied geopolitical
faced during the year, which includes year.
the geopolitical situation in Sudan. outlook and uneven
The Groups Net Profit Attributable to Despite the external volatility and
Shareholders decreased by 17.3% from uncertainty, our standing was driven
recovery of the global
RM59.7 billion previously to RM49.4 by the strength of our portfolio, long economy, and concluded
billion, impacted further by higher term strategy as well as significant
operating costs and impairment costs changes we have made over the last strong financially and
mainly from our operations in Egypt. few years. While there are numerous
Total Assets increased from RM475.1 critical deliverables we focus on in our
operationally; with
billion as at 31 December 2011 to day-to-day activities, allow me to also sound balance sheet,
RM488.3 billion as at 31 December share some of the key highlights from
2012 while Return on Average Capital our business throughout the period. conservative gearing, and
Employed (ROACE) stood at 17.2%.
For Exploration & Production (E&P),
solid cash standing for
Total contribution to the Federal and our focus for the year was largely on capital investments and
State governments in Malaysia for reversing the domestic production
2012 was RM80 billion, which includes decline and adding on new resources dividend distribution.
taxes (RM38.3 billion); petroleum by undertaking aggressive exploration;
proceeds (RM12.5 billion); and export marginal fields development;
duties (RM1.2 billion). Also, dividend Enhanced Oil Recovery (EOR); and
contributed for the year was RM28 exploring new play types in more
billion; RM2 billion lower than what prospects like deep water, High
was contributed in the previous year. Pressure High Temperature (HPHT) and
high CO2 fields.
In addition, and for the benefit of future
generations, the Group continued to This proved to be the right approach,
make its annual contribution to the and E&P contributed 52% (RM29
National Trust Fund (NTF). Taking into billion) to the Groups Gross Net
consideration that petroleum and Operating Profit After Tax (NOPAT)
other natural resources are finite in for 2012. As we exclude the barrels
nature, the NTF was created in 1988 that were due from Sudan and South
and is managed by the Central Bank of Sudan, production for the year had
Malaysia. PETRONAS has consistently increased by 3% as compared to

19
2011, and is projected to be trending additional LNG train capacity in Bintulu;
upwards on the back of successful the development of stranded domestic
discoveries made during the year. We gas fields through Floating LNG; as
have also made significant increase well as the Refinery and Petrochemical
of approximately 70% in terms of Integrated Development (RAPID)
Resource Addition; resulting in Overall Project in Johor.
Resource Replenishment Ratio (ORRR)
of 2x. The Melaka RGT was constructed
as part of the effort to ensure long
In Malaysia, nine Production Sharing term security of domestic gas supply,
Contracts (PSC) and two Risk Service and was initially planned to be fully
Contracts (RSC) were awarded, operational by September 2012.
while 32 fields achieved first oil/ However, due to some construction
The two Floating LNG gas production. We also made 22 delay and safety concerns, the facility is
projects initiated in 2010 discoveries within the Malaysian now expected to be commissioned in
waters, which includes major finds Quarter 2 of 2013.
and 2011 progressed in Kuang North and Kasawari in
Sarawak. Internationally, three new During the year, Gas & Power also
with the award of PSCs were signed in Myanmar and reached Final Investment Decision
Engineering, Procurement, Sierra Leone, and two discoveries were (FID) for the new train (Train 9) of 3.6
made in Indonesia. On balance of million tonnes per annum (MTPA)
Construction, Installation considerations, we have also divested capacity to be added to the existing
shares in Equatorial Guinea and Egypt, 25.7 MTPA at the PETRONAS LNG
and Commissioning and farmed out assets in Cameroon, Complex in Bintulu.
(EPCIC) for Floating LNG Mauritania and Mozambique; all part of
our portfolio rationalisation efforts. The two Floating LNG projects initiated
1, as well as Dual Front in 2010 and 2011 progressed with the
Our venture into the unconventional award of Engineering, Procurement,
End Engineering Design energy was strengthen with the Construction, Installation and
(FEED) award for FLNG 2, acquisition of Progress Energy Canada Commissioning (EPCIC) for Floating
Ltd. for approximately RM18 billion. LNG 1, as well as Dual Front End
both in June 2012. Both Through Progress, PETRONAS now Engineering Design (FEED) award
holds the largest acreage of shale gas for FLNG 2, both in June 2012. Both
projects are on track to in the North Montney area, which projects are on track to commission
commission by 2015 will allow us to have an integrated by 2015 and 2016 respectively as
presence from upstream to gas scheduled.
and 2016 respectively as marketing in Canada, whilst cementing
our global Liquefied Natural Gas (LNG) Gas & Power concluded the year with
scheduled. presence. 29% (RM16.4 billion) contribution
towards the Groups Gross NOPAT, as
Tremendous efforts have also been higher LNG prices were realised during
undertaken to ensure sustainability the year, which offset against declined
of supply, and these are visibly LNG volume due to scheduled plant
seen through the ambitious multi- maintenance.
billion dollar projects PETRONAS
has undertaken in the last few years, Downstream recorded significant
which achieved important milestones improvement in the operations and
within respective project timelines. plant performance, having achieved
This includes building Malaysias first Overall Equipment Effectiveness
regasification terminal (RGT) in Melaka; (OEE) of 89.2% in year 2012. Majority

RAPID project in Southern Johor is the largest green field
investment in Asia Pacific for the supply of feedstock
for highly-specialised chemicals, and will be driving
economic growth in the region. Since we embarked on
this, much emphasis has been made in securing the right
partners and to obtain the necessary agreements.
of the plants within the Business one is too many. PETRONAS has zero On behalf of the Group, I thank you
have now achieved OEE of more tolerance on noncompliance, and we for the continued trust, support and
than 95%, making them World Class assure you that we have every ounce confidence extended to us over the
Achievement, while the rest are of commitment on striving to uphold years. As we move ahead amidst
following suit towards the top quartile our reputation as a safe and reliable the energy outlook that remains
of efficiency. In 2012, Downstream operator and energy supplier. challenging, I strongly believe that
contributed RM6.1 billion or 11% to the the solid foundation we have built will
Groups NOPAT. The past few years have been focused secure the long-term sustainability
on establishing the right foundation of our business. Given the spirit of
RAPID project in Southern Johor is to enhance the robustness of the reimagining energy that we have
the largest green field investment in company. This was reinforced with embraced; we are set to continue
Asia Pacific for the supply of feedstock clear growth strategies, shift in focus creating and returning greater value to
for highly-specialised chemicals, and and making investments in key projects all our stakeholders.
will be driving economic growth in and new legacy assets. Moving on,
the region. Since we embarked on the focus will be on implementation
this, much emphasis has been made and flawless project execution. We
in securing the right partners and to have committed to Group Capital
obtain the necessary agreements. Expenditure spending of around
To date, four Heads of Agreements RM300 billion for the next five years,
have been signed with internationally and poor performance would put the
renowned companies is the companys cash position and financial
petrochemical industries namely, standing at risk.
Evonik, ITOCHU Corporation, PTT TAN SRI DATO SHAMSUL AZHAR ABBAS
Global Chemical and Versalis SpA. Having said that, by all accounts and President and Group CEO
The next milestones for RAPID project measure, 2012 was a notable year for
would be to secure FID in order for the the PETRONAS Group, and I believe
complex to be fully operational by end we are well positioned for continued
2016/2017. growth in the next few years to
come. Our achievements thus far
Where Health, Safety & Environment are testament to the drive, resilience,
is concerned, it is with regret for me sacrifice of the extraordinary individuals
to report that our operations in 2012 of our workforce - all the while
suffered a total of twelve fatalities holding steadfast to the PETRONAS
throughout the year; six during project Shared Values of Loyalty, Integrity,
construction incidents and the other Professionalism and Cohesiveness
six from fire incidents. In any other - men and women whom I am
statistics, this may be a small number honoured to be alongside with under
but when it comes to fatality, even the umbrella of PETRONAS.

21
Statement of
Corporate Governance
Corporate Governance PETRONAS Board
& Transparency Governance Framework
PETRONAS believes that good Corporate The Board directs the Companys strategic
Governance is fundamental to ensuring the planning, financial, operational and
organisations competitiveness, growth and resource management, risk assessment and
sustainability. Implementing best practices provides effective oversight of the executive
in Corporate Governance is important to management. Certain functions are delegated
PETRONAS given the Groups strong global to Board Committees consisting of Non-
orientation and the growing expectations of Executive Directors as detailed in later sections.
stakeholders worldwide for good corporate
citizenship. The Chairman leads the Board, and the
President & Group Chief Executive Officer
Enhanced standards of governance and (CEO) leads the executive management of
transparency serves to strengthen the Groups the Company and provides direction for the
organizational effectiveness and drive a high- implementation of the strategies and business
performance culture within the organisation, plans as approved by the Board and the overall
and are both essential for PETRONAS to management of the business operations
compete successfully in todays challenging Groupwide.
industry environment.
In this regard, the President & Group CEO has
The Board maintains and requires the the support of the Executive Committee and
Management to uphold the high standards of Management Committee which he chairs.
governance, transparency and ethical conduct. The Executive Committees role is to assist the
Today, with a well-established global footprint, President & Group CEO in his management
PETRONAS continues to pave the way towards of the business and affairs of the Company
ensuring the sustainability of good corporate particularly in relation to strategic business
governance based on international standards. development, high impact and high value
investments and cross-business issues of
the Group. It also serves as a platform for
the structured succession planning for the
President & Group CEO in the Company.
The Management Committee continues to

act as the advisory and deliberative body that
supports the President & Group CEO and
the Executive Committee and implements
all the Board resolutions and policies, as well
as supervise all management levels in the
PETRONAS Group.

The Board Board Balance and Board Committees
For the year ended 2012, the Board Independence There are three Board Committees
was made up of the Non-Independent The current Board composition made up primarily of Non-Executive
Non-Executive Chairman, the President reflects a good mix of experience, Directors, namely the Audit
& Group CEO, four Executive Directors backgrounds, skills and qualifications Committee, the Governance and Risk
and eight Non-Executive Directors of and is considered to be of an Committee and the Remuneration
which six were Independent Directors. appropriate size. This diversity is Committee.
A list of the current Directors, with their identified by the members as one of
biographies, is provided on pages six the strengths of the Board. Audit Committee
to 11. The PETRONAS Board Audit
The Non-Executive Directors combine Committee (BAC) is to assist the
The Non-Executive Chairman has broad business and commercial Board of the Company in fulfilling its
assumed the position since July 2012. experience with independent and responsibilities in relation to internal
The Chairmans role is to provide objective judgment. The balance control and financial reporting and
leadership to the Board, facilitate the between the Non-Executive and carries out certain oversight functions
meeting process and ensure that the Executive Directors enables the on behalf of the Board. The BAC
Board and its Committees function Board to provide clear and effective provides the Board with the assurance
effectively. Together with the Company leadership and maintain the highest it requires regarding the adequacy
Secretary, he ensures that the Board standards of integrity across the of the internal controls in place and
members receive regular and timely Companys business activities. that they are operating effectively to
information regarding the Company promote good governance practices,
prior to Board meetings. The Board With the appointment of the Non- proper and professional business
members also have access to the Executive Chairman there is a clear conduct and operational efficiency to
Company Secretary for any further separation of the positions and roles safeguard PETRONAS assets.
information they may require. between the Chairman and the
President & Group CEO to promote The BAC comprises entirely of Non-
The Board met a total of 16 times greater accountability and enhance Executive Directors. In addition to
(which include four Special Board check and balance. the PETRONAS BAC, all public-listed
Meetings) during the year with a formal subsidiaries and certain non-listed
schedule of matters reserved to it. In accordance with the provisions of subsidiaries in PETRONAS Group also
These include the consideration of the the Companys Articles of Association, have their own dedicated BAC.
Companys long term strategy, plan & at least one-third of the Directors The BAC receives and reviews reports
budget, monitoring of Management shall retire from office once every on all internal audits performed
Performance, Group CEOs and subsequent year but shall be eligible under their purview including the
Executive Vice Presidents (EVP) for re-election. This retirement by Agreed Corrective Actions (ACAs)
Performance Scorecards and the rotation shall only be applicable to to be undertaken by the audit
Companys Performance Review. In Non-Executive Directors. client management. Closure of
addition to managing the Companys ACAs are reported and monitored
financial reporting, the Board monitors through Quarterly Audit Status
and identifies material risks to Report submitted by the audit client
PETRONAS and ensure that internal management which will be assessed
systems of risk management and and verified by Group Internal Audit
control are in place to mitigate such Division. The consolidated reports are
risks. submitted and presented to the BAC
for deliberations.
The Special Board Meetings, which
were held four times during the
year, had also given the directors the
opportunity to engage in intensive
deliberation on PETRONAS long term
strategy, plan & budget and talent
management.

23
A total of 11 BAC meetings were Remuneration Committee compliance measures in the conduct
held in 2012 to deliberate on 89 The Remuneration Committee was of the groups business domestically
papers covering annual internal established to assist the Board in and worldwide.
audit plan, internal audit findings and discharging its responsibilities in the
recommendations, status of internal determination of the remuneration The CoBE contains detailed policy
audit issues closure, internal audit and compensation of the Executive statements on the standards of
performance reviews and Group Directors and certain Senior behavior and ethical conduct
financial performance reviews. Management of the Company. The expected of each individual to
Committee determines and agrees whom the CoBE applies. The CoBE
Governance & Risk with the Board on the remuneration is to apply to all employees and
Committee policy for the President & Group CEO, directors within the PETRONAS Group
The Committee continues to be the Executive Directors and certain worldwide. PETRONAS also expects
responsible in assessing of the Senior Management of the Company. that contractors, sub-contractors,
performance of the Board, reviewing The Committee also determines and consultants, agents, representatives
management succession planning as agrees with the Board on the matter and others performing work or services
well as identifying, nominating and of the President & Group CEOs for or on behalf of PETRONAS will
recommending new Directors to the Performance Scorecard. comply with the relevant parts of the
Board. With the recent enhancement CoBE when performing such work or
of the scope of the Committee, it also services.
reviews the adequacy of the Groups
Enterprise Risk Management, Country
Business Ethics In view of the CoBEs international
Risk Profile as well as Financial Risk Code of Conduct and application, some provisions of the
Management Development & updates. Business Ethics CoBE will be modified to adapt the
The new PETRONAS Code of Conduct CoBE to the requirements of the
The Committee also continues to and Business Ethics (CoBE) replaces local jurisdictions where PETRONAS
review and recommend to the Board the 2006 PETRONAS Code of Conduct is operating. The CoBE will have
the appropriate corporate governance and Discipline and the PETRONAS separate Country Supplements to
policies and procedures in accordance Guidelines for Business Conduct, and cater to local jurisdictions applicable
with international governance and best accommodates developments in local legislation and social mores. The CoBE
practices. Among the programmes and international laws and practices as is accompanied by a CoBE Guide that
which were reviewed by the well as technological developments. It sets out frequently asked questions
Committee include the PETRONAS is being implemented in phases in its and some Dos & Donts in relation to
Guidelines for Competition Law operations worldwide, commencing certain specific situations. The CoBE,
Compliance and the Whistleblowing with the PETRONAS Group in Malaysia the Country Supplements (where
Policy. The Committee has direct on 1 April 2012. applicable) and the CoBE Guide were
access to the Corporate Governance printed in booklets and distributed to
& International Compliance Unit, The CoBE emphasizes and advances all employees and are also available
Legal Division, which promotes a the principles of discipline, good on PETRONAS website for viewing by
structured, consistent and centrally- conduct, professionalism, loyalty, third parties dealing with the Company
driven integrated approach to global integrity and cohesiveness that are as well as the general public.
governance and compliance for the critical to the success and well-being
PETRONAS Group. of the PETRONAS group. This Code is
part of the PETRONAS groups overall
corporate enhancement programme.
It reflects the increasing need for
effective corporate governance

Since the launch of CoBE, we have Ask the CoBE Competition Law Compliance
been running a series of trainer In order to assist the understanding of Programmes
workshops across the business chain the CoBE, a helpdesk cobe@petronas. With the increase in the number
to train the trainers to equip them com.my has been created to answer of enforcements by international
to run workshops for employees in queries from employees and third competition authorities against various
their respective businesses. The CoBE parties dealing with PETRONAS on companies, PETRONAS has joined the
workshop is also included as part of matters pertaining to the CoBE. effort in strengthening our competition
the on-boarding programme for new policies by incorporating the basic
executives in the Company. Since Whistleblowing Policy and rules and principles of Competition
1 April 2012, 27,003 employees have Procedure Law in the CoBE and the CoBE Guide
undergone face to face training on the On 1 April 2012, PETRONAS to reflect the companys constant
CoBE and the Company will intensify Whistleblowing Policy was rolled out to intent to adhere to Competition Law.
the training programme by providing provide an avenue for all employees of This is also in tandem with the passing
on-line training to further reach out to PETRONAS and members of the public of the Malaysian Competition Act 2010
more employees in the future. to disclose any improper conduct in and Competition Commission Act
accordance with the procedures as 2010 which came into force in January
Third parties working with provided under the policy. 2012 and April 2011 respectively.
the Company
Recognising the importance of Under the Policy, a whistleblower Furthermore, as part of our
instilling high ethical standards to not will be accorded with protection of Competition Law Compliance
only our employees but to parties that confidentiality of identity, to the extent Programme, continuous training
have business dealing with us, we have reasonably practicable. In addition, an programmes have been and are still
rolled out the CoBE to our contractors, employee who whistleblows internally being conducted for our employees
sub-contractors and others performing will also be protected against any to instill awareness on the principles
work or services for the Company. A adverse and detrimental actions for of Competition Law. In 2012, a series
letter notifying them of the launch of disclosing any improper conduct of training programmes have been
the CoBE and our expectation that committed or about to be committed conducted by qualified Competition
they comply with the relevant parts within PETRONAS, to the extent Law trainers for the various businesses
of the CoBE when performing such reasonably practicable, provided that in the Group including, among others,
work or services had been issued by the disclosure is made in good faith. upstream, gas and power, downstream,
the Company. Effective 1 April 2012, Such protection is accorded even if supply chain and risk. At the same time,
a provision for contractors to comply the investigation later reveals that the we have also launched the PETRONAS
with our CoBE has been included in whistleblower is mistaken as to the Guidelines for Competition Law
our contracts. facts and the rules and procedures Compliance (the Guidelines) which
involved. is aimed at ensuring our employees
are in the know of the common dos
PETRONAS Whistleblowing Committee and donts and FAQs on Competition
(the Committee) has been set up Law. The Guidelines will be printed
in tandem with the Policy roll out, in booklets and distributed to all
to deliberate on the disclosure and employees and will also be available on
decide on the next course of action. PETRONAS website.
The Committee meets at least once
a month to discuss about the action
and investigation on the reports. The
Committee provides update to the
Board.

25
Statement of
Anti-Corruption
PETRONAS is committed to complying with high ethical standards
and applicable anti-corruption laws. The CoBE explicitly prohibits
the giving and acceptance of bribes by PETRONAS employees
including the giving and receiving of facilitation payments in all
its business dealings. This is in line with PETRONAS core values,
business principles and various internal policies which reflect its
focus on making ethics and anti-corruption an integral part of
PETRONAS business operations. As part of PETRONAS Anti-Bribery
and Corruption Compliance Programme, PETRONAS will be
coming up with a specific Anti-Bribery and Corruption Policy and
Guidelines Manual in the next financial year.
As part of PETRONAS efforts to prevent Effective 1 April 2012, a specific provision on

corruption and unethical practices, the Conflict of Interest and Fighting Corruption
Company has also rolled out the No Gift and Unethical Practices has been included in
Policy in April 2012. The introduction of the our contracts with contractors, consultants,
policy is meant to avoid conflict of interest or agents, representatives and others performing
the appearance of conflict of interest for either work or services for or on behalf of PETRONAS.
party in on-going or potential business dealings
between PETRONAS and external parties. Anti-Bribery training sessions will be conducted
to employees of the Company groupwide so
In June 2012, PETRONAS has appointed its that employees are constantly up to date and
Chief Integrity Officer (CIO) who is the Malaysia knowledgeable of the Companys policy as set
Anti-Corruption Commissions (MACC) out in the CoBE.
Director of Community Education Division.
The appointment is on a secondment basis for
a period of two years and follows the terms
of a Memorandum of Understanding (MOU)
that PETRONAS signed on 7 June 2012 with
MACC to formalise a collaborative initiative
announced in March towards ensuring a
corrupt-free business environment within the
PETRONAS Group.

Statement on
Risk Management and
Internal Control
The Board is pleased to provide the following statement
which outlines the nature and scope of risk management
and internal control of Petroliam Nasional Berhad and its
subsidiaries (PETRONAS Group) during the year in review.
Boards Responsibilities Risk Management

The Board recognises the importance of Having regard to managing risk as an inherent
sound risk management and internal control part of the Groups activities, risk management
practices to good corporate governance with and the ongoing improvement in corresponding
the objective of safeguarding the shareholders control structures in all significant risk areas
investment and the Groups assets. The Board (including among others, financial, health,
affirms its overall responsibility for the Groups safety and environment, operations, geopolitics,
system of risk management and internal trading and logistics) remain a key focus of the
controls and for reviewing the adequacy and Board in building a successful and sustainable
integrity of those systems including financial business.
and operational controls and compliance with
relevant laws and regulations. A Risk Management Committee (RMC) is in
place to serve as a central platform of the
The Group has in place an ongoing process Group to assist the Management in identifying
for managing significant risks affecting principal risks at the Group level and providing
the achievement of its business objectives assurance on effective implementation of risk
throughout the period which includes management on a Group-wide basis. The
identifying, evaluating, managing and RMC also promotes sound risk management
monitoring these risks, that has been in place practices through sharing of information and
for the year and up to the date of approval of best practices to enhance the risk culture across
the Annual Report and Financial Statements. the Group. The RMC seeks advice and direction
from the Executive Committee and Board
The Groups system of internal control seeks to Governance and Risk Committee (BGRC).
manage and control risks appropriately, rather
than eliminate the risk of failure to achieve Group risks are being managed on an integrated
business objectives. Because of the inherent basis and their evaluation is incorporated into
limitations in all control systems, these internal the Groups decision-making process such as
control systems can only provide reasonable strategic planning and project feasibility studies.
and not absolute assurance against material Separate risk management units or functions
misstatement or loss or the occurrence of also exist within the Group at various operating
unforeseeable circumstances. unit levels, particularly for its listed subsidiaries,
to assess and evaluate the risk management
processes for reporting to their respective
Board and Management levels.

27
Internal Audit Function Other Elements of
Internal Control
The Board recognises that the internal audit
function is an integral component of the The other elements of the Groups system of
governance process. One of the key functions internal control are tabulated below.
of PETRONAS Group Internal Audit Division
(GIAD) is to assist the Group in accomplishing
its goals by bringing a systematic and Organisational Structure
disciplined approach to evaluate and improve The internal control of the Group is supported
the effectiveness of risk management, control by a formal organisational structure with
and governance processes within the Group. delineated lines of authority, responsibility
GIAD maintains its impartiality, proficiency and and accountability. The Board has put in place
due professional care, as outlined in its Internal suitably qualified and experienced management
Audit Charter, by having its plans and reports personnel to head the Groups diverse
directly under the purview of the Board Audit operating units into delivering results and their
Committee (BAC). performance are measured against approved
performance indicators.
The internal audit function performs
independent audits in diverse areas within the
Group including management, accounting,
Budget Approval
Budgets are an important control mechanism
financial and operational activities, in
used by the Group to ensure an agreed
accordance with the annual internal audit plan
allocation of Group resources and that the
which is presented to the BAC for approval.
operational managers are sufficiently guided
in making business decisions. The Group
The BAC receives and reviews reports on all
performs a comprehensive annual planning and
internal audits performed under their purview,
budgeting exercise including the development
including the agreed corrective actions to be
and validation of business strategies for a
undertaken by the auditees management.
rolling five-year period, and establishment of
GIAD monitors the status of agreed corrective
performance indicators against which business
actions through Quarterly Audit Status Report
units and subsidiary companies are evaluated.
submitted by the auditees which will be
assessed and verified by GIAD. The consolidated
Variances against the budgets are analysed and
reports are submitted and presented to the BAC
reported to the Board on a quarterly basis. The
for deliberations.
Groups strategic directions are also reviewed
at reasonable intervals taking into account
GIAD adopts the standards and principles
changes in market conditions and significant
outlined in the International Professional
business risks.
Practices Framework of The Institute of Internal
Auditors.

Limits of Authority Corporate Financial Policy practices in financial risk methodology
The Limits of Authority (LOA) defines The Corporate Financial Policy and guidance on baseline risk
decision making limits for each level prescribes the Groups governing management procedures and
of management within the Group. policies in effecting the practice of compliance practices.
These limits cover among others, financial risk management. The policy
authority for payments, capital and stipulates a consistent framework
FRMD ensures that any matters
revenue expenditure spending limits, in which financial risk exposures
concerning financial risks and
budget approvals and other non- of entities within the Group are
managing the exposures that arise
financial authority. This LOA manual identified and strategies developed
to mitigate such risks. The policies therefrom are escalated to the
provides a framework of authority and Management and BGRC for direction
accountability within the organisation contained in the Corporate Financial
Policy are intended to provide and action.
and facilitates decision making at the
appropriate level in the organisations clear communication of the policy
hierarchy. stance governing financial and Group Health, Safety and
risk management throughout the Environment (HSE) Policy
PETRONAS Group of Companies The Group HSE Policy is supported by
Procurement and consequently seeks to provide a a HSE Mandatory Control Framework
The Group has clearly defined foundation upon which financial risk (MCF) to strengthen the HSE
authorisation procedures and authority management is practised across the governance within the Group. The
limits set for awarding tenders and all Group. MCF includes clear requirements on
procurement transactions covering operational safety, environment and
both capital and revenue expenditure health for consistent and effective
The Financial Risk Management
items. Tender committees with cross Groupwide implementation. Key
Department (FRMD) has a central
functional representation have been HSE focus areas include process
role with oversight and supervisory
established to provide the oversight safety, project HSE and HSE capability
functions on tendering matters prior to functions to manage the Groups
financial risks. This is to provide development.
approval by the approving authorities
as set out in the LOA approved by the assurance that proper financial
Board or the Boards of the operating risk management practices are HSE assurance is carried out to
units. implemented across the Group in provide independent assurance on the
a manner that is consistent with effectiveness of HSE controls and the
the requirements of the Corporate assurance reports are presented to
Financial Control Framework Financial Policy, whilst attaining the BAC. Group HSE performance is
The Group has developed a Financial visibility of key financial risk exposures presented to the PETRONAS Board for
Control Framework (FCF) with the for better risk management. oversight on a regular basis.
principal objective of enhancing
the quality of the Groups financial
FRMDs oversight role is undertaken
reports through a structured process
in collaboration with the risk
of ensuring the adequacy and
management functions of each
effectiveness of key internal controls
operating at various levels within the individual company within the
Group at all times. FCF requires among PETRONAS Group which is
others, documentation of key controls, implemented by providing policy
remediation of control gaps as well as direction and specification of
a regular conduct of testing of control operational parameters, review
operating effectiveness. and monitoring of key exposures,
prescription of financial risk reporting
On a semi-annual basis, each key requirements, prescription and
process owner at various management application of consistent and best
levels is required to complete and
submit a Letter of Assurance which
provides confirmation of compliance
to key controls for the areas of
the business for which they are
accountable.

29
Crisis Management Plan Employees
and Business Continuity Senior Management sets the tone for A No Gift Policy was also implemented
Management a nurturing culture in the organisation during the year, where PETRONAS
The Group has in place a Crisis through the Groups Shared Values, employees are required to act in the
Management Plan that defines the developed to focus on the importance best interests of PETRONAS and to
structure and processes for managing of these four key values loyalty, refrain from engaging in conduct
emergencies including major oil spills professionalism, integrity and which may affect the best interests
and crises at both its domestic and cohesiveness. The importance of the of PETRONAS. The policy prohibits
international operations. Shared Values is manifested in the employees from giving or receiving
Code of Conduct and Business Ethics personal gifts from external parties
There is a three-tier response (CoBE) and employees are required to to avoid conflicts of interest or the
system in place which provides strictly adhere to CoBE in performing appearance of conflicts of interest
a clear demarcation of roles and their duties. in any ongoing or potential business
responsibilities between emergency dealings of PETRONAS.
site management, operating unit During the year, a Whistleblowing
management, corporate and Policy was rolled-out in order to Employees undergo structured
authorities. Scheduled drills and provide an avenue for all employees training and development
exercises are carried out at facility/ of PETRONAS as well as members of programmes and potential entrants or
asset level to ensure readiness in the the public to disclose any improper candidates are subject to a structured
event of an emergency or crisis. The conduct committed or about to recruitment process. A performance
Crisis Management Plan is aligned to be committed within the Group. management system is in place, with
the Groups Business Continuity Plan. This policy addresses the Groups established performance indicators to
commitment to integrity and measure employee performance and
The above integrated crisis ethical behaviour by fostering and the performance review is conducted
management and business continuity maintaining an environment where on a semi-annual basis. Action plans
strategies shall enhance the Groups employees can act appropriately, to address employee developmental
preparedness to respond and reduce without fear of retaliation. Under requirements are in place. The
the impact of crisis as well as recover the policy, a whistleblower will Group believes that this will motivate
and restore the Groups critical be accorded with protection of employees to deliver their best so
functions within a reasonable period confidentiality of identity, to the extent that the Group can meet its business
of time towards sustaining the Groups reasonably practicable. In addition, an requirements.
operational survival thus protecting employee who whistleblows internally
businesses, partners and customers will also be protected against any
during crisis or disaster. adverse and detrimental actions for
making the disclosure, to the extent
reasonably practicable, provided that
the disclosure is made in good faith.
Such protection is accorded even if
the investigation later reveals that the
whistleblower is mistaken as to the
facts and the rules and procedures
involved.

Conclusion
The Board has received assurance from the President and Group Chief Executive
Officer and the Executive Vice President Finance that the Groups risk management
and system of internal control is operating adequately and effectively.
The Board is of the view that the system of internal control instituted throughout
the Group is sound and provides a level of confidence on which the Board
relies for assurance. In the year under review, there was no significant control
failure or weakness that would have resulted in material losses, contingencies or
uncertainties requiring separate disclosure in the Annual Report.
The Board provides for a continuous review of the Groups risk management and
internal control system to ensure ongoing adequacy and effectiveness of the
system of internal control and risk management practices to meet the changing
and challenging operating environment.
This statement is made in accordance with the resolution of the Board of Directors
dated 26 February 2013.

31
Financial Results
HIGHLIGHTS
RM291 billion Revenue
Revenue marginally improved by 1% following sustained prices.
RM120 billion EBITDA

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) dropped slightly by 3% to
RM120 billion amidst operational and geopolitical challenges.
RM78 billion Cash Flow from Operations

Cash flow from operations lower by 14% on the back of rising costs, nonetheless was sufficient to
fund capital investments and dividends for FY2012.
Acquired Progress Energy Resources Corp.

Completed the acquisition of Progress Energy to position ourselves for sustained gas reserves for
our LNG business.

The year ended 31 sufficient to finance capital
December 2012 was the expenditure and dividends
first full year of our new for the year.
financial year and the results
are compared with the nine During the year, the Group
month results for the period acquired 100% equity
ended 31 December 2011. interest in Progress Energy
Resources Corp., involved in
Group performance was the production of shale gas
affected by the cessation of in Canada, for approximately
crude production activities in RM18 billion. Due to the
Datuk Manharlal Ratilal South Sudan for most of the strong cash reserves we
year and the decision to take have built up over the years,
a charge for our investment we were able to finance
in Egypt. This led to lower this acquisition with internal
operating profit on a period funds.
to period comparison.
However, the underlying
operating profit and cash
earnings remained robust,
with operating cash flow
of RM78 billion which was

33
PETRONAS Group sustained its financial performance in FY2012 despite
continuing geopolitical uncertainties, macroeconomic challenges and
rising operating costs affecting the industry. Revenue increased while
EBITDA amounted to RM120 billion.
The increase in revenue, from RM288.5 billion Meanwhile, the US Dollar strengthened against
to RM291.0 billion, was mainly driven by higher the Ringgit Malaysia from an average of RM3.06
realised prices and favourable exchange rate during 2011 to an average of RM3.09 during
movements, partially offset by a reduction in FY2012.
production volume from our key international
operations. The impact of higher realised prices and
favourable exchange rate movements on
On average, realised prices in FY2012 were revenue were however partially offset by
higher compared to the previous year, except continued crude oil production challenges in
for petrochemicals. Continuing from last year, the Republic of South Sudan (RSS) where the
benchmark crude prices remained above Groups petroleum operations were shut down
US$100 per barrel due to continued supply for the most part of 2012 following a Shut
concerns arising from geopolitical tensions in Down Order issued by the Government of the
the key supply countries of the Middle East and RSS. In addition, the Group made provisions for
the North African region. Average Dated Brent its operations in Egypt due to falling reserves,
for FY2012 was similar to FY2011 average Dated lower revenue arising from a shift in revenue to
Brent at about USD111 per barrel. Nonetheless, the domestic market and slower debt recovery.
average Japanese Crude Cocktail (JCC) prices,
which lagged period crude prices, averaged at
USD114 per barrel in FY2012, a 12% increase
from USD102 per barrel in the previous year.

Against this backdrop, EBITDA and Profit Before interest in, amongst others, Centrica Plc and APA
Tax (PBT) both decreased by 3% and 14% Group. Excluding these gains and gains arising
respectively. from divestment of our interest in Cairn India Ltd
amounting to RM2.6 billion recorded in CY2011,
In 2012, the Group recorded a total gain of EBITDA and PBT decreased by 2% and 13%,
RM1.5 billion arising from the divestment of our respectively.
PETRONAS KEY FINANCIAL INDICATORS

In RM billion
FY2012 +/-(%) CY2011* PE2011** FY2011*** FY2010 FY2009
Revenue 291.0 0.9% 288.5 222.8 241.2 210.8 264.2

EBITDA 119.9 -2.5% 123.0 95.7 107.9 83.3 105.7
Profit Before Taxation 89.1 -14.2% 103.8 83.0 90.5 67.3 89.1
Net Profit Attributable to Shareholders 49.4 -17.3% 59.7 49.1 54.8 40.3 52.5
Total Assets 488.3 2.8% 475.1 475.1 436.3 410.9 389.8
Equity Attributable to Shareholders 303.8 5.9% 286.9 286.9 262.3 242.9 232.1

Financial Ratios
FY2012 PE2011 FY2011 FY2010 FY2009
Return on Revenue 30.6% 37.1% 37.5% 31.9% 33.7%

Return on Total Assets 18.2% 23.0% 20.7% 16.4% 23.0%
Return on Average Capital Employed 17.2% 21.9% 17.6% 15.9% 22.0%
Debt/Assets Ratio 0.09x 0.11x 0.11x 0.13x 0.11x
Gearing Ratio 12.2% 15.5% 15.4% 17.6% 15.9%
Dividend Payout Ratio 55.6% 61.3% 54.7% 74.4% 57.1%
Overall Resource Replenishment Ratio (ORRR)**** 2.0x 1.7x 2.5x 1.1x 1.8x

* Calendar Year (CY) 2011 - unaudited twelve-month period from 1 January 2011 to 31 December 2011.
Included for comparative purpose.
** Audited nine-month period from 1 April 2011 to 31 December 2011. Certain financial information has been restated due to adoption of
Malaysian Financial Reporting Standards (MFRS).
Corresponding ratios have also been restated. Ratios were calculated based on annualised figures, where applicable.

*** Total Assets and Equity Attributable to Shareholders have been restated due to the adoption of MFRS.
Corresponding ratios have also been restated.
**** ORRR FY2012 excludes Progress Energy Resources Corp.
In RM Billion
Revenue EBITDA Profit Before Taxation
288.5 291.0
264.2 103.8
241.2 123.0 119.9
222.8 105.7 107.9 89.1 90.5 89.1
210.8 83.0
95.7
83.3 67.3
09 10 11 Pe11 cy11 12 09 10 11 Pe11 cy11 12 09 10 11 Pe11 cy11 12
Net Profit Attributable

to Shareholders Total Assets Equity Attributable
59.7 488.3
to Shareholders
475.1
52.5 54.8 436.3 303.8
49.1 49.4 389.8 410.9 286.9
262.3
40.3 232.1 242.9
09 10 11 Pe11 cy11 12 09 10 11 Pe11 12 09 10 11 Pe11 12

35
Key Profitability Ratios Gearing Ratio Revenue by Products
In percentage (%) In percentage (%) In percentage (%)
2
5
23 23 6 38
21 18
8
22 22 16 Petroleum Products
18 15 16
LNG
16 Crude Oil & Condensates
18 12
17 Natural & Sales Gas
16
Petrochemicals
09 10 11 Pe11 12 12 19 Property & Others
09 10 11 Pe11
Maritime & Logistics
return on Total assests (rOTa) 22
return on average capital employed

(rOace)
Financial Position and Dividends paid and payable for FY2012 Higher realised LNG prices pushed
Liquidity amounted to approximately RM37 revenue higher from RM58.1 billion
The Groups financial position billion with RM28 billion attributed to RM62.5 billion, an increase of 8%.
remained strong. Total assets increased to the Malaysian Government. The This was despite a reduction in LNG
by RM13.2 billion or 3% from 31 Group also made net debt repayments sales volume of 1.8 million tonnes
December 2011. Property, Plant and of RM9.3 billion during the year. or 7% to 26.1 million tonnes. This
Equipment increased by 10% as a result Approximately RM6.1 billion was in was mainly due to lower production
of further investments in domestic relation to payment for PETRONAS from the PETRONAS LNG Complex
and international upstream and Capital Ltd USD2 billion notes that (PLC) in Bintulu, Sarawak as a result of
downstream projects for growth. matured in May 2012. scheduled maintenance shutdown.
FY2012 cash balance started with In line with lower profits, the Groups Revenue from sale of crude oil and
RM164.3 billion which enabled us ROTA and ROACE decreased to 18% condensates decreased by 14%
to acquire 100% interest in Progress and 17% respectively. The Groups to RM54.8 billion. Crude oil and
Energy Resources Corp. for RM17.8 Gearing Ratio improved to about 12% condensates which contributed 22% of
billion using internal funds. With this as a result of net debt repayments total revenue in CY2011, contributed
acquisition, PETRONAS secured gas amounting to RM9.3 billion during the 19% this year primarily due to upstream
reserves in the Montney Shale Gas year, as mentioned earlier. production challenges in the RSS, as
Asset in British Columbia, Canada to previously mentioned.
enable us to plan for an expansion Revenue by Products
of our Liquefied Natural Gas (LNG) In the year under review, revenue Natural and sales gas revenue recorded
business. increased for most of our products in the highest growth among all products,
tandem with higher realised prices. growing at 29% to RM24.3 billion,
In terms of cash from operations for However, the effect of higher prices benefitting from increased trading
the year, the Group generated RM78.1 was partially offset by continued opportunities in Europe as a result
billion which was sufficient to sustain operational challenges and demand of acquisition of additional storage
the current period capital investments weakness in some markets. Petroleum capacity during the year. In addition,
and dividends. Capital investments products remained the biggest revenue Malaysia sales gas volume also
spent in FY2012 was RM45.6 billion contributor at 38%, followed by LNG at increased due to higher feedgas supply
with 60% allocated to our Exploration 22%, crude oil and condensates at 19% from the Malaysia-Thailand Joint
& Production (E&P) business to support and natural and sales gas at 8%. Development Area.
our exploration activities as well as to
intensify efforts to develop new fields Revenue from petroleum products Petrochemical sales volume increased
and enhanced recovery from existing increased by 1% from the previous year by 6% to 6.8 million metric tonnes
maturing fields. Out of the RM45.6 on the back of higher realised prices. mainly due to production optimisation.
billion, close to 70% was spent in However, volume was lower by 2% to As a result, revenue from the sales of
Malaysia. about 297.1 million barrels as a result of petrochemical products rose by 5% to
limited trading opportunities. RM16.2 billion.

Revenue by Geographical Trade Revenue by Geographical
In RM Billion Segments During the year in review, the E&P
In percentage (%) segment recorded NOPAT of RM29.0
114.1 115.8 61.1
12 291.0
billion compared to RM47.0 billion in
50 the corresponding period last year, a
121.3 112.9 54.3
cy11 288.5 Asia decrease of 38%. The decrease was
13 (excluding Malaysia)
Pe11 222.8 mainly due to lower crude oil and
Malaysia
90.6 87.1 45.1
south africa condensates entitlement as a result
99.1 92.5 49.6
11 241.2 rest of the world of a Shut Down order issued for the
13 Groups South Sudan operations and
92.3 75.8 42.7 impairment charges primarily for
10 210.8
24
our Egypt operations. In addition,
111.2 98.3 54.7
the segment also saw an increase in
09 264.2 amortisation and well costs.
International exports Domestic
The G&P segment recorded higher
Revenue by Geographical Revenue by Geographical NOPAT of RM16.4 billion compared
Trade Segments to RM13.1 billion in the corresponding
The Groups geographical trade is The Groups revenue by geographical period last year, an increase of 25%.
categorised by exports, domestic and segments is based on the geographical The increase was driven by higher
international operations. The revenue location of customers. Revenue from realised LNG prices and higher sales
contribution was led by exports, Asia excluding Malaysia remained the gas prices. However, as discussed
followed by international and domestic largest contributor for the Group at earlier, the segment recorded lower
operations. Revenue from both exports 50%. This was followed by Malaysia LNG sales volume as a result of
and domestic operations recorded an at 24%, South Africa and the rest of scheduled maintenance shutdown at
increase from the previous year, while the world both by 13% respectively. PLC in Sarawak.
a decrease in revenue was recorded in Out of the RM144.7 billion revenue
international operations. generated from the Asian market, The Downstream segment, which
Japan contributed the highest at 35%, contributed 11% to the Groups gross
Our exports recorded a modest mainly from the sales of LNG, followed NOPAT, recorded a lower NOPAT of
increase of 3% in revenue to RM115.8 by China and Indonesia at 10% and RM6.1 billion, a drop of 8% from RM6.6
billion, mainly due to higher realised 9% respectively. The main contributor billion. This was due to production
prices for LNG. This translated to a 40% of the Groups revenue from Malaysia limitations that resulted from
share of the Groups total revenue. and South Africa of RM69.6 billion and geopolitical challenges in international
RM38.4 billion respectively, were from operations, lower refining and
Our revenue in domestic operations the sale of petroleum products. petrochemical margins, compounded
increased by RM6.8 billion or 13% by lower petroleum product sales
compared to the previous year, volumes due to limited trading
mainly contributed by an increase of Segment Earnings opportunities.
petroleum products realised prices. The Group has four reportable
operating segments comprising E&P, The C&O segment recorded a NOPAT
As expected, international operations Gas and Power (G&P), Downstream of RM4.2 billion compared to a net
recorded a decrease of 6% in its and Corporate and Others (C&O). operating loss of RM0.7 billion in the
revenue to RM114.1 billion on the The C&O segment primarily consists corresponding period last year. This
back of production interruption in the of Maritime and Logistics business, was achieved on the back of higher
RSS. This translated to a 39% share Property business and central treasury fund investment income recorded
of Group total revenue, a decrease function. The E&P and G&P segments during the year resulting from higher
of 3% compared to the previous contributed 82% to the Groups gross overall rate of return in FY2012. The
corresponding period. Net Operating Profit After Tax (NOPAT). loss recorded in CY2011 was due
to provisions made by MISC Berhad
Gross NOPAT by Business Segment following its decision to exit the liner
business.
38% 8%
25% >-100%
cy2011
fy2012
47.0 47.0 47.0 47.0
47.0 29.0 13.1 16.4 6.6 6.1 -0.7 4.2
Exploration & Production Gas & Power Downstream Corporate & Others

37
CAPEX Allocation for FY2012
In percentage (%)
12
9 29
60
19 24 71
exploration & Production Domestic E&P

Gas & Power International E&P
Downstream
corporate & Others
Segment Capex Capital investments for the G&P Domestic and International
Recognising the importance of segment increased by 54% to RM8.8 CAPEX Breakdown
sustainable capital investments to billion in FY2012. Key projects such In RM Billion
ensure business growth and future as the GLNG project in Australia, the
31.5 14.1
cash flow generation, the Group has PETRONAS Floating LNG project 12
45.6
embarked on an aggressive growth and the Melaka LNG Regasification 24.3 16.9
plan. Terminal project are important cy11 41.2
investments to ensure our contractual Pe11 30.8
Capital investment has grown from obligations and the nations growing 17.8 13.0
23.4 11.5
RM41.2 billion to RM45.6 billion in energy needs are met. 11 34.9
FY2012, representing an increase of
26.8 10.3
11%. In addition to the RM45.6 billion Similarly, the Downstream segment
10 37.1
CAPEX spent, PETRONAS acquired recorded an increase of 58% in its
100% interest in Progress Energy capital investments from RM2.6 billion 26.2 17.8
09
Resources Corp. for RM17.8 billion, in CY2011 to RM4.1 billion in FY2012. 44.0
securing gas reserves in the Montney Most of the capital spending was Domestic International
Shale Gas Asset in British Columbia, for the Refinery and Petrochemical
Canada. Integrated Development project in
Pengerang, Johor and the Sabah CAPEX by Geographical Segment
The E&P segment accounted for Ammonia Urea project. These projects In percentage (%)
RM27.3 billion or 60% of CAPEX aimed are the Groups major growth projects
at sustaining and growing production that will strengthen our position as a 9
both in Malaysia and internationally. key downstream player in the region.

RM19.3 billion or 71% was spent in 69 15
Malaysia to intensify efforts to enhance The C&O segment spent RM5.4
the recovery rate of existing maturing billion during the period with
fields and development of new fields. MISC accounting for 78% of the 7
Among the key projects in Malaysia are total spending. The bulk of capital
the Gumusut-Kakap and Kinabalu Non- investments for MISC were spent on
Associated Gas projects in Sabah and new petroleum tankers and offshore Asia
(excluding Malaysia)
the Kebabangan project in Sarawak. floating facilities. The remainder
Malaysia
In terms of capital investments made was spent mostly by KLCC Group australia
internationally, key countries included which undertook investments in the rest of the world
Iraq, Egypt and Turkmenistan. development of commercial and
government buildings in Putrajaya.

Dividend Payout Ratio
In percentage (%)
74%
61%
57% 55% 56%
09 10 11 Pe11 12
PeTrOnas
contribution to Components of Contribution to

Governments and REVENUE the supply of gas to customers in the Malaysian Government
FOREGONE Peninsular Malaysias power and non- In RM Billion
During FY2012, PETRONAS contributed power sectors was RM27.9 billion, with
RM80.0 billion to the Federal and the power and non-power sectors 28 38.3 12.5 1.2
12 80.0
State Governments in Malaysia which accounting for RM15.6 billion and
comprised dividend declared of RM12.3 billion respectively, after taking 30 21.9 5.4 1.1
Pe11 58.4
RM28.0 billion, taxes of RM38.3 billion, into account the increase of RM3 per
petroleum proceeds of RM12.5 billion mmbtu in the sales price announced 30 25.1 9.3 1.3
11 65.7
and export duties of RM1.2 billion. by the Government commencing 1
FY2012 dividend declared at RM28 June 2011. 30 18.7 8.3 0.6
10
billion translated to a dividend payout 57.6
ratio of 56%, a reduction of RM2 billion Since its inception, PETRONAS has 30 29.4 12.4 2.2
09
from the previous year. contributed a total of RM733 billion to 74.0
both Federal and State Governments Dividend Taxes
Revenue foregone as a result of and foregone revenue of RM182.8 Petroleum proceeds export Duty
the regulated pricing imposed on billion since regulated gas prices came
into effect in May 1997.
Revenue foregone FY2012 PE2011 +/- Cumulative total since 1997
In RM (billion)
POWER SECTOR 15.6 10.3 51.5% 124.1
- Tenaga Nasional Berhad 6.1 3.9 56.4% 52.2
- Independent Power Producers 9.5 6.4 48.4% 71.9
NON-POWER SECTOR - including industrial,

12.3 8.1 51.9% 58.7
commercial, residential users and NGV
Total 27.9 18.4 51.6% 182.8

39
32.6 2.0x 2,015
billion thousand
boe boe
per day
Group total discovered resources ORRR of 2.0 times for Group total oil Total production of 2,015 thousand
of 32.6 billion boe with more than and gas resources, 3.49x including boe per day with contribution from
31% contribution from international Canada Progress Energy. international production of 428
assets. thousand boe per day, equivalent to
21% of the Groups total production.

Maximising
Resources for
Growth
41
Exploration & Production
HIGHLIGHTS
9 new Production Sharing Contracts (PSCs) and
2 new Risk Services Contracts (RSCs) in Malaysia
Awarded nine new PSCs and two new RSCs in Malaysia, bringing in five new Upstream
Operators - Conoco Phillips, Inpex, Coastal Energy, PEXCO and RH PetroGas
32 first productions
Achieved 32 first production; 11 Greenfields and 21 Brownfields including Deepwater
Gumusut-Kakap, Berantai RSC and Iraq Halfaya.

PETRONAS resource base, decline 2012 production successes with 24 discoveries
significantly. Business was higher than 2011 after equating to two billion boe
foundation was strengthened taking into account Sudans resources was added. The
through process and controls production shutdown due acquisition of Canadas
improvements as well as to local geopolitical issues. Progress Energy will also
discipline and competency Thirty-two projects achieved provide a strong platform for
enhancements. Examples first production with 14 long term business growth.
include achieving first quartile accelerated from 2013.
project schedule delivery There is a strong funnel of Moving forward, E&P will
benchmark conducted projects in progress with grow its business through
Dato Wee Yiaw Hin by Independent Project a record number of Final disciplined delivery and
Analysis (IPA) with over 80% Investment Decision (FID) performance by ensuring
The year in review was a of projects were within taken and Field Development that ventures and projects
good year for E&P in terms of budget; and production Plan (FDP) approved. This are value driven, governed by
operations performance and enhancement successes will support production and strong financial discipline. At
delivery. Structural changes from stronger deployment development growth over the same time, E&P Business
to management systems, of petroleum engineering the next few years. will continue to drive
capabilities and performance competency and reservoir capability enablers. HSE and
as well as business mindset management. Finally, longer term E&P Asset Integrity Management,
have enabled E&P to business sustainability is which are critical success
achieve success in delivering We are delivering today with supported by a robust factors in the pursuit of
production and development total production trending resource base. During the sustainable business goals,
as well as in growing upwards after many years of year in review, we saw will also be continuously
significant exploration improved.

