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Business Times (Malaysia): New Shell chairman outlines four priorities

New Shell chairman outlines four priorities

May 2 2006

REALISING the challenges ahead in making the company stronger, Shell Malaysia chairman Saw Choo Boon has outlined four priorities to keep its business going and growing.

The four priorities are to maintain the current buoyant economic performance, continue to grow its business, attract more and different global shared service hubs to Malaysia, and continue to recruit and train staff.

“All these are important to ensure that we will be present in Malaysia for another 100 years,” he said.

During a recent interview with Business Times, Saw spoke at length about Shell Malaysia’s progress since it first discovered oil well in Miri, Sarawak, in 1910, the outlook of the industry in Malaysia, and commented on the current escalating price of oil.

The following are excerpts from the interview:

Q: As the third Malaysian to become Shell Malaysia chairman, how do you feel about the appointment? How long have you been in Shell and where were you prior to joining the company?

A: You can call me a “madein-Malaysia” chairman as I received all my education locally. I am from Perak and graduated with a science degree in chemistry from Universiti Malaya. I have been with the company for 36 years, starting as a refinery technologist before assuming several managerial responsibilities and assignments, both in Malaysia and abroad.

I returned from the Netherlands in 1990 to manage supply, trading and planning for Shell Malaysia. In 1995, I became the first Malaysian managing director of Shell MDS until 1997 when I assumed the oil products managing director’s position. Since 1999, I have been managing regional and global businesses, the last one before assuming chairmanship of Shell Malaysia being the group’s global marine products business.

I am, of course, pleased to be appointed to the position and feel privileged to be entrusted with leading this great company. Indeed Shell has a 115-year history and presence in Malaysia and is an integrated, “well-to-wheel” energy company comprising 33 wholly-owned, joint-venture and listed companies.

We operate in three core business sectors, exploration and production, downstream (formerly known as oil products), and gas and power. Additionally, there are seven global shared services support hubs, which the group has strategically located in Malaysia.

Q: What are your plans for the company? What do you expect from the company?

A: Shell Malaysia is in a strong profitable position and is growing year on year. We have invested over RM70 billion over the last four decades and we have a current investment commitment of over RM12 billion from 2003 to 2007 — this is over RM2 billion each year.

There are over 5,800 diverse and talented staff employed nationwide, 80 per cent of whom are Malaysians. Testimony to this successful global talent development, we have over 250 Malaysian talents working in management and leadership positions in Shell worldwide — a few as chairman of Shell in countries including China and Egypt.

In line with Shell’s global business principles, Shell Malaysia aspires to operate all business efficiently, responsibly and profitably.

We aim to maintain a healthy, safety and environmental performance we can be proud of; to earn the confidence and trust of customers, shareholders and society; to be a good neighbour and to contribute to sustainable development.

I would like to add that Shell provides very material sponsorship and resources of over RM10 million in environmental conservation, social development and education as well as capacity building.

I certainly want Shell to be here for another 100 years, continuing to pursue high standards of product quality and service performance, striving to meet stakeholder and shareholder expectations and contributing to nation building and wealth creation in Malaysia.

Q: What is your outlook of the oil and gas industry in Malaysia?

A: We believe the outlook of the oil and gas industry in Malaysia is very positive and that is why we will continue to invest at substantial levels. There are still significant prospects in Malaysia and we can expect to see a continual high level of activity in exploration and production.

Malaysia continues to enjoy strong gross domestic product growth which will mean increased energy usage with beneficial impact on the downstream sector.

Q: What is your view on the current escalating price of world crude oil? What is your opinion on the use of renewable energy as a substitute for fossil fuels?

A: The Malaysian Government is currently subsidising the price of diesel for the transport and fisheries sectors. This will help to cushion the full impact of the recent petroleum price increase, especially on the transport sector. If the cost of goods goes up due to increased transportation cost, this will have a significant impact on inflation.

The Government has also put in place a process to ensure the subsidised diesel goes to intended sector, for example, the vehicles entitled to subsidised diesel are issued e-cards for them to pump from retail stations. This prevents the abuse of subsidised diesel where large quantities are smuggled to neighbouring countries.

In support of the subsidised diesel fleet card promotion, Shell hosted several “open days” around the country to assist diesel customers with card applications. Shell intends to continue to invest and participate in the downstream sector.

We expect strong vehicle sales to continue, more so with the National Automotive Policy in place and a clear direction of where the industry is heading. We, therefore, aim to capture the growth opportunities in line with economic growth.

The Government has also been supporting and sustaining the spike in retail prices through the automatic pricing mechanism (APM). We believe the APM is serving its purpose and should continue to be used by the Government to regulate the retail price as it uses various options of subsidies and reduction in duties to help Malaysians mitigate the full brunt of rising crude oil prices.

The Government has rightly mitigated the gross distortion to the market price by progressively increasing the pump price, and encourage more efficient use of fuels.

The promotion of renewable energy is also a move in the right direction. Shell supports the Government’s policy on biofuels.

An area which I think we should do more is to encourage people to conserve energy.

Q: Petroliam Nasional Bhd (Petronas) is considered by local oil and gas companies as a partner in overseas ventures, but a stiff competitor in the domestic market. Do you share this view? Is there any joint effort between Shell and Petronas for overseas venture in the pipeline?

A: We are both partner and competitor of Petronas in Malaysia. We certainly would want to see that partnership extended to overseas ventures given the right opportunities and we are continually exploring for these opportunities.

Petronas Dagangan Bhd is our preferred collaboration partner in the downstream logistics optimisation initiatives. Our collaborative effort has gone a long way.

Internationally, the progress is encouraging. We are also exploring areas of cooperation in Indonesia and Thailand for the supply of oil products for the retail business.

Q: The local oil and gas industry is said to be facing a shortage of skilled manpower. Can you comment on this? Is Shell Malaysia facing a similar situation? What is Shell Malaysia doing to overcome such a shortage?

A: The exciting growth and expansion opportunities in our core and specialised service hub businesses, especially in our exploration and production business, are attracting new people to join Shell. Talent attraction, recruitment and retention are very much a priority for Shell, which promotes itself as an equal opportunity employer.

In the short term, we are recruiting experienced professionals much more aggressively than we have before but see our investment in rebuilding Shell’s presence at Malaysian university campuses as the more sustainable longer term solution.

I was, therefore particularly pleased to see the focus on education in the Ninth Malaysia Plan. Our open work culture, our investment in employees’ development and the unparalled opportunity to grow careers internationally are really the things that draw so many talented people to Shell.

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