43
PETRONAS Exploration and Production (E&P) Business is committed to
enhancing the value and growing PETRONAS resource base through
exploration, development and production of oil and natural gas in Malaysia
and overseas.
In Malaysia, PETRONAS is committed to sustain barrels of oil equivalent (mmboe) additional oil
production levels and grow our resource and gas resources for development.
base to secure the nations energy supply and
catalyse its economic growth. The strategies PETRONAS continues to actively pursue
that were put in place are executed diligently small and marginal fields development for
to ensure that goals delivered are on track. sustainable oil and gas production in Malaysia
Several key milestones were achieved in the by soliciting cost-effective technical solutions
year under review, proving the robustness of from niche small fields players. Two RSCs
these strategies and PETRONAS commitment were awarded during the period under review,
to deliver the targets. bringing a total of four RSCs awarded to date.
The year had also seen the first gas production
As the country continues to face maturing from the Berantai field, the first RSC awarded
fields and declining production, PETRONAS by PETRONAS.
has intensified its efforts to sweat its existing
producing assets by maximising recovery In support of the aggressive exploration
through diligent reservoir management strategy in Malaysia, nine new PSCs were
and by pursuing the potential of Improved awarded to drive exploration drilling,
Gas Recovery (IGR), Improved Oil Recovery maturation of new plays, and exploitation
(IOR), and Enhanced Oil Recovery (EOR). of remaining hydrocarbon potential. Total
Encouraging progress was made in the year resources added via exploration activities
with the signing of two EOR PSCs with Shell increased by 87% from 2011 to 1.5 billion boe in
Malaysia to undertake EOR projects offshore 2012, mainly through two notable discoveries
Sabah and Sarawak. At the same time, made in Sarawak waters.
PETRONAS approved more than 270 million

For PETRONAS international PETRONAS Group Oil and Gas
E&P Business, the focus areas are Production
portfolio highgrading and growing 000 boe per day
unconventional resources. In an 1,587 428
12
on-going effort to highgrade the 2,015
assets in the E&P portfolio to drive 1,558 520

cy11 2,078
value growth and profitability, three
2,047
new PSCs were signed, two assets Pe11
1,528 519
were divested and three were diluted 1,614 523
during the period under review. At 11 2,137
the same time, PETRONAS continued

1,631 640
to seize opportunities to grow its 10 2,271
unconventional resource base, with
current focus on Coal Bed Methane 1,659 629
09 2,288
(CBM) under the GLNG and CBM
Integrated Project in Australia, and Malaysia International
Shale Gas in the Montney Formation in PETRONAS Group Resource

Western Canada. With the acquisition Addition
By Source
of Progress Energy Resources Corp. PETRONAS Group Resource In percentage (%)
Canada, PETRONAS unconventional Addition
resource base (2P + 2C) has grown In MMboe
10
from 0.38 billion barrels of oil
equivalent (Bboe) in January 2012 to 27
3.82 Bboe in January 2013.
1,727 3,894 exploration
12 5,621
The strong performance of PETRONAS acquisition
E&P Business was driven by its clear 862 338 IOr/eOr/IGr
11
strategies and goals it had set in the 1,200
past two years. All plans are currently Malaysia International 63

being executed and monitored
closely to ensure their progress are
on track. The strengthening of E&P PETRONAS Group Petroleum Resources
core capabilities, coupled with strong Bboe (Billion barrels of oil equivalent)
integration across PETRONAS business
units enabled these commendable 1-Jan-13 +/- 1-Jan-12
achievements to be realised. Reserves (2P) 5.043 3.9% 4.853
Crude Oil & Condensate Contingent Resources (2C) 3.785 -2.4% 3.878
Entitlement 3.199 2.4% 3.125
Reserves (2P) 7.929 -5.6% 8.396
Natural Gas Contingent Resources (2C) 12.054 11.2% 10.844
Entitlement 6.112 -5.5% 6.465
Reserves (2P) 0.521 118.1% 0.239
Unconventional Contingent Resources (2C) 3.295 2172.7% 0.145
Entitlement 0.29 23.4% 0.235
Total Discovered Resources 32.627 15.1% 28.355
PETRONAS Entitlement 9.601 -2.3% 9.825
Overall Resource Replenishment Ratio (3 yrs ave) 3.49x 1.70x

45
n Gumusut-Kakap Semi Floating Production System (FPS)
MALAYSIAS EXPLORATION AND average of 586 thousand barrels per The International Energy Agency
PRODUCTION day while gas production averaged reports that the estimated post-peak
Our focus for the year were largely at 6,007 million cubic feet per day decline rate of global producing oil and
on reversing the production decline (equivalent to 1,001 kboe per day). In gas fields to be around 7% on average.
through production optimisation and line with the higher production, an In a maturing oil and gas industry such
acceleration of new development increase in PETRONAS entitlement as Malaysias, being able to reverse
projects as well as adding new was also observed. A total of 1,174 the natural decline and subsequently
resources through aggressive kboe per day or 74.0% of the total deliver production growth of 1.9%
exploration and enhanced recovery average national production made signifies our commitment in driving our
efforts for oil and gas fields. up PETRONAS share, which also E&P strategies to address the energy
includes PETRONAS Carigali Sdn Bhds needs of the nation. This was achieved
In 2012, Malaysias total average (PCSB) domestic equity production, an via numerous efforts and successes
production increased by 1.9% to 1,587 increase from the previous years share delivered in the year.
thousand barrels of oil equivalent of 69.0%.
(kboe) per day. Production of crude Eight new fields were brought
oil and condensates amounted to an onstream increasing the total number

Malaysia Petroleum Resources
Bboe (Billion barrels of oil equivalent)
1-Jan-13 +/- 1-Jan-12

Malaysias Average Oil and Gas
Production
Reserves (2P) 3.688 -1.4% 3.739 000 boe per day
Crude Oil & Condensate Contingent Resources (2C) 2.162 -2.4% 2.215 472 114 1,001
12 1,587
Entitlement 2.406 -5.2% 2.538
460 109 989
Reserves (2P) 6.602 -3.1% 6.815 cy11 1,558
Pe11 1,528
Natural Gas Contingent Resources (2C) 9.785 14.6% 8.539
451 106 971
Entitlement 4.96 -9.2% 5.46 512 115 987
11 1,614
PETRONAS Entitlement 7.366 -7.9% 7.998 535 122 974
10 1,631
Overall Resource Replenishment Ratio (3 yrs ave) 1.91x 1.60x
554 125 980
09 1,659
Crude Oil Condensate Gas
of Malaysias producing fields to 132, of upstream exploration discoveries in On top of this, PETRONAS introduced
which 77 are oil and 55 are gas fields. the region. The discoveries of Kasawari the new Progressive Volume-Based
These include the first production from gas field with six trillion standard (PVB) fiscal terms to drive further
our second deepwater field Gumusut- cubic feet (tscf) of 2C resource and development and improved recovery
Kakap, Kanowit field in Sarawak and the Kuang North were also ranked as top of matured oil fields in Malaysia. The
Berantai field in Peninsular Malaysia. two discoveries in the region. Major first PVB PSC, the 2012 Kinabalu PSC,
In addition, numerous production strides were also made in enhanced was awarded to Talisman Malaysia
optimisation initiatives were initiated recovery efforts, where 21 EOR, IOR (60% equity) and PCSB (40% equity) in
such as the optimisation of gas-lifts and IGR projects were sanctioned, the year under review.
and water injections, implementation contributing approximately 16% of the
of low pressure systems and execution total resource addition. All these efforts required significant
of prudent reservoir management commitment and investments from
plans. These initiatives were done Despite maturing acreages, Malaysia PETRONAS and contractors alike. A
in close collaborations with our continued to attract significant level total of RM40.0 billion was spent in
contractors and service providers. of interest among foreign companies Malaysias upstream sector during the
to bid for and operate blocks in the year, whereby RM22.9 billion (57%) was
As a result of our aggressive country. Nine new PSCs and two new spent on development projects, RM3.7
exploration, Malaysias total discovered RSC were awarded in 2012, bringing billion (9%) on exploration activities,
resources now stand at 22.24 bboe the total number of PSCs in operation and the remaining for the operations of
(as at 1 January 2013), an increase to 95 and RSCs to four. As a result, five existing assets.
by 4.4% over the past year. This new oil and gas companies, namely
brings Malaysias Overall Resource Conoco Phillips, Inpex, Coastal Energy,
Replenishment Ratio (ORRR) to 1.9x PEXCO and RH PetroGas Ltd, have
for total oil and gas. Additionally, assumed upstream operatorship
Malaysia was staged as the stand- through these newly signed Petroleum
out performer in Southeast Asia for Arrangements.
the year as it makes up 72% of total

47
Breakdown of International
INTERNATIONAL EXPLORATION Resources
AND PRODUCTION By Region
The Groups international E&P Business In percentage (%)
performance remained robust despite 14
15
facing increasingly difficult challenges
in key operating areas, particularly
5
in Iraq, South Sudan, Sudan and
Africa
Turkmenistan. America
Middle East and Asia
The overall production was affected Oceania
by the geopolitical uncertainties 22 South East Asia
between South Sudan and Sudan. 44
Liquids average production declined Note: South East Asia excludes Malaysia resources
to 134 kboe per day in 2012 from
250 kboe per day in 2011 mainly PETRONAS International Oil and
due to the cessation of South Sudan Gas Production
000 boe per day
Breakdown of International
production and operating activities Production
134 294
throughout the year. Meanwhile, 12
By Region
428
average gas production increased to In percentage (%)
250 270
294 kboe per day from 270 kboe per cy11 520
12
day for the corresponding period in the Pe11 519
previous year, mainly attributed to the 249 270
252 271
production ramp up in Turkmenistan 11 523 Africa
and production enhancement in Egypt. South East Asia
and Oceania
The Groups international production 265 375
10 Middle East and Asia
delivery was further strengthened with 640
the first production of four projects, 44

276 353
44
namely North Montney, Canada; Chad 09 629
Infill, Chad; West Delta Deep Marine crude & condensate Gas
Phase 8B, Egypt and Halfaya, Iraq. The
total production volume contributed
by these projects was approximately
International Petroleum Resources
23.45 kboe per day. Bboe (Billion barrels of oil equivalent)
Against the backdrop of increasing 1-Jan-13 +/- 1-Jan-12

complexity and higher risks globally, Reserves (2P) 1.355 21.7% 1.114
the Groups international E&P
Crude Oil & Condensate Contingent Resources (2C) 1.623 -2.4% 1.663
operations recorded significant gains
with a 47% growth in its resource base Entitlement 0.793 35.1% 0.587
and 8.95x of three-year rolling average Reserves (2P) 1.327 -16.1% 1.581
ORRR. Total international resource Contingent Resources (2C) 2.269
Natural Gas -1.6% 2.305
stood at 10.39 Bboe compared with
Entitlement 1.153 14.7% 1.005
7.05 Bboe the previous year; with
3.2 Bboe of 2P and 7.19 Bboe of 2C Reserves (2P) 0.521 118.1% 0.239
resources. The new resource additions Unconventional Contingent Resources (2C) 3.295 2172.7% 0.145
were mainly achieved through Entitlement 0.29 23.4% 0.235
exploration, improved recovery efforts
and acquisitions. The unconventional
resource based increased to 3.82 PETRONAS Entitlement 2.236 22.4% 1.827
Bboe, and this was achieved through Overall Resource Replenishment Ratio (3 yrs ave) 8.95x 1.97x

the acquisition of Progress Energy OUTLOOK The Groups international operations
Resources Corp., with contingent The global E&P industry is expected are expected to endure enormous
reserves estimated at 50 tscf. to remain bullish in the coming pressures attributed to the fiscal
Overall resource base continued to be years, driven by stable oil prices and regimes and geopolitical instability of
heavy in gas, which is mainly located increasing hydrocarbon demand some countries we operate in. Focus
in Turkmenistan, Australia, Canada, outlook. This will pave the way for on improving operational performance,
Egypt and Malaysia-Thailand Joint continued investment in the sector. project delivery and competitiveness in
Development Area. However, the challenges in the key operating areas will be heightened
operating environment as well as towards achieving operational
As part of the continuous efforts geopolitical uncertainties are also excellence. The anticipated resumption
to highgrade the E&P portfolio, expected to prevail. of South Sudan SPOC Operations
three new exploration blocks were in 2013 will signify an important
secured in prospective areas within PETRONAS E&P Business strategies milestone for the Groups international
the focus and emerging basins; two remain intact in pursuit of production operations.
blocks in Myanmar and one in Sierra and resource growth opportunities in
Leone. At the same time, dilutions Malaysia and globally. Rigour in project The growth in unconventional areas
and divestments of five assets were delivery will persist while value-driven also marked a significant step-
concluded - the divestments of improvement efforts will remain a key change for the Groups international
shares in PC Equatorial Guinea Ltd focus to generate additional value from growth. Unconventional resources
and El Burg in Egypt and farm outs of current business plans and objectives. and production volume from
assets in Cameroon, Mauritania and Looking ahead, the Malaysian E&P unconventional assets in Australia
Mozambique. industry is expected to be vibrant, and Canada has helped extended
with numerous new Petroleum PETRONAS resource life and is
Significant progress was also made Arrangements to be awarded, expected to sustain the Groups
in Indonesia with the signing of two more development projects to be production volume beyond 2.0 million
Gas Sales Agreements (GSA) by PCSB. implemented, and new fields expected barrels of oil equivalent per day for
The Ketapang GSA was signed with to commence production. In line with years to come.
PT Petrogas Jatim Utama (PJU) for this positive outlook, investment levels
the monetisation of gas resources in are expected to surpass that of 2012. Focus and commitment on HSE will
the Bukit Tua field. The Muriah GSA, The heightened level of activities is continue with stronger emphasis
which was signed by PC Muriah Ltd., a expected to invite greater participation deployed, in line with the need for
subsidiary of PCSB with PT Perusahan from the services industry and generate every level of the organisation to
Listrik Negara (PLN), marked the more spin-off development in support demonstrate HSE ownership and
beginning of PETRONAS collaboration of national economic growth. leadership.
with PLN that will contribute to the
development of gas resources from On the international front, global Continuous reinforcement of Zero
the Kepodang gas field to facilitate the operations will continue to be driven Tolerance (ZeTo) Rules and proactive
energy sector to produce cost effective by the overarching priority to realise, intervention will ensure that work areas
electrical power. sustain, and prolong production. and facilities are safely run and well-
Various initiatives have been lined up maintained.
A total of RM 13.73 billion was invested to safeguard the production target,
in the Groups international ventures, both in the context of long term asset In summary, the outlook for 2013
of which 48% was for development, quality and sustainable profitability. remain positive. E&P Business will
16% for exploration and the remaining continue its efforts to maximise the
for operations of existing assets. value of its portfolio.

49
25.0 %
2542 mmscfd
Higher NOPAT by 25.0% compared Higher average sales gas delivery

to the previous corresponding of 8% mainly from higher feedgas
period on the back of higher LNG supply from MTJDA and domestic
price, which contributed to 29.5% Kertih, Terengganu.
to the overall Group profit for the
period under review.

99.99 %
PETRONAS Gas Berhad achieved

99.99% reliability rate for the
Peninsular Gas Utilisation (PGU)
system pipeline network, exceeding
Resilience
the world class standard of 99.90%.

51
Gas and Power
HIGHLIGHTS
Domestic LNG growth
Awarded the Engineering, Procurement, Construction, Installation and Commissioning
(EPCIC) contract and dual Front End Engineering Design (dual FEED) competition contract
for PETRONAS first and second Floating LNG projects (PFLNG 1 & 2) respectively, both aimed
to provide solutions to monetise marginal and stranded gas fields. Completed the dual FEED
competition for Train 9, which is expected to produce a total of 3.6 million tonnes per annum
(mtpa), expanding the LNG production capacity of the existing PETRONAS LNG Complex (PLC)
in Bintulu, Sarawak.
Portfolio rationalisation
PETRONAS International Corporation Ltd (PICL) sold its entire shareholding of 3.9% in
Centrica Plc (Centrica) via a block trade sale. PETRONAS Australia Pty Ltd (PAPL) sold its entire
shareholding of 17% in APA Group (APA) via a block trade sale.
Power Business
Achieved total power equity of 787 Megawatt through investments in power projects in Malaysia
and abroad.

It was indeed a challenging Domestically, we have made I would like to thank our
and eventful year for the significant achievements dedicated team in Gas &
Gas & Power business as during the year but we have Power for all their hard
we are moving rapidly in also faced tough challenges work, dedication and
our multi-billion dollar in meeting the domestic gas professionalism. I hope that
growth agenda. During demand especially for the we continue to be a resilient
the year, we achieved Final Malaysian power sector. We and high performing
Investment Decision (FID) are confident that with the business.
on our first Floating LNG completion of the countrys
project on 27 March 2012. first LNG Regasification
Datuk Anuar Ahmad Our Floating LNG will be the Terminal in Melaka in the
worlds first and scheduled second quarter of 2013,
for deployment at the end it will ease the Peninsular
of 2015. Moving ahead, we gas demand. The facilities
are developing Floating LNG form a broader effort to
2 and Train 9 domestically support development of
as well as augmenting market-driven gas pricing,
our international supply in which will include allowing
Australia and Canada to third-party access to the
strengthen our position in Peninsular gas grid.
offering more secure and
reliable gas supplies to our
customers.

53
The period under review was a year of mixed results given the varied
business environment that we operated in. Regional gas prices varied
tremendously from an average of USD 3 per million metric British
thermal unit (mmbtu) in North America to USD 10 per mmbtu in Europe
and USD 15 per mmbtu in Asia Pacific.
Over the same period, demand in Asia grew Gas & Power business maintained its position
whilst Europes declined. Some 70 mtpa of as the second largest contributor to the
capacity is being developed in this region alone Groups Net Operating Profit After Tax (NOPAT)
with an additional 25 mtpa expected from at 29.5% and this was mainly contributed by
Canada; all of which are competing for the higher realised LNG prices.
premium Asia market.
In 2012, meeting domestic sales gas demand
Despite the challenging external environment, and ensuring security of domestic gas supply
we set out to achieve aggressive sales volume; remained a challenge. One of the added
key projects on accelerated schedules, all the measures put in place was the additional
while maintaining cost efficiency. gas supply arrangements with Malaysia-
Thailand Joint Development Area (MTJDA)
During the period under review, LNG sales and the development of regasification
volume was lower than the corresponding year terminals. In order to ensure long term
due to lower production from PLC in Bintulu, security of domestic gas supply, we have built
Sarawak, which was caused by scheduled our first regassification terminal in Melaka.
maintenance; as well as lower entitlement from After overcoming technical challenges, the
our operations in Egypt. Melaka regassification terminal is now set for
completion in 2013.

Additionally, in 2012, new Gas Sales GLOBAL LNG PETRONAS LNG Complex (PLC)
Agreement (GSA) for the supply of 57 The Groups total LNG sales volume In million tonnes
mmscfd gas at LNG-based price for decreased marginally by 6.5% to
15 years beginning 2016 was signed 26.1 million tonnes compared to
with Maegma Steel HRC Sdn Bhd. 27.9 million tonnes in the previous 12 24.0
Moreover, the GSA for the supply of year. This was due to lower PLC and
additional gas of 40 mmscfd and up to Egyptian LNG volume. cy11 25.4
192 mmscfd at LNG-based price gas Pe11 18.9
for another 10 years from 1st January Lower PLC volume for the year was
2013 was renewed with Gas Malaysia mainly attributed to the scheduled total 11 24.3
Bhd. shutdown at Malaysia LNG (MLNG)
and MLNG DUA that was carried out
10 23.0
As an ongoing effort to ensure Gas to ensure long term plant integrity,
& Power business continues to reliability and efficiency. This was the
drive value growth and profitability, first time ever that all six LNG modules 09 23.3
Infrastructure & Utilities portfolio sold were simultaneously shutdown, since

its entire shareholdings of 3.9% in the start of its operations. Lower
Centrica and 17% in APA via a block volume from Egyptian LNG operations LNG Sales Volume
trade sale. was a result of lower entitlement In million tonnes
volume from operations in Egypt as
The year under review also saw the more gas was supplied for domestic 23.7 1.0 1.3
12
completion of the Detailed Feasibility use. 26.1
Study (DFS) for the shale gas-to-LNG 25.0 1.8 1.1

cy11 27.9
Pacific NorthWest LNG project and LNG volume from PLC was mainly
Pe11 20.6
subsequently the project had moved to exported to traditional customers in 18.3 1.4 1.0
the pre Front End Engineering Design Japan (62%), South Korea (17%), Taiwan 23.9 2.0 0.4
(pre-FEED) phase. (12%) and China (9%). 11 26.3
22.8 1.9 0.4

In addition, PETRONAS LNG Limited 10 25.1
(PLL) traded 1.34 million tonnes volume
22.3 1.8 0.9
or 21.8% higher than last years traded
09 25.0
volume.
PLc egyptian LnG Traded Volume
(PeTrOnas equity)
PLC Sales Volume

In percentage (%)
9.2 0.3
12.0 61.5
23.7MMT Japan
south Korea
17.0 Taiwan
china
Others
FY2012

55
Average Sales Gas Volume Delivery
In mmscfd
239 214
251 244
Peninsular Malaysia
(PGu system)
2542 2351 sarawak
sabah & Labuan
2,052
1,893
FY2012 CY2011
INFRASTRUCTURE,
UTILITIES & POWER
The Groups gas processing and Average Sales Gas Through
transmission business delivered a total the PGU System
In mmscfd
average of 2,542 million standard cubic
feet per day to customers in Peninsular
1028 881 143
Malaysia, Sabah and Sarawak. This is 12 2,052
an 8% higher average sales gas delivery 933 840 120
against the previous year contributed cy11 1,893
by higher feedgas supply from MTJDA Pe11 1,873
and Kertih, Terengganu. 927 831 115
1,087 819 141
11 2,047
About 81% of the average volume
delivered (2,052 mmscfd) was delivered 1,176 787 125
10 2,088
through the PGU system, an increase
of 8% from the previous year at 1,893 1,280 732 134
mmscfd. 09 2,146
Power sector non-Power Power

In Sabah and Sarawak, the sales gas
delivery increased by 12% and 3%
respectively due to an increase in
demand.
PGU System Supply Sources
In mmscfd
The power sector continued to be the

biggest consumer of gas at 50% (1,028
1,455 597
mmscfd) of the total volume delivered 12 2,052
through the PGU system. Non-power
1,264 629
sector and exports to Singapore also cy11 1,893
grew during the year, accounting for Pe11 1,873
the remaining 43% (882 mmscfd) and 1,300 573
1,493 554
7% (143 mmscfd) respectively. 11 2,047
The Groups gas processing and 1,589 499

10 2,088
transmission arm, PETRONAS Gas
Berhad (PGB), exceeded world class 1,635 511
performance with reliability rates of 09 2,146
99.99% for its PGU pipeline network.
Indonesia & MTJDa

OUTLOOK
Global demand for gas remains sellers. However, developing projects
strong, in line with forecast for modest at competitive cost will be a key
economic growth pickup in 2013 and challenge as strength in oil prices has
a continued push for cleaner-burning led to upward pressure on costs. Thus,
fuels to reduce pollution, making gas oil-indexed pricing will remain relevant
an attractive fuel option. Asia, led by amid the high costs of investments
China, will drive the expansion in gas needed to bring in new LNG supply.
consumption as power plants and the
manufacturing industry burn more of The North America shale gas boom
the fuel. is changing the dynamics of the LNG
global market and PETRONAS is poised
East Asian LNG demand is expected to take advantage by planning an LNG
to remain high while demand for LNG plant in Western Canada i.e. Pacific
is also poised to take off in South East Northwest LNG.
Asia as Thailand, Indonesia, Singapore
and Malaysia import LNG for domestic Amidst the changing landscape,
markets. PETRONAS will remain among the
worlds top LNG suppliers with the
The next wave of LNG supplies could addition of volumes from both
potentially come from projects in North domestic and international projects
America, Australia, East Africa, the such as the floating LNG and Train 9 in
Arctic and East Mediterranean, leading Malaysia as well as GLNG in Australia.
to increased competition among

57
PDB Regional Improvement in
Expansion Overall Equipment
PDB acquired downstream companies from
the PETRONAS Group in the Philippines,
Effectiveness (OEE)
Vietnam and Thailand for RM205.8 million Significant improvement in OEE from 84.4% CY2011 to
to kick start its strategic initiative to expand 89.2% FY2012.
overseas and ride on the growth momentum
of the ASEAN region.

Divestment of Quality Asset
non-performing
assets Through Portfolio
In Indonesia, Thailand and Uganda. Rationalisation

59
Downstream
HIGHLIGHTS
Highest Market Share
PDB capture highest market share of 64.5% in Commercial business segment through its flagship
products namely diesel, bio diesel (B5), aviation fuel, fuel oil and bitumen.
RAPID
PETRONAS signed four Heads of Agreement (HoA) towards the formation of petrochemical
joint ventures within its proposed Refinery and Petrochemical Integrated Development (RAPID)
complex in Pengerang, Johor.
Groundbreaking for SAMUR Project

The Prime Minister of Malaysia officiated the groundbreaking ceremony for the Sabah Ammonia
Urea (SAMUR) Project in Sipitang, Sabah.

through strategic acquisitions as positions mindset and behavior areas such as Health, Safety
well as divestment. were closely monitored by and Environment (HSE) and
management throughout the Operational Excellence to
Safety remains high on the year. achieve our targets. The RAPID
agenda and we continue to project team will be focusing
intensify our efforts to inculcate For growth initiatives, RAPID their efforts towards securing
good safety culture in our Project is progressing well on Final Investment Decision
operations as well as making it with its Front-End Engineering (FID) and the SAMUR project
a personal priority. We also pay Design (FEED) and the Heads of is expected to complete the
close attention to governance Agreements (HoA) with several site preparations and other
and compliance to processes Joint Venture partners have been significant milestones as per the
and procedures. These priorities concluded despite facing many overall project schedule.
have enabled Downstream challenges. The SAMUR project
Business to achieve significant site preparation is well underway I would like to put on record
Datuk Wan Zulkiflee Wan Ariffin improvements in operational and the FEED contract has been that I am encouraged by the
excellence and reliability awarded for MG3 retrofit project. achievements in Downstream
The period under review performance. Business as we continue to be
was an eventful one for In 2012, Downstream Business an essential value contributor to
Downstream Business as we Our efforts in talent generated total revenue of PETRONAS. I would like to take
continued to focus on quality acquisition and Recruit- RM150 billion which translates this opportunity to acknowledge
assets through portfolio To-Train programmes have to around 42% of the Groups and thank each and every one
management, enhancement of been intensified to support Revenue whilst our NOPAT was of our staff and partners for
governance, talent management, growth projects such as 6.1 billion, an 11% contribution to their contribution, dedication,
performance and growth. Refinery and Petrochemical the Group. commitment and sacrifices
We continue to rationalise Integrated Development made for our organisation,
our business through active (RAPID) and Sabah Ammonia Moving forward for 2013, without which our achievements
portfolio management as we Urea (SAMUR). In addition, we expect the markets to be would not have been possible in
see opportunities where we can leadership development and more challenging and we realising our vision to be a merit-
upgrade the quality of our assets capability building for critical will continue to focus on key based high performing business.

61
PETRONAS Downstream Business plays a strategic role in enhancing the
value of Malaysias oil and gas resources through its integrated operations in
refining and trading, marketing of crude oil and petroleum products locally
and internationally, as well as through manufacturing and marketing of
petrochemical products.
PETRONAS owns and operates three refineries PDB acts as the retail arm for PETRONAS in
in Malaysia. Two of the Malaysian refineries are Malaysia, PDB through its subsidiaries namely
located in Melaka and comprises PETRONAS PETRONAS Energy Philippines Inc (PEPI),
Penapisan (Melaka) Sdn Bhd (PP(M)SB), PETRONAS International Marketing (Thailand)
wholly-owned by PETRONAS and Malaysian Co. Ltd (PIMTC) and PETRONAS Vietnam Co.
Refining Company Sdn Bhd (MRC), a joint Ltd (PVL) carries out similar operations in the
venture refinery with Conoco Philips. The third Philippines, Thailand & Vietnam. In Indonesia,
refinery, PETRONAS Penapisan (Terengganu) the marketing activities are managed by PT
Sdn Bhd (PP(T)SB) is located in Kertih on the PETRONAS Niaga Indonesia (PTPNI) while
East Coast of Malaysia. Overseas, PETRONAS in Sudan and South Sudan, it is managed by
also owns a refinery in Durban, South Africa PETRONAS Marketing Sudan Limited (PMSL)
through its majority shareholding in Engen and PETRONAS Marketing Ventures Limited
Petroleum Limited (Engen). Products from the (PMVL) respectively.
four refineries are globally traded and marketed
through PETRONAS Trading Corporation Sdn Significant changes occurred as a result of
Bhd. rigorous portfolio review initiatives. PDB
acquired downstream companies from the
PETRONAS Dagangan Berhad (PDB) manages PETRONAS Group in the Malaysia, Philippines,
all domestic marketing and retailing activities of Thailand and Vietnam for a value of RM205.8
a wide range of petroleum products. Through million.
retail station network that has increased to
1,027 stations, PDB has successfully maintained
a market share of 31% in the country. It also
has the largest network of convenience stores
with 695 number of Kedai Mesra. Whilst

Utilisation Rate for Groups Refining Throughput
Refineries In million barrels
PETRONAS also operates service In percentage (%)
107.1 31.6
stations in South Africa and Sudan. It 12 138.7
is the leading retailer and marketer of
petroleum products in Southern Africa 96.7 97.3 96.6 25.7
cy11 122.3
through Engen. 91.0
87.8 Pe11 99.0
87.6
85.7 76.8 22.2
91.6 84.2
PETRONAS Chemicals Group Berhad 107.6 26.8
86.2 11 134.4
(PCG) is the leading petrochemicals 85.7
82.4 82.1
80.8
producer in Malaysia and one of the 79.3 103.9 34.1
10 138
largest producers in South East Asia.
08 09 10 11 Pe11 cy11 12 126.8 31.6
It primarily manufactures, markets 09 158.4
and sells a diversified range of Domestic Refineries
petrochemical products which include Domestic Refineries Total Refineries
Total Refineries
olefins, polymers, fertilisers, methanol
and other basic chemicals and
derivative products. PCG has over 25
years of combined experience in the
petrochemicals industry. Marketing
Crude Oil & Petroleum In million barrels
REFINING & TRADING Products Marketing
PETRONAS owns and operates four The Groups crude oil and petroleum 59.4 46.9 32.8
12 139.2
refineries with a total refining capacity products marketing activities declined
of about 500,000 barrels a day. The for the year 2012 at 139.2 million 66.5 48.9 47.7
Groups crude oil and petroleum barrels against the total volume of CY CY11 163.1
products marketing and trading 2011 of 163.1 million barrels. This was PE11 116.6
46.5 35.4 34.7
activities span across the globe. attributable to lower production of 69.6 51.4 49.9
Malaysian Crude Oil (MCO) and Foreign 11
170.9
Crude Oil Refining Equity Crude Oils (FEC) as well as lower 58.8 56.6 52.4
During the year under review, the sales of petroleum products. 10 166.8
Groups domestic refineries collectively 76.4 60.3 51.8

recorded a higher throughput volume PETRONAS MCO entitlement reduced 09 188.5
of 107.1 million barrels as compared by 11% from 66.5 million barrels to 59.4
Malaysian Crude Oil Export
to the total throughput volume for million barrels mainly for Bintulu, Miri
Petroleum Products Export
CY2011 of 96.6 million barrels as light and Tapis crude oil. The Groups Sales of Foreign Equity Crude Oil (FEC)
domestic refineries operated with sales of FEC decreased by 31% to 32.8
minimal planned maintenance million barrels from 47.7 million barrels
shutdowns in FY2012. The higher during the same period last year,
throughput volume was reflected in mainly reflecting the production halt of
the higher utilisation rate for domestic crude oil from Sudan.
refineries of 87.8%.
The Group exported lower volumes
The overall reliability rate of the of petroleum products, 46.9 million
domestic refineries was sustained barrels as compared to 48.9 million
at 98%, a testimony to the Groups barrels during the same period last
continued operational excellence. year, mainly due to lower Liquefied
Petroleum Gas (LPG) available for
export as a result of lower domestic
production and leaner gas productions.

63
Trading Retail Stations
In million barrels DOWNSTREAM MARKETING No of retail stations
Downstream Marketing manages
64.8 69.2 the retail and marketing activities of 1027
12 134.0 12
PETRONAS full range of petroleum 1463
93.2 66.5 products including fuels, lubricants and
CY11 159.7 968
LPG for home and commercial use, Pe11
1590
PE11 118.3
63.4 54.9
locally and internationally.
955
79.1 83.5 11
1572
11 162.6 In the year under review, PETRONAS
925
managed to sustain its growth 10
104.8 85.6 1489
10 190.4 momentum by increasing the group
96.8 75.2
petroleum products sales volume to 09
912
1473
09 172.0 192.2 million barrels, an increase of
Malaysian crude Oil export
1.5% against the same corresponding PDB
enGen across the african continents
Petroleum Products export period last year.
PETRONAS will continue to strengthen Solaris Putra and PETRONAS Solaris

its pursuit for a robust portfolio review Serdang. The dual-frontage twin
Crude Oil & Petroleum to ensure that only high quality assets stations are equipped with green
Products Trading are maintained and all its resources are features that offers energy efficient
The Groups crude oil and petroleum fully optimised. In 2012, PETRONAS solutions with customer-centric
products trading volume for the year divested its non-performing assets features. Strategically located in
decreased by 16% compared to the in Indonesia, Thailand and Uganda between the PLUS and Besraya
total trading volume for CY 2011 of to shift its focus on other strategic highways, these stations aim to be the
134.0 million barrels. opportunities, investments and strategic meeting points and hangout
resources. During the same period, locations.
The total volume of crude oil traded PETRONAS continued to grow in other
during the year decreased to 64.8 selective markets, namely China and In South Africa and Sub-Saharan
million barrels as compared to 93.2 South Sudan through acquisitions and Africa, Engen continues on its
million barrels during the same joint-ventures. journey towards becoming The Oil
period last year due to the lower Company of Choice with a retail
demand for crude from the Eurozone Retail Business network of 1,463 retail stations and
and United States of America (US); PETRONAS has a total network of 728 convenience stores. Engen has
the unavailability of crude oil from 2,490 retail stations in Malaysia, South answered customers need for petrol
Sudan in the market for trading; and Africa, and Sudan and across Sub- that offers superior performance as
higher risk trading environment that Saharan Africa. well as economy with the launch of
was aggravated by geopolitical and Engen Primax Unleaded. The new
financial events. With 1,027 retail stations and 31% fuel offers state-of-the-art detergency
market share in Malaysia, PDB has superior performance and driving
However, the total volume of continuously been able to grow its economy.
petroleum products traded increased customer base across the country,
to 69.2 million barrels from 66.5 million including those in remote areas. In due In 2012, for diesel customers, Engen
barrels during the same period last course, PDB is confident to achieve also upgraded its diesel product
year due to higher third party trading its vision of becoming the Brand of 1st offering, designed to meet the
volume. Choice in Malaysia. specifications of new diesel technology
engines and also protects older diesel
In 2012, PDB launched a newly engines.
designed PETRONAS Station at Sri
Hartamas and unveiled the first-of-
its kind twin stations, the PETRONAS

LPG Business February 2013. The UN awards confers In Malaysia, new OEM contract was
In 2012, the Gas PETRONAS Home due recognition for PETRONAS signed with Perodua. In addition, a
Delivery (GPHD) service was launched, commitment in delivering quality and special Automatic Transmission Fluid
the 1st in Malaysia to offer a nationwide reliable product supply at stringent (ATF), the PETRONAS Tutela ATF
hotline number, 1-300-888-GAS(427) HSE standards for UN-African Union XP-4 was developed as a result of
to order cooking gas. The delivery Mission peacekeeping force in Darfur collaboration between PETRONAS and
personnel are also able to conduct free (UNAMID) throughout FY2012 supply Naza KIA.
safety checks at customers home and period.
through GPHD, customers can also PDB secured supply contract with
earn Mesra points via the Mesra card. Lubricants a major fleet operator, Konsortium
PETRONAS formulates, manufactures Logistic Berhad (KLB) which will be
In the year under review, Malaysias and sells a wide range of lubricants and using our PETRONAS Urania lubricants
very first high speed LPG Carousel functional fluids for the automotive, in all its prime mover fleet.
(Flexspeed) at the Melaka LPG Terminal industrial, and marine and agriculture
in December 2012 was installed. Once industries. PETRONAS portfolio of In Vietnam, PETRONAS penetrated the
operationalised in the first quarter of lubricant brands includes Selenia, local OEM sector through the supply
2013, it will increase the LPG cylinders Syntium and Urania whereas the contract with Mercedes and Yamaha.
capacity output of approximately 117%. functional fluids brands includes Akros,
Paraflu and Tutela. In Europe, Latin America, South
Commercial Business Africa and North America, PETRONAS
The commercial business drives the In the year under review, PETRONAS strengthened its OEM partnership with
strategic marketing and aggressive signed new partnership agreement several major OEMs partners namely
sales of petroleum products in bulk with existing and new Original FIAT, Chrysler, Mercedes, BMW and
to various industrial and commercial Equipment Manufacturers (OEMs), both Iveco.
sectors such as agriculture, aviation, domestically and internationally.
construction, fishery, mining, oil and
gas exploration and production, power
generation as well as transportation.
In the year under review, PETRONAS

through PDB managed to capture
the highest domestic market share
of 64.5% from 59.5%, amidst the
challenging environment with a 13.0%
contraction in the commercial industry.
Aviation business has expanded its

reach to international airports such as
London Heathrow and Hong Kong.
In South Africa and Sub Saharan, Engen

was awarded a long-term supply
contract to supply 200 million litres
of diesel and eight million litres of
lubricants for a new mining project in
Mozambique.
In the year under review, PMSL won

the confidence from United Nation
(UN) with the new contract award in

65
Production Volumes Sales
PETRONAS has expanded its blending In million tonnes In percentage (%)
plant capacity from 577 million liters
per year to 745 million liters per year 20
12 8.5 42
particularly from Contagem lube
blending plant in Brazil and Shandong
cy11 7.8
lube blending plant in China. The Malaysia
Pe11 8.2 Others
expansion of the blending plant in
China
Brazil has further strengthened the
11 7.8
capability of PETRONAS to cater
the increasing demands and its
10 9.2 38
market position in Latin America.
The Shandong lube blending plant
09 9.3
expansion on the other hand gives
PETRONAS product supply advantage
in growing the lubricant business in
China. PETROCHEMICALS PCG registered sales volume of 6.8
PETRONAS petrochemical business million tonnes represented an increase
PETRONAS has successfully concluded arm, PCG continued to deliver its value of 6% while total sales volume to
a joint venture agreement with the proposition as a resilient and highly production volume was 79% compared
lubricant business of Yuchai Machinery competitive petrochemicals player to 82% for the same period last year.
Group. The group is the largest diesel against challenging market conditions, Higher sales volume was achieved for
engine manufacturer in China and leveraging on its integrated value chain the year mainly due to improvement
second largest in the world. and proximity to growth markets. in the feed gas supply for PETRONAS
Chemicals Methanol Sdn Bhd facility,
In Sudan, PETRONAS has further In the period under review, PCG stronger plant performance, coupled
solidified the lubricant market share maintained its market reach with 58% with lower levels of external limitations.
by acquiring LAMAs lubricant blending revenue derived from outside Malaysia, Overall, plant utilisation rate for the
plant, a leading local independent particularly within Asia. The domestic year was higher at 83% compared to
player allowing PETRONAS to be one market contributed the remaining 42% 76% in the corresponding year.
of the major players in Sudan whilst of its revenue, reaffirming its leadership
paving its entry into North Africa. position in Malaysia as the largest
olefins manufacturer and the sole OUTLOOK
PETRONAS has successfully introduced producer of methanol and urea. The year 2012 saw the advanced
the cutting-edge product to its economies in the Eurozone continued
customers in China and Thailand with PCGs production volume for the year to struggle with the lingering debt
the launched of PETRONAS Syntium grew by 679,000 metric tonnes, an crisis, and also seen growth in the
7000. The product is formulated for increase of 9% at approximately 8.5 United States of America (US) was at a
the next generation of gasoline & diesel million tonnes compared to the same very tepid pace. The world economy
powered engines. It is specifically period last year. PCG sold 3.2 million recorded a growth rate of 3.2% in 2012,
designed to help prolong and maintain tonnes of olefins and derivatives vastly aided by easing commodity
the efficiency of emission systems in products, and 3.6 million tonnes of prices and tight monetary control
passenger vehicles. fertilisers and methanol products, by central banks. In 2013, the global
representing increases of 2% and 9% economic growth is expected to
respectively. hover at 3.5% in 2013 staying close
to the level achieved in the previous
year. The prolonged downturn in
Eurozone, slow pace of US economic
recovery combined with fading growth
momentum in China still pose a risk to
global economic recovery.

Against this backdrop, global oil
demand is not expected to grow
significantly and will register demand
growth of 0.8 million barrels per day
from 89.8 million barrels per day in
2012. Emerging economies led by
China, Middle East and other Asian
countries will drive demand growth
whilst advanced economies are
expected to grow at a more stagnant
pace. On the supply side, there will
be increasing production from Non-
Organisation of Petroleum Exporting
Countries (Non-OPEC) particularly the
US due to rising tight oil output. expected to remain weak due to slow will strengthen our position in the
passenger car growth and increasing urea market in South East Asia. The
Rapid growth of US production has stringent environment regulations to new urea plant will have a production
reduced its import requirement of light improve the efficiency of lubricants. capacity of 1.2 million metric tonnes
sweet crude from West Africa and this per annum (mtpa) of granulated urea,
has led to rebalancing of the global The global petrochemical demand almost doubling our current capacity.
oil market with increasing supply of for 2013 is expected to grow Located in Sipitang Oil & Gas Industrial
West African crude coming to Asia. approximately 4.4 percent from 3.8 Park, the SAMUR project is expected
Increasing supply of Non-OPEC percent in 2012 driven mainly by to spur the growth of Sipitang and its
together with rising Iraq production will emerging economies as growing surrounding area, promoting economic
put pressure on the global oil market in middle class income consumers spin-offs for Sabah. Construction work
the medium term. continue to support the growth. The is currently on-going with completion
global chemical market will continue targeted for 2015.
Weakening products demand in to find support from China and other
advanced countries have led to surplus developing countries in the face of Despite many challenges highlighted
of petroleum products and this has much weaker demand in the West. above, PETRONAS remains optimistic
prompted rationalisation of refining Regional players particularly China of the growth potential of the region
capacities in the US and Europe and will add new capacities using coal particularly the ASEAN countries.
with potential closure of refineries in as feedstock and this will intensify PETRONAS is strategically located in
Asian region particularly Japan and competition in the region. With developing markets which enables
Australia. However, players in the the gradual rise of coal chemical- it to leverage on growth potential in
Middle East and Asia Pacific continue based producers mainly from China, the regional oil and chemical industry.
to add more refining capacities and naphtha-based producers will need to To secure the value creation from
this could depress the regional refining be integrated with higher value adding the growth initiatives and existing
margin in 2013. petrochemical products to remain businesses, a strong focus will be on
competitive. sustaining operational excellence and
The global lubricants demand is disciplined project execution whilst
expected to increase by 1.6 percent To capture the rising petrochemical operating in a safe environment. Talent
in 2013 driven by increase in car demand and expand our product management and high attrition rates
ownerships in emerging countries portfolio, PETRONAS aims to secure throughout the industry also pose a
particularly China and India. To meet FID in its integrated refinery and challenge but this will be addressed
growing demand for lubricants, petrochemical complex (RAPID), through dedicated initiatives. With
major lubricant players will increase located in Pengerang, Southern Johor the right organisational culture,
their base oil production capacity by by quarter one of 2014. Through PCG, Downstream Business continues to
approximately 42 percent. However, PETRONAS is also building a world- strive towards becoming a Merit Based
demand in advanced countries is scale green field SAMUR plant that High Performing Business.

67
Technology
& Engineering
As the global demand for energy
HIGHLIGHTS
increases, the oil and gas industry
Technology breakthroughs
Advancements continue to be made in the
must continuously apply technical
areas of enhanced oil recovery, carbon solutions and innovative technology
dioxide (CO2) management, contaminants to extract oil and gas from depleting
removal, green and sustainable technologies.
Proprietary technologies that continue to be and previously inaccessible reserves.
developed include Gas Cloud Seismic Imaging At PETRONAS we strive to develop
Technology, FnGMap and Sep-iSYS. technical specialists and differentiated
Central Project Delivery technologies to pursue excellence in
The centralised project management function capital project delivery and operational
is currently managing 17 capital projects at
performance. Our strategic
various stages. They are mainly downstream
and on-shore upstream projects. development and deployment of
technology and engineering solutions
Savings derived from Category
Management are central to address challenges such
Category management for equipment and as diminishing resources, matured
materials used for project and operations facilities, high CO2 gas fields and
contributed 8% to 10% in reduction of cost
from initial procurement value. hydrocarbon impurities.
Value Creation
Provision of technical solutions and services
by in-house technical expertise achieved
a value creation of about RM1,670 million
for PETRONAS through optimisation, yield
improvement and cost avoidance.

Enhanced Oil Recovery (EOR) is Imaging Technology. The technology and implementation of category
being actively pursued to increase the allows for improved sub-surface management achieved equipment
recovery factor of existing oil fields. images previously obscured by gas standardisation and cost savings
Based on initial screening studies, 80% clouds. At the same time, in-house Groupwide.
of Malaysias oil fields are technically development of technology solutions
suitable for EOR. The application of focusing on asset safety, integrity and The year under review saw concerted
EOR technology is estimated to boost optimisation are continuously pursued. efforts made to apply technical
the recovery factor of these oil fields to This has led to the development of a solutions and services to improve
more than 40% and extend the fields three dimensional fire and gas mapping performance in the area of safety,
life to beyond 2040. technology known as FnGMap to asset reliability and integrity as well
detect hazardous gas leaks and fires. as optimisation in both upstream and
Concurrently, PETRONAS is exploring Concurrently, Sep-iSYS, an integrated downstream facilities. As a result of
ways to manage gas fields with high separation system that separates gas, these initiatives, relevant innovative and
CO2 content through various research liquid and sand was developed to value-adding engineering solutions are
and development of CO2 management handle slugging conditions, replacing being adopted as PETRONAS standard
technologies, encompassing the the conventional inlet separation solutions.
entire value chain, from carbon system.
capture to transportation and storage. PETRONAS structured Technical
CO2 management technology aims The delivery of capital projects is faced Capability Development programme
to capture high CO2 content and with a multitude of challenges and rolled out during the year was aimed
reduce hydrocarbon loss as well as the execution of project management at skilling our workforce with the latest
energy consumption in the pursuit of with disciplined and innovative technological advancements and
monetising gas fields with high CO2 approach will ensure projects are skillsets.
content in Malaysia. delivered at competitive cost, on
schedule and with assured operability. PETRONAS was granted 38 patents
PETRONAS own contaminants The delivery of capital projects with in the period under review, bringing a
removal technology. Hycapure Hg, an efficient procurement system total of 282 patents filed in 2012.
a mercury removal technology,
has performed well and displayed
adsorbent stability during pilot
trials in commercial operations.
This proprietary technology has
been proven to outperform other
commercial products.
In line with our sustainability agenda,

PETRONAS successfully installed
a Solar Photovoltaic System on
the rooftop of Suria KLCC and at a
petrol station in Kuala Lumpur. This
system will contribute to a significant
reduction in greenhouse gas emissions.
In addition, our biochemical research
and development on biomass, is
headed towards commercialisation.
Realising the need for better sub-

surface imagery to facilitate the
discovery of oil and gas, PETRONAS
developed the Gas Cloud Seismic n Onshore Gas Terminal in Kertih - Pilot Unit for Mercury Removal in Condensate

69
CO2 Management
PETRONAS is exploring innovative
ways to manage high CO2 gas field
content by extensively researching
CO2 management technologies
in order to increase hydrocarbon
recovery and improve efficiencies by
reducing hydrocarbon loss and energy
consumption. Another main focus of
the technologies is to reduce capital
expenditure via smaller footprint and
lesser weight. The development of our
own CO2 Membrane Separation System
for carbon capture has displayed
promising potential when compared
with commercial membranes.
Commercial manufacturing techniques
are currently being used to produce
the membranes with our first prototype
scheduled for field testing at Tangga
n Non-conventional CO2 separation process using a supersonic separation method called Twister Barat in 2013.
Enhanced Oil Recovery incremental oil of more than 120 In parallel, the development of
The Exploration and Production million standard tank barrels (mmstb). advanced CO2 absorption using
Technology Centre (EPTC) was tasked Membrane Contactor technology
to deploy EOR methods, techniques The year under review, PETRONAS in collaboration with Universal Oil
and technologies to sustain oil and Sarawak Shell Berhad collaborated Products (UOP) is progressing well.
production whilst, research and in the area of chemical-based EOR The basic engineering design for a pilot
development on EOR was undertaken technology via a Joint Research & plant has been completed and is on-
by PETRONAS Research Sdn Bhd Development Agreement (JDA). This going for installation at Gas Processing
(PRSB). The Recovery Factor (RF) of EOR technology will be employed Plant 3 at Kertih in 2013.
existing oil producing fields utilising at nine oil fields in the Baram Delta
EOR is targeted to achieve a 50 % RF, and four oil fields in the north Sabah PETRONAS and our technology
with the current RF at 30% to 40%. development area. The Baram Delta partners are developing a non-
and North Sabah Enhanced Oil conventional CO2 separation process
The EOR technologies being pursued Recovery (EOR) Centre was established using a supersonic separation method
by PETRONAS focus on Water to manage the JDA between Shell called Twister. The main advantage of
Alternating Gas (WAG) processes, and PETRONAS in ensuring that the Twister is that it can reduce carbon
Chemical EOR, Thermal EOR two Production Sharing Contracts footprint and weight, with the potential
and Enhanced WAG primarily for are on track in terms of performance of reducing operating and capital
implementation in Malaysia. Due to delivery and budget. The success of the expenditures. The prototype of actual
the high salinity and high reservoir EOR programmes would unlock vast production scale was successfully
temperatures, PETRONAS has amounts of oil reserves from known designed and manufactured and is
successfully developed a new Alkaline reservoirs to maintain stable production ready for pilot testing in 2013.
Surfactant Polymer for application in and demand balance for years to come
these fields. Presently there are 20 for PETRONAS. In 2012, PETRONAS and TOTAL
fields where various EOR technologies signed a Research and Development
applications are applied. A study on Collaboration Framework Agreement
Chemical EOR at Angsi and St Joseph (RCFA) on 3 October 2012 on a joint
identified prospective additional study on relevant technologies to

develop high CO2 gas fields. The initial been filed under various areas including These encouraging results have further
study will focus on K5, a sour gas mercury removal, acid removal and spurred PETRONAS towards its third
field in offshore Sarawak with up to biochemical using ionic liquids. initiative on Solar PV technology, the
70% CO2 content. This collaboration development of a Solar Independent
allows for PETRONAS and TOTAL to Sustainable Development Power Plant in Gebeng. The 10.02
conduct research and development PETRONAS carries out its business megawatt peak plant, and is expected
in several areas such as gas pre- in a socially responsible and holistic to be completed in 2013. It is estimated
treatment, CO2 capture, and pipeline manner to ensure continued growth to produce 12 gigawatt-hours of
transportation and storage of CO2. The and success for the present and future energy annually which is equivalent
collaboration is expected to enable a generations. Henceforth, PETRONAS to the energy needed to power
viable development for K5 and to equip continues to apply energy efficient up 4,500 households. The system
PETRONAS with the related expertise technologies and solutions across the will contribute to a reduction of
and technical know-how to spearhead Group. greenhouse gas footprint amounting to
potential development of other about 8,000,000 kilogrammes of CO2
identified high CO2 fields. Solar annually.
In 2012, PETRONAS successfully
Contaminants Removal installed a Solar Photovoltaic (PV) Biochemicals
One of the successful developments System on the Suria KLCC rooftop In a continuous effort to produce
in 2012 was the Hycapure Hg and at PETRONAS Solaris Putra and environmentally-friendly products,
mercury removal technology from PETRONAS Solaris Serdang retail PETRONAS has successfully ventured
gas using impregnated ionic liquids stations. The combined energy into several research and development,
with either silica-based or carbon- generated at both locations amount and technology deployment projects
based adsorbents had demonstrated to 830 megawatt-hours of solar that capitalise on the abundant
consistent performance. The silica- energy annually which is equivalent biomass feedstock in Malaysia. For
based adsorbent was applied at Gas to the energy generated to power up example, PETRONAS embarked on a
Processing Plant 4 at Kertih and had 290 households. The clean energy research and development project for
performed consistently to specifications generated can reduce our greenhouse biopolyols in 2009. The technology is
for more than 15 months on-stream. gas footprint by 500,000 kilogrammes now fully developed and pilot-tested
The carbon-based adsorbent was of CO2 annually. with commercialisation potential in
applied at Gas Processing Plant 6 in
Dungun on a pilot trial for six months
and its performance had been on par
with the silica-based adsorbents. The
development of the carbon-based
adsorbent was part of cost-down
efforts to make the technology more
commercially competitive. A pilot plant
for mercury removal in condensate
has been installed at an offshore gas
terminal. This pilot plant is expected to
be commissioned by end 2013.
PETRONAS overall contaminants
removal technology has been
undertaken in a joint-collaboration with
Queens University of Belfast, a leading
research institute in Ionic Liquids
Chemistry that was recently voted by
the British Science Museum the Most
Important British Innovation of the 21st
Century. A total of 150 patents have
n Aerial view of Solar Photovoltaic panels on the rooftop of Suria KLCC

71
biolubricant and biopolyurethane Fire and Gas Mapping Sep-iSYS
applications. The development for the FnGMap PETRONAS has developed an integrated
commercial plant is currently at the PETRONAS developed the FnGMap, three-phase separation system that
Front-End Engineering Stage. a three dimensional fire and gas separates gas, liquid and sand which
detection mapping solution that is highly reliable in handling slugging
Other research and development optimises placement of fire and gas conditions, to replace the existing
projects currently being pursued detectors in production facilities. standard inlet separation system. The
include conversion of biomass into This technology solution for fire and high slug flow is a challenge for the
Mono Ethylene Glycol, a precursor hazardous gas detection is applicable conventional separator system that
to high value polymer products; to both upstream and downstream causes liquid carry-over which may
conversion of fatty acids from biomass facilities, including both greenfields eventually lead to a forced shutdown
into Polyalpha Olefin which is the main and brownfields. Application of this at an oil and gas production facility.
building block in making biolubricants; technology optimises and accurately Sep-iSYS allows up to 50% CAPEX
and conversion of waste gases such as places flame or gas detectors. The reduction as compared to conventional
carbon monoxide and carbon dioxide increasing awareness of fire safety as slugging technology. The first unit that
using biotechnology into chemicals. well as regulatory requirements has was deployed in a facility in Vietnam
These projects are currently at proof- made the application of this technology has been in continuous operation since
of-concept stage and will be further imperative to the oil and gas industry. August 2011.
assessed for its techno-economic
viability.
Seismic Imaging Technology

One of the recent technological
advancements made through research
and development is the development
of the Gas Cloud Seismic Imaging
Technology. This technology was
developed as a solution for improved
imaging previously affected by shallow
gas clouds. Presently, many fields and
reservoirs in the Malay Basin are poorly
imaged due to the presence of shallow
gas accumulations that mask potential
hydrocarbon reserves.
This technology will enable old fields
which were previously deemed
complex and uninterpretable, to
be revisited to uncover additional
resources. The advancements in
seismic imaging technology has
allowed exploration and production
activities to be conducted more cost
effectively, as the number of test wells
required to locate viable reserves would
be greatly reduced. Exploration teams
can now identify oil and natural gas
prospects more accurately, place wells
n Sep-iSYSTM : Separator with Integrated Polishing Scrubber for Floating Production Storage and
more effectively, reduce the number of Offloading (FPSO) vessel in Vietnam
dry-holes drills and reduce drilling cost
as well as exploration time.

n Sabah Oil-Gas Terminal (SOGT)
Project Management & Delivery index on SOGT indicated that the Technical Services and
Managing capital projects in a global performance is in first Quartile schedule Solutions
environment is becoming increasingly and the project is near completion. Focusing on operational excellence
complex. As we embark on various in the area of safety, asset integrity
growth initiatives in both the upstream PETRONAS applies category management and optimisation, Group
and downstream sectors, we put management for equipment and Technical Solutions (GTS) intensified
emphasis on delivering capital projects materials to bring further cost efforts to undertake asset integrity,
safely, on schedule and at competitive savings for project and operational reliability and optimisation programmes
cost. This is achieved by applying requirements. Best practices embarked across PETRONAS facilities. For the
the PETRONAS Project Excellence upon include standardisation of period under review, technical services
Framework, which uses a stage-gated technical specifications and enabling and solutions generated about RM1,670
project management process dubbed volume consolidation for reduction million in value creation through
the PETRONAS Project Management in cost, as well as development of yield improvement, cost savings and
System. regional service centres with Original cost avoidance. GTS successfully
Equipment Manufacturers leading to deployed precise technical solutions
Among the projects is the Refinery and the development of local talent in the and best-in-class technical solutions
Petrochemical Integrated Development long term. For the period under review, and standards. Through this Centre of
(RAPID) project which is the largest category management for equipment Excellence, PETRONAS has reached
and most complex project undertaken and materials used for projects and autonomy with less dependency on
by PETRONAS. Several other major operations contributed 8% to 10% in external technical consultants.
projects are at the execution stage. reduction of cost reduction from the
These include the PETRONAS Floating initial procurement value. Asset Integrity Management
LNG1 (PFLNG1), Sabah Ammonia Managing Asset Integrity concerns the
Urea Project (SAMUR), Sabah Oil- Our proprietary technologies and application of qualified standards, by
Gas Terminal (SOGT) and the Solar solutions are deployed to capital competent people, using appropriate
Independent Power Plant (Solar projects to ensure that we leverage processes and procedures throughout
IPP). PETRONAS strives to achieve on in-house experienced technical the asset lifecycle, from inception to
first Quartile schedule and cost personnel to manage projects and decommissioning. This is a continuous
performance in capital project delivery. development of FEED. This move process in managing the risk of
Project performance is validated and has realised cost savings and built failures to ensure optimal production
benchmarked worldwide on an annual our institutionalised capability for without compromising safety, health
basis by the Independent Project project management, engineering and and environmental requirements.
Analysis Inc (IPA). The benchmark adherence to strict standards. PETRONAS places utmost focus

73
in any event or situation ensuring
the adequacy of safety related
instrumentation at the plant. During the
period under review, this technology
was applied in PFLNG 1, PFLNG 2 and
the SAMUR project.
PIPEASSURE, a novel pipeline repair

system has been applied at more than
200 repair points Including offshore
risers, pipings, refinery fire water lines,
gas receiving lines and others. In
October 2012, PIPEASSURE won the
2012 JEC Innovation Asia Awards in
the Offshore Category for its ability to
repair pipelines and return the system
to its original design specifications
and conditions. The application of
in this area and has applied Asset Inspection (SSI). The PRBI software PIPEASSURE allows plants to run
Integrity Management and its suite has enabled DOSH to access smoothly without the need to shut
of engineering solutions to optimise and review the status of pressure down while repair works are carried
Upstream and Downstream operations equipments and the Certificate out.
while extending the lifespan of of Fitness can now be issued on-
facilities. line. PRBI was also adopted for Process Optimisation
development of Offshore Self- The area of process optimisation is
In line with this, PETRONAS has Regulation (OSR) programme. This integral to the oil and gas industry
developed its own specialised and OSR will eventually allow DOSH to as it allows for the increase in
standard engineering solutions such as provide surveillance of equipment at production revenue, reduces operating
PETRONAS Asset Life Study (P-ALS), offshore facilities. expenditure and optimises commercial
PETRONAS Instrumented Protective strategies for existing facilities. Through
Function (P-IPF), PETRONAS Risk Our Independent Asset Integrity concerted efforts, PETRONAS has
Based Inspection (P-RBI) and Process Review (i-AIR) was designed to address successfully built the relevant modules
Safety Management (PSM) which the management of our upstream for process optimisation with well-
have been adopted for standardised facilities. i-Air provides Technical trained engineers in the application
application groupwide. In addition, Integrity Process Safety in a holistic of optimisation solutions. PETRONAS
technology solutions such as manner through assessment to continues to improve performance
PIPEASSURE has gained recognition improve the integrity of upstream and seek opportunities for continuous
externally and has been proven reliable operations. Efforts are currently on- development of optimisation solutions.
for pipeline repair systems. going to close identified gaps for asset For example, in 2006 PETRONAS
sustainability. successfully developed a process
The PETRONAS Risk Based Inspection The PETRONAS Instrumented simulation software i.e. iCON
(P-RBI) for plant and maintenance Protective Function (P-IPF) is an which has a proven track record of
inspection has been aggressively engineering solution that minimises 2% incremental of oil per field. The
implemented in PETRONAS upstream human errors in the prevention of pragmatic use and reputation of
facilities and downstream plants in unsafe incidents as it provides an iCON is also recognised by many
Malaysia and is now being extended automatic protective layer to prevent local universities in Malaysia. In the
to international facilities. In 2012, operations from continuing beyond period under review, iCON was been
the Department of Safety and Health safe operating limits. The utilisation of adopted as a PETRONAS standard
(DOSH) adopted PRBI as the system this process safety solution enables process simulation tool.
to deploy their Specific Scheme of the testing of the safety robustness

Technical Capability development of technical professionals The ACD programme established since
Management (TP). Over the years, these efforts have January 2009 enables junior technical
With the growing concern for skilled built a pool of competent technical executives to gain skills and experience
and expert workforce required to personnel locally and internationally. in their fields. The Time-to-Autonomy,
support the business, emphasis on which was previously nine years two
technical capability building remains a The PECAS system continuously months in 2009, has now improved to
key focus for PETRONAS. Groupwide improve occupational skill standards seven years seven months in 2012.
technical capability building is on- to be in line with the advancement Throughout the years, PETRONAS
going through the Technical Capability of skills and technology in the has successfully developed over
Development Programme (TCDP) industry and it is pervasively applied 1000 TPs since the inception of the
namely the PETRONAS Competency Groupwide. The TTS programme TPCP programme in 2000. These
Assessment System (PECAS) for has been enhanced to provide more TPs are responsible for the upkeep of
the development of technical non- opportunities for the current TTS to the PETRONAS Technical Standards
executives and Technical Trade progress in their areas of specialisation. (PTS) and best practices, shaping
Specialist (TTS), Accelerated Capability The development of TTS remains and influencing the industry through
Development (ACD) for junior technical robust in its implementation with a involvement in professional bodies and
executives and Technical Professional total of 114 individuals appointed to- learning institutions, both locally and
Career Progression (TPCP) for the date. internationally.
As part of continuous efforts in

ensuring the integrity of PETRONAS
engineering designs and operations,
the framework for Technical Authority
(TA) implementation has been adopted.
To date 160 TAs have been appointed
for the Group and each business unit.
The TAs are responsible to approve
new PTS and its deviations, to evaluate
and endorse Management of Change
for projects and operating assets, as
well as evaluate and endorse new
technologies.
PETRONAS capability development
programmes have been recognised
by its associated companies and third
parties. This programme has been
deployed to PETRONAS JV facilities in
Malaysia as well as overseas operations
such as Engen Petroleum Ltd., Trans-
Thai Malaysia (Thailand) Ltd. and
PETRONAS facilities in Turkmenistan,
Vietnam, and Myanmar. The Malaysian
Government through Department of
Skills Development under the Ministry
of Human Resources, has also adopted
the PETRONAS Occupational Skill
Standards to develop the National
Occupational Skill Standards (NOSS) for
the oil and gas industry in Malaysia.

75
Our People
For the year under review, the Human
HIGHLIGHTS Resource Management (HRM) Division
implemented several key talent
46,145 employees management strategies to attract,
For the period under review, PETRONAS motivate and retain talents to support
employees Groupwide grew by 6.7%
PETRONAS business growth and
from 43,266 employees in CY 2011.
expansion, in meeting new energy
Pushing Boundaries With A challenges.
High Performing Workforce
Performance and Delivery is the Strategic policies and the industrys best
cornerstone to support our aspiration practices were introduced to classify talents,
in building a high performing workforce encourage sustainable performance and
in the organisation. Our attractive eradicate mediocrity, blind conformance
Employee Value Proposition hinges on and groupthink. Merit, differentiation and
the tenets of Trust, Grow and Reward performance-based rewards remained at the
which is designed for and offered to core of the corporate agenda.
employees.
The Company continues to place

Talent Management as a key strategy
in business growth, recognising that
an organisation is only as good as
its talents. While business strategies
remain at the forefront of PETRONAS
global advancement, our talent
management strategies are closely
aligned to strengthen and inculcate a
high performing culture based on the
principles of competency, merit and
performance.

Talent Sourcing & Recruitment New Hires Malaysians Other Nationals Total
The Company has enhanced its
recruitment process to ensure that it
Year 2012 4,864 564 5,428
is able to recruit the right talent for Year 2011 1,867 299 2,166
the right job. Candidates are assessed
not just on previous performance,
but also on soft skills and potential. For the period under review, the
The objective is to make PETRONAS a Company received recognition as
desired Company to work for, for the an Employer of Choice, winning
right people. a number of high profile awards
including the Best Employer Brand
A total of 5,428 new hires were Engineering 2011 by Graduan Aspire
recruited in the period under review, and Most Popular Graduate Employer
in comparison to 2,166 in FY2011. in Energy/Oil & Gas/Utility for 2012 at
The recruitment drive encompassed the countrys 100 Leading Graduate
permanent and contract direct hires, Employers Awards 2012.
as well as hires via third party agencies.
The significant increase was due to the
robust business growth and expansion.
Business Heads drove talent sourcing

at their respective units enabling timely,
effective and focused recruitment
for their business needs. Additionally,
several key initiatives were deployed to
attract a high volume of talents during
the financial year. These included
collaborations with market-established
headhunters to source for highly
specialised candidates, establishment
of full time recruiters within the
Company and strategic alliance with
Talent Corporation Malaysia Berhad
(TalentCorp) on key initiatives, such as
the Talent Outreach Programme and
Returning Expert Programme.

77
Managing Talent For the year under review, a total of
& Building Capability 80 Top Talents (TTs) benefited from
In the period under review, the smooth two internal Leadership Development
execution of People Development programmes. The programmes created
Committees (PDCs) across all engagement opportunities for TTs
businesses provided a platform for and PETRONAS management, and
business leaders to conduct detailed received full support from Executive
and constructive discussions on Vice Presidents, Vice Presidents, as well
talent. The PDCs focused essentially as Chief Executive Officers within the
on strategic decisions regarding Group.
talent development, performance and
consequence management, as well as A Getting to Know You session was
mobility. also launched in 2012. The programme
saw 29 TTs going through a well-
At the Executive Committee (EXCO) designed informal session with
PDC level, Succession Planning selected Human Resource Business
sessions were conducted quarterly to Heads, as well as the Vice President
ensure that the Group met with the of HRM. Apart from this, external
current leadership requirements in programmes such as the Techno
building a pipeline of leaders for the Commercial Leader and Advance
future. This resulted in an increase Management Programme at selected
in the ratio of identified Ready Now Ivy League universities continue to
Successors to PETRONAS Corporate successfully deliver classroom learning
Critical Positions from 1.2:1 at the To further drive meritocracy in to our selected TTs.
beginning of January 2012, to 1.6:1 talent management, the Enhanced
at year end, registering an impressive Promotion Policy was implemented to Pushing our boundaries further, the
increase across all business units. highlight and exemplify the importance Global Workforce and Leadership
of capability building. The policy aims Mobility initiative was launched
The Company refined its top talent to support meritocracy in all aspects as part of the HR Transformation
management by introducing a more of talent management, including the journey to provide a solution that
stringent criterion in the filtering of top selection process and to also support is able to facilitate international
talent, as well as introducing an internal the employees career development expansion through efficient allocation
potential assessment tool developed while growing with the Company. of manpower resources, delivered
specifically for PETRONAS. The move is through seamless global mobility. This
aimed at creating a leadership culture On going collaborations with initiative sees more leadership products
that allows cultivation of critical skills global multinationals continue to within the Company rolled out to
of leaders building leaders for the enable our top talent to participate global locations in order to create
organisation. Managing top talent is in staff exchange and attachment alignment in identifying and managing
viewed as a key strategy in propelling programmes. These programmes TTs.
the Company towards its aspiration provide our talents with on-the-
of becoming a reputable player to be job, accelerated capability building
reckoned with amongst oil majors in experience that focuses on best
the global market. practice sharing and knowledge
exchange.

Compensation and Benefits In the year under review, the Company The PETRONAS Code of
A differentiated reward system remains introduced an Enhanced Remuneration Conduct and Business Ethics
critical to ensure that all employees are Package for International Assignments, (CoBE)
rewarded commensurating with their Deferred Incentive Payment, Effective April 2012, the PETRONAS
performance and deliverables. Enhanced Remuneration Offering Code of Conduct and Business Ethics
for the Technical Trade Specialist (CoBE) sets the professional standard
In the year under review, the Group and Differentiated Remuneration for that all PETRONAS employees must
rewarded employees based on International Operations (Differentiated uphold and adhere to, and it replaces
performance; providing a clear link Salary Structure based on job skill and the previous Code of Conduct and
between performance management talent segment). These initiatives were Discipline (COCD). Benchmarked
systems and how employees are introduced for PETRONAS to remain to international standards, the
remunerated. This emphasised key competitive and reflective of the enhancement was to accommodate
organisational and job-related market conditions. developments in local and international
objectives, motivating employees to laws and practices, as well as related
perform and deliver. This also allowed Since 2010, the Company has technological developments.
the Group to recognise outstanding implemented flexible working hours
performers in a meaningful way. and smart-casual Fridays to create a CoBE is aligned with the Companys
more conducive working environment Shared Values of Loyalty, Integrity,
A new grade structure was to provide further flexibility and ensure Professionalism and Cohesiveness.
introduced to reinforce the tenets of that employees can pursue work-life These also form the foundations of
differentiation, in which each individual balance. The Annual Leave entitlement the PETRONAS General Business
were remunerated based on their and leave without pay criteria were Principles.
specific accountability, capability and enhanced during the year in review. Since its launch in April 2012, 27,003
contribution demonstrated. This new employees have undergone training
structure focuses on deliverables on CoBE in order to provide a better
instead of job grades. understanding of its application.
PETRONAS
Whistleblowing Policy
PETRONAS Whistleblowing Policy was
rolled out in April 2012 to provide an
avenue for all PETRONAS employees,
as well as members of the public
to disclose any improper conduct
committed or may potentially be
committed by PETRONAS employees.
This policy underscores PETRONAS
commitment to integrity and ethical
behaviour by helping to foster and
maintain an environment where
employees can act appropriately,
without fear of retaliation.

79
Mergers & Acquisitions The new structure is a clear departure In our continuous effort to achieve
For the period under review, from the previous command and operational excellence in the area
the Company enhanced its control product-focused structure. of effectiveness and efficiency, HR
Human Resource (HR) Mergers CoE will facilitate in bringing best in SSC achieved a 98% Service Level
& Acquisition (M&A) Framework class practices and guidelines, and Agreement through prudent spending.
through the inclusion of the HR shall work with Business HR to develop This constituted a saving of 6.5% to
Divestiture Framework and detailed specific initiatives that are tailored to clients, exceeding SSCs Industry
implementation modules. Six M&A and business needs. Benchmarked Standard for newly
Divestiture projects were completed established Shared Services Centres.
during the year. The Company treats Notable achievements during the SAP HR ECC6.0 and HR SSC Wave 1
all employees affected by divestments, period under review included the were first rolled out to 25,000 users
mergers and acquisitions and joint execution of a globally integrated across 27 PETRONAS Standard Terms
ventures fairly and prioritises open HR System i.e. SAP HR ECC 6.0, and Conditions Companies in January
and regular communication to ensure including my PETRONAS Advanced 2012, and Wave 2 encompassed
smooth transitions. Self-Service Portal (myPASSPORT) 3,900 users across nine PETRONAS
and the establishment of the HR Non-Standard Terms and Conditions
Improving Efficiency with the Shared Services Centre (HR SSC) for Companies in Malaysia, Indonesia and
Enhanced Human Resource PETRONAS Groupwide. Philippines.
(HR) Operating Model
The enhanced HR Operating model, SAP HR ECC 6.0 is an innovative Education & Sponsorship
implemented in 2010, continues to global integrated system, which will The Company believes that investing
be a key driver in transforming the allow efficient and seamless data in education and human capital
function of HR from transactional and reconciliation, ensuring superior development today ensures the
administrative to strategy formulation; management in global talent sourcing continuous availability of a sustainable
in line with HRs Vision to serve as and sophisticated management of a pool of motivated and knowledge-
a Strategic Enabler & Partner to the global workforce. The system includes empowered human resources for
Business. data entry into a single repository PETRONAS, our partners, host nations
through a comprehensive self-service and communities wherever we
In the year under review, a portal namely My PASSPORT and operate.
restructuring of the HRM Division Centralised Shared Service functions
was implemented to strengthen the for better data integrity. Adopting an integrated approach
implementation of the operating in learning to help develop a well-
model. The new structure focuses on HR SSC is the administrative machinery rounded society, our investment
value creation at the source, akin to which undertakes business as usual HR in education and human capital
a business partner model that seeks tasks. The centre focuses on process development covers a broad spectrum
to provide the right solutions at the efficiencies, data integrity, customer- of programmes and training facilities,
right level. The structure will serve centric services and compliance to ranging from education sponsorship
to enhance the Centre of Excellence policies, in line with the enhanced to the establishment of various
(CoE) environment by providing focus HR Operating Model. This allows educational and training institutions,
in their roles as subject matter experts both CoE and HR Business Units to offering relevant learning programmes.
and strengthening the HR Centralised reduce time spent on administrative
Services and Human Resource people management tasks and manual
Management operational excellence. processes, enabling greater focus on
strategic and critical HR activities.

On-going Education
Transformation
In line with our aspiration to become
a Regional Education and Learning
Hub for the Oil & Gas Industry, the
Group focused primarily on close
collaboration with top industry
players for staff exchange, internship
and scholarship programmes during
the year under review, to enable
talents to broaden their knowledge
and experiences in the oil and gas
industry. Various Memorandum of
Understandings with several key
industry players were agreed on
during the year focusing on industry
engagements, academic positioning,
as well as research and development
stewardship.
Via our four learning institutions,

we continue to provide world-class
education, producing a steady stream
of talents for the oil and gas sector and
for the countrys workforce at large.
PETRONAS Leadership Centre

(PLC) PLC remains one of the most active from more than 10 countries including
PLC had its first full-year of operation corporate learning and development Malaysia. During the year, PLC also
in 2012, following its official launch centres in Malaysia by providing designed and implemented an
in November 2011. As a credible its services to more than 18,000 effective methodology to enhance the
Leadership Centre, PLC provides participants and a total output of application of learning for participants
learning solutions and interventions 74,614 man-days. In the year under graduating from its programmes
to address all levels of leadership review, a total of 17,127 participants to increase performance at the
progression; from individual from PETRONAS Group and its affiliates workplace.
contributor all the way to enterprise attended the various leadership
leader. Throughout the year, PLC development programmes organised PLC received the award for Best
brought together many business by PLC. Training Provider in 2012 from the
leaders from all sectors in the Human Resource Development Fund,
PETRONAS Group to contribute and PLC also organised its first International Ministry of Human Resources, Malaysia
participate in the Leaders-Developing- Coaching Conference in April 2012 in November 2012.
Leaders programme for all levels of that saw the participation of delegates
executives in the organisation.

81
Institut Teknologi Petroleum
PETRONAS (INSTEP)
In the year under review, INSTEP
achieved key milestones in the
following areas:
Operations & Maintenance (O&M)

Training Plant
The year saw the kick-off construction
of the O&M Training Plant, for the oil
and gas industry, in INSTEP. Set to
be the first-of-its-kind in the world,
INSTEP will provide upstream and
downstream training facilities to
enhance learning effectiveness and
produce more job-ready technicians to
cater to the growing industry needs.
Also underway is the enhancement

of the existing Petroleum Technology
Programme which was designed
to produce technicians based on
PETRONAS Occupational Skill
Standards (POSS). The programme is
being enhanced to ensure international
accreditation is obtained, as well as to
fulfill the established requirements set
out in POSS. Programme Candidates
Professional Development Programme

In the year under review, INSTEP and
PETRONAS Carigali Sdn Bhd (PCSB) (Technical & HSE) 11,270
launched its newly rejuvenated
Upstream Operation Induction Competency-based Assessments & Certifications 2,146
Programme (UOIP). The programme
aims to build a strong foundation for Petroleum Technology Programme (PTP) 587
new production engineers.
Customised training for overseas & external clients 352
In the year under review, INSTEP
produced a total of 14,355 candidates. Total 14,355

Universiti Teknologi UTP SIIP is an exciting collaboration In March 2012, ALAM held the single
PETRONAS (UTP) between UTP and its industry partners largest maritime convocation in
UTP, which offers undergraduate and in the fields of engineering and Malaysia with 507 graduates.
post-graduate courses mainly related technology. The collaboration provides
to the oil and gas industry, is on track the platform for UTP undergraduates July 2012 also saw the relocation of
to achieving Research University to undergo a seven month industrial ALAM branch campus in Batu Rakit,
(RU) status by 2013. The RU status training attachment with reputable and Terengganu to the Melaka main
is granted by the Malaysian Ministry relevant companies within the industry. campus. This increased operational
of Higher Education and it provides efficiency and cost management.
access to much needed funding and The year saw a total number of 1,267
grants for research, development, and students graduating from UTP. PETRONAS Scholarship
commercialisation activities. Programme
Akademi Laut Malaysia (ALAM) Every year, PETRONAS offers
In the year under review, UTP added ALAM is ranked amongst the top 10 scholarship to deserving students
the following to its list of achievements percent of the worlds MET (Maritime through its Sponsorship & Talent
and learning offerings: Education Training) institutions and Sourcing Unit and is one of the
the only MET institution in Malaysia pioneering providers of sponsorship
1. Rated a Tier-5 (Excellent) for the that offers the full range of maritime for higher education. It was set up
Rating System for Malaysian Higher shipping-related training to seafarers to complement the nations effort
Education (SETARA 11). SETARA and for shore-based shipping in developing its technical and
11 measures the performance of personnel. professional workforce.
teaching and learning at level six
of the Malaysian Qualifications In 2012, ALAM developed 16 new In the year under review, PETRONAS
Framework (undergraduate level). training courses, for the offshore awarded scholarships to 318 students
UTP was rated a Tier-5 for its industry, as well as customised out of which 79 scholarships were
excellent performance in teaching courses, such as Focused Tanker for overseas universities and 239
and learning for undergraduate Safety Culture Workshop and Chemical scholarships for local universities. The
programmes. Tanker eLearning programme in scholarships offered were for various
collaboration with the American disciplines relevant to PETRONAS
2. Emerged as the first private Bureau of Shipping. business needs, as well as the industry.
university in Malaysia to be
awarded a 5-star rating for
research, development and
commercialisation. The rating
was conducted by the Higher
Education Ministry (MoHE) using
the Malaysia Research Assessment
Instrument (MyRA), an established
measurement tool.
3. Received recognition for its

structured Student Industrial
Internship Programme (SIIP) from
TalentCorp Malaysia, an agency
under the Prime Ministers Office.
The announcement was made
at The Talent Roadmap 2020
launched by the Prime Minister,
YAB Dato Sri Mohd Najib Tun Abdul
Razak.

83
Health, Safety
& Environment
In 2012, the PETRONAS Group
HIGHLIGHTS Health, Safety and Environment
Division embarked on new projects
Strengthened governance
and enhanced existing programmes
in HSE and sustainable
development of our business to elevate HSE and Sustainable
During the period under review the HSE Development best practices across
Mandatory Control Framework (MCF), the Group. This further strengthened
was implemented Groupwide focusing our governance namely in the areas of
on the overall HSE management and
controls from the aspects of safety,
HSE Capability Building, Process Safety
environmental stewardship and social and HSE Controls in projects.
responsibility
PETRONAS continuously explores sustainable
Enhanced Contingency business practices in the economic, social
Planning Standard and environment spheres to address global
Guidelines for effective crisis energy demand. Anchored by the PETRONAS
management such as major Oil Corporate Sustainability Framework, various
Spills was enhanced in domestic and efforts were implemented across our business
international operations focus areas to ensure we remain competitive in
the global market.
Enhanced HSE leadership
and capability in PETRONAS Annually, the Groups HSE performance is
To support the growth of knowledge presented to the Board of Directors, Executive
management in promoting HSE and Management Committees for oversight.
excellence through human capital Risk-based HSE assurance is performed to
development. provide independent assessment on the
effectiveness of our HSE controls, which
are presented to PETRONAS Board Audit
Committee.

GOVERNING HSE In ensuring compliance to HSE SAFETY
HSE Mandatory Control standards and requirements, HSE Due to the increasing number of major
Framework (MCF) assurance exercises were conducted projects and outsourcing activities,
The HSE MCF, supported by the on identified projects, such as the PETRONAS enhanced the standard
Group HSE policy, was established to Sabah Oil and Gas Terminal, Sabah HSE clauses, HSE requirements,
strengthen and enforce effective HSE Ammonia Urea and Sabah-Sarawak incentives and disincentive schemes
governance across the PETRONAS Gas Pipeline. For the Refinery in contractual agreements. These
Group. It defines the HSE requirements and Petrochemical Integrated changes set clearer HSE expectations
in 10 key areas, as outlined in the Development (RAPID) Project, rigorous and requirements for contractors
PETRONAS HSE Management System, reviews were conducted to ensure working in PETRONAS facilities and
ensuring consistent and effective HSE aspects were embedded in the projects. By working closely with our
Groupwide implementation. technical documentation for optimum contractors to establish clear roles,
adherence. responsibilities and interfaces, will
Frequent engagement sessions ensure safer operations and project
were conducted during the year execution.
under review to drive the successful
implementation of HSE MCF. These
sessions ensured overall compliance
to the requirements outlined and
encouraged adherence to our HSE
governance practices.
In 2012, the HSE MCF implementation

plan was established for PETRONAS
domestic and international operations
to achieve desired business results.
Gap assessments were conducted
and reviewed against HSE MCF
required targets. Mitigation
plans were developed based on
approved timelines and milestones.
Participating Operating Units (OPUs)
have progressively undertaken the
necessary gap assessments as per the
HSE MCF, with expected completion
by 2015. The HSE MCF roll out also
involved developing new standards and
procedures to enhance the existing
PETRONAS Technical Standards (PTS).
HSE Controls in Projects

A standard on Project HSE
Management was defined and made
mandatory to PETRONAS projects.
In line with the PETRONAS Project
Management System (PPMS), it
provides guidance to the businesses
and Project Management Teams (PMTs)
in managing HSE and Sustainable
Development performances at various
phases of project lifecycle.

85
n ANGSI-A
In fortifying the Companys emergency for the Plant Senior Management to improve the safety of our staff at all
preparedness, PETRONAS shared advocate proactive approaches in times.
experiences and lessons learnt with managing process safety. Workshops
Government authorities for a safer that highlighted Process Safety In building competencies, HSE
working environment. In the year under awareness were also held covering elements were embedded in the
review, the Company collaborated elements of Management of Change, training modules for all new executives.
on an oil spill exercise to assess the Design Integrity, Mechanical Integrity Additionally, regular assessments of
existing communications systems. and Risk Assessment. various technical disciplines were
For effective crisis management, the carried out to ensure adequacy of
enhanced Contingency Planning In driving cultural and mindset change competent technical personnel to
Standard was established for domestic in Process Safety, the Process Safety support the Groups human capital
and international operations. Leadership Field Guide was developed development.
to improve site engagements and
Building leadership at all levels is inspection activities. Guidelines were The Company values outreach and
an important aspect to strengthen published to recognise early warning dialogue sessions as a means to
the Groups overall process safety signs in Process Safety Information, understand our stakeholder views and
performance. A series of interactive Mechanical Integrity, Operating concerns, as well as gaining insights on
platforms were designed during the Procedures and Management of emerging trends. In 2012, PETRONAS
year in review to support and facilitate Change. PETRONAS Zero Tolerance organised engagements with a wide
knowledge management growth, as in safety-related incidents were range of stakeholders to address HSE
well as potential roll-out at high risk enhanced by developing tools to curb related matters. This has enabled the
sites. non-compliance especially amongst development of improved policies and
the staff executing high risk tasks. processes which fostered collaborative
A workshop on Recognising Interactive learning series on safety working relationships with the
Catastrophic Incident Warning Signs in and noise hazards were developed to Government and other stakeholders.
the Process Industries was conducted

In line with industrys best practices,
codes and standards, the current set
of HSE key performance metrics were
reviewed to include additional process
safety performance indicators. This
is to ensure early warning signs and
issues related to process safety are Fatal Accident Rate LTIF and TRCF for the Group
Reportable Fatalities per 100 million No. of cases per one million man hours
addressed in timely manner to prevent man hours
major incidents.
0.39 0.68
Based on the Hazard and Effect 12 3.91 12
Management Process (HEMP), our 0.34 0.81

cy11
risk management framework was cy11 3.32
2.86 Pe11
enhanced to incorporate best practices Pe11
0.32 1
in barriers management and risk 0.4 0.78
profiling. A series of HEMP workshops 11 2.58 11
and syndication sessions with process

0.31 0.68
safety coordinators from all OPUs were 10 3.36 10
organised to strengthen consistent and
0.44 0.88
effective Group-wide implementation. 09 3.75 09
In 2012, HSE Tier-3 audits were LTIF TRCF
conducted extensively in our domestic

and international operations, including
South Africa, Vietnam and Brazil. A SOCIAL RESPONSIBILITY programme included regular tracking
total of 10 OPUs and three projects The Health Risk Assessment (HRA), and monitoring of asbestos removal
were involved to ensure adherence which is in its sixth running year plan, assurance exercises, regular
and compliance in accordance to achieved 89% and 58% completion in engagement sessions and ensured
PETRONAS HSE regulatory and PTS domestic and international operations PETRONAS facilities are supplied with
requirements. respectively. A structured and asbestos-free material.
consistent methodology was applied
HSE Performance in standardising these assessments. In the year under review, a
In 2012, regrettably, a total of 12 As we progressed, chemicals, comprehensive study was conducted
lives were lost, where six fatalities ergonomics and noise were identified to assess the fitness level of the
were caused by project construction as key health risks requiring further Emergency Response Team (ERT)
incidents. The Groups Lost Time Injury intervention programmes, such as in our Downstream business. The
Frequency (LTIF) rose by 15% to 0.39, Hearing Conservation, Management of objective of this study was to ensure
from 0.34 in CY2011. Hazardous Chemicals at the Workplace that ERT members were fit medically
and Indoor Air Quality Assessment. and physically, in accordance with the
A notable reduction was observed in Guidelines on Health Assessment for
the Groups Total Reportable Case The establishment of the Asbestos Fitness to Work. PETRONAS established
Frequency (TRCF), which decreased Management Programme (AMP) has guidelines on Fatigue Management
to 0.68 in the year under review seen domestic operating units (OPUs) for prevention, management and
compared to 0.81 in CY2011. and joint ventures (JVs), undertake mitigation of fatigue at the workplace.
asbestos abatement activities as In 2012, PETRONAS invested in aligning
As we embark on newer and more part of the companys annual HSE our health practices to international
challenging projects, strict adherence agenda. These efforts were in line with standards to effectively manage health
to PETRONAS HSE Policy defines PETRONAS goal of having an asbestos issues, such as substance misuse and
how we operate by strengthening risk-free workplace by 2015. The HIV/AIDS.
our processes in HSE management,
controls and crisis management.

87
PETRONAS and the Department Efforts were also undertaken to In conjunction with the World Health
of Occupational Safety and Health intensify and elevate our employees Organisations International Blood
(DOSH) collaboratively developed awareness on health, fitness and Donor Day, the Company continued
the Simple Risk Assessment and well-being. The SlimFit Challenge to support the countrys health
Control Guidelines and Chemical was introduced to improve staffs institutions as part of PETRONAS
Health Risk Assessment to optimise health indicators and subsequently, corporate social responsibility through
Industrial Hygiene practices. The 9th reduce the risk of lifestyle diseases, a Blood Donation Drive held at the
International Occupational Hygiene such as heart ailments, diabetes and Twin Towers. Apart from contributing
Association Conference was held for hypertension. Collectively driven by to the blood bank reserves, the
the first time in South East Asia, with Group HSE Division (GHSED), the programme raised awareness to
Malaysia as the host. PETRONAS Association of Wives and Female Staff emphasise on the importance of
Industrial Hygienists were involved in of PETRONAS (PETRONITA), Kelab donating blood and the need for safer
the Scientific and Technical Organising Sukan dan Rekreasi PETRONAS (KSRP) blood products.
Committees. and the Twin Towers Fitness Centre,
the six-month programme focused on ENVIRONMENTAL
During the year under review, weight loss through balanced workout STEWARDSHIP
PETRONAS also led collaborative and healty diet. Personal Health Environment
efforts involving industry players Management programmes such as Environmental Impact Assessment
and relevant authorities to develop awareness of lifestyle illnesses, cancer (EIA) is an essential requirement for
the National Mercury Management and stress management were also development of capital projects in
Guideline for Malaysias Oil & Gas pursued by respective operating units many countries, including Malaysia.
Industry to systematically monitor to promote a healthier lifestyle for local The scope of the conventional EIA
and managed the risk of exposure to communities. typically includes physical, chemical
mercury.

and biological assessments as well as
considerations arising from project
development and activities. In recent
years, social and community health
issues have become more prominent
with increasing awareness from
our stakeholder and the public. The
Environmental, Social and Health
Impact Assessment (ESHIA) PTS was
made available to provide guidance
on for social and health impacts in
accordance to the EIA process.
With the aim of minimising risks

associated to air emissions, the Air
Emission Management Standard
was established. It outlined the executed gap closure activities through For the year under review, we
management requirements on the management of GHG emissions. continued our efforts to support,
consistent air emissions processes The total carbon footprint of safeguard and promote our nations
and practices across the Group, PETRONAS global operations was 47 rich biodiversity in areas such as
supplemented by a guiding document million tonnes of carbon dioxide (CO2) Sabahs Class 1 Imbak Canyon
on Best Available Techniques (BAT) for equivalent, an increase of 6.4% from Forest Reserve, as well as Sarawaks
air emission control. PE 2011, which corresponded with the mangrove swamps. In the East Coast
growth of our operations. region of Malaysia, our conservation
To address regulations and efforts continued with the ecoCare
international conventions, such as Resource Conservation & programme for the reforestation and
the Montreal Protocol on Substances Biodiversity rehabilitation of ecologically-sensitive
that Deplete the Ozone Layer and the In 2012 a new water accounting mangrove habitats, as well as that of
Stockholm Convention on Persistent tool was introduced during the year coastal vegetation along the Kertih
Organic Pollutants (POPs), a standard under review to allow comprehensive River.
on Environmentally Hazardous reporting on our overall water
Substances (EHS) was developed. management. These guidelines
It provides EHS management resulted in the establishment of the
requirements and control measures type-based freshwater accounting and
for operations and phased out inventory. It incorporates information
implementation. on freshwater withdrawal, as well as
the percentage of freshwater recycled
Greenhouse Gas (GHG) and reused adopted at our domestic
Management and international operations. In
To strengthen existing GHG promoting effective use of natural
management practices, we have resources, PETRONAS conducted
established the GHG Monitoring, an international water availability
Reporting and Verification Standards risk assessment in 20 countries
for the Group, in accordance with such as Egypt, South Africa, Sudan,
internationally accepted guidelines. Turkmenistan and Uzbekistan.
With this, PETRONAS aims to improve
its year-on-year carbon footprint
performance through planned and

89
Awards & Recognitions
PETRONAS Group was recognised for its accomplishments
and continuous pursuit of excellence with numerous awards
and recognitions received in 2012.
Royal Society for the Malaysian Society for

Prevention of Accidents Occupational Safety and
(RoSPA) Awards Health (MSOSH) Awards
RoSPA, which is based in United Kingdom, organises its The MSOSH Awards are presented annually to companies
prestigious national award scheme to recognise excellence in Malaysia that have outstanding Occupational Safety
in work-related health and safety performance by private and Health (OSH) performance. Identied companies
and public sector organisations. The scheme is based on are subjected to stringent document and site verication
the assessment of a broad portfolio of evidences about audits from the MSOSH Panel of Auditors in order to be
the level of development and performance of an entrants considered for the awards. The panel members comprise
occupational health and safety management system, and representatives from the Department of Occupational
also takes into account the entrants reportable accident Safety and Health (DOSH), Social Security Organisation
rate and enforcement experience. (SOCSO), National Institute of Occupational Safety
and Health (NIOSH), Standards and Industrial Research
Sector Awards Institute of Malaysia (SIRIM) Berhad, QAS International and
Gold Award Federation of Malaysian Manufacturers (FMM).
PETRONAS Chemicals Ammonia Sdn Bhd
PETRONAS Chemicals Fertiliser Kedah Sdn Bhd Grand Award
BP PETRONAS Acetyls Sdn Bhd
Occupational Health & Safety (OHS) Kertih Terminals Sdn Bhd
Oil & Gas Commendation Award PETRONAS Chemicals Methanol Sdn Bhd
PETRONAS Penapisan (Melaka) Sdn Bhd PETRONAS Chemicals MTBE Sdn Bhd
PETRONAS Gas Berhad, Export Terminal
Gold Merit
PETRONAS Carigali Sdn Bhd (Sabah Operations),
Sabah Gas Terminal (SBGAST)
PETRONAS Carigali Sdn Bhd Peninsular Malaysia
(Terengganu Crude Oil Terminal (TCOT))
PETRONAS Chemicals Ethylene Sdn Bhd
PETRONAS Gas Berhad
Pusat Operasi Penyaluran Gas &
Segamat Regional Office
PETRONAS Penapisan (Melaka) Sdn Bhd


Gold Class I Silver Award
ASEAN Bintulu Fertilizer Sdn Bhd Process Safety Code
BASF PETRONAS Chemicals Sdn Bhd (BDO Complex) PETRONAS Chemicals Derivatives Sdn Bhd
PETRONAS Carigali Sdn Bhd PETRONAS Chemicals Fertilizer Kedah Sdn Bhd
Peninsular Malaysia (Onshore Gas Terminal (OGT))
PETRONAS Carigali Sdn Bhd (Sabah Operations), Distribution Code
Labuan Gas Terminal (LGAST) PETRONAS Chemicals LDPE Sdn Bhd
PETRONAS Chemicals Ammonia Sdn Bhd
PETRONAS Chemicals Derivatives Sdn Bhd Product Stewardship
PETRONAS Gas Berhad Kuantan Regional Office PETRONAS Chemicals LDPE Sdn Bhd
PETRONAS Gas Berhad Seremban Regional Office
PETRONAS Gas Berhad Shah Alam Regional Office Community Awareness and Emergency Response Code
PETRONAS Chemicals Polypropylene Sdn Bhd PETRONAS Penapisan (Melaka) Sdn Bhd
Pollution Prevention Code

Gold Class II PETRONAS Penapisan (Melaka) Sdn Bhd
PETRONAS Chemicals Polypropylene Sdn Bhd
Employee Health and Safety Code
Merit Award
Community Awareness and Emergency Response Code
Chemical Industries PETRONAS Chemicals Ammonia Sdn Bhd
Council of Malaysia PETRONAS Chemicals Derivatives Sdn Bhd
PETRONAS Chemicals LDPE Sdn Bhd
(CICM) Responsible
Care Awards 2010 Pollution Prevention Code
PETRONAS Chemicals Aromatics Sdn Bhd
PETRONAS Chemicals Derivatives Sdn Bhd
Responsible Care is one of CICMs agship activities, launched PETRONAS Chemicals LDPE Sdn Bhd
by the Council in 1994. More than 100 signatories or chemical PETRONAS Penapisan (Terengganu) Sdn Bhd
companies have pledged their commitment to Responsible
Care. The CICM Responsible Care Committee and its Regional Process Safety Code
Committees, namely the Central, Eastern, Northern and PETRONAS Chemicals Ammonia Sdn Bhd
Southern Zone Committees, have been established to further PETRONAS Chemicals LDPE Sdn Bhd
enhance the promotion and implementation of Responsible PETRONAS Penapisan (Melaka) Sdn Bhd
Care among the chemical industry players in Malaysia.
Category Petrochemicals PETRONAS Chemicals Ammonia Sdn Bhd
Gold Award PETRONAS Chemicals Derivatives Sdn Bhd
Community Awareness and Emergency Response Code PETRONAS Chemicals LDPE Sdn Bhd
PETRONAS Chemicals Fertilizer Kedah Sdn Bhd

PETRONAS Chemicals Fertilizer Kedah Sdn Bhd

91
National Council for Sarawak Chief Ministers
Occupational Safety Environmental Award (CMEA)
and Health (NCOSH)
Excellence Award
The National Occupational Safety and Health Sarawak Chief Ministers Environmental Award (CMEA)
Excellence Award is an initiative by the National The CMEA is presented to exemplary organisations that
Council of Occupational Safety and Health, Ministry have made tremendous effort to improve environmental
of Human Resources. It is intended to give credit and performances in its organisation with a view to boosting
acknowledgement to organisations, employers and sustainable development in the state. It is jointly organised
employees in various sectors in the industry that have by the Natural Resources and Environment Board (NREB)
achieved excellence in managing safety and health systems Sarawak and the Sarawak Chamber of Commerce and
in their workplace. Industry. The Award is one of the incentives given to
business and industries to encourage stewardship in
Petroleum/Gas/Chemicals Category environmental protection and management in the state.
PETRONAS Penapisan (Melaka) Sdn Bhd It also aims at providing organisations with the opportunity
of an independent evaluation for their environmental
Gas Facility Category commitment. The award is also organised to stimulate
PETRONAS Gas Berhad Gurun Regional Operations business and industry initiatives in assuming a proactive
Office role in environmental protection throughout the state,
by taking the winning participants of this award as their
Storage Category example.
Kertih Terminals Sdn Bhd
Large Enterprise: Oil and Gas
British Safety Council Gold
Asean Bintulu Fertilizer Sdn. Bhd.
International Safety Awards PETRONAS Carigali Sdn. Bhd.
The British Safety Council International Safety Awards Small Enterprise: Gas/Petrol Station
recognise commitment to good health and safety PETRONAS Service Station Samarahan Expressway
management. Only companies that achieve accident
incidence rates, which are better than the industry average
for their sector, are eligible to apply. Winners must also
demonstrate board level commitment to health and safety
as well as details of significant health and safety advances
for the qualifying year. The British Safety Council has led
the way in promoting health, safety and environmental best
practice in society for more than 50 years.
Occupational Health & Safety (OHS)

Oil & Gas
Merit Award

Etylene
Institut Kimia Malaysia PETRONAS Chemicals Group
Laboratory Excellence (Centralized Laboratory Services)
Award Polyethylene
PETRONAS Chemicals Group
(Centralized Laboratory Services)
Institut Kimia Malaysia (IKM) Laboratory Excellence Methanol

Award is organised by Malaysian Institute of Chemistry, a PETRONAS Chemicals Methanol Sdn Bhd
professional body which regulates the Chemists Act 1975.
It was designed to ensure the laboratorys commitment
Environmental Samples
to achieve excellence in providing quality and competent
PETRONAS Chemicals Methanol Sdn Bhd
testing services pertaining to local legislation especially in
the fields of health, safety and the environment.
Polypropylene
PETRONAS Chemicals MTBE (M) Sdn Bhd /
In addition to the needs of analytical laboratories to operate
Polypropylene (M) Sdn Bhd
a quality system according to the requirements as stipulated
in MS ISO/IEC 17025, the award also requires laboratories to
operate with safety and health features in the workplace. MTBE and Propylene
PETRONAS Chemicals MTBE (M) Sdn Bhd /
Area of Testing
Gas Catalyst
ASEAN Bintulu Fertilizer Sdn Bhd PETRONAS Chemicals MTBE (M) Sdn Bhd /
PETRONAS Chemicals Methanol Sdn Bhd Polypropylene (M) Sdn Bhd
PETRONAS Gas Berhad (Laboratory GPPA)
PETRONAS Gas Berhad (Laboratory GPPB) Petroleum
PETRONAS Penapisan (Terengganu) Sdn Bhd PETRONAS Penapisan (Melaka) Sdn Bhd
PETRONAS Penapisan (Terengganu) Sdn Bhd
Water
ASEAN Bintulu Fertilizer Sdn Bhd Petroleum Products
PETRONAS Chemicals Group PETRONAS Penapisan (Terengganu) Sdn Bhd
(Centralized Laboratory Services)
PETRONAS Chemicals Methanol Sdn Bhd Aromatics-Benzene and p-Xylene
PETRONAS Chemicals MTBE (M) Sdn Bhd / PETRONAS Penapisan (Terengganu) Sdn Bhd
PETRONAS Gas Berhad (Laboratory GPPA) Utilities (Water)
PETRONAS Gas Berhad (Laboratory GPPB) PETRONAS Penapisan (Terengganu) Sdn Bhd
Natural Gas
Wasterwater PETRONAS Research Sdn Bhd
ASEAN Bintulu Fertilizer Sdn Bhd
PETRONAS Chemicals Group Formation water and Drinking water
(Centralized Laboratory Services) PETRONAS Research Sdn Bhd
PETRONAS Gas Berhad (Laboratory GPPB)
PETRONAS Penapisan (Terengganu) Sdn Bhd Crude Oil, Fuel and Polyol Ester
PETRONAS Research Sdn Bhd PETRONAS Research Sdn Bhd
Urea
ASEAN Bintulu Fertilizer Sdn Bhd

93
Prime Ministers Kancil Awards 2012
Hibiscus Award
The Kancil Awards recognise home-grown Malaysian
creative excellence in endorsing the highest standards of
The Prime Ministers Hibiscus Award has been the premier creativity in advertising. The winning advertisements were
national environmental award in Malaysia, aims to produced by Leo Burnett Advertising Sdn Bhd.
recognize business and industry which portray excellent
environmental commitment in reducing impact of their Advertiser of the Year
operations to the Environment. PETRONAS
Notable Award Silver Kancil

PETRONAS Penapisan (Melaka) Sdn. Bhd. Craft (Film Direction)
Malaysian Refining Company Sdn. Bhd. PETRONAS Chinese New Year 2012 advertisement
entitled Coming Home: India
Melaka State Award
PETRONAS Penapisan (Melaka) Sdn. Bhd. Craft (Editing)
Malaysian Refining Company Sdn. Bhd. PETRONAS Chinese New Year 2012 advertisement
entitled Coming Home: China
Bronze Kancil
Craft (Film Direction)
PETRONAS Hari Raya / Merdeka / Malaysia Day
advertisement entitled Strangers
JEC Asia Innovation
Awards 2012 Craft (Editing)
PETRONAS Chinese New Year 2012 advertisement
entitled Coming Home: All Around the World
PETRONAS received an award for its pipeline protection Merit Kancil

technology, PIPEASSURE at the JEC Asia Innovation Awards Film (Single)
2012 recognizing PETRONAS for its technology and PETRONAS Chinese New Year 2012 advertisement
solutions development initiatives. entitled Coming Home: All Around the World
FORTUNE Global 500
PETRONAS improved its ranking to 68th from 86th in

FORTUNE Magazines recently released annual ranking of
the worlds 500 largest companies by revenue. The only
Malaysian company to be ranked in this prestigious listing,
PETRONAS improved its profit.

Malaysias Most Popular Sunday Times Top Brands Survey
Graduate Employer 2012
PETRONAS topped the awards list as Malaysias Most ENGEN won the Sunday Times Top Brands 2012 Top Petrol
Popular Graduate Employer in Energy / Oil & Gas / Utilities Station award, for the second consecutive year as it has
for 2012 at the countrys 100 Leading Graduate Employers been named SAs leading petrol station. The win confirms
Awards 2012. that the company is not only South Africas top marketer of
petroleum products and convenience services, but also its
best-known petrol.
Details of the award provider: The prestigious Sunday Times

Top 10 Malaysian Brands Top Brands Awards is commissioned by Avusa Media and
conducted by TNS Research Surveys. The Sunday Times
is South Africas biggest national weekend newspaper. By
topping the list in 2012 Engen again confirmed that it is
PETRONAS retained the number one spot for the fourth the top marketer of petroleum products and convenience
consecutive year in the fifth annual Top 100 Malaysian services and best-known petrol station brand in South
Brands ranking 2012 by Brand Finance Plc, an independent Africa. Engen began its reign at the top of the petroleum
international brand strategy and valuation consultancy. category in 2011, after taking joint first place with BP in
2010.

95
Corporate Social
Responsibility
PETRONAS supports community
HIGHLIGHTS development programmes that
enable and empower individuals
7,900 underprivileged families and communities with the right
adopted under Program Sentuhan knowledge, skills and resources to
Harapan PETRONAS benefitted make the most of opportunities out
from food aid and skills training there. We believe that sharing our
programmes.
business success creates a more
Contributed RM1 million positive and lasting difference to the
to the Cancer Research lives and prospects of people in our
Initiatives Foundation to areas of operations.
support the fight against cancer in
Malaysia. Our Corporate Social Responsibility (CSR)
and engagement programmes, carried out in
Contributed a total of partnership with local communities, industries,
RM500,000 to the Dayak Cultural governments and Non-Governmental
Foundation, Geng Wak Long, Sekolah Organisations (NGOs), continue to reinforce
Seni Johor and Sekolah Seni Kuching our commitment and unified efforts to ensure
to help preserve, nurture and promote that our operations bring good shareholder
Malaysian traditional performing arts. returns and contribute to the well-being of
people, communities and nations wherever we
operate.
Our investments in a broad range of

community-based programmes, both at home
and abroad, include:

Program Bakti Pendidikan Program Kenali Anak Kita Program Sahabat
PETRONAS (PBPP) PETRONAS (KAKP) Pencegahan Dadah
Introduced in 2002 in partnership In 2009, the Kenali Anak Kita PETRONAS (SAHABAT PPDa)
with the Ministry of Education, this programme was launched in While PETRONAS works closely with
outreach programme aims to provide partnership with PENGASIH, an NGO parents in the Program Kenali Anak
a strong academic foundation for and self-help group affiliated with Kita PETRONAS, Sahabat PPDa aims to
underprivileged and academically- the World Federation of Therapeutic raise awareness among students and
weak students in communities Communities. The programme teachers on substance abuse. More
where PETRONAS operates. This aims to raise awareness among than 48,000 students and teachers
initiative helps open young minds parents on drug, alcohol and other have participated in courses and
to new possibilities and experiences substance abuse and equip them workshops held in collaboration with
while improving their confidence with the knowledge to identify and Malaysias Ministry of Education since
and self-esteem to excel both prevent substance abuse among their the programme was first launched
academically and socially. In support children. In the year under review, in 2008. The programme hopes to
of the Governments efforts to the programme was re-launched as inculcate strong positive values among
improve the standard of English, Program Kenali Anak Kita PETRONAS. students as well as to incorporate
Mathematics and Science among The programme now addresses other schools and communities in drug
students, this programme also aims social issues aside from drug abuse abuse prevention efforts. In the year
to boost proficiencies in these core and aims to create effective change under review, the programme reached
subjects through academic and agents as role models in society. The out to more than 12,000 students and
non-academic activities conducted programme was also introduced in teachers who are currently playing a
weekly by professional teachers, Sabah and Sarawak in 2012. A total of role as drug awareness change agents
and once a month, by PETRONAS 837 participants, including parents, in their respective schools. According
staff facilitators. In the year under attended seminars and workshops to an evaluation report by the Asian
review, 53 schools participated in this conducted during the year under Centre for Research on Drug Abuse
programme. Over 1,000 academic review on the dangers of substance (ACREDA), Sahabat PPDa programmes
and fun learning sessions were held abuse. in 2012 promoted greater awareness
in the respective schools nationwide, and knowledge of substance abuse in
benefiting over 3,000 Year 4 to Year 94.3% of students and teachers who
6 pupils. This programme is made attended the programme.
possible through the participation of
over 700 PETRONAS staff facilitators,
under lining the strong spirit of
volunteerism among our workforce.
In the year under review, there was
a 7% increase in the number of
students who achieved 3As to 5As in
their examinations compared to the
previous year. A notable achievement
was SK Wangsa Maju, that obtained
100% passes in English, Mathematics
and Science.

97
Program Sentuhan Imbak Canyon Research and
Harapan PETRONAS Conservation Area Development in
Launched in 2010, this programme In June 2011, PETRONAS launched Healthcare
involves the distribution of essential a conservation partnership with In line with our mission to contribute
food aid such as rice, sugar and Yayasan Sabah for the Imbak Canyon to the well-being of the people,
cooking oil to selected underprivileged Conservation Area. PETRONAS PETRONAS has been supporting the
families nationwide via PETRONAS contribution of RM6 million over a Cancer Research Initiatives Foundation
Mesra stores and selected retail outlets three-year period is aimed to help (CARIF) since its inception in 2000.
such as Econsave and Giant. Families conserve the unique biodiversity in Our contributions have helped in the
also attended financial literacy, health Imbak Canyon while promoting public establishment of its research facilities
checks as well as parenting sessions awareness, environmental education and furthered cancer research efforts.
that are aimed to transform their lives and community outreach. In 2012, In the year under review, PETRONAS
socially and economically. the partnership saw the ground contributed RM1 million towards CARIF
breaking event of both the Imbak to support its work in the fight against
In 2012, PETRONAS contributed RM8 Canyon Information Kiosk where cancer in Malaysia.
million in food aid to 7,900 families visitors can obtain information about
in 10 states namely Selangor, Perak, the conservation areas and the Imbak
Kedah, Melaka, Johor, Pahang, Village Jetty which benefits the locals Preservation of Malaysian
Kelantan, Terengganu, Sabah and who live along the river and use boats Traditional Music, Arts
Sarawak. The programme was also for transportation. In the year under and Culture
officially launched in the northern review, PETRONAS and Yayasan Sabah In the year under review, as part of
region in the year under review. together with local authorities and our continued commitment towards
universities embarked on an ethno- the preservation of Malaysias
botanical survey to catalogue the use traditional arts and culture, PETRONAS
Program Sentuhan Kasih of traditional medicine with the aim of contributed a total of RM500,000 to
PETRONAS preserving the traditional knowledge the Dayak Cultural Foundation, Geng
During the festivals of Hari Raya, and practices of the natives. Wak Long, Sekolah Seni Johor and
Chinese New Year, Deepavali, Sekolah Seni Kuching in support of
Hari Gawai (Sarawak) and Tadau their work in preserving, nurturing and
Kaamatan (Sabah) in the year under promoting Malaysian traditional dance
review, PETRONAS hosted a series of and music.
gatherings for underprivileged children
from orphanages and shelter homes
in and around our areas of operations
in the spirit of sharing and caring.
In 2012, Program Sentuhan Kasih
PETRONAS was expanded to include
more activities such as cleaning,
clearing and refurbishment activities.
In the year under review, between 300
and 500 staff volunteers participated
in various grassroot level activities
which allowed for closer interaction
and more meaningful engagement
with the local Orang Asli community
in Gombak, Indian community in Perak
and Chinese community in Selangor.
n Imbak Canyon Conservation Area

Malaysian, and in the course of their
work have demonstrated the true Spirit
of Merdeka that of the liberation of
mind and spirit.
The categories for the Merdeka Award

are Education and Community;
Environment; Health, Science and
Technology; Outstanding Scholastic
Achievement; and Outstanding
Contribution to the People of Malaysia.
The Merdeka Award 2012 was

presented to:
Academician Tan Sri Emeritus
Professor Datuk Dr Augustine
The Merdeka Award Ong Soon Hock in the category of
- Recognising and The support from the highest levels Health, Science and Technology,
Rewarding Excellence of the Government, as well as from who is recognised for his
& Contribution to the Malaysians from the private sector, outstanding contribution to the
Nation continue to sustain the Merdeka research and development of the
Awards mission of promoting thought chemistry and technology of palm
The Merdeka Award was established leadership and innovation, fostering oil and for his significant role in
in August 2007 by PETRONAS, a culture of excellence, encouraging advocating and promoting the
ExxonMobil and Shell as a combined a world view, thereby enhancing Malaysian palm oil industry to the
effort to recognise and reward Malaysias standing as a dynamic, world.
Malaysians and non-Malaysians who competitive 21st Century Global Player Tan Sri Professor Dr Syed
have made outstanding and lasting in all key sectors from science and Muhammad Naquib al-Attas in the
contributions to the nation and the technology to the arts. category of Outstanding Scholastic
people of Malaysia in their respective Achievement, for his outstanding
fields. Since it was established in 2007 contribution to the scholarly
the Merdeka Award has honoured research in the area of Islamisation
The founding of the Merdeka Award 17 outstanding individuals and two of Contemporary Knowledge and
is a reaffirmation of the oil and organisations. The Merdeka Award of Muslim Education.
gas industrys commitment to the 2012 was presented by the Prime Dr Engkik Soepadmo in the
continued development of Malaysia Minister of Malaysia and the patron of category of Outstanding
and its people. This noble aspiration the Award, YAB Dato Sri Mohd Najib Contribution to the People of
has united these oil and gas industry bin Tun Abdul Razak at the Dewan Malaysia, for his outstanding
players to put aside competition Filharmonik PETRONAS in Kuala contribution to the research and
and unite in their collective aim of Lumpur. conservation of Malaysias forest
recognising and rewarding outstanding plant diversity.
contributions by Malaysians and non- In his inaugural speech as Chairman
Malaysians. of the Merdeka Award Board of There were no recipients for the
Trustees, following his appointment Education and Community and
Indeed, the Founding Members of the earlier in the year, His Royal Highness Environment categories in 2012.
Merdeka Award have sought to pay Raja Dr Nazrin Shah Ibni Sultan Azlan
tribute to those who have helped make Muhibbuddin Shah, the Regent of The 2012 recipients each received
this nation great. It is a mission that Perak Darul Ridzuan, said the recipients RM500,000 cash, a trophy, a work of
honours our shared history and our of the Merdeka Award have made art by renowned Malaysian artist Latiff
common future. the people of Malaysia proud to be Mohidin and an inscribed certificate.

99
PETRONAS approach to
sustainable development
underpins the responsible
way we work. Over the
years, we have initiated and
supported various educational,
social, health, environmental
and community projects,
contributing to the wellbeing
of the communities where we
operate.
MYANMAR
PETRONAS manages socio-economic
and humanitarian projects under
the Yetagun Socio-Economic across the nation. The contest which have benefited from PETRONAS
Development Programme. These is open to students aged 12 to 16, is scholarships to pursue degree courses
initiatives include an early childhood aimed at nurturing interest in natural in Information Technology and
care and development programme science and promoting the spirit of Electrical and Electronic Engineering at
that have benefited more than 10,000 teamwork among school children. Universiti Teknologi PETRONAS (UTP).
children living in 37 villages around a These scholarships have been awarded
cross-border pipeline transporting gas Recognising that education provides to build a resilient and competent
from the Yetagun Gas field to Thailand. the vital foundation for building local workforce, who will in the future,
capabilities and skilled manpower, contribute their services towards the
VIETNAM PETRONAS has extended its development of their country.
The annual Natural Science contest sponsorship to deserving Vietnamese
Discovering Our World with students to pursue undergraduate During the year in review, PETRONAS,
PETRONAS held since 2006 has seen studies. together with other companies in
the participation of more than 1.2 Vietnam, organised a walk themed
million secondary school students Close to 100 Vietnamese students Walk for a Green Environment
involving more than 5,000 people to
create an awareness on environmental
protection and garner support for
victims of Agent Orange during the
Vietnam war and the less fortunate.
REPUBLIC OF THE SUDAN

More than 600 students with
exceptional results in the Sudan
Secondary School Certificate
Examinations have received
PETRONAS Top 100 Achievers awards.
Additionally, the PETRONAS Debate

and Quiz Trophy competition, which
was established to encourage public
speaking skills amongst secondary
school students, has also benefited
more than 400 students.

PETRONAS has also sponsored
students to pursue undergraduate
and postgraduate studies at UTP in
Malaysia.
REPUBLIC OF
SOUTH SUDAN
More than 1000 students have
benefited from the refurbishment of
the Kuajok Secondary School, located
in the capital state of Warrap. In line
with our capability development
initiatives, PETRONAS also contributed
school bags and library books to
more than 900 school children at
two schools in Juba. Additionally,
PETRONAS also donated a bus to
the University of Juba in July 2012 to interact with the local community. TURKMENISTAN
to facilitate students activities in the The children enjoyed an interactive As one of the key strategies in
University. session on environmental topics. developing human capital in the
The mobile clinic visits will continue country, PETRONAS continues to
PETRONAS has also sponsored to be an integral part of PETRONAS provide sponsorships for Turkmen
students to pursue undergraduate community building efforts in the students to study at UTP each year.
studies at UTP in Malaysia. Garraf region. Currently 13 graduates are employed
by PETRONAS Carigali Turkmenistan
MOZAMBIQUE EGYPT Sdn Bhd.
A total of 300 underprivileged PETRONAS has sponsored the school
children from the Anglican Primary fees for more than 800 less fortunate
School Nacala received assistance children and orphans in Egypt as well
for stationery and books for their as awarded more than 100 Egyptian
education through PETRONAS Carigali scholars in UTP.
Mozambique (Rovuma Basin) Ltds
community service efforts.
MAURITANIA
The renovations of primary schools in
rural areas enabled 400 students to
resume classes.
IRAQ
Access to healthcare facilities is one
of the key community concerns in
Garraf where PETRONAS recently
commenced its upstream operations.
In the period under review, our Iraq
operations established a Garraf Mobile
Healthcare Services programme, which
provided services to more than 600
people over the course of three visits.
These mobile clinics also provided an
opportunity for PETRONAS personnel

101
Main Events
CORPORATE
12 January 13 February 15 February
PETRONAS Technical Universiti Teknologi PETRONAS (UTP) won PETRONAS and Astana Negeri Sarawak jointly
Training Sdn Bhd (PTTSB) eight gold, three silver, one bronze and five organised the annual Sentuhan Kasih Tahun
signed a Memorandum of special awards for 12 innovations in the field Baru Cina at the Pusat Pemulihan Samarahan,
Understanding (MoU) with of research that were exhibited at the Innova touching the hearts of 100 less fortunate
SIRIM QAS International Sdn Brussels Exposition 2011. people in the community. This event is part of
Bhd to institute a Scheme for PETRONAS social responsibility initiatives.
Certification of Competent
Personnel for Explosive
Atmosphere. The scheme is
Asias first and is envisaged
to be led by Malaysia 21 February
in accordance with the Mercedes-Benz the 2012
International Electrotechnical unveiled Silver Arrow, the
Commission for Explosion MERCEDES AMG PETRONAS
Proof (IECEx) standard F1 W03, and the first public
electrical and instrumentation sneak preview of the brand
equipment used in oil and gas new Mercedes-Benz SL63
plants and platforms. AMG at the circuit de
Catalunya in Barcelona.
The new high-performance
roadster, which develops 537
12 January PS while delivering weight
PETRONAS launched savings of 125 kg and 30%
PETROSAINS Playsmart in improved fuel economy, was
Kota Kinabalu, which is its introduced by Nico Rosberg
third satellite science centre and Michael Schumacher.
in the country. PETROSAINS
Playsmart Kota Kinabalu
is a collaboration with the
Sabah State Library that offers 1 March 18 March
unique learning experiences Deputy Minister of Education, Yang Berhormat Imbak Canyon, one of Malaysias last remaining
to visitors. Datuk Ir Dr Wee Ka Siong commended virgin jungles, is set to become a significant
PETRONAS for its admirable efforts to Malaysian-led conservation effort in the
improve the academic performance and country as a central hub for research and
13 January development of Malaysians through its studies on the environment and biodiversity
PETRONAS contributed signature CSR programme, Program Bakti under a partnership with PETRONAS.
RM 50,000 to the Sarawak Pendidikan PETRONAS (PBPP). He also lauded
State Disaster Relief Fund with PETRONAS staff active and voluntary
towards relief efforts for involvement in making a real difference in the
thousands of victims affected lives of the students.
by floods that hit the State.
PETRONAS cash contribution
will help the State
Governments overall efforts 15 March
to provide relief to victims in PETRONAS announced that it is embarking on
the badly affected southern a collaborative anti-corruption initiative with
region of Sarawak. the Malaysian Anti-Corruption Commission
(MACC) as part of its efforts in ensuring
a business environment that is free from
corruption.

21 March 21 June 2 July 29 November
PETRONAS continues to PETRONAS, through its Global management PETRONAS and TOTAL signed
contribute as the main Technology and Engineering consulting firm, Hay Group, a Research and Development
sponsor of the Malaysian (T&E) Division, launched identified PETRONAS as Collaboration Framework
Press Institute-PETRONAS five new industry-related the first and only Malaysian Agreement (RCFA) to jointly
Journalism Awards for the technology and technical company ranked among study relevant technologies
18th year in a row with a solutions that are poised Asias Top 10 best companies involved in developing high
sponsorship of RM 300,000 to optimise hydrocarbon for leadership in its seventh CO2 gas fields.
to the MPI-PETRONAS production value and annual Best Companies for
Journalism Awards for 2011. enhance operational Leadership study.
efficiency, productivity and
safety in the oil and gas
operating environment. The
20 June five solutions, considered 11 October
PETRONAS and CNPC signed major milestones in Signifying PETRONAS commitment to sustainable development,
two agreements, namely the PETRONAS technology the Company ventured into its first solar Photovoltaic (PV)
Joint Incorporated Company development are in the areas project via the installation of the largest solar PV system on a
(JIC) Shareholders Agreement of contaminant removal, rooftop shopping mall at Suria KLCC.
and MOU on Unconventional pipeline repair system, fire
Hydrocarbons during and hazardous gas detection,
the fourth PETRONAS- online real-time metering
CNPC Joint Coordination supervisory system, and
Committee (JCC) meeting. integrated liquid and gas
separation system.
21 June
PETRONAS and UOP signed
a collaboration agreement
with UOP (a Honeywell
Company) to explore novel
CO2 separation technologies
for Acid Gas Removal
Units (AGRU) based on the
advanced super-efficient
absorbers and membrane
contractors.
26 June
In a drive towards achieving
its aspiration to be the
Preferred Leadership Centre
in the Region by 2013,
PETRONAS Leadership Centre
(PLC) is actively promoting
the Centre and its learning
solutions and services to
companies within the Asia
Pacific region.

103
Exploration & Production
16 January 19 January
PETRONAS awarded The Kasawari well offshore Sarawak
Production Sharing recorded significant gas find
Contracts (PSCs) for PETRONAS with 6.02 trillion
for two Enhanced standard cubic feet (tscf) of net gas
Oil Recovery (EOR) reserves, classified as one of the
projects offshore largest gas discoveries in the region
Sarawak and Sabah in 2012.
to Shell Malaysia and
PETRONAS Carigali
Sdn Bhd (PCSB).
9 February 16 June 27 July

PCSB and Halliburton signed a framework PETRONAS Carigali Iraq Holding B.V. PETRONAS signed four PSCs with
agreement for the development of shale (PCIHBV) achieved a major milestone for PEXCO Sarawak and PCSB for blocks
gas and shale oil fields.This collaboration Halfaya, one of its ventures in Iraq, which offshore Sarawak. These blocks have
provides opportunities for PETRONAS to successfully reached the first key phase of remained open and dormant since
access the technical knowledge, expertise field development, producing an average the 1990s and renewed interest
and technologies required for development of 70,000 barrels a day. would be a catalyst to unlock
of these fields. potential gas with high CO2.
29 June
The third Malaysian Risk Service Contract 14 August
(RSC) was awarded to Coastal Energy PETRONAS through its joint operating
and Petra Energy Development for the company, Greater Nile Petroleum
development of Kapal, Banang, and Meranti Operating Company (GNPOC),
marginal fields. successfully piloted the first
application of Chemical Enhanced Oil
Recovery (CEOR) in the Republic of
29 June Sudan.
PC Muriah Ltd, a subsidiary of PETRONAS
13 April Carigali Sdn Bhd operating in Indonesia, The CEOR pilot project
PCSB signed a Gas Sales & Purchase successfully signed a Gas Sales Agreement commissioned at Bamboo W23 well
Agreement (GSA) with PT Petrogas (GSA) with Perusahaan Listrik Negara is expected to improve its production
Jatim Utama for the monetisation of gas (PLN), a Government-owned enterprise by approximately 185%, a significant
resources for Bukit Tua in East Java. in Indonesia. The GSA represents the increase from 70 barrels of oil per day
beginning of PETRONAS collaboration to around 200 barrels of oil per day.
with PLN that will contribute to the
23 May development of gas resources as well as
PETRONAS awarded the 2012 Kinabalu facilitate the power sector to produce 28 September
Production Sharing Contract (PSC) to cost effective electrical power from the PETRONAS signed a Production
Talisman Malaysia and PCSB, the first PSC utilisation of Kepodang gas. Sharing Contract (PSC) with Shell,
to be awarded under the new Progressive Newfield and PCSB for Block SK319
Volume-Based fiscal terms. This fiscal offshore Sarawak. The contract grants
arrangement regime was designed to offer the consortium the responsibility
value-added incentives for the development to drill five wells within three years
and production of matured oil fields in using a Low Cost Development and
Malaysia. Exploration concept.

GAS & POWER
20 October 8 February 4 June

Gas production was achieved PETRONAS, through its Malaysias Prime Minister Yang Amat Berhormat Dato Sri Mohd
from the Berantai field, the wholly owned subsidiary Najib Tun Haji Abdul Razak declared open the 25th World Gas
first Risk Service Contract PETRONAS International Conference 2012 in Kuala Lumpur. The event was hosted by
(RSC) awarded by PETRONAS. Corporation Limited (PICL), PETRONAS and organised by the International Gas Union to
The Berantai marginal field is sold its entire shareholdings celebrate the Silver Jubilee of this important industry gathering,
developed by Petrofac and in Centrica Plc (Centrica) via a themed is Gas: Sustaining Future Global Growth.
SapuraKencana. block trade sale.
18 November 24 February
The Gumusut-Kakap field, PETRONAS renewed the Gas
Malaysias second deepwater Sales Agreement (GSA) with
development, achieved first Gas Malaysia Berhad (GMB)
oil production via an interim for another 10 years from 1
crude evacuation system January 2013, which includes
(ICES) whereby two wells are an additional gas volume
tied back to the Kikeh field. of up to 192 million metric
It is a huge achievement as standard cubic feet per day
the project took about 14 (mmscfd) at prevailing market
months to be completed, price.
from planning to achieving
first oil.
3 April
PETRONAS, through its
subsidiary PETRONAS 5 June
Gas Berhad, awarded the PETRONAS, through its wholly owned subsidiary PETRONAS
Front End Engineering and Floating LNG 1 (Labuan) Ltd, awarded the Engineering,
Design (FEED) contract to Procurement, Construction, Installation and Commissioning
Fluor Corporation for its (EPCIC) contract to the consortium of Technip France SAS,
Regasification Terminal 3 Technip Geoproduction (M) Sdn Bhd and Daewoo Shipbuilding &
project in Lahad Datu, Sabah. Marine Engineering for PFLNG 1, with target completion by 2015.
1 May
15 Dec PETRONAS, through its
Cendor Phase 2 Project wholly owned subsidiary
achieved first oil. The project PETRONAS Australia Pty Ltd,
involves the installation of an sold its entire shareholdings
Floating Production, Storage in APA Group via a block trade
and Offloading (FPSO) and sale.
two wellhead platforms to
produce incremental oil from
Cendor Field in 2013. An Early
Production System (EPS)
was implemented to deliver
partial production from the
field earlier via the existing
Phase 1 MOPU and FSO. The
works were completed within
schedule.

105
DOWNSTREAM
8 June 16 February
PETRONAS, through its wholly owned The Sabah Ammonia Urea (SAMUR) Ground Breaking Ceremony in Sipitang, Sabah was
subsidiary PETRONAS Power Sdn Bhd officiated by YAB Dato Sri Mohd Najib Tun Hj Abdul Razak, Prime Minister of Malaysia in
(PPSB) achieved Final Investment Decision the presence of the Chief Minister of Sabah, YAB Datuk Musa Hj Aman. The event was
for its Solar Independent Power Producer attended by more than 7,000 people from the surrounding communities.
project in Gebeng, Pahang and awarded
EPCC on the same day to the consortium
of Toyo-Thai Corporation Public Company
Ltd and Toyo-Thai Msia Sdn. Bhd.
25 June
PETRONAS signed a GSA with Maegma
Steel HRC Sdn Bhd for the supply of 57
mmscfd of gas for 15 years beginning
2016 at prevailing market price.
30 October
Malaysia LNG Sdn Bhd (MLNG) a
subsidiary of PETRONAS, achieved the
Final Investment Decision (FID) and
awarded the Engineering, Procurement,
Construction and Commissioning (EPCC)
in September 2012 and October 2012
respectively for the MLNG Advanced 10 March 2 April
Re-liquefaction (MARLIN) Project. The PETRONAS Dagangan Berhad (PDB) PDB introduced the Gas PETRONAS
MARLIN Project with a capacity of 0.5 unveiled its High Quality Car Care Home Delivery (GPHD), a unique and
million tonnes per annum (mtpa) aims to products as part of its efforts to convenient way of ordering cooking gas
create value by re-liquefying boil off gas continuously deliver innovative products via a nationwide hotline 1-300-888-
(clean, LNG quality gas) instead of using it to its customers. The Company launched GAS (427). This unique delivery system,
as fuel for gas turbines. This also helps to its range of high quality car care products, offers value-added services including free
minimise flaring of excess boil off gas. PETRONAS Durance and its car air safety checks and Mesra Card reward
freshener series, Arexons. points. With the phased rollout of GPHD,
customers across Malaysia can place
31 December orders for both 12kg and 14kg Liquefied
PETRONAS LNG 9 Sdn Bhd (PL9SB) that Petroleum Gas (LPG) cylinder variants via a
was incorporated on 13 January 2012 single hotline number.
completed the dual Front End Engineering
Design (dual-FEED) for Train 9 Project,
in the existing PETRONAS LNG Complex
(PLC) in Bintulu, Sarawak. The new LNG
train will add another 3.6 mtpa to existing
LNG produced at PLC.

9 April 28 August 11 September 25 September
PETRONAS Penapisan PETRONAS signed a Heads PETRONAS Lubricants PDB unveiled its 1,001st
(Terengganu) Sdn. Bhd. of Agreement (HOA) with International (PLI) PETRONAS station at
(PP(T)SB), PETRONAS first oil Italy-based Versalis SpA to commemorated its 100th Wangsa Maju, cementing
refinery, celebrated its 30th jointly own, develop, construct year of operation by kicking the Companys position as
Anniversary themed 30 Years and operate elastomer plants off the worlds first on-line the largest petroleum retail
of Excellence. The celebration within PETRONAS proposed digital fluid art platform called network in Malaysia. Mercedes
was officiated by the Vice RAPID complex in Pengerang, Fluid Art Movement that had AMG PETRONAS Formula
President of Refining and Johor. The proposed joint participants from all over the One team driver Nico
Trading, En Mohd Farid Adnan. venture will produce and world submitting their own Rosberg made a special pit
market synthetic rubbers using virtual artwork. stop at the pre-launch of the
Versalis technology license official opening of the station.
16 April and technical know-how. Inspired by A Century
As part of the PDBs of Fluids Innovation, the
commitment to continually Fluid Art Movement was 6 November
upgrade its facilities to set launched by PLIs CEO, Amir PETRONAS introduced
industry standards, the Hamzah Azizan. Mercedes Innovative Transmission Fluid
Company introduced the first AMG PETRONAS Formula as part of the Companys
re-imaged PETRONAS station One Team drivers Michael commitment to anticipate
at its existing premises at Sri Schumacher and Nico and meet the demands of the
Hartamas. Unveiling a dynamic Rosberg were given the evolving automotive industry.
combination of sleek design honour to roll out the first two It was specifically developed
and modern functionality, art pieces. The launch event in collaboration with one of
the station also incorporated was held at the Triennale Art PDBs long-standing Original
energy saving and safety Gallery in Milan, Italy on 10 Equipment Manufacturer
enhancing concepts such as September. partners, which is Malaysias
the usage of LED lights. leading automotive distributor,
Naza Kia Malaysia Sdn Bhd.
5 December
PDB launched the first-
of-its-kind twin stations,
PETRONAS Solaris Serdang
and PETRONAS Solaris Putra.
The dual-frontage stations
incorporate customer-centric
13 May features and energy-efficient
The PETRONAS Refinery and Petrochemical Integrated Development (RAPID) project was launched solutions, including a solar
by His Royal Highness the Sultan of Johor, Sultan Ibrahim Ibni Almarhum Sultan Iskandar. The launch photovoltaic panel, LED lights
marked an important milestone for the development of the RM60 billion project which will pave the and a rainwater harvesting
way for PETRONAS to further grow and add value to Malaysias oil, gas and petrochemical industry system.
as well as spur domestic and foreign direct investments in the country. The launch was also graced
by the presence of Prime Minister, Dato Sri Mohd Najib Tun Abdul Razak, Johor Menteri Besar, Dato
Abdul Ghani Othman and PETRONAS President and Group Chief Executive Officer Tan Sri Dato
Shamsul Azhar Abbas.

107
Glossary
a c e
Industry terms as generally understood
Additives CO2 Earnings before Interest, Tax,

Chemicals added in small quantities to fuel Carbon dioxide, one of the primary Depreciation and Amortisation
or lubricants to control engine deposits and greenhouse gases. (EBITDA)
improve lubricating performance. Profit before taxation with the addition
b
Coal Bed Methane of amounts previously deducted for
A form of natural gas extracted from coal depreciation, amortisation and impairment
beds, as opposed to the conventional loss on property, plant and equipment and
Barrel natural gas found in reservoirs. intangible assets and financing costs and
A standard unit of measurement for oil the exclusion of interest income.
production. One barrel contains 159 litres Condensates
of oil. Liquid hydrocarbons produced with natural Energy Loss Management (ELM)
gas, separated by cooling and other means. An initiative to improve energy efficiency
d
Barrels of oil equivalent (boe) and reduce greenhouse gas (GHG)
A unit of measurement to quantify the emissions.
amount of crude oil, condensates and
natural gas. Natural gas volumes are Enhanced Oil Recovery (EOR)
converted to barrels on the basis of energy Deadweight tonne (dwt) Any method(s) applied to productive
content. A ships maximum carrying capacity in reservoirs in order to increase production
tonnes of cargo, including passengers, rates and to improve the overall recovery
Base oil crew, stores, ballast and fuel. factor.
An oil to which other oils or additives are
added to produce a lubricant. This includes Deepwater Exploration
Group III base oil that has been subjected In Malaysia offshore exploration, deepwater The search for crude oil and/or natural gas
to the highest level of refining of the base is demarcated at water depths exceeding by geological and topographical studies,
oil groups, offering very high viscosity index 200 m. Unique methods are required geophysical and seismic surveys, and
to produce premium quality lubricants. to produce the oil and gas from the drilling of wells.
f
ocean bed at such depths. See Floating
Basin Production Unit.
A low-lying area beneath the Earths
surface filled with thick layers of sediment, Development
often a source of valuable hydrocarbons. Drilling, construction and related activities Feed-in-Tariff (FiT)
following discovery that are necessary to Malaysias FiT system is a policy mechanism
Brent price begin production and transportation of designed to accelerate investment
The benchmark crude oil price in Europe, crude oil and natural gas. in renewable energy technologies. It
as traded on the International Petroleum requires Distribution Licensees (DLs) to
Exchange in London. Brent crude refers Dividend Payout Ratio buy electricity produced from renewable
to a particular grade of crude oil, which is Percentage of net profit attributable to resources from Feed-in Approval Holders
slightly heavier than WTI crude. See WTI PETRONAS shareholders paid as dividend in (FIAHs) and sets the rate. The DLs will
price. the period. pay for renewable energy supplied to the
electricity grid for a specific duration.
Downstream The goal of FiT is to offer cost-based
All segments of a value chain that add compensation to renewable energy
value to the crude oil and natural gas producers, providing the price certainty
produced, for example, oil refining, gas and long-term contracts that help finance
processing, gas liquefaction, petrochemical renewable energy investments.
manufacturing, marketing of petroleum
and petrochemical products, storage and
transportation.

Field Gearing ratio Ionic liquids
A geographical area overlying a Total borrowing expressed as a percentage Liquids that comprise entirely of positive
hydrocarbon reservoir. of total borrowing plus equity attributable and negatively charged ions. Ionic
to shareholders of PETRONAS. liquids are being explored for an array
Floating Liquefied Natural Gas (FLNG) of applications, e.g. as environmentally
Either a ship or barge that can sail or be Greenhouse gases (GHG) friendly substitutes for volatile organic
towed to offshore gas fields, extract gas, Gases that trap heat in the Earths compounds in the oil and gas industry.
freeze it to Liquefied Natural Gas (LNG) and atmosphere, e.g. carbon dioxide, methane,
offload the LNG to tankers for shipping. nitrous oxide, hydrofluorocarbons, Improved Oil Recovery (IOR)
perfluorocarbons and sulphur hexafluoride. Improved Oil Recovery that is commonly
h
Floating Production Unit (FPU) used to describe any process, or
Floating structures of various designs used combination of processes, that may
in offshore production. These floaters be applied to economically increase
replace traditional fixed platforms and the cumulative volume of oil that is
they are moored to the ocean bed. FPU is Heavy Oil/Bitumen ultimately recovered from the reservoir
more commonly used in deepwater. See Unlike conventional crude oil that can be at an accelerated rate. IOR may include
Deepwater. pumped without being heated or diluted, chemical, mechanical, physical, or
heavy oil is oil that cannot be extracted in procedural processes.
Floating Production, Storage and its natural state via a well and conventional
Offloading (FPSO) production methods. This definition is also Improved Gas Recovery (IGR)
A converted or custom-built ship-like applicable to bitumen. Refers to recovery of gas by injection of
structure, with modular facilities to process fluids beyond the normal recovery through
oil and gas and for temporary storage of High Pressure High Temperature well conventional methods. In recent times,
the oil prior to transfer to tankers. Well with a surface shut-in pressure carbon dioxide is used as a lubricant fluid
greater than 10,000 psi and a bottomhole to recover additional gas from the reservoir
Floating, Storage and Offloading temperature greater than 150C. and thereby provides an avenue for storing
(FSO) the captured carbon dioxide.
j
A converted or custom-built ship-like Heads of Agreement (HOA)
structure for temporary storage of the oil A non-binding document outlining
prior to transfer to tankers. the main issues relevant to a tentative
partnership agreement. HOA represents the
Floating Storage Unit (FSU) first step on the path to a full legally binding Joint venture
A converted or custom-built ship-like agreement or contract, and serves as a A partnership between two or more
g
structure to receive and store LNG. guideline for the roles and responsibilities companies to undertake a specific project
of the parties involved in a potential and share the resulting profit and loss.
partnership before any binding documents
are drawn up.
i
Gas Processing
An activity to turn streams of natural gas
into commercial products, in addition to
treating gas deposits. Integrated oil and gas company
A company that engages in all aspects
Gas To Liquids (GTL) of the oil and gas industry - exploring
A refinery process to convert natural gas for and producing crude oil and natural
or other gaseous hydrocarbons into longer gas (upstream); refining, marketing
chain hydrocarbons, such as gasoline or and transporting crude oil, natural gas
diesel fuel. It is used predominantly in the and refined products (downstream); as
creation of high-quality transportation well as manufacturing and distributing
fuels. petrochemicals.

109
l Liquefied Natural Gas (LNG) mtpa
p
Peninsular Gas Utilisation (PGU)
n
Natural gas that is liquefied under extremely Million tonnes per annum. A standard The PGU system was developed to
cold temperatures of about minus 260 measurement of output for the year. spearhead the use of natural gas in
degrees Fahrenheit to facilitate storage or Malaysia. The natural gas produced from
transportation in specially designed vessels. offshore Terengganu is processed in six
Gas Processing Plants in Kertih and are
Liquefied Petroleum Gas (LPG) then fed into a 2,505 km pipeline system
Light gases, such as butane and propane, Natural gas that delivers natural gas to the power,
that can be maintained as liquids while A clean burning, odourless, colourless, industrial, petrochemical and other sectors
under pressure. highly compressible mixture of throughout Peninsular Malaysia and
hydrocarbons found occurring naturally Singapore.
Lost Time Injury (LTI) in gaseous form. Natural gas is made up
This is defined as an occurrence that of methane but can also include ethane, Petrochemicals
resulted in a fatality, permanent disability or propane and butane. Organic and inorganic compounds and
time lost from work including days off, off mixtures derived from petroleum, used
shift, weekends or public holidays. NOPAT principally to manufacture chemicals,
Net operating profit after tax is derived from plastics and resins, synthetic fibres,
Lost Time Injury Frequency (LTIF) net profit after tax excluding financing cost, detergents, adhesives and synthetic motor
This refers to the total LTI cases per million share of profits of associates and jointly oils.
exposure hours worked during the period. controlled entities and other non-operating
income and expenses. Production Sharing Contract (PSC)
Lubricant A contractual agreement between a
A substance to reduce friction and wear Naphtha company and a host government, whereby
among moving surfaces, resulting in Usually an intermediate product between the company bears all exploration,
m o
improved efficiency. It contains about 90% gasoline and benzene, naphtha is a development and production costs
r
base oil and about 10% additives. colourless and volatile petroleum distillate in return for an agreed-upon share of
used as a solvent or fuel. production.
mmBtu OEM
Million metric British thermal unit. It Original Equipment Manufacturer. Refers Regasification Terminal (RGT)
measures the energy content in fuel and to a company that acquires a product or Also known as a receiving terminal, an
is used in the power, steam generation, component, then reuses or incorporates RGT is usually a coastal plant that accepts
heating and air conditioning industries. it into a new product with its own brand deliveries of LNG and processes it back into
name. gaseous form for injection into a pipeline
mmscfd system.
Million metric standard cubic feet per day. Olefins
It is a unit of measurement for natural gas. Any from a class of unsaturated open-chain Refining
Liquefied Petroleum Gas (LPG), compressed hydrocarbons such as ethylene, having the A purification process for natural resources
natural gas and other gases that extracted, general formula CnH2n; an alkene with which includes hydrocarbons, using
processed or transported in high quantities. only one carbon-carbon double bond. distillation, cooling and/or compression.
Mobile offshore Production Unit Operational Performance Renewable energy

(MOPU) Improvement (OPI) Energy derived from natural sources that
Self installing and re-usable production A set of tools and methodologies that are replaceable.
jack-ups. emphasise on instilling operational
discipline, with the aim of improving
operational excellence of PETRONAS
producing assets.

Reserves
Hydrocarbons which are anticipated to be
Return on Total Assets (ROTA)
Profit before taxation expressed as a
u
Unconventional oil and gas
Oil and gas that cannot be produced or
s
recovered from known accumulations of percentage of total assets. extracted using conventional methods.
hydrocarbons.
Upstream
Reservoir Segment of value chain pertaining to
Any porous and permeable rock (usually finding, developing and producing crude oil
sandstone or limestone/chalk and Seismic data and natural gas. These include oil and gas
occasionally a normally impermeable rock The collection of stratigraphic data exploration, development and production
which has been heavily fractured), thus obtained by creating shockwaves through operations; also known as Exploration &
w
providing interconnecting spaces through the rock layers. Reflection of these waves Production (E&P).
which oil/gas can flow. from anomalies within the rock layers are
electronically recorded at surface. These
Resources recordings are then analysed to produce a
Resources are defined as the total stratigraphic representation of the surveyed
estimated quantities of petroleum at area, which helps to deduce the structure WTI price
a specific date to be contained in, or of the underlying rock layers. Stands for West Texas Intermediate, the
that have been produced from known benchmark crude oil price in the US
accumulations of hydrocarbon. Shale Gas measured in USD per barrel, which refers to
Natural gas found in shale rock derived a type of high quality light crude oil.
Resource Replenishment Ratio from underground shale deposits that
Figures reported are calculated based are broken up by hydraulic fracturing.
on a formula of (Difference of Resource The process is needed to produce gas in
Base of current year and previous year commercial quantities as shale has low
t
+ Production Volume of previous year) / matrix permeability.
(Production Volume of previous year).
Return on Average of Capital

Employed (ROACE) Throughput
NOPAT expressed as a percentage The amount of output produced by a
of average of equity attributable to system, e.g. a refinery, plant, or pipeline, in a
shareholders of PETRONAS and long-term given period of time.
debt during the period.
Total Reportable Case (TRC)
Return On Revenue (ROR) The sum of injuries resulting in fatalities,
Profit before taxation expressed as a permanent total disabilities, permanent
percentage of total revenue. partial disabilities, lost workday cases,
restricted work cases and medical
Risk Service Contract (RSC) treatment cases, but excluding first aid
In the context of this report, RSC refers cases.
to a petroleum arrangement between
PETRONAS and any other company for the Total Reportable Case Frequency
appraisal, development and/or production (TRCF)
of petroleum in a contract area on behalf of This refers to the number of total
PETRONAS whereby the PA Contractors are reportable cases per million exposure hours
remunerated on a set based on achieved worked during the period.
Key Performance Indicators consisting of
the agreed Cost, Schedule and Production
level.

111
Financial Statements
Directors Report 114
Statement by Directors 119
Statutory Declaration 120
Consolidated Statement of Financial Position 121
Consolidated Statement of Comprehensive Income 122
Consolidated Statement of Changes in Equity 123
Consolidated Statement of Cash Flow 127
Statement of Financial Position 128
Statement of Comprehensive Income 129
Statement of Changes in Equity 130
Statement of Cash Flow 131
Notes to the Financial Statements 132
Report of the Auditors to the Members 244
Appendix I 246

113
DIRECTORS REPORT FOR THE YEAR ENDED
31 DECEMBER 2012
The Directors have pleasure in submitting their report and the audited financial statements of the Group and of the Company for
the year ended 31 December 2012.
PRINCIPAL ACTIVITIES
The principal activities of the Company in the course of the financial year remained unchanged and consist of exploitation of
oil and gas, the marketing of petroleum and petroleum products and investment holding. The principal activities of significant
subsidiaries, associates and jointly controlled entities are stated in note 44, note 45 and note 46 to the financial statements
respectively.
RESULTS
In RM Mil Group Company
Profit for the year 59,062 46,307

Attributable to:
Shareholders of the Company 49,388 46,307
Non-controlling interests 9,674 -
DIVIDENDS
During the financial year, the Company paid a dividend of RM27,461 million out of the approved tax exempt final dividend under
Section 84 of the Petroleum (Income Tax) Act, 1967 of RM280,000 per ordinary share amounting to RM28 billion in respect of
the financial period ended 31 December 2011.
Out of the remaining RM539 million dividend to be paid, RM343 million was paid on 22 February 2013, while the balance of
RM196 million is also expected to be paid in the financial year ending 31 December 2013.
The Directors propose a tax exempt final dividend under Section 84 of the Petroleum (Income Tax) Act, 1967 of RM270,000 per
ordinary share amounting to RM27 billion in respect of the financial year ended 31 December 2012 for shareholders approval at
the forthcoming Annual General Meeting.
The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the
shareholders, will be accounted for in equity as an appropriation of retained profits in the financial year ending 31 December
2013.
RESERVES AND PROVISIONS
There were no material movements to and from reserves and provisions during the year other than as disclosed in the financial
statements.

DIRECTORS OF THE COMPANY
Directors who served since the date of the last report are:
Tan Sri Mohd Sidek bin Hassan (Chairman appointed on 1 July 2012)
Tan Sri Dato Shamsul Azhar bin Abbas (President and Group CEO)
Datuk Anuar bin Ahmad (Executive Vice President)
Datuk Wan Zulkiflee bin Wan Ariffin (Chief Operating Officer and Executive Vice President)
Datuk Mohd Omar bin Mustapha
Tan Sri Dato Seri Hj Megat Najmuddin bin Datuk Seri Dr. Hj Megat Khas
Datuk Muhammad bin Ibrahim
Dato Mohamad Idris bin Mansor
Datin Yap Siew Bee
Krishnan C K Menon
Datuk Manharlal Ratilal (Executive Vice President)
Dato Wee Yiaw Hin @ Ong Yiaw Hin (Executive Vice President)
Tan Sri Amirsham bin Abdul Aziz
Dato Sri Dr. Mohd Irwan Serigar bin Abdullah (appointed on 28 November 2012)
Tan Sri Dr. Wan Abdul Aziz bin Wan Abdullah (resigned on 27 November 2012)
Dato Siti Halimah binti Ismail (alternate to Tan Sri Dr. Wan Abdul Aziz bin Wan Abdullah ceased as alternate director on 27
November 2012)

In accordance with Article 68 of the Companys Articles of Association, Tan Sri Mohd Sidek bin Hassan and Dato Sri Dr. Mohd
Irwan Serigar bin Abdullah who were appointed during the year retire from the Board at the forthcoming Annual General
Meeting and, being eligible, offer themselves for re-election.
In accordance with Article 71(1) of the Companys Articles of Association, Datin Yap Siew Bee and Krishnan C K Menon retire by
rotation from the Board at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.
In accordance with Article 71(2) of the Companys Articles of Association, the Chairman, President and Group CEO and Executive
Vice Presidents shall not be subject to retirement by rotation except in the first year of appointment where they are required to
retire in accordance with Article 68.
DIRECTORS INTERESTS
The Directors in office at the end of the year who have interests in the shares of the Companys related corporations other than
wholly-owned subsidiaries (including the interests of the spouses and/or children of the Directors who themselves are not
directors of the Company) as recorded in the Register of Directors Shareholdings are as follows:
Number of ordinary shares

of RM1.00 each in
PETRONAS Gas Berhad
Balance at Balance at
Name 1.1.2012 Bought Sold 31.12.2012
Datin Yap Siew Bee 7,000 - - 7,000
Tan Sri Amirsham bin Abdul Aziz:
- others 2,000 - - 2,000

115
DIRECTORS INTERESTS (continued)

of RM1.00 each in
PETRONAS Dagangan Berhad
Name 1.1.2012 Bought Sold 31.12.2012
Datuk Anuar bin Ahmad 2,000 - - 2,000
- others 2,000 - - 2,000


of RM0.10 each in
PETRONAS Chemicals Group Berhad
Name 1.1.2012 Bought Sold 31.12.2012
Tan Sri Dato Shamsul Azhar bin Abbas 20,000 - - 20,000
Datuk Anuar bin Ahmad 20,000 - - 20,000
Datuk Wan Zulkiflee bin Wan Ariffin 20,000 - - 20,000
Datuk Mohd Omar bin Mustapha 10,000 - - 10,000
Tan Sri Dato Seri Hj Megat Najmuddin bin
Datuk Seri Dr. Hj Megat Khas 20,000 - - 20,000
Datuk Muhammad bin Ibrahim 20,000 - - 20,000
Dato Mohamad Idris bin Mansor 20,000 - (10,000) 10,000
Datin Yap Siew Bee 20,000 - - 20,000
Krishnan C K Menon 20,000 - - 20,000
Datuk Manharlal Ratilal 20,000 - - 20,000
Dato Wee Yiaw Hin 20,000 - - 20,000


of RM1.00 each in
KLCC Property Holdings Berhad

Name 1.1.2012 Bought Sold 31.12.2012
Datuk Manharlal Ratilal 5,000 - - 5,000

of RM1.00 each in
MISC Berhad
Name 1.1.2012 Bought Sold 31.12.2012
- own 11,600 - - 11,600
- others 4,000 - - 4,000

DIRECTORS INTERESTS (continued)
of RM0.50 each in
Malaysia Marine and Heavy Engineering
Holdings Berhad
Name 1.1.2012 Bought Sold 31.12.2012
Datuk Wan Zulkiflee bin Wan Ariffin 10,000 - - 10,000
- own 6,000 - - 6,000
- others 6,000 - - 6,000
None of the other Directors holding office at 31 December 2012 had any interest in the ordinary shares of the Company and of
its related corporations during the financial year.
DIRECTORS BENEFITS
Since the end of the previous financial period, no Director of the Company has received or become entitled to receive any
benefit (other than the benefit included in the aggregate amount of emoluments received or due and receivable by Directors as
shown in the financial statements), by reason of a contract made by the Company or a related corporation with the Director or
with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the
Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body
corporate.
ISSUE OF SHARES
There were no changes in the issued and paid up capital of the Company during the financial year.
OPTIONS GRANTED OVER UNISSUED SHARES
No options were granted to any person to take up unissued shares of the Company during the financial year.
OTHER STATUTORY INFORMATION
Before the financial statements of the Group and of the Company were made out, the Directors took reasonable steps to
ascertain that:
i) all known bad debts have been written off and adequate provision made for doubtful debts, and
(ii) any current assets which were unlikely to realise, in the ordinary course of business, their values as shown in the
accounting records of the Group and of the Company, had been written down to an amount which they might be
expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
(i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts, in the Group
and in the Company inadequate to any substantial extent, or

117
OTHER STATUTORY INFORMATION (continued)
(ii) that would render the value attributed to the current assets in the financial statements of the Group and of the Company
misleading, or
(iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of
the Company misleading or inappropriate, or
(iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial
statements of the Group and of the Company misleading.
At the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company that has arisen since the end of the financial year and which
secures the liabilities of any other person, or
(ii) any contingent liability in respect of the Group or of the Company that has arisen since the end of the financial year.
No contingent liability or other liability of any company in the Group has become enforceable, or is likely to become
enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or
may substantially affect the ability of the Group and of the Company to meet their obligations as and when they fall due.
In the opinion of the Directors, the financial performance of the Group and of the Company for the financial year ended 31
December 2012 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has
any such item, transaction or event occurred in the interval between the end of that financial year and the date of this report
other than impairment losses on certain property, plant and equipment as disclosed in note 27 to the financial statements.
AUDITORS
The auditors, Messrs KPMG Desa Megat & Co., have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors

in accordance with a resolution of the Directors:
.............................
Tan Sri Mohd Sidek bin Hassan
.............................
Tan Sri Dato Shamsul Azhar bin Abbas
Kuala Lumpur,
Date: 26 February 2013

STATEMENT BY DIRECTORS
In the opinion of the Directors, the financial statements set out on pages 121 to 243, are drawn up in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965 in Malaysia
so as to give a true and fair view of the financial position of the Group and of the Company at 31 December 2012 and of their
financial performance and cash flows for the year ended on that date.
Signed on behalf of the Board of Directors

in accordance with a resolution of the Directors:
.............................
Tan Sri Mohd Sidek bin Hassan
.............................
Tan Sri Dato Shamsul Azhar bin Abbas
Kuala Lumpur,

119
STATUTORY DECLARATION
I, Datuk Manharlal Ratilal, the Director primarily responsible for the financial management of PETROLIAM NASIONAL BERHAD,
do solemnly and sincerely declare that the financial statements set out on pages 121 to 243 are, to the best of my knowledge and
belief, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of
the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the abovenamed

Datuk Manharlal Ratilal at Kuala Lumpur in
Wilayah Persekutuan on 26 February 2013.
BEFORE ME:

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2012
In RM Mil Note 31.12.2012 31.12.2011 1.4.2011

ASSETS
Property, plant and equipment 3 226,059 205,555 190,949
Investment properties 4 10,753 11,024 10,561
Land held for development 5 1,579 1,601 1,641
Prepaid lease payments 6 960 625 551
Investments in associates 8 4,445 5,381 5,725
Investments in jointly controlled entities 9 7,225 6,942 5,836
Intangible assets 10 33,256 20,614 13,272
Long term receivables 11 3,539 4,084 3,289
Fund and other investments 12 8,053 3,495 11,824
Deferred tax assets 14 6,445 3,887 3,979
Cash and cash equivalents 15 164 89 108
TOTAL NON-CURRENT ASSETS 302,478 263,297 247,735

Trade and other inventories 16 14,187 12,366 10,274
Trade and other receivables 17 42,279 38,111 33,545
Assets classified as held for sale 18 755 631 346
Cash and cash equivalents 15 107,735 125,358 106,556
TOTAL CURRENT ASSETS 185,830 211,849 188,590
TOTAL ASSETS 488,308 475,146 436,325
EQUITY
Share capital 19 100 100 100
Reserves 20 303,689 286,797 262,172
Total equity attributable to shareholders of the Company 303,789 286,897 262,272
Non-controlling interests 21 32,423 32,079 31,283
TOTAL EQUITY 336,212 318,976 293,555

LIABILITIES
Borrowings 22 32,051 39,674 44,354
Deferred tax liabilities 14 14,195 13,267 12,865
Other long term liabilities and provisions 24 26,574 23,977 24,544
TOTAL NON-CURRENT LIABILITIES 72,820 76,918 81,763

Trade and other payables 25 58,820 50,408 38,122
Borrowings 22 10,166 12,849 3,457
Taxation 9,751 15,995 13,428
Dividend payable 539 - 6,000
TOTAL CURRENT LIABILITIES 79,276 79,252 61,007
TOTAL LIABILITIES 152,096 156,170 142,770
TOTAL EQUITY AND LIABILITIES 488,308 475,146 436,325
The notes set out on pages 132 to 243 are an integral part of these financial statements.

121
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2012
1.1.2012 1.4.2011
to to
In RM Mil Note 31.12.2012 31.12.2011
Revenue 290,976 222,831
Cost of revenue (183,461) (126,212)
Gross profit 26 107,515 96,619

Selling and distribution expenses (4,455) (3,585)
Administration expenses (19,428) (10,536)
Other expenses (2,575) (4,050)
Other income 9,439 5,305
Operating profit 27 90,496 83,753

Financing costs (2,935) (2,028)
Share of profit after tax and non-controlling interests of
equity accounted associates and jointly controlled entities 1,518 1,317
Profit before taxation 89,079 83,042

Tax expense 29 (30,017) (27,142)
Profit for the year/period 59,062 55,900

Other comprehensive (expenses)/income
Items that may be reclassified subsequently to
profit or loss
Net movements from exchange differences (5,489) 5,034
Available-for-sale financial assets
- Changes in fair value 1,896 (1,875)
- Transfer to profit or loss upon disposal (1,326) (3,068)
Other comprehensive income/(expenses) 162 (33)
Total other comprehensive (expenses)/income for the year/period (4,757) 58
TOTAL COMPREHENSIVE INCOME FOR THE YEAR/PERIOD 54,305 55,958
Profit attributable to:

Non-controlling interests 9,674 6,764
PROFIT FOR THE YEAR/PERIOD 59,062 55,900

Total comprehensive income attributable to:
Non-controlling interests 9,180 7,297

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to shareholders of the

Company
Non-distributable
Foreign
Currency Available-
Share Capital Translation for-sale
In RM Mil Note Capital Reserves Reserve Reserve

Balance at 1 April 2011 100 13,450 (174) 6,909
Net movements from exchange differences - - 4,479 -
Available-for-sale financial assets:
- Changes in fair value - - - (1,867)
- Transfer to profit or loss upon disposal - - - (3,068)
Other comprehensive expenses - (19) - -
Total other comprehensive
(expenses)/income for the period - (19) 4,479 (4,935)
Profit for the period - - - -
Total comprehensive (expenses)/
income for the period - (19) 4,479 (4,935)

Share of reserves of associates and
jointly controlled entities - (36) - -
Redemption of preference shares - 10 - -
Additional issuance of shares to
non-controlling interests - - - -
Dividends 30 - - - -
Total transactions with shareholders - (26) - -
Balance at 31 December 2011 100 13,405 4,305 1,974
continue to next page

123
FOR THE YEAR ENDED 31 DECEMBER 2012 (continued)
Attributable to shareholders of
the Company
Distributable
Non-
General Retained controlling Total
In RM Mil Note Reserve Profits Total Interests Equity

Balance at 1 April 2011 12,000 229,987 262,272 31,283 293,555
Net movements from exchange differences - - 4,479 555 5,034
- Changes in fair value - - (1,867) (8) (1,875)
- Transfer to profit or loss upon disposal - - (3,068) - (3,068)
Other comprehensive expenses - - (19) (14) (33)
(expenses)/income for the period - - (475) 533 58
Profit for the period - 49,136 49,136 6,764 55,900
Total comprehensive (expenses)/
income for the period - 49,136 48,661 7,297 55,958

jointly controlled entities - - (36) - (36)
Redemption of preference shares - (10) - (36) (36)
non-controlling interests - - - 37 37
Dividends 30 - (24,000) (24,000) (6,502) (30,502)
Total transactions with shareholders - (24,010) (24,036) (6,501) (30,537)
Balance at 31 December 2011 12,000 255,113 286,897 32,079 318,976
continued from previous page

Attributable to shareholders of the

Company
Non-distributable
Foreign
Currency Available-
Share Capital Translation for-sale
In RM Mil Note Capital Reserves Reserve Reserve

Balance at 1 January 2012 100 13,405 4,305 1,974
Net movements from exchange differences - - (4,945) -
- Changes in fair value - - - 1,873
- Transfer to profit or loss upon disposal - - - (1,326)
Other comprehensive income - 135 - -
income/(expenses) for the year - 135 (4,945) 547
Profit for the year - - - -
Total comprehensive income/
(expenses) for the year - 135 (4,945) 547

jointly controlled entities - (22) - -
Redemption of preference shares - 6 - -
non-controlling interests - - - -
Additional equity interest in a subsidiary - - - -
Dividends 30 - - - -
Total transactions with shareholders - (16) - -
Balance at 31 December 2012 100 13,524 (640) 2,521

125
Attributable to shareholders of
the Company
Distributable
Non-
General Retained controlling Total
In RM Mil Note Reserve Profits Total Interests Equity

Balance at 1 January 2012 12,000 255,113 286,897 32,079 318,976
Net movements from exchange differences - - (4,945) (544) (5,489)
- Changes in fair value - - 1,873 23 1,896
- Transfer to profit or loss upon disposal - - (1,326) - (1,326)
Other comprehensive income - - 135 27 162
income/(expenses) for the year - - (4,263) (494) (4,757)
Profit for the year - 49,388 49,388 9,674 59,062
Total comprehensive income/
(expenses) for the year - 49,388 45,125 9,180 54,305

jointly controlled entities - - (22) - (22)
Redemption of preference shares - (6) - (54) (54)
non-controlling interests - 64 64 28 92
Additional equity interest in a subsidiary - (275) (275) 260 (15)
Dividends 30 - (28,000) (28,000) (9,070) (37,070)
Total transactions with shareholders - (28,217) (28,233) (8,836) (37,069)
Balance at 31 December 2012 12,000 276,284 303,789 32,423 336,212

CONSOLIDATED STATEMENT OF CASH FLOWS
1.1.2012 1.4.2011
to to
In RM Mil Note 31.12.2012 31.12.2011
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 282,683 217,481
Cash paid to suppliers and employees (165,230) (121,351)
117,453 96,130
Interest income from fund and other investments 3,888 2,046
Interest expenses paid (2,273) (1,699)
Taxation paid (41,000) (24,499)
Net cash generated from operating activities 78,068 71,978
CASH FLOWS FROM INVESTING ACTIVITIES

Net cash used in investing activities 31 (50,428) (21,049)
CASH FLOWS FROM FINANCING ACTIVITIES

Net cash used in financing activities 32 (43,327) (34,229)
NET (DECREASE)/INCREASE IN CASH AND

CASH EQUIVALENTS (15,687) 16,700
DECREASE IN DEPOSITS RESTRICTED 79 232
NET FOREIGN EXCHANGE DIFFERENCES (787) 1,274
CASH AND CASH EQUIVALENTS AT BEGINNING

OF THE YEAR/PERIOD 124,283 106,077
CASH AND CASH EQUIVALENTS AT

END OF THE YEAR/PERIOD 107,888 124,283

31.12.2012 31.12.2011
CASH AND CASH EQUIVALENTS
Cash and bank balances and deposits 15 107,899 125,447
Negotiable certificate of deposits 12 1,793 514
Bank overdrafts 22 (1,113) (908)
108,579 125,053
Less: Deposits restricted 15 (691) (770)
107,888 124,283

127
STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2012
In RM Mil Note 31.12.2012 31.12.2011 1.4.2011

ASSETS
Property, plant and equipment 3 11,441 3,225 3,025
Investments in subsidiaries 7 47,008 46,479 45,778
Investments in associates 8 302 302 302
Investments in jointly controlled entities 9 1,385 1,385 1,385
Long term receivables 11 75,411 69,716 71,813
Fund and other investments 12 8,348 2,570 76
Deferred tax assets 14 4,932 2,558 2,108
TOTAL NON-CURRENT ASSETS 148,827 126,235 124,487

Trade and other inventories 16 45 24 49
Trade and other receivables 17 39,731 15,096 12,519
Assets classified as held for sale 18 47 - -
Cash and cash equivalents 15 52,015 75,608 58,164
TOTAL CURRENT ASSETS 107,772 119,084 102,547
TOTAL ASSETS 256,599 245,319 227,034

EQUITY
Share capital 19 100 100 100
Reserves 20 191,316 173,126 156,877
TOTAL EQUITY 191,416 173,226 156,977

LIABILITIES
Borrowings 22 20,151 21,612 26,591
Other long term liabilities and provisions 24 21,327 18,743 21,587
TOTAL NON-CURRENT LIABILITIES 41,478 40,355 48,178

Trade and other payables 25 16,252 14,284 6,712
Borrowings 22 566 6,357 -
Taxation 6,348 11,097 9,167
Dividend payable 539 - 6,000
TOTAL CURRENT LIABILITIES 23,705 31,738 21,879
TOTAL LIABILITIES 65,183 72,093 70,057
TOTAL EQUITY AND LIABILITIES 256,599 245,319 227,034

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
1.1.2012 1.4.2011
to to
In RM Mil Note 31.12.2012 31.12.2011
Revenue 125,340 92,229
Cost of revenue (62,473) (35,118)
Gross profit 26 62,867 57,111

Selling and distribution expenses (372) (217)
Administration expenses (5,405) (3,046)
Other expenses (2,334) (2,573)
Other income 7,561 3,779
Operating profit 27 62,317 55,054

Financing costs (1,678) (1,023)

Tax expense 29 (14,332) (13,830)

Other comprehensive (expenses)/income
Items that may be reclassified subsequently to
profit or loss
Changes in fair value of available-for-sale
financial assets (117) 48


129
STATEMENT OF CHANGES IN EQUITY
Non-distributable Distributable
Available-
Share for-sale General Retained Total
In RM Mil Note Capital Reserve Reserve Profits Equity

Balance at 1 April 2011 100 101 12,000 144,776 156,977
Changes in fair value of
available-for-sale financial
assets representing other
comprehensive income for the
period - 48 - - 48
Profit for the period - - - 40,201 40,201
Total comprehensive income for
the period - 48 - 40,201 40,249
Dividends representing
transaction with shareholders
of the Company 30 - - - (24,000) (24,000)
Balance at 31 December 2011 100 149 12,000 160,977 173,226

Balance at 1 January 2012 100 149 12,000 160,977 173,226
Changes in fair value of
available-for-sale financial
assets representing other
comprehensive expense for the
year - (117) - - (117)
Profit for the year - - - 46,307 46,307
Total comprehensive
(expenses)/income for the year - (117) - 46,307 46,190
Dividends representing
transaction with shareholders
of the Company 30 - - - (28,000) (28,000)
Balance at 31 December 2012 100 32 12,000 179,284 191,416


STATEMENT OF CASH FLOWS
1.1.2012 1.4.2011
to to
In RM Mil Note 31.12.2012 31.12.2011
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 106,280 76,325
Cash paid to suppliers and employees (69,564) (37,489)
36,716 38,836
Interest income from fund and other investments 2,361 2,062
Interest expenses paid (1,302) (809)
Taxation paid (21,277) (12,188)
Net cash generated from operating activities 16,498 27,901

CASH FLOWS FROM INVESTING ACTIVITIES
Net cash (used in)/generated from investing
activities 31 (3,612) 18,878
CASH FLOWS FROM FINANCING ACTIVITIES

Net cash used in financing activities 32 (35,060) (30,000)
NET (DECREASE)/INCREASE IN CASH AND

CASH EQUIVALENTS (22,174) 16,779

NET FOREIGN EXCHANGE DIFFERENCES (140) 689

CASH AND CASH EQUIVALENTS AT BEGINNING
OF THE YEAR/PERIOD 76,122 58,654

CASH AND CASH EQUIVALENTS AT END OF
THE YEAR/PERIOD 53,808 76,122
31.12.2012 31.12.2011
CASH AND CASH EQUIVALENTS
Cash and bank balances and deposits 15 52,015 75,608
Negotiable certificate of deposits 12 1,793 514
53,808 76,122

131
NOTES TO THE FINANCIAL STATEMENTS - 31 DECEMBER 2012
1. BASIS OF PREPARATION
1.1 Statement of compliance
The financial statements of the Group and the Company have been prepared in accordance with Malaysian
Financial Reporting Standards (MFRS), International Financial Reporting Standards and the Companies Act, 1965
in Malaysia. These are the Group and the Companys first financial statements prepared in accordance with MFRS
and MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards has been applied. In the previous
financial years, the financial statements of the Group and the Company were prepared in accordance with
Financial Reporting Standards (FRS) in Malaysia.
The Group and the Company have elected 1 April 2011, being the beginning date of the immediate preceding
financial period, as the date of transition to MFRS. The financial impacts on transition from FRS to MFRS are set out
in note 47.
The Group and the Company have early adopted the amendments to MFRS 101 Presentation of Financial
Statements which are effective for annual periods beginning on or after 1 July 2012. The early adoption of the
amendments to MFRS 101 has no impact on the financial statements other than the presentation format of the
statement of profit or loss and other comprehensive income.
The Malaysian Accounting Standards Board (MASB) has also issued accounting standards, amendments and
interpretations of the MFRS framework (collectively referred to as pronouncements) which are not yet effective
for the Group and the Company and therefore, have not been implemented in these financial statements. These
pronouncements including their impact on the financial statements in the period of initial application are set out in
note 42. Pronouncements that are not relevant to the operations of the Group and of the Company are set out in
note 43.
The financial statements were approved and authorised for issue by the Board of Directors on 26 February 2013.
1.2 Comparative figures
The Group and the Company have changed their financial year end from 31 March to 31 December effective from
2011. Consequently, the immediate preceding comparatives, being the Group and the Companys first financial
statements under the new financial year, are for a period of 9 months from 1 April 2011 to 31 December 2011.
1.3 Basis of measurement
The financial statements of the Group and of the Company have been prepared on historical cost basis except
that, as disclosed in the accounting policies below, certain items are measured at fair value.
1.4 Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the currency of the primary
economic environment in which the entity operates (the functional currency). The Group and the Companys
financial statements are presented in Ringgit Malaysia, which is the Companys functional currency.

1. BASIS OF PREPARATION (continued)
1.5 Use of estimates and judgments
The preparation of financial statements requires management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying
accounting policies that have the most significant effect on the amount recognised in the financial statements are
described in the following notes:
i. Note 3 : Property, Plant and Equipment;
ii. Note 10 : Intangible Assets;
iii. Note 14 : Deferred Tax;
iv. Note 24 : Other Long Term Liabilities and Provisions; and
v. Note 40 : Financial Instruments.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these financial statements
and in preparing the opening MFRS statements of financial position of the Group and of the Company at 1 April 2011 (the
transition date to MFRS framework), unless otherwise stated.
2.1 Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The financial statements of subsidiaries are included in the consolidated financial statements of the Group from
the date that control commences until the date that control ceases.
All inter-company transactions are eliminated on consolidation and revenue and profits relate to external
transactions only. Unrealised losses resulting from intercompany transactions are also eliminated unless cost
cannot be recovered.
Business combinations
A business combination is a transaction or other event in which an acquirer obtains control of one or more
businesses. Business combinations are accounted for using the acquisition method. The identifiable assets
acquired and liabilities assumed are measured at their fair values at the acquisition date. The cost of an acquisition
is measured as the aggregate of the fair value of the consideration transferred and the amount of any non-
controlling interests in the acquiree. Non-controlling interests are stated either at fair value or at the proportionate
share of the acquirees identifiable net assets at the acquisition date.

133
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
2.1 Basis of consolidation (continued)
Business combinations (continued)
When a business combination is achieved in stages, the Group remeasures its previously held non-controlling
equity interest in the acquiree at fair value at the acquisition date, with any resulting gain or loss recognised in
the profit or loss. Increase in the Groups ownership interest in an existing subsidiary is accounted for as equity
transactions with differences between the fair value of consideration paid and the Groups proportionate share of
net assets acquired, recognised directly in equity.
For acquisition on or after 1 October 2009, being the date the Group elects to apply MFRS 3 Business
Combinations, the Group measures goodwill as the excess of the cost of an acquisition as defined above and
the fair values of any previously held interest in the acquiree over the fair value of the identifiable assets acquired
and liabilities assumed at the acquisition date. When the excess is negative, a bargain purchase gain is recognised
immediately in profit or loss.
Goodwill arising from business combinations prior to 1 October 2009 is stated at the previous carrying amount
less subsequent impairments.
Transaction costs, other than those associated with the issuance of debt or equity securities, that the Group incurs
in connection with a business combination, are expensed as incurred.
Non-controlling interests
Non-controlling interests at the reporting date, being the portion of the net assets of subsidiaries attributable
to equity interests that are not owned by the Company, whether directly or indirectly through subsidiaries, are
presented in the consolidated statement of financial position and statement of changes in equity within equity,
separately from equity attributable to the equity shareholders of the Company. Non-controlling interests in the
results of the Group are presented in the consolidated statement of profit or loss and other comprehensive
income as an allocation of the profit or loss and total comprehensive income for the year between the non-
controlling interests and the equity shareholders of the Company.
Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests
even if doing so causes the non-controlling interests to have a deficit balance.
The Group treats all changes in its ownership interest in a subsidiary that do not result in a loss of control as equity
transactions between the Group and its non-controlling interest holders. Any difference between the Groups
share of net assets before and after the change, and any consideration received or paid, is adjusted to or against
Group reserves.
Loss of control
Upon loss of control of a subsidiary, the Group derecognises the assets and liabilities of the subsidiary, any non-
controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on
the loss of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then
such interest is measured at fair value at the date that control is lost. Subsequently it is accounted for as an equity-
accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

2.2 Associates
Associates are entities in which the Group has significant influence including representation on the Board of
Directors, but not control or joint control, over the financial and operating policies of the investee company.
Associates are accounted for in the consolidated financial statements using the equity method. The consolidated
financial statements include the Groups share of post-acquisition profits or losses and other comprehensive
income of the equity accounted associates, after adjustments to align the accounting policies with those of the
Group, from the date that significant influence commences until the date that significant influence ceases.
The Groups share of post-acquisition reserves and retained profits less losses is added to the carrying value of the
investment in the consolidated statement of financial position. These amounts are taken from the latest audited
financial statements or management financial statements of the associates.
When the Groups share of post-acquisition losses exceeds its interest in an equity accounted associate, the
carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of
further losses is discontinued except to the extent that the Group has an obligation or has made payments on
behalf of the associate.
When the Group ceases to have significant influence over an associate, it is accounted for as a disposal of the
entire interest in that associate, with the resulting gain or loss being recognised in profit or loss. Any retained
interest in the former associate at the date when significant influence is lost is re-measured at fair value and this
amount is regarded as the initial carrying amount of a financial asset.
When the Groups interest in an associate decreases but does not result in loss of significant influence, any
retained interest is not re-measured. Any gain or loss arising from the decrease in interest is recognised in
profit or loss. Any gains or losses previously recognised in other comprehensive income are also reclassified
proportionately to the profit or loss.
Unrealised profits arising from transactions between the Group and its associates are eliminated to the extent of
the Groups interests in the associates. Unrealised losses on such transactions are also eliminated partially, unless
cost cannot be recovered.
2.3 Jointly controlled entities
The Group has interests in joint ventures which are jointly controlled entities. A joint venture is a contractual
arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control,
established by contractual agreement and requiring unanimous consent for strategic financial and operating
decisions. A jointly controlled entity is a joint venture that involves the establishment of a separate entity in which
each venturer has an interest.
Investments in jointly controlled entities are accounted for in the consolidated financial statements using the
equity method of accounting as described in note 2.2.
2.4 Property, plant and equipment and depreciation
Freehold land and projects-in-progress are stated at cost less accumulated impairment losses and are not
depreciated. Other property, plant and equipment are stated at cost less accumulated depreciation and
accumulated impairment losses.

135
2.4 Property, plant and equipment and depreciation (continued)
Cost includes expenditures that are directly attributable to the acquisition of the assets and any other costs directly
attributable to bringing the assets to working condition for their intended use, and the costs of dismantling and
removing the items and restoring the site on which they are located. The cost of self-constructed assets also
includes the cost of materials and direct labour. For qualifying assets, borrowing costs are capitalised in accordance
with the accounting policy on borrowing costs. Purchased software that is integral to the functionality of the related
equipment is capitalised as part of that equipment.
When the use of a property changes from owner-occupied to investment property, the property is reclassified as
investment property at cost.
When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for
as separate items (major components) of property, plant and equipment.
The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount
of the item if it is probable that the future economic benefits embodied within the component will flow to the Group
or the Company and its cost can be measured reliably. The net book value of the replaced item of property, plant
and equipment is derecognised with any corresponding gain or loss recognised in the profit or loss accordingly. The
costs of the day-to-day servicing of property, plant and equipment are recognised in the profit or loss as incurred.
Depreciation for property, plant and equipment other than freehold land, oil and gas properties and projects-in-
progress, is recognised in the profit or loss on a straight-line basis over the estimated useful lives of each component
of an item of property, plant and equipment. Property, plant and equipment are not depreciated until the assets are
ready for their intended use.
Depreciation of producing oil and gas properties is computed based on the unit of production method using total
proved and probable reserves for capitalised acquisition costs and total proved and probable developed reserves for
capitalised exploration and development costs.
Lease properties are depreciated over the lease term or the estimated useful lives, whichever is shorter. Leasehold
land is depreciated over the lease term.
The estimated useful lives of the other property, plant and equipment are as follows:
Buildings 14 - 50 years
Plant and equipment 3 - 67 years
Office equipment, furniture and fittings 5 - 10 years
Computer software and hardware 5 years
Motor vehicles 3 - 5 years
Vessels 25 - 40 years

Estimates in respect of certain items of property, plant and equipment were revised during the year (refer note 3).
Property, plant and equipment individually costing less than RM5,000 are expensed off in the year of purchase.
The depreciable amount is determined after deducting residual value. The residual value, useful life and
depreciation method are reviewed at each financial year/period end to ensure that the amount, period and
method of depreciation are consistent with previous estimates and the expected pattern of consumption of the
future economic benefits embodied in the items of property, plant and equipment.

2.4 Property, plant and equipment and depreciation (continued)
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected from its use or disposal. The difference between the net disposal proceeds, if any, and the net carrying
amount is recognised in the profit or loss.
2.5 Investment properties
Investment properties are properties which are owned either to earn rental income or for capital appreciation or
for both. Properties that are occupied by the companies in the Group are accounted for as owner-occupied rather
than as investment properties.
Freehold land and projects-in-progress are stated at cost and are not depreciated. Other investment properties
are stated at cost less accumulated depreciation and accumulated impairment losses, if any, consistent with the
accounting policy for property, plant and equipment as stated in note 2.4.
Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of
self-constructed investment property includes the cost of materials and direct labour, any other costs directly
attributable to bringing the investment property to a working condition for its intended use and capitalised
borrowing costs.
Depreciation is recognised in the profit or loss on a straight-line basis over their estimated useful lives ranging
between 10 and 50 years for buildings.
An investment property is derecognised on its disposal, or when it is permanently withdrawn from use and no
future economic benefits are expected from its disposal. The difference between the net disposal proceeds and
the carrying amount is recognised in profit or loss in the period in which the item is derecognised.
2.6 Land held for development

Land held for development consists of land or such portions thereof on which no development activities have
been carried out or where development activities are not expected to be completed within the normal operating
cycle. Such land is classified as non-current asset and is stated at the lower of cost and net realisable value
consistent with the accounting policy for inventories as stated in note 2.16.
Cost includes acquisition cost of land and attributable development expenditure. Cost associated with the
acquisition of land includes the purchase price of the land, professional fees, stamp duties, commissions,
conversion fees and other relevant levies. Development expenditure includes the cost for development of main
infrastructure works.
Land held for development is reclassified as properties under development at the point when development
activities have commenced and where it can be demonstrated that the development activities can be completed
within the normal operating cycle. Properties under development is, in turn, reclassified as developed properties
held for sale upon completion of the development activities.
Properties under development and developed properties held for sale are recognised as trade and other
inventories in current assets. The accounting policy is described separately in note 2.16.

137
2.7 Leased assets
A lease arrangement is accounted for as finance or operating lease in accordance with the accounting policy
as stated below. When the fulfillment of an arrangement is dependent on the use of a specific asset and the
arrangement conveys a right to use the asset, it is accounted for as a lease in accordance with the accounting
policy below although the arrangement does not take the legal form of a lease.
Finance lease
A lease is recognised as a finance lease if it transfers substantially to the Group and the Company all the risks
and rewards incidental to ownership. Upon initial recognition, the leased asset is measured at an amount equal
to the lower of its fair value and the present value of the minimum lease payments at the inception of the lease.
Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable
to that asset. The corresponding liability is included in the statement of financial position as borrowings.
Minimum lease payments made under finance leases are apportioned between the finance costs and the
reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing
commitments and the fair value of the assets acquired, are recognised in the profit or loss and allocated over the
lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability for each
accounting period.
Contingent lease payments, if any, are accounted for by revising the minimum lease payments over the remaining
term of the lease when the lease adjustment is confirmed.
Leasehold land which in substance is a finance lease is classified as property, plant and equipment.
Operating lease
All leases that do not transfer substantially to the Group and the Company all the risks and rewards incidental
to ownership are classified as operating leases and the leased assets are not recognised on the Group and the
Companys statement of financial position.
Payments made under operating leases are recognised as an expense in the profit or loss on a straight-line basis
over the term of the lease. Lease incentives received are recognised as a reduction of rental expense over the
lease term on a straight-line basis. Contingent rentals are charged to profit or loss in the reporting period in which
they are incurred.
Leasehold land which in substance is an operating lease is classified as prepaid lease payments.
Prepaid lease payments
Prepaid rental and leasehold land which in substance is an operating lease are classified as prepaid lease payments.
The payments made on entering into a lease arrangement or acquiring a leasehold land are accounted for as
prepaid lease payments that are amortised over the lease term in accordance with the pattern of benefits provided.
Leasehold land is classified into long lease and short lease. Long lease is defined as a lease with an unexpired lease
period of fifty years or more. Short lease is defined as a lease with an unexpired lease period of less than fifty years.

2.8 Investments
Long term investments in subsidiaries, associates and jointly controlled entities are stated at cost less impairment
loss, if any, in the Companys financial statements. The cost of investments includes transaction costs.
The carrying amount of these investments includes fair value adjustments on shareholders loans and advances, if
any (note 2.12(i)).
2.9 Intangible assets
Goodwill
Goodwill arising from business combinations is initially measured at cost as described in note 2.1. Following the
initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is not amortised
but instead, it is reviewed for impairment, annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired.
In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of
the investment. The entire carrying amount of the investment is reviewed for impairment when there is objective
evidence of impairment.

Exploration expenditure
Intangible assets also include expenditure on the exploration for and evaluation of oil and natural gas resources
(hereinafter collectively referred to as exploration expenditure). The accounting policy for exploration
expenditure is described separately in note 2.10.
Other intangible assets
Intangible assets other than goodwill and exploration expenditure are measured on initial recognition at cost. The
costs of intangible assets acquired in a business combination are their fair values as at the date of acquisition.
Following initial recognition, intangible assets with finite useful lives are carried at cost less accumulated
amortisation and any accumulated impairment losses.
Amortisation for intangible assets with finite useful lives is recognised in the profit or loss on a straight-line basis
over the estimated economic useful lives, other than certain recoverable expenditure incurred under a service
contract which is amortised based on unit of production method. The amortisation method and the useful life
for intangible assets are reviewed at least at each reporting date. Intangible assets are assessed for impairment
whenever there is an indication that the intangible assets may be impaired.
Intangible assets with indefinite useful lives are carried at cost less accumulated impairment losses. These
intangible assets are reviewed for impairment annually or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired.
2.10 Exploration and development expenditure
The Group follows the successful efforts method of accounting for the exploration and development expenditure.


139
2.10 Exploration and development expenditure (continued)
Exploration expenditure
Costs directly associated with an exploration well, including license acquisition and drilling costs, are initially
capitalised as intangible assets until the results have been evaluated.
If a well does not result in successful discovery of economically recoverable volume of hydrocarbons, such costs
are written off as a dry well. If hydrocarbons are found and, subject to further appraisal activity which may include
the drilling of further wells, are likely to be capable of commercial development under prevailing economic
conditions, the costs continue to be carried as intangible assets. All such carried costs are reviewed at least once a
year to determine whether the reserves found or appraised remain economically viable. When this is no longer the
case, the costs are written off.
Where development plan is commercially viable and approved by the relevant authorities, the related exploration
and evaluation costs are transferred to projects-in-progress in property, plant and equipment.
Development expenditure
Development expenditure comprises all costs incurred in bringing a field to commercial production and is
capitalised as incurred. The amount capitalised includes attributable interests and other financing costs incurred
on exploration and development before commencement of production.
Upon commencement of production, the exploration and development expenditure initially capitalised as
projects-in-progress are transferred to oil and gas properties, and are depreciated as described in the accounting
policy for property, plant and equipment (note 2.4).
2.11 Non-current assets held for sale
Non-current assets and disposal groups comprising assets and liabilities that are expected to be recovered
primarily through sale rather than through continuing use, are classified as held for sale. This condition is regarded
as met only when the sale is highly probable and the asset is available for immediate sale in its present condition.
Immediately before classification as held for sale, the assets (or all the assets and liabilities in a disposal group) are
remeasured in accordance with the Groups applicable accounting policies. Thereafter, on initial classification as
held for sale, the assets or disposal groups are measured at the lower of carrying amount and fair value less cost to
sell. Any differences are charged to the profit or loss.
Intangible assets, property, plant and equipment and investment properties once classified as held for sale are not
amortised or depreciated. In addition, equity accounting of equity accounted investees ceases once classified as
held for sale.
2.12 Financial instruments
A financial instrument is recognised in the statement of financial position when, and only when, the Group or the
Company becomes a party to the contractual provisions of the instrument.

2.12 Financial instruments (continued)
(i) Financial assets
Initial recognition
Financial assets are classified as financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments or available-for-sale financial assets, as appropriate. The Group and the
Company determine the classification of financial assets at initial recognition.
Financial assets are recognised initially at fair value, normally being the transaction price plus, in the case of
financial assets not at fair value through profit or loss, any directly attributable transaction costs.
Purchases or sales under a contract whose terms require delivery of financial assets within a timeframe
established by regulation or convention in the marketplace concerned (regular way purchases) are
recognised on the trade date i.e. the date that the Group and the Company commit to purchase or sell the
financial asset.
Fair value adjustments on shareholders loans and advances at initial recognition, if any, are added to the
carrying value of investments in the Companys financial statements.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at fair value through profit or loss
Fair value through profit or loss category comprises financial assets that are held for trading, including
derivatives (except for a derivative that is a financial guarantee contract or a designated and effective
hedging instrument) and financial assets that are specifically designated into this category upon initial
recognition.
Financial assets categorised as fair value through profit or loss are subsequently measured at their fair values
with gains or losses recognised in the profit or loss. The methods used to measure fair values are stated in
note 2.12(vi).
Loans and receivables
Loans and receivables category comprises debt instruments that are not quoted in an active market.
Subsequent to initial recognition, financial assets categorised as loans and receivables are measured at
amortised cost using the effective interest rate method (note 2.12(vii)).
Held-to-maturity investments
Held-to-maturity investments category comprises debt instruments that are quoted in an active market and
the Group or the Company has positive intention and ability to hold the assets to maturity. Subsequent to
initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest
rate method.

141
(i) Financial assets (continued)
Available-for-sale category comprises investment in equity and debt securities instruments that are not held
for trading.
Investments in equity instruments that do not have a quoted market price in an active market and whose
fair value cannot be reliably measured are measured at cost. Other financial assets categorised as available-
for-sale are subsequently measured at their fair values with unrealised gains or losses recognised directly
in other comprehensive income and accumulated under available-for-sale reserve in equity until the
investment is derecognised or determined to be impaired, at which time the cumulative gain or loss
previously recorded in equity is recognised in the profit or loss.
All financial assets, except for those measured at fair value through profit or loss, are subject to review for
impairment (see note 2.13(i)).
(ii) Financial liabilities
Initial recognition
Financial liabilities are classified as financial liabilities at fair value through profit or loss or loans and
borrowings, as appropriate. The Group and the Company determine the classification of financial liabilities
at initial recognition.
Financial liabilities are recognised initially at fair value less, in the case of loans and borrowings, any directly
attributable transaction costs.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Fair value through profit or loss category comprises financial liabilities that are derivatives (except for a
derivative that is a financial guarantee contract or a designated and effective hedging instrument) and
financial liabilities that are specifically designated into this category upon initial recognition.
Financial liabilities categorised as fair value through profit or loss are subsequently measured at their fair
values with gains or losses recognised in the profit or loss.
Loans and borrowings
Subsequent to initial recognition, loans and borrowings are measured at amortised cost using the effective
interest rate method.

(iii) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse
the holder for a loss it incurs because a specified debtor fails to make payment when due in accordance
with the terms of a debt instrument.
Financial guarantee contracts are recognised initially as a liability at fair value, adjusted for transaction costs
that are directly attributable to the issuance of the guarantee. Financial guarantee contracts are amortised
on a straight-line basis over the contractual period of the debt instrument. Where the guarantee does not
have a specific period, the guarantee will only be recognised in the profit or loss upon discharge of the
guarantee.
When settlement of a financial guarantee contract becomes probable, an estimate of the obligation is
made. If the carrying value of the financial guarantee contract is lower than the obligation, the carrying
value is adjusted to the obligation amount and accounted for as provision.
(iv) Derivative financial instruments
The Group and the Company use derivative financial instruments such as interest rate and foreign currency
swaps, forward rate contracts, futures and options, to manage certain exposures to fluctuations in foreign
currency exchange rates, interest rates and commodity prices.
Derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as financial
assets when the fair value is positive and as financial liabilities when the fair value is negative.
Any gains or losses arising from changes in fair value on derivatives during the year are taken directly to the
profit or loss.
An embedded derivative is recognised separately from the host contract and accounted for as a derivative
if, and only if, it is not closely related to the economic characteristics and risks of the host contract and
the host contract is not categorised as fair value through profit or loss. The host contract, in the event an
embedded derivative is recognised separately, is accounted for in accordance with policy applicable to the
nature of the host contract.
In general, contracts to sell or purchase non-financial items to meet expected own use requirements are
not accounted for as financial instruments. However, contracts to sell or purchase commodities that can
be net settled or which contain written options are required to be recognised at fair value, with gains and
losses taken to the profit or loss.
(v) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the statement of financial
position if, and only if, there is a currently enforceable legal right to offset the recognised amounts and
there is an intention to settle on a net basis or to realise the assets and settle the liabilities simultaneously.

143
(vi) Fair value of financial instruments
The fair value of financial instruments that are actively traded in organised financial markets is determined
by reference to quoted market bid prices at the close of business at the end of reporting date. For financial
instruments where there is no active market, fair value is determined using valuation techniques. Such
techniques may include using recent arms length market transactions; reference to the current fair value of
another instrument that is substantially the same; discounted cash flow analysis or other valuation models.
Where fair value cannot be reliably estimated, assets are carried at cost less impairment losses, if any.
(vii) Amortised cost of financial instruments
Amortised cost is computed using the effective interest rate method. This method uses effective interest
rate that exactly discounts estimated future cash receipts or payments through the expected life of the
financial instrument to the net carrying amount of the financial instrument. Amortised cost takes into
account any transaction costs and any discount or premium on settlement.
(viii) Derecognition of financial instruments
A financial asset is derecognised when the rights to receive cash flows from the asset have expired or, the
Group and the Company have transferred their rights to receive cash flows from the asset or have assumed
an obligation to pay the received cash flows in full without material delay to a third party under a pass-
through arrangement without retaining control of the asset or substantially all the risks and rewards of
the asset. On derecognition of a financial asset, the difference between the carrying amount and the sum
of the consideration received (including any new asset obtained less any new liability assumed) and any
cumulative gain or loss that had been recognised in equity is recognised in the profit or loss.
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expired. On derecognition of a financial liability, the difference between the carrying amount of the financial
liabilities extinguished or transferred to another party and the consideration paid, including any non-cash
assets transferred or liabilities assumed, is recognised in the profit or loss.
2.13 Impairment
(i) Financial assets
All financial assets (except for financial assets categorised as fair value through profit or loss, investment
in subsidiaries and investment in associates) are assessed at each reporting date to determine whether
there is any objective evidence of impairment as a result of one or more events having an impact on the
estimated future cash flows of the asset. Losses expected as a result of future events, no matter how likely,
are not recognised. For an investment in an equity instrument, a significant or prolonged decline in the fair
value below its cost is an objective evidence of impairment. If any such objective evidence exists, then the
financial assets recoverable amount is estimated.
An impairment loss in respect of loans and receivables and held-to-maturity investments is recognised in
profit or loss and is measured as the difference between the assets carrying amount and the present value
of estimated future cash flows discounted at the assets original effective interest rate. The carrying amount
of the asset is reduced through the use of an allowance account.

2.13 Impairment (continued)
(i) Financial assets (continued)
An impairment loss in respect of available-for-sale financial assets is recognised in profit or loss and is
measured as the difference between the assets acquisition cost (net of any principal repayment and
amortisation) and the assets current fair value, less any impairment loss previously recognised. Where a
decline in the fair value of an available-for-sale financial asset has been recognised in other comprehensive
income, the cumulative loss in other comprehensive income is reclassified from equity to profit or loss.
An impairment loss in respect of unquoted equity instrument that is carried at cost is recognised in profit or
loss and is measured as the difference between the financial assets carrying amount and the present value
of estimated future cash flows discounted at the current market rate of return for a similar financial asset.
Impairment losses recognised in profit or loss for an investment in an equity instrument classified as
available for sale is not reversed through profit or loss.
If, in a subsequent period, the fair value of a debt instrument increases and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss
is reversed, to the extent that the assets carrying amount does not exceed what the carrying amount would
have been had the impairment not been recognised at the date the impairment is reversed. The amount of
the reversal is recognised in profit or loss.
(ii) Other assets
The carrying amounts of other assets, other than inventories, amount due from contract customers,
deferred tax assets and non-current assets or disposal groups classified as held for sale, are reviewed at
each reporting date to determine whether there is any indication of impairment.
If any such indication exists, the assets recoverable amount is estimated. An impairment loss is recognised
if the carrying amount of an asset or the cash-generating unit to which it belongs exceeds its recoverable
amount. Impairment losses are recognised in the profit or loss.
A cash-generating unit is the smallest identifiable asset group that generates cash flows from continuing
use that are largely independent from other assets and groups. An impairment loss recognised in respect of
a cash-generating unit is allocated first to reduce the carrying amount of any goodwill allocated to the unit
and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis.
The recoverable amount is the greater of the assets fair value less cost to sell and its value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs.
An impairment loss in respect of goodwill is not reversed in a subsequent period. In respect of other
assets, impairment losses are reversed if there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does
not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.

145
2.13 Impairment (continued)
(ii) Other assets (continued)
Reversals of impairment losses are credited to the profit or loss in the year in which the reversals are
recognised.
2.14 Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and bank balances, deposits with licensed financial institutions
and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the cash flow
statement, cash and cash equivalents are presented net of bank overdrafts and deposits restricted, if any.
2.15 Construction work-in-progress
Construction work-in-progress represents the gross unbilled amount expected to be collected from customers for
contract work performed to date. It is measured at cost plus profit recognised to date less progress billings and
recognised losses. Cost includes all expenditure related directly to specific projects and an allocation of fixed and
variable overheads incurred in the Groups contract activities based on normal operating capacity.
Construction work-in-progress is presented as part of trade and other receivables as amount due from contract
customers in the statement of financial position for all contracts in which costs incurred plus recognised profits
exceed progress billings. If progress billings exceed costs incurred plus recognised profits, then the difference
is presented as amount due to contract customers which is part of trade and other payables in the statement of
financial position.
2.16 Inventories
Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business, less the estimated costs of completion and selling expenses.
Cost of crude oil and condensates includes costs of bringing the inventories to their present location and
condition and is determined on a weighted average basis.
Cost of petroleum products includes crude oil costs, export duty, transportation charges and processing costs and
is determined on a weighted average basis.
Cost of liquefied natural gas (LNG) and petrochemical products includes raw gas costs and production overheads
and is determined on a weighted average basis.
Cost of material stores and spares consists of the invoiced value from suppliers and import duty charges and is
determined on a weighted average basis.
Cost of developed properties held for sale and properties under development consists of costs associated with
the acquisition of land, all costs that are directly attributable to development activities, appropriate proportions
of common costs attributable to developing the properties, and interest expenses incurred during the period of
active development.

2.17 Provisions
A provision is recognised if, as a result of a past event, the Group and the Company have a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by discounting the expected future net cash flows
at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to
the liability. Where discounting is used, the accretion in the provision due to the passage of time is recognised as
finance cost.
The amount recognised as a provision is the best estimate of the net expenditure required to settle the present
obligation at the reporting date. Provisions are reviewed at each reporting date and adjusted to reflect the current
best estimate.
Possible obligations whose existence will only be confirmed by the occurrence or non-occurrence of one or more
future events not wholly within the control of the Group, are not recognised in the financial statements but are
disclosed as contingent liabilities unless the possibility of an outflow of economic resources is considered remote.
In particular, information about provisions that have the most significant effect on the amount recognised in the
financial statements is described in note 24.
2.18 Employee benefits
Short term benefits
Wages and salaries, bonuses and social security contributions are recognised as an expense in the year in which
the associated services are rendered by employees of the Group and the Company.
Defined contribution plans
As required by law, companies in Malaysia make contributions to the state pension scheme, the Employees
Provident Fund (EPF).
Some of the Groups foreign subsidiaries make contributions to their respective countries statutory pension
schemes and certain other independently-administered funds which are defined contribution plans.
Such contributions are recognised as an expense in the profit or loss as incurred.
2.19 Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the profit or
loss except to the extent it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax
Current tax expense is the expected tax payable on the taxable income for the year, using the statutory tax rates at
the reporting date, and any adjustment to tax payable in respect of previous years.

147
2.19 Taxation (continued)
Deferred tax
Deferred tax is provided for, using the liability method, on temporary differences at the reporting date between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities
are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary
differences, unabsorbed capital allowances, unused reinvestment allowances, unused investment tax allowances,
unused tax losses and unused tax credits to the extent that it is probable that future taxable profit will be available
against which the deductible temporary differences, unabsorbed capital allowances, unused reinvestment allowances,
unused investment tax allowances, unused tax losses and unused tax credits can be utilised.
Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, and the
initial recognition of an asset or liability in a transaction which is not a business combination and that affects neither
accounting nor taxable profit or loss.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability
is settled, based on the laws that have been enacted or substantively enacted by the end of the reporting period.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets,
and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities
where they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised
simultaneously.

Deferred tax asset is reviewed at each reporting date and is reduced to the extent that it is no longer probable that
future taxable profit will be available against which the related tax benefit can be realised.
2.20 Foreign currency transactions
In preparing the financial statements of individual entities in the Group, transactions in currencies other than the entitys
functional currency (foreign currencies) are translated to the functional currencies at rates of exchange ruling on the
transaction dates.
Monetary assets and liabilities denominated in foreign currencies at the reporting date have been retranslated to the
functional currency at rates ruling on the reporting date.
Non-monetary assets and liabilities denominated in foreign currencies, which are measured at fair value, are
retranslated to the functional currency at the foreign exchange rates ruling at the date when the fair value was
determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Gains and losses on exchange arising from retranslation are recognised in the profit or loss, except for differences
arising on retranslation of available-for-sale equity instruments, which are recognised in equity.
On consolidation, the assets and liabilities of subsidiaries with functional currencies other than Ringgit Malaysia, are
translated into Ringgit Malaysia at the exchange rates approximating those ruling at the reporting date, except for
goodwill and fair value adjustments arising from business combinations before 1 April 2011 pursuant to the election
of transitional exemptions of MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards. The income and
expenses are translated at the average exchange rates for the year, which approximates the exchange rates at the dates
of the transactions. All resulting exchange differences are taken to the foreign currency translation reserve within equity.

2.20 Foreign currency transactions (continued)
In the consolidated financial statements, when settlement of a monetary item receivable from or payable to the
Groups foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses
arising from such a monetary item are considered to form part of a net investment in a foreign operation and
are reclassified to other comprehensive income and accumulated under foreign currency translation reserve in
equity. Upon disposal of the investment, the cumulative exchange differences previously recorded in equity are
recognised in the consolidated profit or loss.
2.21 Borrowing costs and foreign currency exchange differences relating to projects-in-progress
Borrowing costs which are directly attributable to the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time to be prepared for their intended use or sale, are
capitalised as part of the cost of those assets.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure
for the asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare
the asset for its intended use or sale are in progress. Capitalisation of borrowing costs ceases when all activities
necessary to prepare the qualifying asset for its intended use or sale are completed.
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is the weighted
average of the borrowing costs applicable to borrowings that are outstanding during the year, other than
borrowings made specifically for the purpose of financing a specific qualifying asset, in which case the actual
borrowing cost incurred on that borrowing less any investment income on the temporary investment of that
borrowings, will be capitalised.
Exchange differences arising from foreign currency borrowings, although regarded as an adjustment to borrowing
costs, are not capitalised but instead recognised in the profit or loss in the period in which they arise.
2.22 Revenue

Revenue from sale of oil and gas and their related products are recognised in the profit or loss when the risks and
rewards of ownership have been transferred to the buyer.
Revenue from services rendered is recognised in the profit or loss based on actual and estimates of work done in
respect of services rendered for long term project management contracts. Work done is measured based on internal
certification of project activities. Full provision is made for any foreseeable losses.
Revenue arising from shipping activities are mainly from freight income and charter income. Freight income and the
relevant discharged costs of cargoes loaded onto vessels up to the reporting date are accrued for in the profit or loss
based on percentage of completion method. Charter income is accrued on time accrual basis.
Revenue from sale of properties is recognised in the profit or loss when the significant risks and rewards of
ownership of the properties have been transferred to the buyer.
Revenue arising from assets yielding interest is recognised on a time proportion basis that takes into account the
effective yield on the assets.
Revenue arising from investments yielding dividend is recognised when the shareholders right to receive payment is
established.
149
2.23 Financing costs
Financing costs comprise interest payable on borrowings and profit share margin on Islamic Financing Facilities, as
well as accretion in provision due to the passage of time.
All interest and other costs incurred in connection with borrowings are expensed as incurred, other than that
capitalised in accordance with the accounting policy stated in note 2.21. The interest component of finance lease
payments is accounted for in accordance with the policy set out in note 2.7.
2.24 Operating segments
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Groups
other component. An operating segments operating results are reviewed regularly by the chief operating decision
maker, which in this case is the PETRONAS Executive Committee, to make decision about resources to be
allocated to the segment and to assess its performance, and for which discrete financial information is available.

3. PROPERTY, PLANT AND EQUIPMENT
Group Acquisition
31.12.2012 At of Disposals/
In RM Mil 1.1.2012 Additions subsidiary write-offs

At cost:
Freehold land 2,482 8 - (14)
Leasehold land 2,400 152 - (10)
Lease properties 1,224 - - (1)
Oil and gas properties 133,465 1,524 6,187 -
Buildings 15,553 296 - (39)
Plant and equipment 76,772 878 - (245)
Office equipment, furniture and fittings 2,169 81 - (26)
Computer software and hardware 2,372 88 - (139)
Motor vehicles 544 38 - (31)
Vessels 30,176 1,281 - (330)
Projects-in-progress
- oil and gas properties 50,072 22,334 - -
- other projects 18,174 13,961 - (93)
335,403 40,641 6,187 (928)
Acquisition
Accumulated depreciation and At Charge for of Disposals/
impairment losses: 1.1.2012 the year subsidiary write-offs
Freehold land - - - -
Leasehold land 554 28 - (2)
Lease properties 772 62 - -
Oil and gas properties 57,114 15,387 - -
Buildings 4,630 403 - (12)
Plant and equipment 44,542 3,592 - (74)
Office equipment, furniture and fittings 1,683 140 - (25)
Computer software and hardware 1,898 192 - (139)
Motor vehicles 343 50 - (23)
Vessels 15,289 1,065 - (48)
- oil and gas properties 2,971 - - -
- other projects 52 - - -
129,848 20,919 - (323)

151
3. PROPERTY, PLANT AND EQUIPMENT (continued)
Group Transfers/ Translation

31.12.2012 reclass/ exchange At
In RM Mil adjustment difference 31.12.2012

At cost:
Freehold land 68 (16) 2,528
Leasehold land (172) (20) 2,350
Lease properties - (6) 1,217
Oil and gas properties 25,792 (2,005) 164,963
Buildings 596 (176) 16,230
Plant and equipment (296) (1,136) 75,973
Office equipment, furniture and fittings 48 (112) 2,160
Computer software and hardware 132 (13) 2,440
Motor vehicles 5 (25) 531
Vessels 5,991 (1,189) 35,929
- oil and gas properties (19,553) (251) 52,602
- other projects (7,804) (309) 23,929
a,b
4,807 (5,258) 380,852
Impairment Transfers/ Translation

Accumulated depreciation and (write-back)/ reclass/ exchange At
impairment losses: loss adjustment difference 31.12.2012
Leasehold land (38) (1) (10) 531
Lease properties - (4) (3) 827
Oil and gas properties 5,941 1,109 (673) 78,878
Buildings 80 25 (132) 4,994
Plant and equipment 175 (675) (635) 46,925
Office equipment, furniture and fittings 1 (15) (82) 1,702
Computer software and hardware - 31 (5) 1,977
Motor vehicles - - (13) 357
Vessels 256 (793) (655) 15,114
- oil and gas properties 1,097 (611) (5) 3,452
- other projects - (16) - 36
7,512 a,c
(950) (2,213) 154,793
a
Includes revision to future cost of decommissioning of oil and gas properties amounting to RM5,134 million and corresponding
depreciation charges of RM498 million.
b
Includes net transfers of (RM327 million) comprising transfer from intangible assets of RM2,025 million and transfers to assets
held for sale of (RM2,297 million), other receivables of (RM40 million), and investment properties of (RM15 million).
c
Includes net transfers of (RM1,448 million) comprising transfer from intangible assets of RM2 million and transfer to assets held
for sale of (RM1,450 million).

Group Acquisition/
31.12.2011 At (disposal) of Disposals/
In RM Mil 1.4.2011 Additions subsidiaries write-offs

At cost:
Freehold land 2,513 20 11 (5)
Leasehold land 2,508 8 - (3)
Lease properties 1,176 - - -
Oil and gas properties 112,092 1,689 (1,470) (1)
Buildings 15,738 103 42 (29)
Plant and equipment 75,788 1,798 (1,186) (553)
Office equipment, furniture and fittings 2,158 62 6 (23)
Computer software and hardware 2,317 95 (10) (30)
Motor vehicles 522 77 (3) (22)
Vessels 30,273 367 - (188)
- oil and gas properties 53,905 16,146 - (22)
- other projects 11,246 6,344 - (181)
310,236 26,709 (2,610) (1,057)
Charge Acquisition/
Accumulated depreciation and At for the (disposal) of Disposals/
impairment losses: 1.4.2011 period subsidiaries write-offs
Freehold land 22 - - -
Leasehold land 565 24 - (3)
Lease properties 718 50 - -
Oil and gas properties 50,530 6,674 (1,019) -
Buildings 4,562 334 8 (17)
Plant and equipment 42,964 3,213 (1,169) (446)
Office equipment, furniture and fittings 1,614 101 7 (18)
Computer software and hardware 1,832 136 (7) (22)
Motor vehicles 319 38 1 (15)
Vessels 13,343 865 - (126)
- oil and gas properties 2,724 - - -
- other projects 94 - - -
119,287 11,435 (2,179) (647)
The fair value of property, plant and equipment of subsidiaries acquired during the period is presented on a gross basis, where cost is separately
presented from accumulated depreciation and impairment losses.

153
Group Transfers/ Translation

31.12.2011 reclass/ exchange At
In RM Mil adjustment difference 31.12.2011
At cost:
Freehold land (52) (5) 2,482
Leasehold land (118) 5 2,400
Lease properties 49 (1) 1,224
Oil and gas properties 18,794 2,361 133,465
Buildings (150) (151) 15,553
Plant and equipment 416 509 76,772
Office equipment, furniture and fittings (21) (13) 2,169
Computer software and hardware 57 (57) 2,372
Motor vehicles (6) (24) 544
Vessels (1,893) 1,617 30,176
- oil and gas properties (20,748) 791 50,072
- other projects 306 459 18,174
a,b
(3,366) 5,491 335,403
Transfers/ Translation
Accumulated depreciation and Impairment reclass/ exchange At
impairment losses: loss adjustment difference 31.12.2011
Freehold land - (22) - -
Leasehold land - (35) 3 554
Lease properties - 7 (3) 772
Oil and gas properties 6 (126) 1,049 57,114
Buildings 18 (221) (54) 4,630
Plant and equipment 175 (470) 275 44,542
Office equipment, furniture and fittings 2 (14) (9) 1,683
Computer software and hardware 3 (7) (37) 1,898
Motor vehicles 1 8 (9) 343
Vessels 666 (219) 760 15,289
- oil and gas properties 19 228 - 2,971
- other projects - (42) - 52
890 a,c
(913) 1,975 129,848
a
Includes revision to future cost of decommissioning of oil and gas properties amounting to (RM1,745 million) and corresponding
depreciation charges of (RM147 million).
b
Includes net transfers of (RM1,621 million) comprising transfer from intangible assets of RM118 million and transfers to assets
held for sale of (RM1,253 million), long term receivables of (RM464 million), prepaid lease payments of (RM20 million) and
investment properties of (RM2 million).
c
Includes net transfers of (RM766 million) comprising transfer from prepaid lease payments of RM5 million and transfers to
assets held for sale of (RM569 million) and long term receivables of (RM202 million).

Company Transfers/
31.12.2012 At reclass/ At
In RM Mil 1.1.2012 Additions Disposals adjustment 31.12.2012
At cost:
Freehold land 53 - - (47) 6
Leasehold land 125 - - - 125
Lease properties 367 - - - 367
Oil and gas properties 6,088 213 - 5,911 12,212
Buildings 253 - - - 253
Plant and equipment 12 1 - - 13
Office equipment, furniture and fittings 113 1 (8) - 106
Computer software and hardware 450 7 (139) 58 376
Motor vehicles 25 3 (4) - 24
- oil and gas properties 809 1,169 - (777) 1,201
- other projects 821 3,545 - (1,052) 3,314
9,116 4,939 (151) a,b
4,093 17,997

Charge
At for the At
Accumulated depreciation: 1.1.2012 year Disposals Adjustment 31.12.2012
Freehold land - - - - -
Leasehold land 36 2 - - 38
Lease properties 328 4 - - 332
Oil and gas properties 5,057 234 - 498 5,789
Buildings 55 1 - - 56
Plant and equipment 9 1 - - 10
Office equipment, furniture and fittings 69 12 (8) - 73
Computer software and hardware 320 60 (139) - 241
Motor vehicles 17 4 (4) - 17
- oil and gas properties - - - - -
- other projects - - - - -
5,891 318 (151) a
498 6,556

a
Represents revision to future cost of decommissioning of oil and gas properties amounting to RM5,134 million and corresponding
depreciation charges of RM498 million.
b
Includes net transfers of (RM1,041 million) comprising transfers to amount due from subsidiaries of (RM994 million) and assets
held for sale of (RM47 million).

155
Company
31.12.2011 At Reclass/ At
In RM Mil 1.4.2011 Additions adjustment 31.12.2011
At cost:
Freehold land 53 - - 53
Leasehold land 125 - - 125
Lease properties 367 - - 367
Oil and gas properties 7,147 686 (1,745) 6,088
Buildings 200 - 53 253
Plant and equipment 10 2 - 12
Office equipment, furniture and fittings 182 5 (74) 113
Computer software and hardware 422 7 21 450
Motor vehicles 22 3 - 25
- oil and gas properties - 809 - 809
- other projects 411 410 - 821
8,939 1,922 a
(1,745) 9,116

Charge
At for the Reclass/ At
Accumulated depreciation: 1.4.2011 period adjustment 31.12.2011
Leasehold land 35 1 - 36
Lease properties 321 7 - 328
Oil and gas properties 5,134 70 (147) 5,057
Buildings 52 2 1 55
Plant and equipment 9 - - 9
Office equipment, furniture and fittings 72 6 (9) 69
Computer software and hardware 276 36 8 320
Motor vehicles 15 2 - 17
- oil and gas properties - - - -
- other projects - - - -
5,914 124 a
(147) 5,891

a
Represents revision to future cost of decommissioning of oil and gas properties amounting to (RM1,745 million) and corresponding
depreciation charges of (RM147 million).

Group Company
C
arrying amount C
arrying amount
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011

Freehold land 2,528 2,482 2,491 6 53 53
Leasehold land 1,819 1,846 1,943 87 89 90
Lease properties 390 452 458 35 39 46
Oil and gas properties 86,085 76,351 61,562 6,423 1,031 2,013
Buildings 11,236 10,923 11,176 197 198 148
Plant and equipment 29,048 32,230 32,824 3 3 1
Office equipment,
furniture and fittings 458 486 544 33 44 110
Computer software and
hardware 463 474 485 135 130 146
Motor vehicles 174 201 203 7 8 7
Vessels 20,815 14,887 16,930 - - -
- oil and gas properties 49,150 47,101 51,181 1,201 809 -
- other projects 23,893 18,122 11,152 3,314 821 411
226,059 205,555 190,949 11,441 3,225 3,025

Security
Property, plant and equipment of certain subsidiaries costing RM5,523,076,000 (31.12.2011: RM8,677,709,000; 1.4.2011:
RM8,175,757,000) have been pledged as security for loan facilities as set out in note 22 and note 23 to the financial
statements.
Included in additions to projects-in-progress of the Group is finance cost capitalised during the year of RM100,680,000
(31.12.2011: RM71,872,000; 1.4.2011: RM126,232,000). The interest rate on borrowings capitalised ranges from 1.42% to 3.79%
(31.12.2011: 1.25% to 3.18%; 1.4.2011: 2.48% to 5.90%) per annum.
Restriction of land title
The titles to certain freehold and leasehold land are in the process of being registered in the subsidiaries name.
Change in estimates
During the year, the Company revised the estimated future cost of decommissioning of oil and gas properties. The revision
was accounted for prospectively as a change in accounting estimates resulting in an increase in cost of oil and gas properties
by RM5,134,000,000 and higher depreciation charges for the year by approximately RM421,000,000 (refer note 24).

157
Estimation of oil and gas reserves and resources
Oil and gas reserves and resources are key elements in the Groups and the Companys investment decision-making process.
Estimation of oil and gas reserves and resources are conducted using industry recognised methods.
The term reserves describes the recoverable quantity of oil and gas volumes that are commercially viable for development
given the prevailing economic situation present at the time of estimation of which field development plan (FDP) is already
in place. The term resources describes those oil and gas volumes, as of a given date, to be potentially recoverable from
known accumulations, but the projects are yet to be considered sufficiently mature for commercial development due to one
or more contingencies.
Reserves estimates are normally presented alongside the range of level of certainties namely P1 (proved reserves; high
level of certainty), P2 (probable reserves; mean level of certainty) and P3 (possible reserves; low level of certainty). The level
of certainties depends on the availability and understanding of the geological and reservoir data available at the time of
estimation and is normally represented in the form of a probability distribution.
The reserves are further subdivided into developed and undeveloped categories. Developed reserves are expected to be
recovered through existing wells and facilities under the operating conditions that have been designed for. Undeveloped
reserves are reserves to be recovered from approved FDP projects and remain so until the wells are drilled, completed and
production commences, which would by then, be classified as developed.
Estimation of reserves and resources are reviewed annually. These estimates are inherently imprecise, require the application
of judgments and are subject to regular revision, either upward or downward, based on new information available such as
new geological information gathered from the drilling of additional wells, observation of long-term reservoir performance
under producing conditions and changes in economic factors, including product prices, contract terms or development
plans. Furthermore, estimation of resource volumes is based on the information that is less robust than that available for
mature reservoirs.
Such changes will impact the Groups and the Companys reported financial position and results which include:
i. carrying value of oil and gas properties and their corresponding amortisation charges;
ii. carrying value of project-in-progress;
iii. provisions for decommissioning of oil and gas properties; and
iv. carrying value of deferred tax assets/liabilities.
Impairment
As at 31 December 2012, the Group recognised net impairment losses on certain property, plant and equipment amounting
to RM7,512,000,000 (31.12.2011: RM890,000,000; 1.4.2011: RM4,121,000,000). In arriving at the impairment loss amount, the
carrying amount of each impaired cash generating unit is compared with the recoverable amount of the cash generating
unit.
The recoverable amount is determined from the value in use calculations, using cash flow projections. The Group uses a
range of long term assumptions including prices, volumes, margins and costs based on past performance and managements
expectations of market development. The projected cash flows were discounted using a discount rate between 9% and 10%
(31.12.2011 and 1.4.2011: 9% and 10%).

4. INVESTMENT PROPERTIES
Group Translation
31.12.2012 At exchange At
In RM Mil 1.1.2012 Additions Disposal Transfers difference 31.12.2012
At cost:
Freehold land 1,172 - - - - 1,172
Buildings 11,823 24 - 11 (12) 11,846
Projects-in-progress 962 155 - 5 - 1,122
13,957 179 - a
16 (12) 14,140
Translation
Accumulated At Charge for exchange At
depreciation: 1.1.2012 the year Disposal Transfers difference 31.12.2012
Freehold land - - - - - -
Buildings 2,933 462 - - (8) 3,387
Projects-in-progress - - - - - -
2,933 462 - - (8) 3,387
Translation
At exchange At
31.12.2011 1.4.2011 Additions Disposal Transfers difference 31.12.2011
At cost:
Freehold land 1,104 - (1) 69 - 1,172
Buildings 10,404 7 (8) 1,409 11 11,823
Projects-in-progress 1,680 731 (12) (1,437) - 962
13,188 738 (21) b
41 11 13,957

Translation
Accumulated At Charge for exchange At
depreciation: 1.4.2011 the period Disposal Transfers difference 31.12.2011
Freehold land - - - - - -
Buildings 2,627 305 (3) (3) 7 2,933
Projects-in-progress - - - - - -
2,627 305 (3) c
(3) 7 2,933
a
Comprises transfers from property, plant and equipment of RM15 million and trade and other inventories of RM8 million and transfer to trade
and other receivables of (RM7 million).
b
Comprises transfers from land held for development of RM37 million, trade and other inventories of RM11 million and property, plant and
equipment of RM2 million and transfer to assets held for sale of (RM9 million).
c
Comprises transfer to assets held for sale of (RM3 million).

159
4. INVESTMENT PROPERTIES (continued)
Group C
arrying amount
In RM Mil 31.12.2012 31.12.2011 1.4.2011
Freehold land 1,172 1,172 1,104
Buildings 8,459 8,890 7,777
Projects-in-progress 1,122 962 1,680
10,753 11,024 10,561
The Directors have estimated the fair values of investment properties as at 31 December 2012 to be RM17,833,975,000
(31.12.2011: RM16,459,687,000; 1.4.2011: RM16,070,632,000). The fair values have been determined by discounting the
estimated future cash flows or by reference to market evidence of transaction prices for similar properties.
Certain investment properties with carrying amount of RM4,084,466,000 (31.12.2011: RM3,352,481,000; 1.4.2011:
RM3,465,042,000) have been pledged as securities for loan facilities as set out in note 22 and note 23 to the financial
statements.
5. LAND HELD FOR DEVELOPMENT
Included in land held for development is freehold land amounting to RM1,012,000,000 (31.12.2011: RM1,536,000,000;
1.4.2011: RM1,132,000,000).
6. PREPAID LEASE PAYMENTS
Transfers
Group from
31.12.2012 At intangible At
In RM Mil 1.1.2012 Additions Disposals assets 31.12.2012

At cost:
Leasehold land
- long lease 132 15 - - 147
- short lease 58 1 (8) - 51
Prepaid rental 677 237 (1) 163 1,076
867 253 (9) 163 1,274
Transfers
from
Accumulated amortisation At Charge for intangible At
and impairment losses: 1.1.2012 the year Disposals assets 31.12.2012
Leasehold land
- long lease 9 2 - - 11
- short lease 28 3 (2) - 29
Prepaid rental 205 36 - 33 274
242 41 (2) 33 314

6. PREPAID LEASE PAYMENTS (continued)
Transfers
from/(to)
Group property,
31.12.2011 At plant and At
In RM Mil 1.4.2011 Additions Disposals equipment 31.12.2011
At cost:
Leasehold land
- long lease 89 16 - 27 132
- short lease 58 - - - 58
Prepaid rental 630 54 - (7) 677
777 70 - 20 867
Transfers to
property,
Accumulated amortisation At Charge for plant and At
and impairment losses: 1.4.2011 the period Disposals equipment 31.12.2011
Leasehold land
- long lease 7 2 - - 9
- short lease 26 2 - - 28
Prepaid rental 193 17 - (5) 205
226 21 - (5) 242

Group C
arrying amount
In RM Mil 31.12.2012 31.12.2011 1.4.2011
Leasehold land
- long lease 136 123 82
- short lease 22 30 32
Prepaid rental 802 472 437
960 625 551
Restrictions of land title
The title to certain leasehold land is in the process of being registered in the subsidiarys name. Certain long term leasehold
land of the Group cannot be disposed of, charged or sub-leased without the prior consent of the relevant authority.
7. INVESTMENTS IN SUBSIDIARIES
Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011
Investments at cost in Malaysia
- quoted shares 16,284 16,284 16,284
- unquoted shares 26,511 25,107 24,117
Fair value adjustments on loans and advances and
financial guarantee 5,732 6,044 6,325
48,527 47,435 46,726
Less: Impairment losses
- unquoted shares (1,519) (956) (948)
47,008 46,479 45,778
Market value of quoted shares 85,010 77,380 84,756
Details of significant subsidiaries are stated in note 44 to the financial statements.

161
8. INVESTMENTS IN ASSOCIATES

Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Investments at cost
- quoted shares
- in Malaysia 256 256 256 302 302 302
- unquoted shares 2,725 2,622 2,512 - - -
Share of post-acquisition
profits and reserves 2,524 2,593 3,029 - - -
5,505 5,471 5,797 302 302 302
- unquoted shares (1,060) (90) (72) - - -
4,445 5,381 5,725 302 302 302
Market value of
quoted shares 918 867 852 918 867 852
Summary of financial
information on associates:
Total assets (100%) 23,961 21,697 25,320 2,018 1,013 1,021
Total liabilities (100%) (12,546) (10,796) (13,092) (1,348) (137) (176)
Revenue (100%) 12,140 10,641 12,659 522 485 455
Profit (100%) 2,448 2,307 4,512 159 181 150
Contingent liabilities:
Guarantees extended
to third parties (2,763) (3,444) (3,757) - - (2)
Details of significant associates are stated in note 45 to the financial statements.
9. INVESTMENTS IN JOINTLY CONTROLLED ENTITIES
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Investments at cost
- unquoted shares 4,186 4,166 4,116 677 677 677
Fair value adjustments on
loans and advances and
financial guarantee 1,358 1,437 1,275 717 717 717
Share of post-acquisition
profits and reserves 1,740 1,382 492 - - -
7,284 6,985 5,883 1,394 1,394 1,394
Less: Impairment losses (59) (43) (47) (9) (9) (9)
7,225 6,942 5,836 1,385 1,385 1,385
Summary of financial
information on jointly
controlled entities:
Total assets (100%) 27,011 24,678 18,038 3,732 3,831 3,875
Total liabilities (100%) (16,512) (15,791) (11,733) (1,834) (2,098) (2,139)
Revenue (100%) 7,075 5,809 3,091 1,232 316 615
Profit (100%) 2,055 1,208 592 226 57 249
Contingent liabilities:
Guarantees extended to
third parties (1) - (2) (1) - (2)
Details of significant jointly controlled entities are stated in note 46 to the financial statements.

10. INTANGIBLE ASSETS

Group
31.12.2012 At Disposal/
In RM Mil 1.1.2012 Additions write-offs Transfers

At cost:
Goodwill 5,512 63 - -
Exploration expenditure 12,975 4,063 (2,117) (2,011)
Other intangible assets 5,389 2,501 (78) (184)
23,876 6,627 (2,195) a
(2,195)

Accumulated amortisation and At Charge for Disposal/
impairment losses: 1.1.2012 the year write-offs Transfers
Goodwill 222 - - -
Exploration expenditure 1,692 - - -
Other intangible assets 1,348 1,032 - (38)
3,262 1,032 - b
(38)
At Disposal/ Transfer/
31.12.2011 1.4.2011 Additions write-offs Reclass
At cost:
Goodwill 5,810 - - -
Exploration expenditure 6,587 6,304 (341) 98
Other intangible assets 3,723 1,974 (52) (216)
16,120 8,278 (393) c
(118)
c
ontinue to next page
Accumulated amortisation and At Charge for Disposal/

impairment losses: 1.4.2011 the period write-offs Reclass
Goodwill 542 - - -
Exploration expenditure 965 - - 35
Other intangible assets 1,341 155 (43) (35)
2,848 155 (43) -
a
Comprises transfers to property, plant and equipment of (RM2,025 million), prepaid lease payments of (RM163 million) and assets held for sale
of (RM7 million).
b
Comprises transfers to prepaid lease payments of (RM33 million), assets held for sale of (RM3 million) and property, plant and equipment of
(RM2 million).
c
Comprises transfer to property, plant and equipment of (RM118 million).

163
10. INTANGIBLE ASSETS (continued)

Group Acquisition Translation
31.12.2012 of exchange At
In RM Mil subsidiary difference 31.12.2012

At cost:
Goodwill - (37) 5,538
Exploration expenditure 14,480 (734) 26,656
Other intangible assets - (129) 7,499
14,480 (900) 39,693

Acquisition Translation
Accumulated amortisation Impairment of exchange At
and impairment losses: loss subsidiary difference 31.12.2012
Goodwill 6 - (16) 212
Exploration expenditure 2,266 - (55) 3,903
Other intangible assets - - (20) 2,322
2,272 - (91) 6,437

Acquisition/ Translation
(disposal) of exchange At
31.12.2011 subsidiaries difference 31.12.2011
At cost:
Goodwill (325) 27 5,512
Exploration expenditure (55) 382 12,975
Other intangible assets - (40) 5,389
(380) 369 23,876
Impairment Acquisition/ Translation

Accumulated amortisation loss/ (disposal) of exchange At
and impairment losses: (write-back) subsidiaries difference 31.12.2011
Goodwill 25 (341) (4) 222
Exploration expenditure 688 - 4 1,692
Other intangible assets (47) - (23) 1,348
666 (341) (23) 3,262

10. INTANGIBLE ASSETS (continued)

Group Carrying Amount
In RM Mil 31.12.2012 31.12.2011 1.4.2011
Goodwill 5,326 5,290 5,268
Exploration expenditure 22,753 11,283 5,622
Other intangible assets 5,177 4,041 2,382
33,256 20,614 13,272
Impairment review of goodwill
For the purpose of impairment testing, goodwill is allocated to groups of cash-generating units which represent the
lowest level within the Group at which the goodwill is monitored for internal management purposes.
In assessing whether goodwill has been impaired, the carrying amount of the cash-generating unit (including goodwill)
is compared with the recoverable amount of the cash-generating unit. The recoverable amount is the higher of fair value
less costs to sell and value in use. In the absence of any information about the fair value of a cash-generating unit, the
value in use is deemed to be the recoverable amount.
Included in goodwill is an amount of RM3,986,000,000 (31.12.2011 and 1.4.2011: RM3,986,000,000) arising from the
acquisition of PETRONAS Lubricants Italy S.p.A Group (PLI Group). The recoverable amount of PLI Group unit was based
on its value in use and was determined with the assistance of independent valuers. The value in use was determined
by using the discounted cash flow method based on managements business plan cash flow projections for 5 financial
years from 2013 to 2017, adjusted with an estimated terminal value. The cash flow assumes a long term growth rate of
2.9% (31.12.2011: 2.8%; 1.4.2011: 2.9%) and is discounted to present value using discount rate of between 8.4% and 9.1%
(31.12.2011: 8.2% and 9.4%; 1.4.2011: 8.1% and 8.4%).
Based on the above, the recoverable amount of the unit was determined to be higher than its carrying amount and
therefore, no impairment loss was recognised. The above estimates are sensitive in the following areas:
(i) A decrease of a half percentage point in long term growth rate used would have reduced the recoverable amount by
approximately RM256 million but would not result in impairment loss.
(ii) An increase of a one percentage point in discount rate used would have reduced the recoverable amount by
approximately RM472 million but would not result in impairment loss.
The value in use of other goodwill is derived from the respective cash-generating units business plan cash flow
projections for 5 financial years and extrapolated using long term average growth rate of the respective industries those
units are engaged in. These cash flows are discounted to present value using discount rate at 9% (31.12.2011: 9%; 1.4.2011:
7% to 9%).
Based on the above, the carrying amount of other goodwill of certain units were determined to be higher than their
recoverable amount and impairment losses of RM6,000,000 (31.12.2011: RM25,000,000; 1.4.2011: RM351,000,000) was
recognised. The impairment loss was allocated to goodwill and is included in administration expenses.

165
11. LONG TERM RECEIVABLES

Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Term loans and advances:
Loans and advances
due from subsidiaries - - - 75,914 65,207 67,151
Term loans due
from subsidiaries - - - - 3,714 3,502
Loans and advances
due from associates
and jointly
controlled entities 1,564 1,788 918 - - -
1,564 1,788 918 75,914 68,921 70,653
Derivative
assets (note 13) - 491 433 - 1,298 1,663
Other receivables 2,510 2,309 2,317 - - -
4,074 4,588 3,668 75,914 70,219 72,316
- Term loans and
advances (158) (2) (68) (503) (503) (503)
- Other receivables (377) (502) (311) - - -
3,539 4,084 3,289 75,411 69,716 71,813
Included in the Companys loans and advances due from subsidiaries is an amount of RM41,494,220,000 (31.12.2011:
RM46,735,665,000; 1.4.2011: RM44,436,480,000), which bears interest at rates ranging from 2.04% to 7.88% (31.12.2011:
2.04% to 7.88%; 1.4.2011: 3.10% to 7.88%) per annum.
Included in the Groups loans and advances due from associates and jointly controlled entities is an amount of
RM1,036,049,000 (31.12.2011: RM1,242,935,000; 1.4.2011: RM538,809,000), which bears interest at rates ranging from
4.26% to 10.00% (31.12.2011: 0.95% to 10.00%; 1.4.2011: 3.22% to 10.00%) per annum.
Term loans due from subsidiaries were on-lending of term loans obtained by the Company, on terms and conditions
similar as those of the principal loan agreements entered into by the Company.
12. FUND AND OTHER INVESTMENTS
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011

Non-current
Unquoted securities 690 715 682 - - -

Held-to-maturity
Malaysian Government
Securities 3,393 407 - 3,393 407 -
Corporate Private Debt
Securities 3,295 2,087 - 4,879 2,087 -
6,688 2,494 - 8,272 2,494 -
Balance carried forward 7,378 3,209 682 8,272 2,494 -

12. FUND AND OTHER INVESTMENTS (continued)

Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Balance brought forward 7,378 3,209 682 8,272 2,494 -
Available-for-sale
Quoted shares
- in Malaysia 401 72 373 - - -
- outside Malaysia - - 10,344 - - -
Unquoted shares 277 217 428 76 76 76
678 289 11,145 76 76 76
Unquoted shares (3) (3) (3) - - -
675 286 11,142 76 76 76
Total non-current
investments 8,053 3,495 11,824 8,348 2,570 76
Current
Available-for-sale
Quoted shares
- in Malaysia 150 611 284 150 334 286
- outside Malaysia 5,760 9,035 6,731 - - -
Treasury Bills - 16,073 18,450 - 16,073 18,450
Negotiable Certificate
of Deposits 485 - - 485 - -
6,395 25,719 25,465 635 16,407 18,736
Fair value through profit

or loss
Designated upon initial
recognition
Quoted shares
- outside Malaysia 2 - 104 - - -
Quoted securities
- outside Malaysia 174 964 1,351 174 964 1,351
Malaysian Government
Securities 7,541 5,876 6,286 7,521 5,814 6,193
Corporate Private Debt
Securities 5,305 2,115 3,918 6,296 4,657 5,045
Negotiable Certificate
of Deposits 1,308 514 490 1,308 514 490
Unquoted securities 149 195 250 - - -
Loan Stock - - 5 - - -
14,479 9,664 12,404 15,299 11,949 13,079
Total current
investments 20,874 35,383 37,869 15,934 28,356 31,815

Total fund and other
investments 28,927 38,878 49,693 24,282 30,926 31,891

Representing items:
At amortised cost 7,652 3,423 1,112 8,348 2,570 76
At fair value 21,275 35,455 48,581 15,934 28,356 31,815
28,927 38,878 49,693 24,282 30,926 31,891
Included in corporate private debt securities of the Company are securities issued by subsidiaries amounting to
RM2,575,000,000 (31.12.2011: RM2,542,000,000; 1.4.2011: RM1,127,000,000).

167
13. DERIVATIVE ASSETS/LIABILITIES

Group Company
In RM Mil Note 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Derivative assets
Non-current
Forward foreign
exchange contracts - 491 433 - 1,298 1,663

Current
Commodity swaps 14 4 4 - - -
Forward gas contracts 54 106 - - - -
Forward foreign
exchange contracts 574 38 74 430 16 17
642 148 78 430 16 17
Included within:
Long term receivables 11 - 491 433 - 1,298 1,663
Trade and other receivables 17 642 148 78 430 16 17
642 639 511 430 1,314 1,680

Derivative liabilities
Non-current
Interest rate swaps (26) (281) (303) - - -
Forward foreign
exchange contracts - - - - (208) (164)
(26) (281) (303) - (208) (164)
Current
Commodity swaps (12) (4) (51) - - -
Interest rate swaps (117) (6) (4) - - -
Forward gas contracts (15) (18) - - - -
Forward foreign
exchange contracts (57) (23) (70) (127) (6) (9)
Forward oil price contracts - (12) (121) - - -
(201) (63) (246) (127) (6) (9)
Included within:
Other long term
liabilities and provisions 24 (26) (281) (303) - (208) (164)
Trade and other payables 25 (201) (63) (246) (127) (6) (9)
(227) (344) (549) (127) (214) (173)
Included in the Companys derivative assets and derivative liabilities are forward foreign exchange contracts entered into
with certain subsidiaries in relation to loans due from the subsidiaries amounting to Nil (31.12.2011: RM807,000,000;
1.4.2011: RM1,230,000,000) and RM118,000,000 (31.12.2011: RM208,000,000; 1.4.2011: RM164,000,000) respectively.

13. DERIVATIVE ASSETS/LIABILITIES (continued)
In the normal course of business, the Group and the Company enter into derivative financial instruments to manage their
normal business exposures in relation to commodity prices, foreign currency exchange rates and interest rates, including
management of the balance between floating rate and fixed rate debt, consistent with risk management policies and
objectives.
The calculation of fair value for derivative financial instruments depends on the type of instruments. The fair value of
interest rate swap agreements are estimated by discounting expected future cash flows using current market interest
rates and yield curve over the remaining term of the instrument. The fair value of forward foreign currency exchange
contracts is based on the fair value difference between forward exchange rates and the contracted rate. The fair value of
commodity swap and commodity forward contracts is based on the fair value difference between market price at the date
of measurement and the contracted price.
Certain subsidiaries of the Group adopt hedge accounting whereby hedges meeting the criteria for hedge accounting
are classified as cash flow hedges. The effective portion of the gain or loss on the hedging instruments is recognised
directly in equity until the hedged transaction occurs, while the ineffective portion is recognised in the profit or loss. As
at 31 December 2012, the balance recognised under capital reserves in equity amounts to RM138,000,000 (31.12.2011:
RM274,000,000; 1.4.2011: RM255,000,000) while the ineffective portion recognised under other income in profit or loss
amounts to RM20,643,000 (31.12.2011: RM800,000; 1.4.2011: Nil). As these amounts are not material to the Group, no full
disclosure of hedge accounting is presented in the Groups financial statements.
14. DEFERRED TAX
The components and movements of deferred tax liabilities and assets during the year/period prior to offsetting are as
follows:
Group Charged/ Acquisition Translation

31.12.2012 At (credited) to of exchange At
In RM Mil 1.1.2012 profit or loss subsidiary Equity difference 31.12.2012
Deferred tax
liabilities
Property, plant and
equipment 14,563 (1,990) 3,733 - (210) 16,096
Other items 223 55 - (176) 15 117
14,786 (1,935) 3,733 (176) (195) 16,213
Deferred tax assets

Property, plant and
equipment (52) 341 - - 4 293
Unused tax losses (2,896) (2,504) - (7) 19 (5,388)
Unabsorbed capital
allowances (558) 241 - - 34 (283)
Unused reinvestment
allowances (9) (249) - - - (258)
Unused investment tax
allowances (1,000) (406) - - - (1,406)
Other items (891) (473) - (79) 22 (1,421)
(5,406) (3,050) - (86) 79 (8,463)

169
14. DEFERRED TAX (continued)
Group Charged/ Acquisition/ Translation

31.12.2011 At (credited) to (disposal) of exchange At
In RM Mil 1.4.2011 profit or loss subsidiaries Equity difference 31.12.2011
Deferred tax
liabilities
Property, plant and
equipment 13,858 778 (285) - 212 14,563
Other items 384 (239) (9) 37 50 223
14,242 539 (294) 37 262 14,786
Deferred tax
assets
Property, plant and
equipment - (52) - - - (52)
Unused tax losses (2,617) (435) 158 - (2) (2,896)
Unabsorbed capital
allowances (631) 72 - - 1 (558)
Unused reinvestment
allowances (23) 14 - - - (9)
Unused investment tax
allowances (1,119) 119 - - - (1,000)
Other items (966) 140 (11) - (54) (891)
(5,356) (142) 147 - (55) (5,406)
Charged/
Company (credited)
31.12.2012 Opening Closing to profit
In RM Mil balance balance or loss
Deferred tax liabilities
Property, plant and equipment 4 168 172
Others 65 (54) 11
69 114 183

Deferred tax assets
Unused tax losses (2,593) (2,021) (4,614)
Others (34) (467) (501)
(2,627) (2,488) (5,115)
31.12.2011
Property, plant and equipment 29 (25) 4
Others 120 (55) 65
149 (80) 69

Deferred tax assets
Unused tax losses (2,210) (383) (2,593)
Others (47) 13 (34)
(2,257) (370) (2,627)

14. DEFERRED TAX (continued)
Deferred tax liabilities and assets are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when the deferred taxes relate to the same tax authority. The amounts determined after
appropriate offsetting are as follows:
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Deferred tax assets
Deferred tax liabilities 1,502 809 681 183 69 149
Deferred tax assets (7,947) (4,696) (4,660) (5,115) (2,627) (2,257)
(6,445) (3,887) (3,979) (4,932) (2,558) (2,108)

Deferred tax liabilities 14,711 13,977 13,561 - - -
Deferred tax assets (516) (710) (696) - - -
14,195 13,267 12,865 - - -
No deferred tax has been recognised for the following items:
Group
In RM Mil 31.12.2012 31.12.2011 1.4.2011
Deductible temporary differences 41 27 -
Unabsorbed capital allowances 1,247 1,100 771
Unused tax losses 6,342 6,617 3,885
Unused investment tax allowances 1,677 1,582 1,863
9,307 9,326 6,519
The unabsorbed capital allowances, unused tax losses and unused investment tax allowances do not expire under current
tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that
future taxable profit will be available against which the Group can utilise the benefits.
The Group and the Company have unused tax losses carried forward of approximately RM27,894,000,000 (31.12.2011:
RM18,201,000,000; 1.4.2011: RM14,353,000,000) and RM18,456,000,000 (31.12.2011: RM10,372,000,000; 1.4.2011:
RM8,840,000,000) respectively, which give rise to the recognised and unrecognised deferred tax assets above.
The Group also has unused investment tax allowances and unused reinvestment allowances of approximately
RM7,301,000,000 (31.12.2011: RM5,582,000,000; 1.4.2011: RM6,339,000,000) and RM1,032,000,000 (31.12.2011:
RM36,000,000; 1.4.2011: RM92,000,000) respectively, which give rise to the recognised and unrecognised deferred tax
assets above.

171
15. CASH AND CASH EQUIVALENTS
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Non-current
Deposits placed:
Banks 164 89 108 - - -
Current
Cash and bank balances 4,274 4,084 2,510 1,829 2 2
Deposits placed:
Banks 97,379 114,400 98,850 63,130 70,462 54,654
Finance companies 5 65 42 - 50 -
Other corporations 6,077 6,809 5,154 5,451 5,094 3,508
107,735 125,358 106,556 70,410 75,608 58,164
Less: Subsidiaries cash

with PETRONAS
Integrated Financial
Shared Service Centre - - - (18,395) - -
107,735 125,358 106,556 52,015 75,608 58,164
107,899 125,447 106,664 52,015 75,608 58,164
Beginning 1 January 2012, the Company also manages the cash and cash equivalents on behalf of certain subsidiaries
through its Integrated Financial Shared Service Centre in order to allow for more efficient management of cash. The cash
and cash equivalents reported in the Companys financial statements do not include the amounts managed on behalf of
the subsidiaries.
Included in cash and bank balances of the Group are interest-bearing balances amounting to RM4,246,867,000
(31.12.2011: RM3,595,102,000; 1.4.2011: RM1,901,221,000).
Included in cash and bank balances of the Group are amounts of RM49,105,000 (31.12.2011: RM23,222,000; 1.4.2011:
RM26,692,000) held pursuant to the requirement of the Housing Development (Housing Development Account)
Regulations 2002 and are therefore restricted from use in other operations.
Included in deposits placed with licensed financial institutions of the Group is an amount of RM642,216,000 (31.12.2011:
RM769,891,000; 1.4.2011: RM1,001,700,000) being deposits held under designated accounts for repayment of term loan
and redemption of Islamic Financing Facilities. Deposits held in respect of repayments which are not due within the next
12 months are presented as non-current.

16. TRADE AND OTHER INVENTORIES
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Crude oil and condensate 4,070 2,329 2,072 - - -
Petroleum products 4,998 4,885 4,885 45 24 49
Petrochemical products 591 582 100 - - -
Liquefied natural gas 1,189 883 485 - - -
Stores, spares and others 2,281 2,756 1,809 - - -
Developed properties held
for sale 358 330 349 - - -
Properties under
development 700 601 574 - - -
14,187 12,366 10,274 45 24 49
17. TRADE AND OTHER RECEIVABLES
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Trade receivables 30,948 26,631 24,388 4,601 3,220 3,066
Other receivables, deposits
and prepayments 11,234 10,840 7,668 1,917 379 664
Amount due from:
- a shareholder - 1,000 - - 1,000 -
- contract customers 1,359 573 271 - - -
- subsidiaries - - - 33,159 10,799 9,090
- associates and jointly
controlled entities 399 403 1,147 28 73 28
Tax recoverable 516 762 446 - - -
Derivative assets (note 13) 642 148 78 430 16 17
45,098 40,357 33,998 40,135 15,487 12,865
Trade receivables (2,533) (2,235) (428) (45) (90) (90)
Amount due from
subsidiaries - - - (344) (286) (238)
Other receivables, deposits
and prepayments (286) (11) (25) (15) (15) (18)
42,279 38,111 33,545 39,731 15,096 12,519
Amount due from subsidiaries, associates and jointly controlled entities arose in the normal course of business.
Tax recoverable is subject to the agreement with the relevant tax authorities.

173
17. TRADE AND OTHER RECEIVABLES (continued)
Amount due from contract customers:

Group
In RM Mil 31.12.2012 31.12.2011 1.4.2011
Aggregate costs incurred to date 11,187 10,828 2,246
Add: Attributable profit 22 14 311
11,209 10,842 2,557
Less: Progress billings (9,850) (10,269) (2,286)
1,359 573 271
18. ASSETS CLASSIFIED AS HELD FOR SALE

Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Vessels 374 520 52 - - -
Land and building 214 153 5 47 - -
Plant and equipment 111 39 152 - - -
Intangible assets 4 - 96 - - -
Other assets/(liabilities) 52 (81) 41 - - -
755 631 346 47 - -
The above amount represents carrying values of assets owned by the Group and the Company with the intention of
disposal in the immediate future. The carrying amounts of these assets immediately before reclassification are not
materially different from their fair values.
19. SHARE CAPITAL

Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011
Authorised:
500,000 ordinary shares of RM1,000 each 500 500 500

Issued and fully paid:
100,000 ordinary shares of RM1,000 each 100 100 100

20. RESERVES
Pursuant to Section 84 of the Petroleum (Income Tax) Act 1967, dividends paid out on income derived from petroleum
operations are not chargeable to income tax. Subject to agreement by the Inland Revenue Board, the Company has
sufficient income derived from petroleum operations, Section 108 tax credit and tax exempt income to distribute all its
distributable reserves at 31 December 2012, if paid out as dividends.
The Financial Act, 2007 introduced a single tier company income tax system with effect from year of assessment 2008.
As such, the remaining Section 108 tax credit as at 31 December 2012 will be available to the Company until such time the
credit is fully utilised or upon expiry of the six-year transitional period on 31 December 2013, whichever is earlier.
Capital Reserves
Capital reserves represent primarily reserves created upon issuance bonus shares and redemption of preference shares by
subsidiaries and the Groups share of its associate companies reserves.
Foreign Currency Translation Reserve
The foreign currency translation reserve comprises all foreign currency differences arising from the translation of the
financial statements of subsidiaries whose functional currencies are different from that of the Companys functional
currency as well as foreign currency differences arising from the translation of monetary items that are considered to
form part of a net investment in a foreign operation.
Available-for-sale Reserve
This reserve records the changes in fair value of available-for-sale investments. On disposal or impairment, the
cumulative changes in fair value are transferred to the profit or loss.
General Reserve
General reserve represents appropriation of retained profits for general purposes rather than for a specific item of future
loss or expense. In effect, it is a reserve for unspecified possible events.
21. NON-CONTROLLING INTERESTS
This consists of the non-controlling interests proportion of share capital and reserves of partly-owned subsidiaries.

175
22. BORROWINGS
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Current
Secured
Term loans 549 743 602 - - -
Islamic financing facilities 473 300 679 - - -
Total current secured
borrowings 1,022 1,043 1,281 - - -

Unsecured
Term loans 5,927 675 536 - - -
Notes and Bonds 566 6,357 - 566 6,357 -
Islamic financing facilities 123 1,137 1,250 - - -
Revolving credits 1,415 2,729 274 - - -
Bankers acceptances - - 41 - - -
Bank overdrafts 1,113 908 75 - - -
Total current unsecured
borrowings 9,144 11,806 2,176 566 6,357 -
Total current
borrowings 10,166 12,849 3,457 566 6,357 -

Non-current
Secured
Term loans 3,389 3,380 2,463 - - -
Islamic financing facilities 1,455 1,863 2,292 - - -
Total non-current
secured borrowings 4,844 5,243 4,755 - - -
Unsecured
Term loans 285 7,672 8,167 - - -
Notes and Bonds 17,769 19,039 24,195 15,569 16,815 22,055
Islamic financing facilities 9,153 7,720 7,237 4,582 4,797 4,536
Total non-current
unsecured borrowings 27,207 34,431 39,599 20,151 21,612 26,591
Total non-current
borrowings 32,051 39,674 44,354 20,151 21,612 26,591

Total borrowings 42,217 52,523 47,811 20,717 27,969 26,591

22. BORROWINGS (continued)
Terms and debt repayment schedule
Group Under 1-2 2-5 Over 5

In RM Mil Total 1 year years years years

Secured
Term loans 3,938 549 1,284 1,673 432
Islamic financing facilities 1,928 473 224 814 417
5,866 1,022 1,508 2,487 849
Unsecured
Term loans 6,212 5,927 155 124 6
Notes and Bonds 18,335 566 2,139 1,913 13,717
Islamic financing facilities 9,276 123 5,512 1,670 1,971
Revolving credits 1,415 1,415 - - -
Bank overdrafts 1,113 1,113 - - -
36,351 9,144 7,806 3,707 15,694
42,217 10,166 9,314 6,194 16,543
Company
Unsecured
Notes and Bonds 16,135 566 - 1,913 13,656
Islamic financing facilities 4,582 - 4,582 - -
20,717 566 4,582 1,913 13,656
Islamic financing facilities
Details of Islamic financing facilities are included in note 23.
Unsecured term loans
The unsecured term loans obtained by the subsidiaries primarily comprise:
In Mil 31.12.2012 31.12.2011 1.4.2011

USD Term loan US$1,004 US$1,104 US$1,098
RM Term loans RM504 RM2,328 RM2,328
BAHT Term loans - - BAHT714
EURO Term loans 859 877 859

These unsecured term loans bear interest at rates ranging from 1.64% to 4.46% (31.12.2011: 1.20% to 9.10%; 1.4.2011: 1.10%
to 6.00%) per annum and are fully repayable at their various due dates from 2013 to 2023.

177
Unsecured Notes and Bonds
The unsecured Notes and Bonds comprise:
In Mil 31.12.2012 31.12.2011 1.4.2011

USD Notes and Bonds:
7% Notes due 2012^ - US$2,000 US$2,000
6 1/8% Notes due 2014* US$700 US$700 US$700
7 3/4% Bonds due 2015 US$625 US$625 US$625
5 1/4% Guaranteed Notes due 2019^ US$3,000 US$3,000 US$3,000
7 7/8% Notes due 2022^ US$1,000 US$1,000 US$1,000
7 5/8% Bonds due 2026 US$500 US$500 US$500

Samurai Bonds
6th Series 3.4% due 2013 16,000 16,000 16,000

* Obtained by a subsidiary.
^ Obtained by the Company via a subsidiary.
Secured term loans
The secured term loans obtained by the subsidiaries primarily comprise:

In Mil Securities 31.12.2012 31.12.2011 1.4.2011
USD Term loans Secured by way of a charge over certain US$1,432 US$1,735 US$1,499
vessels, property, plant and equipment
and investment properties, together
with assignments of earnings, charter
agreements and insurance of the relevant
vessels, property, plant and equipment of
certain subsidiaries.
Secured by way of a charge over certain

RM Term loans RM1,133 RM1,539 RM1,312
vessels, property, plant and equipment
and investment properties, together
with assignments of earnings, charter
agreements and insurance of the relevant
vessels, property, plant and equipment of
certain subsidiaries.
The secured term loans bear interest at rates ranging from 1.66% to 8.00% (31.12.2011: 1.29% to 8.50%; 1.4.2011: 1.05% to
7.00%) per annum and are fully repayable at their various due dates from 2013 to 2022.
Unsecured revolving credits, bankers acceptances and bank overdrafts
The unsecured revolving credits, bankers acceptances and bank overdrafts are obtained by the subsidiaries and primarily
bear interest at rates ranging from 1.08% to 6.00% (31.12.2011: 1.08% to 10.59%; 1.4.2011: 2.57% to 6.74%) per annum.


Certain borrowings obtained by the Company are on-lent to subsidiaries. At the reporting date, the outstanding amounts
on-lent to subsidiaries are as follows:
Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011
Subsidiaries - repayable within twelve months (note 17) 454 - -
- repayable after twelve months (note 11) - 3,714 3,502
In connection with the long term borrowing facility agreements, the Group and the Company have agreed on the
following significant covenants with the lenders:
i. not to allow any material indebtedness (the minimum aggregate amount exceeding US$30,000,000 or its equivalent
in any other currency) for borrowed money of the Company to become due or capable of being declared due before
its stated maturity, any material guarantee of the Company is not discharged at maturity or when validly called or
the Company goes into default under, or commits a breach of, any instrument or agreement relating to any such
indebtedness for borrowed money or guarantee and such default or breach remains unpaid or unremedied for a
period of 30 days;

ii. the Company (not including any of its subsidiaries) not to create, incur or have outstanding any mortgage, pledge,
lien, charge, encumbrance or any other lien upon the whole or any part of its property or assets, present or future
indebtedness of itself or any other person, unless the aggregate outstanding principal amount of all such secured
indebtedness (other than indebtedness secured by the liens already in existence) plus attributable debt of the Company
in respect of sales and leaseback transactions would not exceed 10% of the consolidated net tangible assets; and

iii. the Company (not including any of its subsidiaries) not to enter into any sale and leaseback transaction, unless the
attributable debt in respect of such sale and leaseback transaction and all other sale and leaseback transaction plus
the aggregate outstanding principal amount of indebtedness for borrowed money secured by security interests (other
than permitted security interests) then outstanding which have not equally and rateably secured the total outstandings
would not exceed 10% of the Companys tangible net worth provided that, within 12 months after such sale and
leaseback transaction, it applies to the retirement of indebtedness for borrowed money the repayment obligations in
respect of which are at least pari passu with its repayment obligations hereunder and which are not secured by any
security interest, an amount equal to the greater of:
the net proceeds of the sale or transfer of the property or other assets which are the subject of such sale and
leaseback transaction as determined by the Company; or
the fair market value of the property or other assets so leased as determined by the Company.


179
23. ISLAMIC FINANCING FACILITIES
Secured Islamic Financing Facilities
The secured Islamic financing facilities obtained by the subsidiaries comprise:

In RM Mil 31.12.2012 31.12.2011 1.4.2011

Al Baibithaman Ajil long term facilities 706 2,410 2,450
Bai Al-Dayn Note Issuance Facilities 152 200 399
Al Murabahah Medium Term Notes 1,561 2,200 2,200
The secured Islamic financing facilities bear a yield payable ranging from 3.90% to 6.57% (31.12.2011: 3.40% to 7.20%;
1.4.2011: 3.40% to 8.30%) per annum and are fully repayable at their various due dates from 2013 to 2021.
The Islamic financing facilities are secured by way of a charge over certain property, plant and equipment and investment
properties.
Unsecured Islamic Financing Facilities
The unsecured Islamic financing facilities obtained by the subsidiaries comprise:
In Mil 31.12.2012 31.12.2011 1.4.2011

Murabahah Note Issuance Facilities RM3,180 RM5,000 RM5,000
Sukuk Musyarakah RM3,936 RM2,380 RM1,500
Ijarah Muntahiyah Bit Tamleek RM660 RM95 RM95
Trust Certificates^ US$1,500 US$1,500 US$1,500

^ Obtained by the Company via a subsidiary.
The unsecured Islamic financing facilities bear a yield payable ranging from 3.48% to 6.25% (31.12.2011: 3.30% to 6.20%;
1.4.2011: 3.08% to 6.20%) per annum and are fully repayable at their various due dates from 2013 to 2021.
The Company has obtained the above Trust Certificates financing via a subsidiary of the Group (referred to as
special purpose vehicle or SPV). In relation to this financing arrangement, certain subsidiaries sold their beneficial
ownership of property, plant and equipment (sukuk assets) with a carrying amount of RM2,389,000,000 (31.12.2011:
RM2,526,000,000; 1.4.2011: RM2,710,000,000) to the SPV to hold in trust for and on behalf of the Trust Certificate
holders. The SPV then leased this beneficial ownership of the sukuk assets to the Company in accordance with Syariah
Principles.

24. OTHER LONG TERM LIABILITIES AND PROVISIONS
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Provision for
decommissioning of:
- oil and gas properties 19,195 16,367 22,517 16,148 14,282 20,743
- other property, plant
and equipment 236 229 241 - - -
Financial guarantees 449 464 425 489 647 680
Derivative liabilities (note 13) 26 281 303 - 208 164
Others 6,668 6,636 1,058 4,690 3,606 -
26,574 23,977 24,544 21,327 18,743 21,587
Provision for decommissioning of oil and gas properties and other property, plant and equipment is recognised when
there is an obligation to decommission and remove a facility or an item of property, plant and equipment and to restore
the site on which it is located, and when a reasonable estimate of that liability can be made.
The provision recognised is the present value of the estimated future costs determined in accordance with local
conditions and requirements net of, in the case of oil and gas properties, amounts received and estimated future funds
receivable from contractors pursuant to the terms of the various production sharing contracts that the Company has
entered into.
A corresponding asset of an amount equivalent to the provision is also created. This asset is depreciated in accordance
with the policy set out in note 2.4. The increase in the present value of the provision for the expected costs due to the
passage of time is included within finance costs.
Most of these removal events are many years in the future and the precise requirements that will have to be met when
the removal events actually occur are uncertain. Because actual timing and net cash outflows can differ from estimates
due to changes in laws, regulations, public expectations, technology, prices and conditions, the carrying amounts of
provisions, together with the interest rate used in discounting the cash flows and inflation rate, are regularly reviewed
and adjusted to take account of such changes. The interest rate and inflation rate used to determine the obligation as at
31 December 2012 was 4.42% (31.12.2011 and 1.4.2011: 4.42%) per annum and 3.00% (31.12.2011 and 1.4.2011: 3.00%) per
annum respectively. Changes in the expected future costs are reflected in both the provision and the asset.
The movement of provision for decommissioning during the financial year are as follows:
In RM Mil Group Company

At 1 January 2012 16,596 14,282
Net changes in provision 2,137 1,182
Provision utilised (4) -
Unwinding of discount 773 684
Translation exchange difference (71) -
At 31 December 2012 19,431 16,148
Net changes in provision includes foreign exchange gains or losses arising from retranslation of the provision and are
adjusted against the carrying amount of the corresponding asset accordingly.

181
24. OTHER LONG TERM LIABILITIES AND PROVISIONS (continued)
During the year, the Company revised its estimated future costs of decommissioning of oil and gas properties resulting
from changes in estimated cash flows. The revision was accounted for prospectively as a change in accounting estimates
resulting in the following:
i. increase in other long term liabilities and provisions by RM969,000,000;

ii. increase in cost of property, plant and equipment by RM5,134,000,000; and
iii. increase in net profits by RM4,165,000,000.
25. TRADE AND OTHER PAYABLES

Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Trade payables 19,586 16,721 14,499 1,352 1,847 1,050
Other payables 38,385 33,055 23,034 13,580 10,268 4,187
Amount due to:
- Subsidiaries - - - 1,193 2,163 1,447
- Associates and jointly
controlled entities 648 569 343 - - 19
Derivative
liabilities (note 13) 201 63 246 127 6 9
58,820 50,408 38,122 16,252 14,284 6,712
Included in other payables of the Group are security deposits of RM98,592,000 (31.12.2011: RM100,361,000; 1.4.2011:
RM75,929,000) mainly held in respect of tenancies of a shopping centre and office buildings. These deposits are
refundable upon termination of the respective lease agreements.
Also included in trade payables and other payables of the Group are retention sums on construction contracts amounting
to RM148,294,000 (31.12.2011: RM182,216,000; 1.4.2011: RM188,180,000) and RM36,497,000 (31.12.2011: RM36,144,000;
1.4.2011: RM36,201,000) respectively.
Amount due to subsidiaries, associates and jointly controlled entities arose in the normal course of business.

26. GROSS PROFIT
Group Company
1.1.2012 1.4.2011 1.1.2012 1.4.2011
to to to to
In RM Mil 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Revenue
- sales of oil and gas 269,278 204,951 89,949 65,698
- others 5,984 5,043 11,977 9,528
275,262 209,994 101,926 75,226

- rendering of services 3,053 2,689 54 29
- shipping and shipping related services 6,578 5,306 - -
- sale and rental of properties 2,090 1,780 - -
11,721 9,775 54 29
- dividend income
in Malaysia (Quoted)
- subsidiaries - - 2,048 2,918
- associates - - 49 49
- investments 5 5 5 5
in Malaysia (Unquoted)
- subsidiaries - - 17,863 11,976
- investments 28 26 28 26
outside Malaysia (Quoted)
- investments 72 350 - -
outside Malaysia (Unquoted)
- jointly controlled entities - - 143 5
105 381 20,136 14,979
- interest income 3,888 2,681 3,224 1,995
290,976 222,831 125,340 92,229

Cost of revenue
- cost of sales (172,895) (117,764) (62,473) (35,118)
- cost of services (10,566) (8,448) - -
(183,461) (126,212) (62,473) (35,118)

Gross profit 107,515 96,619 62,867 57,111


183
27. OPERATING PROFIT
Group Company
1.1.2012 1.4.2011 1.1.2012 1.4.2011
to to to to
In RM Mil 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Included in operating profit are the
following charges:
Audit fees 29 26 2 1
Amortisation of:
- intangible assets 1,032 155 - -
- prepaid lease payments 41 21 - -
Contribution to Tabung Amanah Negara 2,000 1,000 2,000 1,000
Depreciation of property, plant and
equipment and investment properties 21,381 11,740 318 124
Impairment losses on:
- property, plant and equipment 7,765 1,564 - -
- intangible assets 2,469 713 - -
- investments in associates and jointly
controlled entities 808 18 - -
- trade and other receivables 509 1,845 - -
- loan and advances to associates, jointly
controlled entities and subsidiaries 156 - - -
- long term receivables - 191 - -
- investments in subsidiaries - - 579 23
- receivables from subsidiaries - - 58 48
Inventories written down to net realisable
value 210 16 - -
Loss on disposal of subsidiaries 65 - 8 -
Net loss on foreign exchange - 689 1,387 -
Operating lease rental 782 543 612 495
Property, plant and equipment written off 97 178 - -
Rental of:
- plant, machinery, equipment and
motor vehicles 564 386 33 36
- land and buildings 473 322 32 26
Research and development expenditure 82 31 77 14
Staff costs
- wages, salaries and others 7,381 5,956 830 782
- contributions to Employees Provident Fund 800 631 173 121

27. OPERATING PROFIT (continued)
Group Company
1.1.2012 1.4.2011 1.1.2012 1.4.2011
to to to to
In RM Mil 31.12.2012 31.12.2011 31.12.2012 31.12.2011
and credits:
Gain on disposal/partial disposal of:
- other investment 1,550 2,556 169 -
- property, plant and equipment 186 74 - -
- associates 100 - - -
- subsidiaries - 570 120 -
Interest income - others 470 158 2,626 2,208
Rental income on land and buildings 292 173 202 179
Write back of impairment losses on:
- property, plant and equipment 253 674 - -
- intangible assets 197 47 - -
- trade and other receivables 45 14 45 3
- investments in subsidiaries - - 16 15
- loan and advances to associates,
jointly controlled entities and subsidiaries - 66 - -
- investments in associates and jointly
controlled entities - 4 - -
Net gain on foreign exchange 85 - - 1,109

28. OPERATING LEASES
Total future minimum lease payments under non-cancellable operating leases are as follows:
Group Company
In RM Mil 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Less than one year 853 903 596 612
Between one and five years 2,893 3,355 2,358 2,376
More than five years 3,353 3,504 5,361 5,939
7,099 7,762 8,315 8,927

185
29. TAX EXPENSE
Group Company
1.1.2012 1.4.2011 1.1.2012 1.4.2011
to to to to
In RM Mil 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Current tax expenses
Malaysia
Current year/period 32,178 25,292 16,706 14,413
Prior year 208 (740) - (133)
Overseas
Current year/period 2,679 2,207 - -
Prior year (63) (14) - -
Total current tax expenses 35,002 26,745 16,706 14,280

Deferred tax expense
Origination and reversal of temporary differences (4,819) (459) (2,374) (640)
(Over)/under provision in prior period (166) 856 - 190
Total deferred tax expenses (4,985) 397 (2,374) (450)
Total tax expenses 30,017 27,142 14,332 13,830
A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax
expense at the effective income tax rate of the Group and of the Company is as follows:
1.1.2012 1.4.2011
to to
In RM Mil % 31.12.2012 % 31.12.2011
Group

Taxation at Malaysian statutory tax rate 25 22,270 25 20,761
Effect of different tax rates in foreign jurisdictions 1 750 1 585
Effect of different tax rates between
corporate income tax and petroleum income tax 8 7,496 8 6,320
Effect of changes in tax rates - (13) - 66
Non deductible expenses, net of non assessable income 3 2,638 1 1,098
Tax exempt income (3) (2,528) (3) (2,639)
Tax incentives - (556) - (58)
Effect of (net utilisation deferred tax benefits
previously not recognised)/net deferred tax
benefits not recognised - (5) 1 702
Foreign exchange translation difference - (14) - 205
34 30,038 33 27,040
(Over)/under provision in prior years (21) 102
Tax expense 30,017 27,142

29. TAX EXPENSE (continued)
1.1.2012 1.4.2011
to to
In RM Mil % 31.12.2012 % 31.12.2011
Company

Taxation at Malaysian statutory tax rate 25 15,160 25 13,508
Effect of different tax rates
between corporate income tax
and petroleum income tax 10 5,909 10 5,154
Non assessable income, net of non deductible
expenses (3) (1,881) (2) (1,303)
Tax exempt income (8) (4,856) (7) (3,586)
24 14,332 26 13,773
Under provision in prior years - 57
Tax expense 14,332 13,830
30. DIVIDENDS

Company
1.1.2012 1.4.2011
to to
In RM Mil 31.12.2012 31.12.2011
Ordinary:
Final:
Tax exempt dividend of RM280,000 (31.12.2011 : RM220,000) per ordinary
share under Section 84 of the Petroleum (Income Tax) Act, 1967 in respect
of financial period 31 December 2011 (31.12.2011: 31 March 2011) 28,000 22,000
Interim:
First tax exempt dividend of RMNil (31.12.2011 : RM20,000) per ordinary
of financial year 31 December 2012 (31.12.2011: 31 December 2011) - 2,000
28,000 24,000

Proposed:
Final:
Tax exempt dividend of RM270,000 (31.12.2011: RM280,000) per ordinary
of financial year 31 December 2012 (31.12.2011: 31 December 2011) 27,000 28,000
The proposed tax exempt final dividend under Section 84 of the Petroleum (Income Tax) Act, 1967 of RM270,000
per ordinary share amounting to RM27 billion in respect of the financial year ended 31 December 2012, has not been
accounted for in the financial statements.

187
31. NET CASH (USED IN)/GENERATED FROM INVESTING ACTIVITIES
The cash (used in)/generated from investing activities comprise:

Group Company
1.1.2012 1.4.2011 1.1.2012 1.4.2011
to to to to
In RM Mil 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Acquisition of:
- subsidiaries, net of cash acquired (note 33) (17,751) (55) - -
- additional shares in subsidiaries - - (290) -
Dividends received 105 381 20,136 14,821
Investment in:
- associates, jointly controlled entities and
unquoted companies (258) (146) - -
- securities (13,273) (3,640) (13,821) (6,085)
Long term receivables and advances
(to)/repaid from:
- subsidiaries - - (29,214) 3,243
- associates and jointly controlled entities 323 (861) - -
Net cost incurred in property development cost - (120) - -
Other long term receivables (170) 135 - -
Proceeds from disposal/partial disposal of:
- investment in subsidiaries, net of cash
disposed (note 33) 145 521 157 39
- investment in associates 144 - - -
- property, plant and equipment, prepaid lease
payments and intangible assets 963 287 - -
- securities and other investment 24,999 13,425 21,978 7,220
Purchase of:
- property, plant and equipment, prepaid lease
payments and intangible assets (45,623) (30,800) (2,574) (428)
- other investments (32) (176) - -
Redemption of preference shares in subsidiaries - - 16 68
(50,428) (21,049) (3,612) 18,878

32. NET CASH USED IN FINANCING ACTIVITIES
The cash used in financing activities comprise:

Group Company
1.1.2012 1.4.2011 1.1.2012 1.4.2011
to to to to
In RM Mil 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Dividends paid (27,461) (30,000) (27,461) (30,000)
Dividends paid to non-controlling interests (6,545) (6,502) - -
Drawdown of:
- Islamic financing facilities 2,060 706 - -
- term loans, notes and bonds 402 1,172 - -
- revolving credits and bankers acceptances 2,483 3,805 - -
Repayment of:
- Islamic financing facilities (1,621) (1,477) - -
- term loans, notes and bonds (8,881) (635) (7,599) -
- revolving credits and bankers acceptances (3,774) (1,299) - -
Payment to non-controlling interests on
redemption of shares (54) (36) - -
Payment to non-controlling interests on
additional equity interest (8) - - -
Proceeds from shares issued to non-controlling
interests 72 37 - -
(43,327) (34,229) (35,060) (30,000)
33. ACQUISITIONS AND DISPOSALS
Acquisition of Progress Energy Resources Corporation
On 12 December 2012, the Group via its wholly-owned subsidiary, PETRONAS Carigali Canada Ltd. (PCCL), acquired
100% interest in Progress Energy Resources Corporation (Progress Energy) and its group of companies (Progress
Energy Group), a Canada-based energy corporation focused on natural gas exploration, development and production in
northeast British Columbia and northwest Alberta, for a total purchase consideration of C$5,803.9 million (approximately
RM17,859.0 million). PCCL and Progress Energy were subsequently amalgamated after which the amalgamated
corporation is named Progress Energy Canada Ltd. The net profit contributed by Progress Energy Group from the date of
acquisition to 31 December 2012 is not material in relation to the Groups consolidated net profit for the year.

189
33. ACQUISITIONS AND DISPOSALS (continued)
Acquisition of Progress Energy Resources Corporation (continued)
The effect of acquisition of Progress Energy Group on the cash flows and fair values of assets and liabilities acquired at
date of acquisition are as follows:
At initial Fair value At

In RM Mil recognition adjustment fair value
Property, plant and equipment 7,077 (890) 6,187
Intangible assets 857 13,623 14,480
Cash and cash equivalents 108 - 108
Other assets 1,510 - 1,510
Borrowings (431) - (431)
Deferred tax liability (135) (3,598) (3,733)
Other liabilities (262) - (262)
8,724 9,135 17,859
Purchase consideration 17,859

Less: Cash and cash equivalents of subsidiaries acquired (108)
Cash flow on acquisition, net of cash acquired (note 31) 17,751
Disposal of subsidiaries
During the financial year, the Group disposed of several subsidiaries for a total consideration of RM157 million. The net
profit contributed by these subsidiaries from 1 January 2012 to the date of disposal is not material in relation to the
consolidated net profit of the Group for the year.
The net effect of the above disposals of subsidiaries on the Groups cash flows is RM145 million.
34. COMMITMENTS
Outstanding commitments in respect of capital expenditure at the end of the reporting period not provided for in the
financial statements are:
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Property, plant and
equipment
Approved and
contracted for
Less than one year 16,715 20,045 10,824 1,559 1,107 15
Between one and
five years 24,397 13,993 16,086 1,177 124 337
More than five
years 281 221 67 20 - -
41,393 34,259 26,977 2,756 1,231 352

Approved but not
contracted for
Less than one year 13,215 16,125 20,027 436 2,576 17
Between one and
five years 45,814 67,422 37,338 531 9,046 23
More than five
years - - 2,461 - - 2,451
59,029 83,547 59,826 967 11,622 2,491
100,422 117,806 86,803 3,723 12,853 2,843
34. COMMITMENTS (continued)
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Share of capital
expenditure of
joint venture
Approved and
contracted for
Less than one year 14,421 11,124 10,401 - - -
Between one and
five years 2,668 4,697 6,121 - - -
More than
five years 1,409 - - - - -
18,498 15,821 16,522 - - -

Approved but not
contracted for
Less than one year 4,916 11,530 5,354 - - -
Between one and
five years 38,708 55,177 49,310 - - -
43,624 66,707 54,664 - - -
62,122 82,528 71,186 - - -

Investment in shares
Approved and
contracted for
Less than one year - - 79 - - -

Approved but not
contracted for
Less than one year - - 547 - - -
- - 626 - - -

Total commitments 162,544 200,334 158,615 3,723 12,853 2,843
35. CONTINGENT LIABILITIES (UNSECURED)

Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Guarantees extended
to third parties 468 285 155 - - -
Claims filed
by/disputes with
various parties - - 3 - - 3
Contingent payments 265 301 258 - - -
733 586 416 - - 3
On 21 March 2012, following an application by the Terengganu State Government, the legal suit brought against the
Company and the Federal Government in the year 2000 has been withdrawn.

191
35. CONTINGENT LIABILITIES (UNSECURED) (continued)
The Kelantan State Government brought a suit against the Company in 2010 in respect of payment of petroleum
proceeds under the terms of the agreement dated 9 May 1975 entered into between the Kelantan State Government and
PETRONAS (the Agreement). There is no specific amount claimed by way of damages. The Kelantan State Government
has also taken out an injunction which is yet to be heard directing PETRONAS to make payments of all alleged cash
payments to the Kelantan State Government. PETRONAS has been advised by its solicitors there is no merit in the claim
by the Kelantan State Government.
PETRONAS has taken out an application under Order 14A for a construction of the Agreement and other relevant statutes
to determine the liability (which is denied) if any and the High Court and the Court of Appeal have made an order for the
Court to hear such an application. There is presently pending in the Federal Court an appeal against the decision of the
Court of Appeal. The Government of Malaysia, though not a party to the original suit, has intervened in the above suit and
the High Court and the Court of Appeal have affirmed the intervention.
During the financial year, certain individuals brought a claim against PETRONAS and the State Government of Sabah
wherein the individuals are seeking a declaration that the agreement dated 14 June 1976 entered into between the State
Government of Sabah and PETRONAS is ultra vires and null and void; and a declaration that the Petroleum Development
Act of 1974 is also ultra vires and null and void. The individuals are also claiming damages.
PETRONAS has been advised by its solicitors that there is no merit in the claim by the plaintiffs. PETRONAS has taken out
an application to strike out the claim of the plaintiffs and the application is fixed for hearing on 15 April 2013 before the
High Court in Kota Kinabalu. The State Government of Sabah is also taking out an application to strike out the claim of the
plaintiffs.
36. RELATED PARTY DISCLOSURES
Key management personnel compensation

Group
and
Company
1.1.2012 1.4.2011
to to
In RM Mil 31.12.2012 31.12.2011
Directors remuneration:
- Fees 4 2
- Emoluments 23 15
The estimated monetary value of Directors benefits-in-kind is RM171,000 (31.12.2011: RM183,000).
Significant transactions with related parties
For the purpose of these financial statements, parties are considered to be related to the Company if the Company has
the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and
operating decisions, or vice versa. Related parties may be individuals or other entities.
The Companys related parties include subsidiaries, associates, jointly controlled entities as well as the Government of
Malaysia and its related entities as the Company is wholly-owned by the Government of Malaysia.

36. RELATED PARTY DISCLOSURES (continued)
Significant transactions with related parties (continued)
In addition to the transactions detailed elsewhere in the financial statements, the Group and the Company had the
following transactions with related parties during the financial year/period:
1.1.2012 1.4.2011
Group to to
In RM Mil 31.12.2012 31.12.2011
Federal and State Governments of Malaysia:
Petroleum proceeds 12,286 8,614
Sale of petroleum products 347 293
Government of Malaysias related entities:
Sales of petroleum products, processed gas and utilities 6,335 4,760
Associate companies:
Sales of petrochemical products, processed gas and utilities 3,696 2,598
Purchase of petrochemical products, processed gas and utilities (65) (37)
Lease and rental expenses (284) (222)
Other expenses (189) (46)
Other income 231 14
Jointly controlled entities:
Sales of petrochemical products, processed gas, petroleum
products and general merchandise 593 137
Interest receivable from jointly controlled entities 74 54
Gas processing fee payable (383) (244)
Other income 682 323
Company
Federal and State Governments of Malaysia:
Petroleum proceeds 12,286 8,614
Government of Malaysias related entities:
Sales of petroleum products, processed gas and utilities 2,056 1,280
Subsidiaries:
Sales of crude oil, petroleum products and natural gas 57,010 40,434
Interest receivable from subsidiaries 2,587 1,948
Purchase of crude oil and natural gas (32,697) (17,803)
Gas processing fee payable (2,182) (2,137)
Research cess 128 101
Supplemental payments 5,655 4,377
Associate companies:
Sale of processed gas 1,798 1,276
Jointly controlled entities:
Gas processing fee payable (383) (244)
Information regarding outstanding balances arising from related party transactions as at 31 December 2012 are disclosed
in note 11, note 17 and note 25.
Information regarding impairment losses on receivables and bad debts written off during the financial year are disclosed
in note 27.
The Directors of the Company are of the opinion that the above transactions have been entered into in the normal course
of business and have been established on a commercial basis. The above has been stated at contracted amount.

193
37. OPERATING SEGMENTS
The Group has four reportable segments, as described below, which offer different products and services and are
managed separately because they require different technology and marketing strategies. The following summary
describes the operations in each of the Groups reportable segments:
Exploration and production - activities include oil and natural gas exploration, development and production, together
with related pipeline and transportation activities.
Gas and power - activities include gas processing and marketing and trading of liquefied natural gas (LNG) and sales
gas.
Downstream - activities include the supply and trading, refining, manufacturing, marketing and transportation of crude
oil, petroleum and petrochemical products.
Corporate and others - comprise primarily logistic and maritime segment, property segment and central treasury
function.
For each of the reportable segment, the Group chief operating decision maker, which in this case is the PETRONAS
Executive Committee, reviews internal management reports at least on a quarterly basis.
Performance is measured based on segment net operating profit after tax (NOPAT), which is derived from net profit after
tax excluding financing cost, share of profits of associates and jointly controlled entities and other non-operating income
and expenses, as included in the internal management reports. Segment NOPAT is used to measure performance as the
Executive Committee believes that such information is the most relevant in evaluating the results of the segments.
Segment assets are measured based on total assets (including goodwill) of a segment, as included in the internal
management reports and are used to measure the return of assets of each segment.

37. OPERATING SEGMENTS (continued)
C
onsolidation
Group Exploration Corporate adjustments
31.12.2012 and Gas and and and
In RM Mil Production Power Downstream Others eliminations Total

Revenue
Third parties 49,063 79,176 148,407 14,330 - 290,976
Inter-segment 59,924 6,720 1,928 4,224 (72,796) -
Total revenue 108,987 85,896 150,335 18,554 (72,796) 290,976

Reportable segment
profit 28,972 16,423 6,070 4,177 1,325 56,967

Included in the
measure of segment
profit are:
Depreciation and
amortisation (16,507) (1,559) (2,293) (2,095) - (22,454)
Impairment losses (10,217) (47) (190) (445) - (10,899)
Tax expense (22,322) (5,929) (1,544) (222) - (30,017)

Segment assets 199,990 73,768 87,066 163,742 (36,258) 488,308

Included in the
measure of segment
assets are:
Investments in
associates and
jointly controlled
entities 2,720 3,726 1,084 4,140 - 11,670
Additions to non-
current assets other
than financial
instruments and
deferred tax assets 29,328 8,774 4,102 5,557 - 47,761

195
C
onsolidation
Group Exploration Corporate adjustments
31.12.2011 and Gas and and and
In RM Mil Production Power Downstream Others eliminations Total

Revenue
Third parties 40,469 55,577 115,816 10,969 - 222,831
Inter-segment 46,932 5,751 1,395 3,685 (57,763) -
Total revenue 87,401 61,328 117,211 14,654 (57,763) 222,831

Reportable segment
profit/(loss) 36,452 12,149 4,539 (625) (289) 52,226

Included in the
measure of segment
profit/(loss) are:
Depreciation and
amortisation (6,574) (1,267) (2,163) (1,912) - (11,916)
Impairment losses (3,288) (5) (293) (745) - (4,331)
Tax expense (20,095) (4,787) (1,553) (707) - (27,142)

Segment assets 166,082 63,755 81,554 188,086 (24,331) 475,146

Included in the
measure of segment
assets are:
Investments in
associates and
jointly controlled
entities 2,476 4,443 1,035 4,369 - 12,323
Additions to non-
current assets other
than financial
instruments and
deferred tax assets 22,394 5,577 2,475 5,382 - 35,828
Certain items in the comparative figures have been reclassified between segments to be consistent with current year
presentation.

Reconciliations of reportable segment profits

1.1.2012 1.4.2011
Group to to
In RM Mil 31.12.2012 31.12.2011
Total reportable segment profit 56,967 52,226
Financing cost, net of tax (1,946) (1,363)
Share of profits of associates and jointly controlled entities, net of tax 1,518 1,317
Unrealised foreign exchange gains/(losses) 926 (584)
Other non-operating income, net of tax 1,597 4,304
Products and services segments
The following are revenue from external customers by product and service:
1.1.2012 1.4.2011
Group to to
In RM Mil 31.12.2012 31.12.2011
Petroleum products 111,498 84,046
Crude oil and condensates 54,849 49,772
Liquefied natural gas 62,468 45,183
Sales and natural gas 24,301 14,506
Petrochemicals 16,162 11,444
Shipping services 6,578 5,306
Investment income 3,888 2,681
Others 11,232 9,893
290,976 222,831
Geographical segments
In presenting information on the basis of geographical segments, segment revenue is based on geographical location
of customers. Segment assets are based on the geographical location of the assets. The amounts of non-current assets
do not include financial instruments (including investment in associates and jointly controlled entities) and deferred tax
assets.
Revenue Non-current assets
1.1.2012 1.4.2011
Group to to At At
In RM Mil 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Asia 144,670 114,680 24,004 25,616
Malaysia 69,570 52,569 190,676 172,067
South Africa 38,441 27,130 2,735 2,725
Rest of the world 38,295 28,452 55,192 39,011
290,976 222,831 272,607 239,419
Major customers
As at 31 December 2012, there are no major customers with revenue that contribute to more than 10 percent of Group
revenue.

197
38. PETROLEUM ARRANGEMENTS
The Petroleum Development Act, 1974 vests the entire ownership, rights, powers, liberties and privileges of exploiting
petroleum resources on land and offshore Malaysia in PETRONAS.
The exploitation by PETRONAS of petroleum resources is carried out primarily by means of production sharing contracts
(PSCs) with international oil and gas companies and with its subsidiaries. Under the terms of the various PSCs that
PETRONAS has entered into, the PSC Contractors bear all costs. The PSC Contractors may recover their costs in barrels
of crude oil or gas equivalent in accordance with the terms of their respective PSCs.
Certain terms of the PSCs are:
i. Research cess, supplemental payments and crude oil or gas entitlement
The determination of research cess, supplemental payments, and PETRONAS and the contractors entitlements to
crude oil or gas produced subsequent to 31 December 1992 have been based on the returns submitted by contractors
and is dependent on agreement being reached on the method of valuation of crude oil or gas and the quantum
of costs incurred and claimed by contractors subject to the maximum rate provided under the production sharing
contracts for the year. PETRONAS entitlements to crude oil and natural gas are taken up as income on the basis of
liftings and sales respectively made by the Company.
ii. Property, plant and equipment
Title to all equipment and other assets purchased or acquired by PSC Contractors exclusively for the purpose
of petroleum operations, and which costs are recoverable in barrels of cost oil or gas equivalent, is vested with
PETRONAS. However, the values of these assets are not taken up in the financial statements of PETRONAS other than:
the property, plant and equipment of a subsidiary which is also a contractor to PETRONAS under certain PSCs; and
the estimated costs of decommissioning and removing the assets and restoring the site on which they are located
where there is an obligation to do so.
iii. Inventories
Title to all crude oil held in inventories by the PSC Contractors lies with PETRONAS and title to the contractors
entitlement passes only upon delivery at point of export. However, the values of these inventories are not taken up in
the financial statements of PETRONAS.
The exploitation of petroleum resources is also carried out by means of risk service contracts (RSCs). Under the terms
of the RSCs, RSC Contractors provide services for the development and production of oil and gas resources on behalf of
PETRONAS.

38. PETROLEUM ARRANGEMENTS (continued)
Certain terms of the RSCs are:
i. Cost reimbursement and remuneration fees
RSC Contractors incur all upfront costs and will be reimbursed upon first commercial production. Under the terms of
the RSCs, PETRONAS owns the title to all equipment and other assets purchased or acquired by the RSC Contractors
for the purpose of petroleum operations. The values of these assets are taken up in the financial statements of
PETRONAS upon incurrence, together with the estimated costs of decommissioning the assets where there is an
obligation to do so.
Contractors are also entitled to remuneration fees which commensurate with their performance under the contract.
All payments of remuneration fees are recognised as expenditures in PETRONAS financial statements.
ii. Production
All barrels of crude oil and gas produced belongs to PETRONAS and inventories, if any, are taken up in the financial
statements of PETRONAS.
39. SIGNIFICANT AND SUBSEQUENT EVENTS
Petroleum operations in the Republic of South Sudan
As disclosed in the previous years financial statements, the Groups petroleum operations in the Republic of South Sudan
(RSS) were shut down for the most part of 2012 following a Shut Down Order issued by the Government of the RSS. To-
date, the Groups petroleum operations in the RSS have yet to resume. Currently, the Group and other operators continue
to undertake technical preparation and maintenance activities as allowed by the Government of the RSS. The impact of
the shut down is not material in relation to the consolidated net profit of the Group for the year.
Conditional take-over offer to MISC Berhad
On 31 January 2013, the Company issued a notice on conditional take-over offer to its subsidiary, MISC Berhad (MISC),
for the remaining shares in MISC which it does not hold for a cash price of RM5.30 per share. MISC is currently listed
on the Main Market of Bursa Malaysia Securities Berhad. The offer is conditional upon the Company receiving valid
acceptances which would result in the Company holding 90% or more of the total MISCs shares as well as obtaining
approval from the relevant authorities.
The offer is currently in progress and, if successful, will result in the Company holding 90% or more of the total MISCs
shares.
40. FINANCIAL INSTRUMENTS
Categories of financial instruments
The table below provides an analysis of financial instruments categorised as follows:
i. Loans and receivables (L&R)

ii. Fair value through profit or loss (FVTPL)
- Designated upon initial recognition (DUIR)
- Held for trading (HFT)
iii. Available-for-sale financial assets (AFS)
iv. Loans and borrowings (L&B)
v. Held-to-maturity investments (HTM)

199
40. FINANCIAL INSTRUMENTS (continued)
Categories of financial instruments (continued)

Group Total
31.12.2012 L&R/ FVTPL FVTPL carrying
In RM Mil Note (L&B) - DUIR - HFT AFS HTM amount
Financial assets
Long term receivables * 3,315 - - - - 3,315
Fund and other
investments 12 690 14,479 - 7,070 6,688 28,927
Trade and other
receivables * 40,346 - 642 - - 40,988
Cash and cash
equivalents 15 107,899 - - - - 107,899
152,250 14,479 642 7,070 6,688 181,129

Financial liabilities
Borrowings 22 (42,217) - - - - (42,217)
Other long term
liabilities * (449) - (26) - - (475)
Trade and other
payables * (54,613) - (201) - - (54,814)
Dividend payable (539) - - - - (539)
(97,818) - (227) - - (98,045)
31.12.2011

Financial assets
Long term receivables * 3,402 - 491 - - 3,893
Fund and other
investments 12 715 9,664 - 26,005 2,494 38,878
Trade and other
receivables * 36,334 - 148 - - 36,482
Cash and cash
equivalents 15 125,447 - - - - 125,447
165,898 9,664 639 26,005 2,494 204,700

Borrowings 22 (52,523) - - - - (52,523)
Other long term
liabilities * (464) - (281) - - (745)
Trade and other
payables * (46,572) - (63) - - (46,635)

(99,559) - (344) - - (99,903)
* These balances exclude non-financial instruments balances.
Certain fund and other investments have been designated upon initial recognition as at fair value through profit or loss as
management internally monitors these investments on fair value basis.


Group Total
Financial assets
Long term receivables * 2,636 - 433 - - 3,069
Fund and other
investments 12 682 12,404 - 36,607 - 49,693
Trade and other
receivables * 32,794 - 78 - - 32,872
Cash and cash
equivalents 15 106,664 - - - - 106,664
142,776 12,404 511 36,607 - 192,298

Borrowings 22 (47,811) - - - - (47,811)
Other long term
liabilities * (425) - (303) - - (728)
Trade and other
payables * (36,945) - (246) - - (37,191)
Dividend payable (6,000) - - - - (6,000)
(91,181) - (549) - - (91,730)
Company
31.12.2012

Financial assets
Long term receivables 11 75,411 - - - - 75,411
Fund and other
investments 12 - 15,299 - 711 8,272 24,282
Trade and other
receivables * 39,153 - 430 - - 39,583
Cash and cash
equivalents 15 52,015 - - - - 52,015
166,579 15,299 430 711 8,272 191,291

Borrowings 22 (20,717) - - - - (20,717)
Other long term
liabilities * (489) - - - - (489)
Trade and other
payables * (16,125) - (127) - - (16,252)
Dividend payable (539) - - - - (539)
(37,870) - (127) - - (37,997)

201

Company Total
Financial assets
Long term receivables 11 68,418 - 1,298 - - 69,716
Fund and other
investments 12 - 11,949 - 16,483 2,494 30,926
Trade and other
receivables * 14,590 - 16 - - 14,606
Cash and cash
equivalents 15 75,608 - - - - 75,608
158,616 11,949 1,314 16,483 2,494 190,856

Borrowings 22 (27,969) - - - - (27,969)
Other long term
liabilities * (647) - (208) - - (855)
Trade and other
payables * (13,748) - (6) - - (13,754)

(42,364) - (214) - - (42,578)
1.4.2011
Financial assets
Long term receivables 11 70,150 - 1,663 - - 71,813
Fund and other
investments 12 - 13,079 - 18,812 - 31,891
Trade and other
receivables * 12,499 - 17 - - 12,516
Cash and cash
equivalents 15 58,164 - - - - 58,164
140,813 13,079 1,680 18,812 - 174,384

Borrowings 22 (26,591) - - - - (26,591)
Other long term
liabilities * (680) - (164) - - (844)
Trade and other
payables * (6,661) - (9) - - (6,670)
Dividend payable (6,000) - - - - (6,000)
(39,932) - (173) - - (40,105)
The fair value of borrowings is shown on page 221. For all other financial instruments, the carrying amounts are either the
fair value, or are not materially different from the fair value.

The fair value movements for financial assets categorised as at fair value through profit or loss are mainly attributable to
changes in market price.
Financial risk management
As an integrated oil and gas company, the Group and the Company are exposed to various risks that are particular to its
core business of exploration and production, gas and power, and downstream operations. These risks, which arise in the
normal course of the Groups and of the Companys business, comprise credit risk, liquidity risk and market risk relating to
interest rates, foreign currency exchange rates, equity prices and commodity prices.
The Group has policies and guidelines in place that sets the foundation for a consistent approach towards establishing an
effective financial risk management across the PETRONAS Group.
The Group and the Companys goal in risk management are to ensure that the management understands, measures and
monitors the various risks that arise in connection with their operations. Policies and guidelines have been developed to
identify, analyse, appraise and monitor the dynamic risks facing the Group and the Company. Based on this assessment,
each business unit adopts appropriate measures to mitigate these risks in accordance with the business units view of the
balance between risk and reward.
Credit risk
Credit risk is the potential exposure of the Group and of the Company to losses in the event of non-performance by
counterparties. The Group and the Companys exposures to credit risk arise principally from their receivables from
customers, investment securities and financial guarantees given to financial institutions for credit facilities granted to
subsidiaries, jointly controlled entities and associates. Credit risks are controlled by individual operating units in line with
PETRONAS policies and guidelines.
Receivables

The Group and the Company minimise credit risk by entering into contracts with highly credit rated counterparties.
Potential counterparties are subject to credit assessment and approval prior to any transaction being concluded
and existing counterparties are subject to regular reviews, including re-appraisal and approval of granted limits.
The creditworthiness of counterparties is assessed based on an analysis of all available quantitative and qualitative
data regarding business risks and financial standing, together with the review of any relevant third party and market
information. Reports are prepared and presented to the management that cover the Groups overall credit exposure
against limits and securities, exposure by segment and overall quality of the portfolio.
Depending on the types of transactions and counterparty creditworthiness, the Group and the Company further mitigate
and limit risks related to credit by requiring collateral or other credit enhancements such as cash deposits, letter of credit
and bank guarantees.

203
Receivables (continued)
Exposure to losses increases with concentrations of credit risk which may exist when a number of counterparties are
involved in similar activities or operate in the same industry sector or geographical area, which may result in their ability to
meet contractual obligations being impacted by changes in economic, political or other conditions. The Groups principal
customers with which it conducts business are located throughout the world and there is no significant concentration of
credit risk at reporting date.
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is equal to the carrying
amount. The ageing of trade receivables net of impairment amount as at the end of the reporting period is analysed
below:
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
At net
Current 25,684 22,281 21,243 3,902 2,983 2,760
Past due 1 to 30 days 1,621 1,190 1,002 253 32 27
Past due 31 to 60 days 257 304 579 21 32 25
Past due 61 to 90 days 149 103 288 50 20 25
Past due more than 90 days 704 518 848 330 63 139
28,415 24,396 23,960 4,556 3,130 2,976
Representing:
Trade receivables (note 17) 30,948 26,631 24,388 4,601 3,220 3,066
Less: Impairment losses (note 17) (2,533) (2,235) (428) (45) (90) (90)
28,415 24,396 23,960 4,556 3,130 2,976
With respect to the Groups trade receivables, there are no indications as of the reporting date that the debtors will not
meet their payment obligations except for impairment losses recognised below.
The movements in the allowance for impairment losses of trade receivables during the year/period are as follows:
Group Company
In RM Mil 31.12.2012 31.12.2011 31.12.2012 31.12.2011
Opening balance 2,235 428 90 90
Impairment loss/(reversal) recognised 314 1,845 (45) -
Impairment written off (16) (38) - -
Closing balance 2,533 2,235 45 90

Fund and other investments
The Group and the Company are also exposed to counterparty credit risk from financial institutions through fund
investment activities comprising primarily money market placement and investments in bonds, and trade facilities. These
exposures are managed in accordance with existing policies and guidelines that define the parameters within which the
investment activities shall be undertaken in order to achieve the Groups investment objective of preserving capital and
generating optimal returns above appropriate benchmarks within allowable risk parameters.
Investments are only made with approved counterparties who met the appropriate rating and other relevant criteria, and
within approved credit limits, as stipulated in the policies and guidelines. The treasury function undertakes a credit risk
management activities similar to the credit management and monitoring procedures for receivables.
As at the reporting date, the Group and the Company has invested 96% (31.12.2011: 94%; 1.4.2011: 97%) of the
investments in domestic securities and 4% (31.12.2011: 6%; 1.4.2011: 3%) in foreign securities.
The fund and other investments are unsecured, however, in view of the sound credit rating of counterparties,
management does not expect any counterparty to fail to meet its obligation.
Financial guarantees
The Group and the Company provide unsecured financial guarantees to banks in respect of banking facilities granted to
certain subsidiaries, jointly controlled entities and associates (Group entities). The Group and the Company monitor on
an ongoing basis, the results of the Group entities and repayments made by the Group entities.
The maximum exposure to credit risk amounted to RM680,000,000 (31.12.2011: RM707,000,000; 1.4.2011:
RM680,000,000) which represents the outstanding banking facilities of the Group entities as at reporting date. As at
reporting date, there was no indication that any Group entities would default on repayment. The fair value of the financial
guarantee recognised is disclosed in note 24.
Liquidity risk
Liquidity risk is the risk that suitable sources of funding for the Groups business activities may not be available. In
managing its liquidity risk, the Group maintains sufficient cash and liquid marketable assets. The Companys current credit
rating enables it to access banking facilities in excess of current and immediate future requirements of the Group and
of the Company. The Groups borrowing power is not limited by its Articles of Association. However, certain covenants
included in agreements impose limited restrictions on some of the debt level of PETRONAS subsidiaries.
Maturity analysis
The table below summarises the maturity profile of the Groups and of the Companys financial liabilities as at the
reporting date based on undiscounted contractual payments:

205
Maturity analysis (continued)

Contractual
interest/
Group profit rates
31.12.2012 Carrying per annum Contractual Within
In RM Mil amount % cash flows 1 year
Secured Term Loans
USD fixed rate loan 968 5.00 1,047 411
USD floating rate loan 988 2.04 1,122 120
RM fixed rate loan 534 6.41 604 63
RM floating rate loan 584 4.07 663 61
Other fixed rate loan 189 4.93 211 2
Other floating rate loan 675 5.45 690 14

Unsecured Term Loans
USD floating rate loan 2,319 1.68 2,361 2,344
EURO floating rate loan 3,478 2.99 3,584 3,575

USD Notes 5,261 7.10 7,689 307
USD Guaranteed Notes 9,065 5.25 12,254 482
USD Bonds 3,443 7.69 5,442 265
JPY Bonds 566 3.40 577 577

Unsecured revolving credits
RM revolving credits 491 3.45 508 508
GBP revolving credits 818 2.00 834 834
Other revolving credits 106 2.14 107 107

Unsecured bank overdrafts
EURO bank overdrafts 115 1.00 116 116
ZAR bank overdrafts 913 6.25 970 970
Other bank overdrafts 85 14.69 97 97

Secured Islamic financing facilities
RM Islamic financing facilities 1,928 5.51 2,569 589

Unsecured Islamic financing facilities
USD Islamic financing facilities 4,582 4.25 4,898 195
Trade and other payables 54,613 - 54,613 54,613

Dividend payable 539 - 539 539

Fair value through profit or loss held
for trading
Derivative liabilities 227 - 227 201
97,596 108,379 67,583

Group
31.12.2012 More than
In RM Mil 1-2 years 2-5 years 5 years
Secured Term Loans
USD fixed rate loan 398 238 -
USD floating rate loan 174 532 296
RM fixed rate loan 495 38 8
RM floating rate loan 57 429 116
Other fixed rate loan 43 148 18
Other floating rate loan 223 442 11

USD floating rate loan 16 1 -
RM floating rate loan 120 79 -
EURO floating rate loan 4 4 1
Other floating rate loan 27 17 -

USD Notes 2,511 723 4,148
USD Guaranteed Notes 482 1,446 9,844
USD Bonds 265 2,356 2,556
JPY Bonds - - -

RM revolving credits - - -
GBP revolving credits - - -
Other revolving credits - - -

EURO bank overdrafts - - -
ZAR bank overdrafts - - -
Other bank overdrafts - - -

RM Islamic financing facilities 547 987 446

USD Islamic financing facilities 4,703 - -
RM Islamic financing facilities 1,182 2,208 2,377

Trade and other payables - - -
Dividend payable - - -

for trading
Derivative liabilities 26 - -
11,291 9,680 19,825

207

Contractual
interest/
Group profit rates
Secured Term Loans
USD fixed rate loan 1,371 5.09 1,520 435
USD floating rate loan 1,100 2.01 1,260 241

EURO floating rate loan 3,537 3.38 3,563 65

USD Notes 11,759 7.07 14,758 6,919
USD Bonds 3,576 7.69 5,997 275
JPY Bonds 653 3.40 687 22

USD revolving credits 1,110 1.08 1,122 1,122
RM revolving credits 1,206 3.50 1,249 1,249
GBP revolving credits 413 1.84 421 421



RM Islamic financing facilities 4,060 5.27 4,996 1,365


for trading
99,439 111,402 61,841
c
ontinue to next page

Group
Secured Term Loans
USD fixed rate loan 426 645 14
USD floating rate loan 72 242 705
Other floating rate loan 27 244 10

USD floating rate loan 3,545 17 -
RM fixed rate loan 392 - -
RM floating rate loan 112 184 -
EURO floating rate loan 3,493 5 -

USD Notes 390 3,019 4,430
USD Bonds 275 2,671 2,776
JPY Bonds 665 - -

USD revolving credits - - -
GBP revolving credits - - -


RM Islamic financing facilities 543 1,156 227

USD Islamic financing facilities 203 4,921 -
RM Islamic financing facilities 292 2,909 430


for trading
Derivative liabilities 235 46 -
11,372 18,686 19,503

209

Contractual
interest/
Group profit rates
Secured Term Loans
USD fixed rate loan 823 5.39 933 206

RM fixed rate loan 1,378 4.83 1,554 484
EURO fixed rate loan 15 5.16 17 3
EURO floating rate loan 3,663 3.40 4,284 144
BAHT floating rate loan 71 2.97 78 30

USD Notes 11,220 7.07 14,757 794
USD Bonds 3,405 7.69 5,839 262
JPY Bonds 586 3.40 633 20

BAHT revolving credits 92 2.93 94 94
RM revolving credits 182 3.20 188 188

Unsecured bankers acceptances
RM bankers acceptances 41 3.05 42 42



RM Islamic financing facilities 3,951 4.48 4,532 1,377

Dividend payable 6,000 - 6,000 6,000

for trading
91,305 104,678 49,072

Group
1.4.2011 More than
Secured Term Loans
USD fixed rate loan 200 482 45
USD floating rate loan 345 545 -
Other fixed rate loan 11 - -

USD floating rate loan 152 3,325 -
RM fixed rate loan 359 711 -
EURO fixed rate loan 2 7 5
EURO floating rate loan 128 4,012 -
BAHT floating rate loan 31 17 -

USD Notes 6,484 2,989 4,490
USD Bonds 262 2,586 2,729
JPY Bonds 20 593 -

BAHT revolving credits - - -

Unsecured bankers acceptances
RM bankers acceptances - - -


RM Islamic financing facilities 586 788 1,300

RM Islamic financing facilities 1,199 1,203 753


for trading
Derivative liabilities 2 301 -
10,592 24,830 20,184
211

Contractual
interest/
Company profit rates
USD Notes 3,061 7.88 5,325 241
USD Bonds 3,443 7.69 5,442 265
JPY Bonds 566 3.40 577 577

Unsecured Islamic financing
facilities

Dividend payable 539 - 539 539

for trading
37,508 45,287 18,551

31.12.2011
USD Notes 9,535 7.29 12,211 6,780
USD Bonds 3,576 7.69 5,997 275
JPY Bonds 653 3.40 687 22

facilities


for trading
41,931 51,406 21,535

Company
USD Notes 241 723 4,120
USD Bonds 265 2,356 2,556
JPY Bonds - - -

facilities
USD Islamic financing facilities 4,703 - -


for trading
Derivative liabilities - - -
5,691 4,525 16,520
31.12.2011
USD Notes 250 751 4,430
USD Bonds 275 2,671 2,776
JPY Bonds 665 - -

facilities


for trading
Derivative liabilities 208 - -
2,102 9,845 17,924

213

Contractual
interest/
Company profit rates
USD Notes 9,080 7.29 12,218 662
USD Bonds 3,405 7.69 5,839 262
JPY Bonds 586 3.40 633 20

facilities

Dividend payable 6,000 - 6,000 6,000

for trading
39,425 49,681 14,284

Company
1.4.2011 More than
USD Notes 6,351 715 4,490
USD Bonds 262 2,586 2,729
JPY Bonds 20 593 -

facilities


for trading
Derivative liabilities - 164 -
7,303 10,287 17,807
Market risk
Market risk is the risk or uncertainty arising from changes in market prices and their impact on the performance of
the business. The market price changes that the Group and the Company is exposed to include interest rates, foreign
currency exchange rates, commodity prices, equity prices and other indices that could adversely affect the value of the
Groups and the Companys financial assets, liabilities or expected future cash flows.
Interest rate risk
The Groups and the Companys investments in fixed rate debt securities and fixed rate borrowings are exposed to a risk
of change in their fair values due to changes in interest rates. The Groups variable rate borrowings are exposed to a risk
of change in cash flows due to changes in interest rates. Investments in equity securities and short term receivables and
payables are not significantly exposed to interest rate risk.
All interest rate exposures are monitored and managed proactively in line with PETRONAS policies and guidelines. The
Group enters into hedging transactions with respect to interest rate on certain long term borrowings and other debts
where necessary and appropriate, in accordance with policies and guidelines.

215
Interest rate risk (continued)
The interest rate profile of the Groups and the Companys interest-bearing financial instruments based on carrying
amount as at reporting date is as follows:
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Fixed rate instruments
Financial assets 127,928 133,445 125,559 107,125 136,467 113,693
Financial liabilities (39,657) (50,969) (45,719) (20,717) (27,969) (27,272)
88,271 82,476 79,840 86,408 108,498 86,421
Floating rate
instruments
Financial assets 2,834 5,629 4,434 31,666 13,384 15,211
Financial liabilities (2,702) (1,841) (2,399) - - -
132 3,788 2,035 31,666 13,384 15,211
Since most of the Groups and the Companys financial assets and liabilities are fixed rate instruments measured at
amortised cost, a change in interest rate is not expected to have material impact on the Groups and the Companys profit
or loss.
Foreign exchange risk
The Group and the Company are exposed to varying levels of foreign exchange risk when they enter into transactions
that are not denominated in the respective companies functional currencies and when foreign currency monetary assets
and liabilities are translated at the reporting date. The main underlying economic currencies of the Groups cash flows are
Ringgit Malaysia and US Dollars.
The Group and the Companys foreign exchange management policy is to minimise economic and significant
transactional exposures arising from currency movements. The Group coordinates the handling of foreign exchange
risks centrally typically by matching receipts and payments for the same currency. For major capital projects, the Group
performs assessment of potential foreign exchange risk exposure at the investment decision phase to determine the
appropriate foreign exchange risk management strategy. Residual net positions are actively managed and monitored
against prescribed policies and control procedures. When deemed necessary and appropriate, the Group will enter into
derivative financial instruments to hedge and minimise its exposures to the foreign currency movements.

Foreign exchange risk (continued)
The Groups and the Companys significant exposure to foreign currency risk, based on carrying amounts as at the
reporting date is as follows:
Group
In RM Mil 31.12.2012 31.12.2011 1.4.2011
Denominated in USD
Financial assets
Loan and advances to subsidiaries 50,909 43,458 62,250
Cash and cash equivalents 14,766 5,142 15,319
Trade and other receivables 29,222 10,489 7,722
Long term receivables 301 2,412 1,846
Fund and other investments 174 588 989
Other financial assets 504 816 1,303
95,876 62,905 89,429

Loan and advances from holding company (8,482) (4,461) (16,360)
Borrowings (20,151) (27,660) (26,466)
Trade and other payables (7,816) (5,950) (6,362)
Other financial liabilities (923) (834) (1,311)
(37,372) (38,905) (50,499)
Net exposure 58,504 24,000 38,930

Denominated in MYR
Financial assets
Cash and cash equivalents 3,054 277 2,040
Long term receivables - 496 -
5,669 3,670 3,125

Loan and advances from holding company (935) (1,537) (2,962)
Borrowings - (80) -
Trade and other payables (10,465) (468) (2,537)
(11,400) (2,085) (5,499)
Net exposure (5,731) 1,585 (2,374)

217
Group
In RM Mil 31.12.2012 31.12.2011 1.4.2011
Denominated in AUD
Financial assets
Cash and cash equivalents 678 181 177
Trade and other receivables 7 44 5
Fund and other investments 110 2,094 361
Other financial assets 122 13 -
917 2,332 543

Loan and advances from holding company - - (36)
Trade and other payables (277) (276) (98)
(277) (276) (134)
Net exposure 640 2,056 409
Company
Denominated in USD
Financial assets
Loan and advances to subsidiaries 46,872 42,927 53,314
Cash and cash equivalents 13,809 3,758 13,461
Other financial assets - 808 1,247
84,529 53,602 72,784

Borrowings (20,151) (27,315) (26,004)
Trade and other payables (3,205) (2,359) (1,026)
Other financial liabilities (451) (502) (500)
(23,807) (30,176) (27,530)
Net exposure 60,722 23,426 45,254

Sensitivity analysis for a given market variable provided in this note, discloses the effect on profit or loss and equity as at 31
December 2012 assuming that a reasonably possible change in the relevant market variable had occurred at 31 December
2012 and been applied to the risk exposures in existence at that date to show the effects of reasonably possible
changes in price on profit or loss and equity to the next annual reporting date. Reasonably possible changes in market
variables used in the sensitivity analysis are based on implied volatilities, where available, or historical data for equity and
commodity prices and foreign exchange rates. Reasonably possible changes in interest rates are based on management
judgment and historical experience.
The sensitivity analysis is hypothetical and should not be considered to be predictive of future performance because
the Groups actual exposure to market prices is constantly changing with changes in the Groups portfolio of among
others, commodity, debt and foreign currency contracts. Changes in fair values or cash flows based on a variation in a
market variable cannot be extrapolated because the relationship between the change in market variable and the change
in fair value or cash flows may not be linear. In addition, the effect of a change in a given market variable is calculated
independently of any change in another assumption and mitigating actions that would be taken by the Group. In reality,
changes in one factor may contribute to changes in another, which may magnify or counteract the sensitivities.
The following table demonstrates the indicative pre-tax effects on the profit or loss and equity of applying reasonably
foreseeable market movements in the following currency exchange rates:
Appreciation in
foreign currency
31.12.2012 rate Group Company
In RM Mil % Reserve Profit or loss Reserve Profit or loss
USD 5 2,587 231 - 3,036
MYR 5 - (287) - -
AUD 5 - 32 - -
31.12.2011
USD 5 1,633 (425) - 1,357
MYR 5 - 79 - -
AUD 5 - 101 - -
A depreciation in foreign currency rate above would have had equal but opposite effect, on the basis that all other
variables remain constant.
Equity price risk
Equity price risk arises from the Groups and Companys investments in equity securities. The Group and the Company
have Investment Guidelines in place to minimise their exposures on price risk. Permitted investment in terms of allowable
financial instruments, minimum credit rating and markets are stipulated in the Investment Guidelines. The Group and the
Company monitors the equity investments on a portfolio basis and a performance benchmark is established for each
investment portfolio giving consideration to portfolio objectives and return expectation. All buy and sell decisions are
monitored by the Group Treasury Division.

219
Equity price risk (continued)
The Group and the Company also hold equity investment for strategic purposes, that are classified as available-for-sale
financial assets. Reports on the equity portfolio performance are submitted to the Groups and the Companys senior
management on a regular basis.
The Groups and the Companys exposure to equity price risk based on carrying amounts as at the reporting date is as
follows:
Group Company
In RM Mil 31.12.2012 31.12.2011 1.4.2011 31.12.2012 31.12.2011 1.4.2011
Local equities 551 683 657 150 334 286
Foreign equities 5,762 9,035 17,179 - - -
6,313 9,718 17,836 150 334 286
The following table demonstrates the indicative pre-tax effects on the profit or loss and equity of applying reasonably
foreseeable market movements in the following equities:
Increase in
price based
on average
change in Group Company
31.12.2012 index rate Profit Profit
In RM Mil % Reserve or loss Reserve or loss
Local equities 15 101 - 23 -
Foreign equities 15 to 20 868 - - -
31.12.2011
Local equities 15 119 - 50 -
Foreign equities 15 to 20 1,440 - - -
A decrease in price based on average change in index rate above would have had equal but opposite effect, on the basis
that all other variables remain constant.
Commodity price risk
The Group is exposed to changes in crude oil and petroleum products prices which may affect the value of the Groups
assets, liabilities or expected future cash flows. To mitigate these exposures from a business perspective, the Group enters
into various financial instruments. In effecting these transactions, the Group operates within policies and procedures
designed to ensure that risks are minimised. All financial instruments positions are marked-to-market by independent risk
management department and reported to management for performance monitoring and risk management purposes on a
daily basis.
Since the Group undertakes hedging using commodity derivatives for the majority of its transactions, a change in
commodity price is not likely to result in a significant impact on the Groups and the Companys profit or loss and equity.

Fair value
The fair values of financial liabilities measured at amortised cost, together with the carrying amounts are as follows:

31.12.2012 31.12.2011 1.4.2011
Group Carrying Fair Carrying Fair Carrying Fair
In RM Mil Note amount value amount value amount value
Notes and Bonds 22 18,335 22,719 25,396 29,003 24,195 27,084
Term loans 22 10,150 10,018 12,470 12,460 11,768 11,834
Islamic financing
facilities 22 11,204 11,454 11,020 12,491 11,458 11,701
Revolving credits 22 1,415 1,415 2,729 2,729 274 274
Bankers acceptances 22 - - - - 41 41
Bank overdrafts 22 1,113 1,113 908 908 75 75
Company
Notes and Bonds 22 16,135 20,374 23,172 26,774 22,055 24,758
Islamic financing
facilities 22 4,582 4,816 4,797 5,070 4,536 4,773
Fair value hierarchy
The following table analyses financial instruments carried at fair value by valuation method. The different levels have been
defined as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Input other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).

221
Fair value hierarchy (continued)
Group
31.12.2012
In RM Mil Level 1 Level 2 Total
Financial assets
Quoted shares 6,313 - 6,313
Negotiable Certificate of Deposits - 1,793 1,793
Quoted securities - 174 174
Malaysian Government Securities - 7,541 7,541
Corporate Private Debt Securities - 5,305 5,305
Unquoted securities - 149 149
Forward foreign exchange contracts - 574 574
Commodity swaps - 14 14
Forward gas contracts 54 - 54
6,367 15,550 21,917
Interest rate swaps - (143) (143)
Forward foreign exchange contracts - (57) (57)
Commodity swaps - (12) (12)
Forward gas contracts (15) - (15)
(15) (212) (227)
31.12.2011
Financial assets
Treasury Bills - 16,073 16,073
Negotiable Certificate of Deposits - 514 514
Forward gas contracts 106 - 106
9,824 26,270 36,094

Forward gas contracts (18) - (18)
Forward oil price contracts (12) - (12)
(30) (314) (344)

Group
1.4.2011
Financial assets
Quoted securities - 1,351 1,351
17,836 31,256 49,092

Forward oil price contracts (121) - (121)
(121) (428) (549)
Company
31.12.2012
Financial assets
Quoted shares 150 - 150
Negotiable Certificate of Deposits - 1,793 1,793
150 16,214 16,364

- (127) (127)

223
Company
31.12.2011
Financial assets
Forward foreign exchange contracts - 1,314 1,314
334 29,336 29,670

- (214) (214)
1.4.2011
Financial assets
Quoted securities - 1,351 1,351
Forward foreign exchange contracts - 1,680 1,680
286 33,209 33,495

- (173) (173)

Income/(expense), net gains and losses arising from financial instruments
Group
1.1.2012
to 31.12.2012 Interest Interest Impairment
In RM Mil income expense loss Others Total
Financial instruments at fair
value through profit or loss
- Held for trading - - - (28) (28)
- Designated upon initial recognition 664 - - (2) 662
Held-to-maturity 122 - - - 122
Available-for-sale
- recognised in profit or loss - - - 1,650 1,650
- recognised in equity - - - 570 570
- recognised in profit or loss 3,572 - (620) 172 3,124
- recognised in equity - - - (1,528) (1,528)
Financial liabilities at amortised
cost - (2,162) - (132) (2,294)
Total 4,358 (2,162) (620) 702 2,278
1.4.2011
to 31.12.2011
- Held for trading - - - 223 223
- Designated upon initial recognition 357 - - 5 362
Available-for-sale
- recognised in profit or loss - - - 458 458
- recognised in equity - - - (4,943) (4,943)
- recognised in profit or loss 2,482 - (1,956) (660) (134)
- recognised in equity - - - 1,452 1,452
cost - (1,388) - (149) (1,537)
Total 2,839 (1,388) (1,956) (3,614) (4,119)

225
Income/(expense), net gains and losses arising from financial instruments (continued)
Company
1.1.2012
to 31.12.2012 Interest Interest Impairment
In RM Mil income expense loss Others Total
- Held for trading - - - (95) (95)
- Designated upon initial recognition 655 - - (14) 641
Held-to-maturity 122 - - - 122
Available-for-sale
- recognised in equity - - - (117) (117)
Loans and receivables 5,073 - (13) (1,587) 3,473
cost - (994) - 219 (775)
Total 5,850 (994) (13) (1,397) 3,446
1.4.2011
to 31.12.2011
- Held for trading - - - (409) (409)
- Designated upon initial recognition 376 - - 133 509
Available-for-sale
- recognised in equity - - - 48 48
Loans and receivables 3,827 - (45) 966 4,748
Financial liabilities at amortised cost - (820) - - (820)
Total 4,203 (820) (45) 764 4,102

Others relate to gains and losses arising from financial instruments other than interest income, interest expense and
impairment loss such as realised and unrealised foreign exchange gains or losses, dividend income and fair value gains or
losses.

41. CAPITAL MANAGEMENT
The Group, as an essential part of its capital management strategy, is committed to a policy of financial prudence as
outlined in the PETRONAS Group Corporate Financial Policy. The Groups capital structure consists of consolidated equity
plus debt, defined as the current and long term portions of the Groups debt.
The objective of the Groups capital management is to maintain an optimal capital structure and ensure availability of
funds in order to meet financial obligations, support business growth and maximise shareholders value. The Group
monitors and maintains a prudent level of total debt to total assets ratio and ensures compliance with all covenants.
There were no changes in the Groups approach to capital management during the year.
42. PRONOUNCEMENTS YET IN EFFECT
The following pronouncements that have been issued by the MASB will become effective in future financial reporting
periods and have not been adopted by the Group and the Company in these financial statements:
Effective for annual periods beginning on or after 1 January 2013

MFRS 10 Consolidated Financial Statements
MFRS 11 Joint Arrangements
MFRS 12 Disclosure of Interests in Other Entities
MFRS 13 Fair Value Measurement
MFRS 119 Employee Benefits (2011)
MFRS 127 Separate Financial Statements (2011)
MFRS 128 Investments in Associates and Joint Ventures (2011)
Amendments to MFRS 7 Financial Instruments: Disclosures Offsetting Financial Assets and Financial Liabilities
Amendments to MFRS 1 Firsttime Adoption of Malaysian Financial Reporting Standards (Annual Improvements
2009-2011 Cycle)
Amendments to MFRS 10 Consolidated Financial Statements: Transition Guidance
Amendments to MFRS 11 Joint Arrangements: Transition Guidance
Amendments to MFRS 12 Disclosure of Interests in Other Entities: Transition Guidance
Amendments to MFRS 101 Presentation of Financial Statements (Annual Improvements 2009-2011 Cycle)
Amendments to MFRS 116 Property, Plant and Equipment (Annual Improvements 2009-2011 Cycle)
Amendments to MFRS 132 Financial Instruments: Presentation (Annual Improvements 2009-2011 Cycle)
Amendments to MFRS 134 Interim Financial Reporting (Annual Improvements 2009-2011 Cycle)

Amendments to MFRS 132 Financial Instruments: Presentation Offsetting Financial Assets and Financial Liabilities

MFRS 9 Financial Instruments (2009)
MFRS 9 Financial Instruments (2010)
Amendments to MFRS 7 Financial Instruments: Disclosures Mandatory Effective Date of MFRS 9 and
Transition Disclosures

227
42. PRONOUNCEMENTS YET IN EFFECT (continued)
The Group and the Company are expected to apply the abovementioned pronouncements beginning from the respective
dates the pronouncements become effective. The Group and the Company is currently assessing the impact of adopting
the above pronouncements. Key highlights are discussed below:
i. MFRS 9 Financial Instruments
MFRS 9 replaces the guidance in MFRS 139 Financial Instruments: Recognition and Measurement on the classification
and measurement of financial assets. Upon adoption of MFRS 9, financial assets of the Group and the Company will
be measured at either fair value or amortised cost.
ii. MFRS 10 Consolidated Financial Statements
MFRS 10 introduces a new single control model to determine which investees should be consolidated. MFRS 10
supersedes MFRS 127 Consolidated and Separate Financial Statements and IC Interpretation 112 Consolidation
Special Purpose Entities. Upon adoption of MFRS 10, the Group and the Company may need to consolidate certain
existing investees under the new control model while certain subsidiaries may need to be deconsolidated from the
results of the Group and accounted for in accordance with other applicable accounting standards.
iii. MFRS 11 Joint Arrangements
MFRS 11 establishes the principles for classification and accounting for joint arrangements and supersedes MFRS 131
Interests in Joint Ventures. Under MFRS 11, a joint arrangement may be classified as joint venture or joint operation.
Interest in joint venture will be accounted for using the equity method whilst interest in joint operation will be
accounted for using the applicable standards relating to the underlying assets, liabilities, income and expense items
arising from the joint operations.
43. PRONOUNCEMENTS NOT APPLICABLE TO THE GROUP AND THE COMPANY
The MASB has issued pronouncements which are not yet effective, but for which are not relevant to the operations of the
Group and the Company and hence, no further disclosure is warranted.

IC 20 Stripping Costs in the Production Phase of a Surface Mine
Amendments to IC 2 Members Shares in Co-operative Entities and Similar Instruments (Annual Improvements
2009-2011 Cycle)
Amendments to MFRS 1 Firsttime Adoption of Malaysian Financial Reporting Standards - Government Loans

44. SIGNIFICANT SUBSIDIARIES AND ACTIVITIES
The significant subsidiary undertakings of the Company at 31 December 2012 and the Group percentage of share capital
are set out below:

Effective Percentage Country of
Holding Incorporation Principal Activities
31.12.2012 31.12.2011
% %

* PETRONAS Carigali Sdn. Bhd. 100 100 Malaysia Petroleum exploration,
development and
production
Doba Pipeline Investment Inc. 100 100 Cayman Investment holding

Islands
PETRONAS Carigali (Chad EP) 100 100 Cayman Petroleum operations

Inc. Islands

PETRONAS Carigali Chad 100 100 Cayman Investment holding

Exploration and Production Inc. Islands

PETRONAS Chad Marketing Inc. 100 100 Cayman Trading of petroleum

Islands products
PETRONAS Carigali Overseas 100 100 Malaysia Investment holding

Sdn. Bhd. and petroleum
operations
* PETRONAS International 100 100 Malaysia Investment holding

Corporation Ltd.
PC JDA Ltd. 100 100 Republic of Petroleum operations

Mauritius
PC Vietnam Ltd. 100 100 Republic of Petroleum operations

Mauritius
PETRONAS Australia Pty. Limited 100 100 Australia Investment holding
PAPL (Upstream) Pty. Limited 100 100 Australia Exploration and

production of coal
seam gas
PAPL (Downstream) Pty. Limited 100 100 Australia Production and

transportation of
liquefied natural gas
for export
PETRONAS Carigali (Jabung) Ltd. 100 100 Bahamas Petroleum operations
PETRONAS Carigali 100 100 Malaysia Petroleum operations

(Turkmenistan) Sdn. Bhd.
PETRONAS Carigali Canada B.V. 100 100 Netherlands Investment holding

229
44. SIGNIFICANT SUBSIDIARIES AND ACTIVITIES (continued)

31.12.2012 31.12.2011
% %
Progress Energy Canada Ltd. 100 - Canada Petroleum and gas
exploration,
development and
production
Progress Deep Basin Ltd. 100 - Canada Petroleum and gas

exploration,
development and
production
Progress Montney Ltd. 100 - Canada Petroleum and gas

exploration,
development and
production
Progress Ventures Ltd. 100 - Canada Petroleum and gas

exploration,
development and
production
PETRONAS Carigali Iraq Holding 100 100 Netherlands Petroleum operations

B.V.
PETRONAS Carigali Myanmar 100 100 Liberia Petroleum operations

Inc.
PETRONAS Carigali Nile Ltd. 100 100 Republic of Petroleum operations

Mauritius
PETRONAS (E&P) Overseas 100 100 Malaysia Investment holding

Ventures Sdn. Bhd. (formerly
known as PETRONAS Natuna
Sdn. Bhd.)
PICL (Egypt) Corporation Ltd. 100 100 Malaysia Investment holding,

exploration, and
production of oil and
gas
Engen Limited 80 80 South Africa Refining of crude oil

and marketing of
refined petroleum
products
Engen Petroleum Ltd. 80 80 South Africa Refining and

distribution of
petroleum products


31.12.2012 31.12.2011
% %
PETRONAS Marketing Sudan 100 100 Sudan Marketing of
Limited petroleum products
Energas Insurance (L) Limited 100 100 Malaysia Offshore captive

insurance business
MITCO Labuan Co. Ltd. 100 100 Malaysia General merchandise

trading
PETRONAS LNG Ltd. 100 100 Malaysia Trading of natural gas

and LNG
PETRONAS Energy Trading Ltd. 100 100 United Trading of natural gas
Kingdom and LNG
PETRONAS LNG (UK) Limited 100 100 United Trading of natural gas
Kingdom and LNG
* Malaysia LNG Sdn. Bhd. 90 90 Malaysia Liquefaction and sale

of LNG
* Malaysia LNG Dua Sdn. Bhd. 60 60 Malaysia Liquefaction and sale

of LNG
* Malaysia LNG Tiga Sdn. Bhd. 60 60 Malaysia Liquefaction and sale

of LNG
@ * PETRONAS Gas Berhad 60.6 60.6 Malaysia Processing and

transmission of
natural gas
* Malaysian Refining Company Sdn. 53 53 Malaysia Refining of crude oil

Bhd.
@ * PETRONAS Dagangan Berhad 69.9 69.9 Malaysia Marketing of

petroleum products
and operation of
service stations
* PETRONAS Penapisan (Melaka) 100 100 Malaysia Refining and

Sdn. Bhd. condensation of
crude oil
* PETRONAS Penapisan 100 100 Malaysia Refining and

(Terengganu) Sdn. Bhd. condensation of
crude oil
* PETRONAS Trading Corporation 100 100 Malaysia Trading of crude oil

Sdn. Bhd. and petroleum
products
@ * PETRONAS Chemicals Group 64.3 64.3 Malaysia Investment holding

Berhad

231

31.12.2012 31.12.2011
% %
PETRONAS Chemicals Aromatics 45 45 Malaysia Production and sale of
Sdn. Bhd. (formerly known as aromatics products
Aromatics Malaysia Sdn. Bhd.)
Asean Bintulu Fertilizer Sdn. Bhd. 40.9 40.9 Malaysia Production and sale of
urea and ammonia

PETRONAS Chemicals 64.3 64.3 Malaysia Manufacturing and
Derivatives Sdn. Bhd. (formerly selling ethylene and
known as OPTIMAL Chemicals propylene derivative
(Malaysia) Sdn. Bhd.) products

PETRONAS Chemicals Ethylene 56.3 56.3 Malaysia Production and sale of
Sdn. Bhd. ethylene

PETRONAS Chemicals Ammonia 64.3 64.3 Malaysia Production and sale of
Sdn. Bhd. ammonia, syngas
and carbon
monoxide
PETRONAS Chemicals Fertilizer 64.3 64.3 Malaysia Production and sale of

Kedah Sdn. Bhd. urea, ammonia and
methanol
PETRONAS Chemicals Glycols 64.3 64.3 Malaysia Manufacturing and

(Malaysia) Sdn. Bhd. selling ethylene
oxide, ethylene
glycol and other
glycols
PETRONAS Chemicals Marketing 64.3 64.3 Malaysia Petrochemicals and

Sdn. Bhd. general trading
PETRONAS Chemicals Methanol 64.3 64.3 Malaysia Production and sale of

Sdn. Bhd. methanol
PETRONAS Chemicals MTBE 64.3 64.3 Malaysia Production and sale of

Sdn. Bhd. methyl tertiary butyl
ether and propylene
PETRONAS Chemicals Olefins 56.6 56.6 Malaysia Manufacturing and

Sdn. Bhd. marketing of
ethylene, propylene
and other
hydrocarbon
products
PETRONAS Chemicals Fertiliser 64.3 64.3 Malaysia Manufacturing and

Sabah Sdn. Bhd. marketing of
ammonia, urea and
any component or
derivative substances


31.12.2012 31.12.2011
% %
* PrimeSourcing International Sdn. 100 100 Malaysia Trading and
Bhd. procurement of
equipment spares
and materials
* PETRONAS Lubricants 100 100 Malaysia Investment holding,

International Sdn. Bhd. manufacturing and
trading of lubricant
products
PLI (Netherlands) B.V. 100 100 Netherlands Investment holding
PETRONAS Lubricants Italy S.p.A 100 100 Italy Manufacturing and

marketing of
lubricant products
@ * MISC Berhad 62.6 62.6 Malaysia Shipping and shipping

related activities
AET Inc. Limited 62.6 62.6 Bermuda Ship-owning and

operations
Malaysia Deepwater Floating 31.8 31.8 Malaysia Floating production

Terminal (Kikeh) Ltd. storage and off-
loading (FPSO)
owner
@ Malaysia Marine and Heavy 41.6 41.6 Malaysia Investment holding

Engineering Holdings Berhad
Gumusut-Kakap Semi-Floating 81.3 62.6 Malaysia Leasing of semi

Production System (L) Limited floating production
storage
* KLCC (Holdings) Sdn. Bhd. 100 100 Malaysia Property investment

related activities and
property
development
MISC Tankers Sdn. Bhd. 62.6 62.6 Malaysia Investment holding

and provision of
management services
Kuala Lumpur Convention Centre 100 100 Malaysia Property investment

Sdn. Bhd.
Midciti Resources Sdn. Bhd. 76.1 76.1 Malaysia Property investment
Putrajaya Holdings Sdn. Bhd. 64.4 64.4 Malaysia Property owner and
developer

233

31.12.2012 31.12.2011
% %
@ * KLCC Property Holdings Berhad 52.6 52.6 Malaysia Investment holding
and property
investment
Suria KLCC Sdn. Bhd. 31.6 31.6 Malaysia Property investment
Arena Merdu Sdn. Bhd. 51.0 51.0 Malaysia Property investment
* Institute of Technology 100 100 Malaysia Institute of higher

PETRONAS Sdn. Bhd. learning
PETRONAS Capital Ltd. 100 100 Malaysia Investment holding
PETRONAS Global Sukuk 100 100 Malaysia Investment holding

Limited
* Subsidiaries held directly by the Company.

@ The shares of these subsidiaries are quoted on the Main Market of Bursa Malaysia Securities Berhad.
Companies incorporated under the Labuan Companies Act 1990.

45. SIGNIFICANT ASSOCIATES AND ACTIVITIES

31.12.2012 31.12.2011
% %
BASF PETRONAS Chemicals Sdn. 25.7 25.7 Malaysia Own and operate
Bhd. acrylic acid and
oxo plants

Bintulu Port Holdings Berhad 32.8 32.8 Malaysia Port management
Cameroon Oil Transportation 29.8 29.8 Republic of Pipeline operations

Company- S.A. Cameroon
El Behera Natural Gas Liquefaction 35.5 35.5 Egypt Manufacturing and

Company S.A.E. production of LNG
for the purpose of
export
Gas Malaysia Bhd. 9.0 12.1 Malaysia Selling, marketing,

distribution and
promotion of
natural gas
GMR Energy (Singapore) Pte. Ltd. 30.0 30.0 Singapore Construct and
operate a power
plant and
electricity trading
IDKU Natural Gas Liquefaction 38.0 38.0 Egypt Manufacturing and

Company S.A.E. production of LNG
for the purpose of
export
PP Oil & Gas (Indonesia- Jabung) 50.0 50.0 United Exploration and
Limited Kingdom production of oil
and gas
Taninthayi Pipeline Co. LLC 40.9 40.9 Cayman Transportation of

Islands gas
Tchad Oil Transportation Company- 30.2 30.2 Republic of Pipeline operations

S.A. Chad
The Egyptian LNG Company S.A.E. 35.5 35.5 Egypt Owning, managing
and developing the
land and the
common facilities
related to the
Egyptian LNG
facility

235
46. SIGNIFICANT JOINTLY-CONTROLLED ENTITIES AND ACTIVITIES

31.12.2012 31.12.2011
% %
BP PETRONAS Acetyls Sdn. Bhd. 19.3 19.3 Malaysia Manufacture, sell
and distribute
acetic acid
Dragon LNG Group Ltd. 50.0 50.0 United Operate LNG import
Kingdom and storage
terminal
Trans Thai-Malaysia (Thailand) Ltd. 50.0 50.0 Thailand Gas pipeline

transportation and
gas separation
services
Trans Thai-Malaysia (Malaysia) 50.0 50.0 Malaysia Transporting and

Sdn. Bhd. delivering gas
products

Indianoil PETRONAS Private Limited 50.0 50.0 India Manufacture and
bottling services of
LPG
VTTI B.V. 31.3 31.3 Netherlands Owning, operating

and managing a
network of oil
product storage
terminals and
refineries

47. EFFECT OF FIRST TIME ADOPTION OF MFRS
These financial statements represent the Group and the Companys first application of MFRS and MFRS 1 First-time
Adoption of Malaysian Financial Reporting Standards (MFRS 1) has been applied.
The general principle that should be applied on first-time adoption of MFRS is that accounting standards in force at the
first annual reporting date should be applied retrospectively. However, MFRS 1 contains a number of exemptions which
first-time adopters are permitted to apply. The Group and the Company have elected:

i. to adopt MFRS 3 Business Combinations retrospectively from 1 October 2009;
ii. to measure certain items of property, plant and equipment at their fair values at 1 April 2011 and use that fair values as
their deemed costs at that date;
iii. to deem cumulative currency translation differences to be zero at 1 April 2011; and
iv. to adopt MFRS 121 The Effects of Changes in Foreign Exchange Rates to goodwill and fair value adjustments arising in
business combinations prospectively from 1 April 2011.
The impact of the above election of MFRS 1 transitional exemptions are set out below:
i. Retrospective application of MFRS 3 Business Combinations
MFRS 1 provides the option to apply MFRS 3 prospectively from the date of transition or retrospectively from a
designated date prior to the date of transition. This provides relief from full retrospective application of MFRS 3 which
would require restatement of all business combinations prior to the date of transition. Where MFRS 3 is applied
retrospectively from a designated date, MFRS 127 Consolidated and Separate Financial Statements shall be applied
from the same date.
The Group has elected to apply MFRS 3 retrospectively from 1 October 2009. As such, all business combinations on
or after 1 October 2009 are accounted for in compliance with MFRS 3 and MFRS 127 which include among others, the
following requirements applicable to the Group:
increase in the Groups ownership interest in an existing subsidiary is accounted for as equity transactions with
differences between fair value of consideration paid and the Groups proportionate share of net assets acquired,
recognised directly in equity and therefore previously-recognised goodwill, if any, shall be taken to retained
profits.
when a business combination is achieved in stages (i.e. step acquisition), the Group remeasures its previously held
non-controlling equity interest in the acquiree at fair value at the acquisition date, with any resulting gain or loss
recognised in the profit or loss.
The impact from electing the above transitional exemption is summarised as follows:

1.4.2011
Consolidated statement of profit or loss and other comprehensive income to
In RM Mil 31.12.2011
Decrease in amortisation of intangible assets 127
Increase in deferred tax expense (32)

Consolidated statement of financial position
In RM Mil 31.12.2011 1.4.2011
Decrease in intangible assets (1,990) (2,117)
Decrease in deferred tax liabilities (341) (373)
Decrease in non-controlling interests (589) (622)
Decrease in retained profits (1,060) (1,122)

237
47. EFFECT OF FIRST TIME ADOPTION OF MFRS (continued)
ii. Fair value of property, plant and equipment as deemed cost
The Group has elected to measure certain items of property, plant and equipment at 1 April 2011 at their fair value and
use that fair value as deemed cost at that date. These property, plant and equipment will continue to be measured
using the cost model subsequent to 1 April 2011. The Group recognises the fair value adjustments directly in retained
profits.
The aggregate fair value of these property, plant and equipment was determined to be RM1,068,000,000 compared to
their carrying amount of RM1,694,000,000 at 1 April 2011. The detailed impact is summarised as follows:

1.4.2011
In RM Mil 31.12.2011
Decrease in depreciation of property, plant and equipment 73

In RM Mil 31.12.2011 1.4.2011
Decrease in property, plant and equipment (562) (626)
Decrease in deferred tax liabilities (20) (20)
Decrease in retained profits (348) (389)
iii. Cumulative currency translation differences deemed as zero
The Group has elected to apply the transition exemption to deem the amount of foreign currency translation reserve
to be zero at 1 April 2011, other than reserve amount recorded by entities within the Group which had already adopted
the International Financial Reporting Standards prior to 1 January 2012.
The gain or loss on subsequent disposal of any foreign operations of the Group shall exclude translation differences
that arose before 1 April 2011 and shall include translation differences subsequent to 1 April 2011.
The impact from electing the above transitional exemption is summarised as follows:
1.4.2011
In RM Mil 31.12.2011
Increase in other income 170
Decrease in net movement from exchange differences (170)

In RM Mil 31.12.2011 1.4.2011
Increase in foreign currency translation reserve 13,233 13,403
Decrease in retained profits (13,233) (13,403)

iv. Prospective application of MFRS 121 The Effects of Changes in Foreign Exchange Rates to goodwill and fair value
adjustments arising in business combinations
MFRS 121 requires any goodwill and fair value adjustments to carrying amounts of assets and liabilities arising from
an acquisition of a foreign operation, to be treated as assets and liabilities of the foreign operation and therefore shall
need to be translated using the closing rate at the end of each reporting period.
MFRS 1 provides the option to apply MFRS 121 to such goodwill and fair value adjustments prospectively from the date
of transition. As such, the carrying amounts of goodwill and fair value adjustments arising from acquisitions of foreign
operations are stated at the previously-translated carrying amounts and are not subsequently re-translated in the
Groups financial statements.
There is no financial impact to the Groups statement of financial position and retained profits as a result of electing
the above transitional exemption.
v. Others
In addition to the above impact resulting from electing certain transitional exemptions under MFRS 1, other
adjustments and reclassifications to the Groups statement of financial position and retained profits are summarised
below. These adjustments arose mainly due to changes in revenue recognition for property development activities
from stage of completion to full completion method for certain subsidiaries within the Group.

1.4.2011
In RM Mil 31.12.2011
Increase in property development revenue 34
Increase in property development cost (49)
Decrease in income tax expense 3

In RM Mil 31.12.2011 1.4.2011
Increase in deferred tax assets 7 4
Increase in trade and other inventories 601 574
Decrease in trade and other receivables (15) (63)
Decrease in property development costs (507) (441)
Increase in trade and other payables 98 83
Decrease in retained profits (5) (5)
Further detailed reconciliations and explanations of how the transition from the previous FRS to MFRS has affected the
Groups statement of financial position, profit or loss and other comprehensive income, changes in equity and cash
flows are set out as follows:

239
a. Reconciliation of consolidated statement of financial position at 31 December 2011
Effect of
transition to MFRS
In RM Mil Note FRS 31 December 2011 MFRS
ASSETS
Property, plant and equipment 47(ii) 206,117 (562) 205,555
Investment properties 11,024 - 11,024
Land held for development 1,601 - 1,601
Prepaid lease payments 625 - 625
Investments in associates 5,381 - 5,381
Investments in jointly controlled entities 6,942 - 6,942
Intangible assets 47(i) 22,604 (1,990) 20,614
Long term receivables 4,084 - 4,084
Fund and other investments 3,495 - 3,495
Deferred tax assets 47(v) 3,880 7 3,887
TOTAL NON-CURRENT ASSETS 265,842 (2,545) 263,297

Property development costs 47(v) 507 (507) -
Trade and other inventories 47(v) 11,765 601 12,366
Trade and other receivables 47(v) 38,126 (15) 38,111
Assets classified as held for sale 631 - 631
Cash and cash equivalents 125,358 - 125,358
TOTAL CURRENT ASSETS 211,770 79 211,849
TOTAL ASSETS 477,612 (2,466) 475,146
EQUITY
Share capital 100 - 100
Reserves 47(i),(ii),(v) 288,210 (1,413) 286,797
Total equity attributable to
shareholders of the Company 288,310 (1,413) 286,897
Non-controlling interests 47(i),(ii),(v) 32,869 (790) 32,079
TOTAL EQUITY 321,179 (2,203) 318,976

LIABILITIES
Borrowings 39,674 - 39,674
Deferred tax liabilities 47(i),(ii) 13,628 (361) 13,267
Other long term liabilities and provisions 23,977 - 23,977
TOTAL NON-CURRENT LIABILITIES 77,279 (361) 76,918

Trade and other payables 47(v) 50,310 98 50,408
Borrowings 12,849 - 12,849
Taxation 15,995 - 15,995
TOTAL CURRENT LIABILITIES 79,154 98 79,252
TOTAL LIABILITIES 156,433 (263) 156,170
TOTAL EQUITY AND LIABILITIES 477,612 (2,466) 475,146

a. Reconciliation of consolidated statement of financial position at 1 April 2011
Effect of
transition to MFRS
In RM Mil Note FRS 1 April 2011 MFRS
ASSETS
Property, plant and equipment 47(ii) 191,575 (626) 190,949
Investment properties 10,561 - 10,561
Land held for development 1,641 - 1,641
Prepaid lease payments 551 - 551
Investments in associates 5,725 - 5,725
Investments in jointly controlled entities 5,836 - 5,836
Intangible assets 47(i) 15,389 (2,117) 13,272
Long term receivables 3,289 - 3,289
Deferred tax assets 47(v) 3,975 4 3,979
TOTAL NON-CURRENT ASSETS 250,474 (2,739) 247,735

Property development costs 47(v) 441 (441) -
Trade and other inventories 47(v) 9,700 574 10,274
Trade and other receivables 47(v) 33,608 (63) 33,545
Assets classified as held for sale 346 - 346
Cash and cash equivalents 106,556 - 106,556
TOTAL CURRENT ASSETS 188,520 70 188,590
TOTAL ASSETS 438,994 (2,669) 436,325
EQUITY
Share capital 100 - 100
Reserves 47(i),(ii),(v) 263,688 (1,516) 262,172
Total equity attributable to
shareholders of the Company 263,788 (1,516) 262,272
Non-controlling interests 47(i),(ii),(v) 32,126 (843) 31,283
TOTAL EQUITY 295,914 (2,359) 293,555

LIABILITIES
Borrowings 44,354 - 44,354
Deferred tax liabilities 47(i),(ii) 13,258 (393) 12,865
Other long term liabilities and provisions 24,544 - 24,544
TOTAL NON-CURRENT LIABILITIES 82,156 (393) 81,763

Trade and other payables 47(v) 38,039 83 38,122
Borrowings 3,457 - 3,457
Taxation 13,428 - 13,428
Dividend payable 6,000 - 6,000
TOTAL CURRENT LIABILITIES 60,924 83 61,007
TOTAL LIABILITIES 143,080 (310) 142,770
TOTAL EQUITY AND LIABILITIES 438,994 (2,669) 436,325

241
b. Reconciliation of consolidated statement of profit or loss and other comprehensive income for the period ended 31
December 2011
Effect of
t ransition to
MFRS
1.4.2011
to
In RM Mil Note FRS 31.12.2011 MFRS
Revenue 47(v) 222,797 34 222,831
Cost of revenue 47(ii),(v) (126,236) 24 (126,212)
Gross profit 96,561 58 96,619

Selling and distribution expenses (3,585) - (3,585)
Administration expenses 47(i) (10,663) 127 (10,536)
Other expenses (4,050) - (4,050)
Other income 47(iii) 5,135 170 5,305
Operating profit 83,398 355 83,753

Financing costs (2,028) - (2,028)
Share of profit after tax and non-controlling
interests of equity accounted associates and
jointly controlled entities 1,317 - 1,317
Profit before taxation 82,687 355 83,042

Tax expense 47(i),(v) (27,113) (29) (27,142)
Profit for the period 55,574 326 55,900

Other comprehensive income/(expenses)
Items that may be reclassified subsequently
to profit or loss
Net movements from exchange differences 47(iii) 5,204 (170) 5,034
- Changes in fair value (1,875) - (1,875)
- Transfer to profit or loss upon disposal (3,068) - (3,068)
Other comprehensive expenses (33) - (33)
income/(expenses) for the period 228 (170) 58
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 55,802 156 55,958

Profit attributable to:
Shareholders of the Company 48,863 273 49,136
Non-controlling interests 6,711 53 6,764
PROFIT FOR THE PERIOD 55,574 326 55,900

Total comprehensive income attributable to:
Shareholders of the Company 48,558 103 48,661
Non-controlling interests 7,244 53 7,297
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 55,802 156 55,958

c. Reconciliation of consolidated statement of changes in equity
Foreign
currency Non-
translation Retained controlling
In RM Mil Note reserve profits Total interests
Impact as at 1 April 2011 47(e) 13,403 (14,919) (1,516) (843)
Movement during the period (170) 273 103 53
Impact as at 31 December 2011 47(e) 13,233 (14,646) (1,413) (790)
d. Reconciliation of consolidated statement of cash flows
The adoption of MFRS does not result in material differences to the Groups statement of cash flows.
e. Notes to reconciliations
i. Retained profits
The changes that affected retained profits are as follows:
In RM Mil Note 31.12.2011 1.4.2011

Retrospective application of MFRS 3 and MFRS 127 47(i) 1,060 1,122
Fair value of property, plant and equipment as
deemed cost 47(ii) 348 389
Cumulative currency translation differences deemed
as zero 47(iii) 13,233 13,403
Others 47(v) 5 5
Decrease in retained profits 14,646 14,919
ii. Non-controlling interests
The changes that affected non-controlling interests are as follows:
In RM Mil Note 31.12.2011 1.4.2011

Retrospective application of MFRS 3 and MFRS 127 47(i) 589 622
Fair value of property, plant and equipment as
deemed cost 47(ii) 194 217
Others 47(v) 7 4
Decrease in non-controlling interests 790 843
iii. Foreign currency translation reserve
The changes that affected foreign currency translation reserve are as follows:
In RM Mil Note 31.12.2011 1.4.2011

Cumulative currency translation differences deemed
as zero 47(iii) 13,233 13,403

243
REPORT OF THE AUDITORS TO THE MEMBERS
Report on the Financial Statements
We have audited the financial statements of Petroliam Nasional Berhad, which comprise the statements of financial position as
at 31 December 2012 of the Group and of the Company, and the statements of profit or loss and other comprehensive income,
changes in equity and cash flows of the Group and of the Company for the year then ended, and a summary of significant
accounting policies and other explanatory notes, as set out on pages 121 to 243.
Directors Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation of financial statements that give a true and fair view in
accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of
the Companies Act, 1965 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in
accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entitys
preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the Directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as
of 31 December 2012 and of their financial performance and cash flows for the year then ended in accordance with Malaysian
Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in
Malaysia.
Report on Other Legal and Regulatory Requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its
subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.
b) We have considered the accounts and the auditors reports of all the subsidiaries of which we have not acted as auditors,
which are indicated in Appendix I to the financial statements.
c) We are satisfied that the accounts of the subsidiaries that have been consolidated with the Companys financial statements
are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group
and we have received satisfactory information and explanations required by us for those purposes.
d) The audit reports on the accounts of the subsidiaries did not contain any qualification or any adverse comment made under
Section 174(3) of the Act.
Other Matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act,
1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
KPMG Desa Megat & Co. Johan Idris

Firm Number: AF 0759 Partner
Chartered Accountants Approval Number: 2585/10/14(J)
Chartered Accountant
Petaling Jaya, Malaysia

245
APPENDIX I
SUBSIDIARIES AUDITED BY OTHER FIRMS OF ACCOUNTANTS
KLCC (Holdings) Sdn. Bhd. and its subsidiaries:
Putrajaya Homes Sdn. Bhd. Arah Moden Sdn. Bhd.

Hartamas Riang Sdn. Bhd. City Centre Convention Centre Sdn. Bhd.
Convex Malaysia Sdn. Bhd. Gagasan Ria Sdn. Bhd.
Gas District Cooling (M) Sdn. Bhd. Gas District Cooling (Putrajaya) Sdn. Bhd.
Gilang Cendana Sdn. Bhd. Heritage Lane Sdn. Bhd.
Hasrat Intisari (M) Sdn. Bhd. Ilham Merpati Sdn. Bhd.
HLP Bina Sdn. Bhd. Idaman Putrajaya Sdn. Bhd.
Impian Bebas Sdn. Bhd. Impian Moden Sdn. Bhd.
Kenyalang Murni Sdn. Bhd. Kelana Perkasa Sdn. Bhd.
KLCC Projeks Sdn. Bhd. KLCC Convention Centre Sdn. Bhd.
KLCC Real Estate Management Sdn. Bhd. KLCC Properties Sdn. Bhd.
KLCC Projeks Services Sdn. Bhd. Komponen Abadi Sdn. Bhd.
Kuala Lumpur City Park Berhad Kuala Lumpur City Centre Holdings Sdn. Bhd.
Layar Intan Sdn. Bhd. Kuala Lumpur Convention Centre Sdn. Bhd.
Menara Putrajaya Sdn. Bhd. Lembah Putrajaya Sdn. Bhd.
Pedoman Purnama Sdn. Bhd. Metro Kemasik Sdn. Bhd.
Purnama Sepi Sdn. Bhd. Pedoman Semarak Sdn. Bhd.
Putrajaya Development Sdn. Bhd. Putrajaya Holdings Sdn. Bhd.
Putrajaya Group Sdn. Bhd. Putrajaya Management Sdn. Bhd.
Putrajaya Projects Sdn. Bhd. Putrajaya Properties Sdn. Bhd.
Putrajaya Resources Sdn. Bhd. Putrajaya Ventures Sdn. Bhd.
Senandung Asli Sdn. Bhd. Serba Harapan (M) Sdn. Bhd.
Tapak Senja Sdn. Bhd. Gas District Cooling (Holdings) Sdn. Bhd.
Gas District Cooling (KLIA) Sdn. Bhd. Gas District Cooling (UTP) Sdn. Bhd.
Antara Merdu Sdn. Bhd. Indah Putrajaya Sdn. Bhd.
Pelangi Maksima Sdn. Bhd.
KLCC Property Holdings Berhad and its subsidiaries:
Arena Johan Sdn. Bhd. Arena Merdu Sdn. Bhd.

Asas Klasik Sdn. Bhd. Impian Cemerlang Sdn. Bhd.
KLCC Parking Management Sdn. Bhd. KLCC Urusharta Sdn. Bhd.
Kompleks Dayabumi Sdn. Bhd. Midciti Resources Sdn. Bhd.
Suria KLCC Sdn. Bhd.
Marmel Incorporated and its subsidiaries:
Darton Ltd. Darton U.S. Holdings, Inc.

GCB Associates, LLC Grabhorn Properties, LLC
Sparknight, LLC World Gateway Investments, Inc.
Sparknight (U.S.), Inc. World Gateway Property Owners Association
Paterson, LLC (formerly known as WG WG Parcel B, LLC
Parcel B Management LLC)

APPENDIX I
SUBSIDIARIES AUDITED BY OTHER FIRM OF ACCOUNTANTS (continued)
MISC Berhad and its subsidiaries:
AET Agencies Inc. AET Holdings (L) Pte. Ltd.

AET Inc. Limited AET Lightering Services LLC
AET Offshore Services Inc. AET Petroleum Tanker (M) Sdn. Bhd.
AET Shipmanagement (India) Pte. Ltd. AET Shipmanagement (Malaysia) Sdn. Bhd.
AET Shipmanagement (Singapore) Pte. Ltd. AET Azerbaijan Ltd.
AET Tanker Holdings Sdn. Bhd. AET Tanker India Pte. Ltd.
Asia LNG Transport Sdn. Bhd. AET (UK) Limited
Bunga Kasturi (L) Pte. Ltd. AET Tankers Pte. Ltd.
Leo Launches Pte. Ltd. Asia LNG Transport Dua Sdn. Bhd.
Malaysia Deepwater Floating Terminal (Kikeh) Ltd. FPSO Ventures Sdn. Bhd.
Malaysian Maritime Academy Sdn. Bhd. Malaysia Deepwater Production Contractors Sdn. Bhd.
MISC Offshore Floating Terminals Dua (L) Ltd. Malaysia Marine and Heavy Engineering Sdn. Bhd.
Misan Logistics B.V. MILS - Seafrigo Sdn. Bhd.
MISC Agencies (Australia) Pty. Ltd. MILS - Seafrigo Cold Chain Logistics Sdn. Bhd.
MISC Agencies India Pte. Ltd. MISC Agencies Sdn. Bhd.
MISC Agencies (Netherlands) B.V. MISC Agencies (Japan) Ltd.
MISC Agencies (Sarawak) Sdn. Bhd. MISC Agencies (New Zealand) Ltd.
MISC Agencies (U.K.) Ltd. MISC Agencies (Singapore) Pte. Ltd.
MISC Capital (L) Ltd. MISC Enterprises Holdings Sdn. Bhd.
MISC Ferry Services Sdn. Bhd. MISC Agencies (Thailand) Co. Ltd.
MISC Haulage Services Sdn. Bhd. MISC Offshore Mobile Production (Labuan) Ltd.
MISC International (L) Ltd. MISC Integrated Logistics Sdn. Bhd.
M.I.S.C. Nigeria Ltd. MISC Offshore Floating Terminals (L) Ltd.
MISC Offshore Holdings (Brazil) Sdn. Bhd. MISC Properties Sdn. Bhd.
MISC Ship Management Sdn. Bhd. MISC Tanker Holdings Sdn. Bhd.
MISC Tanker Holdings (Bermuda) Limited MISC Trucking and Warehousing Services Sdn. Bhd.
MTTI Sdn. Bhd. MMHE-SHI LNG Sdn. Bhd.
Malaysia Marine and Heavy Engineering Holdings Gas Asia Terminal (L) Private Ltd.
Berhad (@) MISC Tankers Sdn. Bhd.
Puteri Delima Satu (L) Pte. Ltd. Puteri Delima Sdn. Bhd.
Puteri Firus Satu (L) Pte. Ltd. Puteri Firus Sdn. Bhd.
Puteri Intan Satu (L) Pte. Ltd. Puteri Intan Sdn. Bhd.
Puteri Nilam Satu (L) Pte. Ltd. Puteri Mutiara Satu (L) Pte. Ltd.
Puteri Zamrud Satu (L) Pte. Ltd. Puteri Nilam Sdn. Bhd.
Puteri Zamrud Sdn. Bhd. Techno Indah Sdn. Bhd.
Malaysia Marine and Heavy Engineering MISC PNG Shipping (L) Ltd.
(Turkmenistan) Sdn. Bhd. Western Pacific Shipping (L) Ltd.
AET Tanker Kazakhstan LLP AET Sea Shuttle AS
AET Shipmanagement (USA) LLC AET MCV Delta Sdn. Bhd.
AET Tankers (Suezmax) Pte. Ltd. AET MCV Beta L.L.C.
AET Shuttle Tankers Sdn. Bhd. AET MCV Alpha Pte. Ltd.
AET MCV Alpha L.L.C. AET Brasil STS Ltda
AET MCV Gamma L.L.C.
AET Brasil Services Maritamos Ltda

247
APPENDIX I
PETRONAS Carigali Sdn. Bhd. and its subsidiaries:
Doba Pipeline Investment Inc. E&P Malaysia Venture Sdn. Bhd.

PC Gulf Ltd. PC Lampung II Ltd.
PC (North East Madura IV) Ltd. PC Randugunting Ltd.
PC (SE Palung Aru) Ltd. PC (South Pars) 11 Ltd.
PC (Timor Sea 06-102) Ltd. PC Venezuela Ltd.
PETRONAS Carigali (Australia) Pty. Ltd. PETRONAS Carigali (Baisun) Operating Company LLC
PETRONAS Carigali (Chad EP) Inc. PETRONAS Carigali (Karapan) Ltd.
PETRONAS Carigali (Ketapang) Ltd. PC Ketapang II Ltd.
PETRONAS Carigali (Surumana) Ltd. PETRONAS Carigali (Surkhanski) Operating Company LLC
PETRONAS Carigali (Tanjung Jabung) Ltd. PETRONAS Carigali (Tanjung Aru) Ltd.
E&P O&M Services Sdn. Bhd. PETRONAS Carigali Chad Exploration & Production Inc.
PETRONAS Chad Marketing Inc. PETRONAS Carigali International Sdn. Bhd.
PC Algeria Ltd. () PETRONAS Carigali Mozambique E&P Ltd.
PETRONAS Carigali Niger Exploration & Production Ltd. PETRONAS Carigali Nigeria Limited
PETRONAS Carigali White Nile (5B) Ltd. PETRONAS Carigali Overseas Sdn. Bhd.
PETRONAS Carigali Vietnam (Blocks 10 & 11-1) Ltd. Seerat Refinery Investment Inc.
PETRONAS Carigali (Mandar) Ltd. PC Mozambique (Rovuma Basin) Ltd.
PETRONAS Carigali (Oman) Ltd. PETRONAS Carigali Cameroon Ltd.
PETRONAS Iraq Garraf Ltd. PETRONAS Carigali (Baisun) Ltd.
PETRONAS Carigali Iraq (Halfaya) Ltd. PETRONAS Carigali (West Glagah Kambuna) Ltd.
PETRONAS Carigali Iraq Holding B.V. PETRONAS Carigali Iraq (Majnoon) Ltd.
PETRONAS Carigali Iraq (Badra) Ltd. E&P Ventures Solution Co. Sdn. Bhd.
PETRONAS Chemicals Group Berhads subsidiaries:
Kertih Port Sdn. Bhd. PETRONAS Chemicals LDPE Sdn. Bhd. (formerly known as Petlin
(Malaysia) Sdn. Bhd.)
PETRONAS Chemicals Ammonia Sdn. Bhd. PETRONAS Chemicals Fertilizer Kedah Sdn. Bhd.
Phu My Plastics and Chemicals Co. Ltd.() PETRONAS Chemicals Derivatives Sdn. Bhd. (formerly known as
OPTIMAL Chemicals (Malaysia) Sdn. Bhd.)
PETRONAS Chemicals Glycols (Malaysia) Sdn. Bhd. PETRONAS Chemicals Olefins Sdn. Bhd.
Vinyl Chloride (Malaysia) Sdn. Bhd. PETRONAS Chemicals Trading (Labuan) Ltd.()
PETRONAS Hartabina Sdn. Bhd. and its subsidiary:
Prince Court Medical Centre Sdn. Bhd.

APPENDIX I
PETRONAS International Corporation Ltd. and its subsidiaries:
Aktol Chemicals (Pty.) Ltd. PETRONAS LNG Ltd.

Azania Petroleum (Pty.) Ltd. BGI Properties Ltd.
Citycat Properties (Pty.) Ltd. Cavallo Engineering & Construction (Pty.) Ltd.
Chemico (Pty.) Ltd. Durban Liquid Storage Pty. Ltd.
Engen African Minority Holdings Engen African Holdings
Engen Gabon S.A. Engen Botswana Limited ()
Engen Group Funding Trust Engen Ghana Ltd.
Engen Holdings (Ghana) Ltd. Engen Holdings (Pty.) Ltd.
Engen International Holdings (Mauritius) Ltd. Engen Holdings Zimbabwe (PVT) Ltd.
Engen Lesotho (Pty.) Ltd. Engen Kenya Ltd.
Engen Marketing Botswana (Pty.) Ltd. Engen Limited
Engen (Nigeria) Ltd. Engen Marketing Ltd.
Engen Offshore Holdings (Mauritius) Ltd. Engen Marketing Zimbabwe Ltd.
Engen Swaziland (Pty.) Ltd. Engen Namibia (Pty.) Ltd.
Engen Rwanda Ltd. Engen Producing (Nigeria) Ltd.
Engen Petroleum Zimbabwe (PVT) Ltd. Engen Oil Tanking Ltd.
Engen Petroleum International Ltd. Engen Petroleum (Burundi) Ltd.
Engen Petroleum (Mocambique) Ltd. Engen Petroleum (DRC) Ltd.
Engen Petroleum Zambia Ltd. Engen Petroleum Ltd.
Engen Guinea-Bissau Ltd. Engen Petroleum Tanzania Ltd.
Enpet Insurance Ltd. Engen Petroleum Zimbabwe (PVT) Ltd.
Federico Trading (Pty.) Ltd. Enpet Africa Insurance Ltd.
Ivory Properties (Pty.) Ltd. MITCO Labuan Co. Limited
Imtrasel (Pty.) Ltd. Myanmar PETRONAS Trading Co. Ltd.
Labuan Energy Corporation Limited LEC Ireland Employment Ltd.
New Jack Trading (Pty.) Ltd. MITCO Labuan India Co. Limited
PAPL (Upstream) Pty Limited Nada Properties Company Ltd.
PC JDA Ltd. Natuna 1 B.V.
PC Muriah Ltd. Engen Petroleum (Mauritius) Ltd.
PC Myanmar (Hong Kong) Ltd. Pakenzyl (Pty.) Ltd.
PAPL Services Pty Limited Parsi International Ltd.
PAPL (Upstream II) Pty Limited PC Madura Ltd.
Petroleum Investment Holding Ltd. PAPL (Downstream) Pty Limited
PETRONAS Energy Trading Ltd. () PC Myanmar Holdings Ltd. ()
PETRONAS Carigali Myanmar Inc. PC Vietnam Ltd.
PC Nile Ltd. Petrarch Petroleum (Pty.) Ltd.
PC Greenland Holding Ltd. PETRONAS Australia Pty. Ltd.
PC Greenland A/S PETRONAS Carigali (Jabung) Ltd.
PETRONAS Carigali Myanmar III Inc. PETRONAS Carigali (Turkmenistan) Sdn. Bhd.
Argentinean Pipeline Holding Company S.A. () () PETRONAS Carigali (Urga) Operating Company LLC ()
PETRONAS Carigali (Urga) Ltd. Engen Reunion SA
PETRONAS Marketing Sudan Ltd. PETRONAS Marketing (Thailand) Co. Ltd. ()
Chevron Zimbabwe (Pvt) Ltd. PETRONAS Natuna Sdn. Bhd.
PETRONAS Philippines Inc. () () PETRONAS Brasil E&P Limitada
PETRONAS (Thailand) Co. Ltd. () PETRONAS Sierra Leone E&P Ltd.
PETRONAS International Power Corporation BV () Japan Malaysia LNG Co. Ltd.
249
APPENDIX I
PETRONAS International Corporation Ltd. and its subsidiaries (continued):
Kabuye Depot Holding Company Rwanda Ltd. PICL Marketing Thailand Ltd. ()
PICL Siri Company Limited () PICL (Egypt) Corporation Ltd.
PICL Downstream (Mauritius) Ltd. PSE Ireland Limited
PSE Kinsale Energy Ltd. PSE Seven Head Ltd.
PT PETRONAS Niaga Indonesia () Quickstep 284 (Pty.) Ltd.
PC Mauritania I Pty Limited () Quickstep 286 (Pty.) Ltd.
PC Mauritania II B.V. () Rockyhill Properties (Pty.) Ltd.
PC Brunei Co. Ltd. Sirri International Ltd.
PETRONAS LNG Sdn. Bhd. Sonap Petroleum (South Africa) (Pty.) Ltd.
PETRONAS LNG (UK) Ltd. ENGEN Ltd. (Malawi)
Quickstep 285 (Pty.) Ltd. Valais Investments (Pty.) Ltd.
Renaissance Petroleum (Pty.) Ltd. PETRONAS Carigali Canada B.V.
SEP Burundi Progress Energy Co. Ltd.
PETRONAS Power Sdn. Bhd. () PETRONAS Myanmar Ltd.
PETRONAS Marketing Ventures Ltd. Ximex Energy Holdings (PVT) Ltd.
Thang Long LPG JV Company Ltd. Societe de Transport Mace SA
Voltage Renewables Sdn. Bhd. Engen Company (Mauritius) Ltd.
Trek Petroleum (Pty.) Ltd. Engen Properties (Pty.) Ltd.
Zenex Oil (Pty.) Ltd. Engen Marketing Tanzania Ltd.
Engen Oil Lesotho (Pty.) Ltd.
PETRONAS Maritime Services Sdn. Bhd. and its subsidiary:
Sungai Udang Port Sdn. Bhd.
PETRONAS Assets Sdn. Bhd. and its subsidiaries:
iPerintis Sdn. Bhd. Petrofibre Network (M) Sdn. Bhd.
PETRONAS Lubricants International Sdn. Bhd.s subsidiaries:
PETRONAS Lubricants Italy S.p.A () PETRONAS Lubricants Belgium N.V. ()

PETRONAS Lubrificantes Brasil S.A. () Viscosity Oil Co. ()
PETRONAS Lubricants France S.A.S. PETRONAS Lubricants Poland Sp.Zo.o()
PETRONAS Lubricants Netherlands B.V. () PETRONAS Lubricants Argentina S.A. ()
PETRONAS Madeni Yaglar TIC LTD STI () PETRONAS Lubricants Great Britain Ltd.()
PETRONAS Lubricants Spain S.L.U. () PETRONAS Lubricants Deutschland GmbH()
PETRONAS Lubricants Portugal Lda () FL Nominees Ltd. ()
PLI (Netherlands) B.V. PETRONAS Lubricants (India) Private Ltd. ()
PETRONAS Lubricants China Co. Ltd. () PETRONAS Marketing (Netherlands) B.V.
Finco (UK) Ltd. PETRONAS Lubricants Shandong Co. Ltd. ()
PETRONAS Marketing China Co. Ltd. () PETRONAS Lubricants Africa Ltd.

APPENDIX I
PETRONAS Technical Services Sdn. Bhd.s subsidiary:
PTSSB JLT
Subsidiaries held directly by the Company:
Energas Insurance (L) Limited Institute of Technology PETRONAS Sdn. Bhd.

PETRONAS Management Training Sdn. Bhd. PETRONAS e-Learning Solutions Sdn. Bhd.
PETRONAS South Africa (Pty.) Ltd. () PETRONAS India (Holdings) Co. Pte. Ltd. ()
PETRONAS NGV Sdn. Bhd. PETRONAS Technical Training Sdn. Bhd.
Consolidated based on management financial statements.

Audited by affiliates of KPMG Desa Megat & Co.
@ The shares of this subsidiary are quoted on the Main Market of Bursa Malaysia Securities Berhad.
The shares of this subsidiary are quoted on the Botswana Stock Exchange.

251
Kuala Lumpur City Centre, 50088 Kuala Lumpur Malaysia
T: +603 2051 5000

F: +603 2026 5050
www.petronas.com

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ANNUAL REPORT 2012

Crude Oil Natural Gas

A Exploration, Development F Petroleum Products Transportation Sector

C Processing H Liqueed Petroleum Gas (LPG) Residential; and Commercial Sectors

D Liquefaction I Processed Gas / Peninsular Power Sector

Exploration & Production (E&P)

Gas & Power

*Includes Engen subsidiaries and marketing and trading offices.

PETRONAS ANNUAL REPORT 2012 reimagining energy

3 Our Presence 76 Our People

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PETRONAS ANNUAL REPORT 2012 reimagining energy

The Petroleum Management Unit of PETRONAS

Its E&P subsidiary, PETRONAS Carigali Sdn

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Downstream lubricants manufacturing and marketing

Business arm of PETRONAS, with presence in more

PETRONAS ANNUAL REPORT 2012 reimagining energy

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PETRONAS ANNUAL REPORT 2012 reimagining energy

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PETRONAS ANNUAL REPORT 2012 reimagining energy

Tan Sri Dato Shamsul Azhar Abbas

Faridah Haris Hamid Abdul Rahman Musa @ Onn

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PETRONAS ANNUAL REPORT 2012 reimagining energy

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PETRONAS ANNUAL REPORT 2012 reimagining energy

In 2012, despite huge

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PETRONAS ANNUAL REPORT 2012 reimagining energy

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PETRONAS ANNUAL REPORT 2012 reimagining energy

The Management Committee continues to

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PETRONAS ANNUAL REPORT 2012 reimagining energy

As part of PETRONAS efforts to prevent Effective 1 April 2012, a specific provision on

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Boards Responsibilities Risk Management

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RM120 billion EBITDA

RM78 billion Cash Flow from Operations

Acquired Progress Energy Resources Corp.

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PETRONAS ANNUAL REPORT 2012 reimagining energy

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PETRONAS KEY FINANCIAL INDICATORS

Revenue 291.0 0.9% 288.5 222.8 241.2 210.8 264.2

Return on Revenue 30.6% 37.1% 37.5% 31.9% 33.7%

**** ORRR FY2012 excludes Progress Energy Resources Corp.

09 10 11 Pe11 cy11 12 09 10 11 Pe11 cy11 12 09 10 11 Pe11 cy11 12