Wednesday, August 31, 2005

Mr Jon Chadwick

Chairman, Shell Malaysia

Yang Berbahagia Datuk-Datuk Datin-Datin, ladies and gentlemen - a very good evening to you all.

Thank you very much for your kind invitation to address this evening's gathering - Lilian and I are delighted to be with so many friends again.

I have pretty good memories of my teenage years in the 70s - our "groovy" theme for tonight. Teens can be a terribly troubling period ... and while I had my fun, I may not necessarily wish I was back there ever again!

Ladies and gentlemen, on behalf of Shell Malaysia, I would like to take this opportunity to thank you personally for your continuing contribution and dedication to Shell Malaysia. While you are our single most valued asset, you are also Shell customers, Shell shareholders and therefore, very important stakeholders of the Company.

I would like to spend some time to briefly update you on some of the latest developments in our company. In summary, we are investing in Malaysia at a staggering pace… at record levels we have never done before. Over RM 7 Mln capital investment is made every day by our company - or about RM 2.6 Bln every year. Our Businesses are flourishing, we have over 4,990 staff in the Shell Malaysia family and we are delivering very well on all our short term targets.

Ladies and gentlemen, allow me to take a look at each business…

In Oil Products.… our retail and refining business, ...

  • We are still the retail market share leader in Malaysia. We continue to sell more products to consumers in Malaysia than Petronas - an achievement I am very proud of. Both our retail and commercial businesses are going all out to improve profitability and market share. I believe that today we run the best Shell retail business in Asia Pacific … and probably the world. We have had an astounding 3rd and 4th quarter ... this is proof that our super-brand is very, very strong in Malaysia - something we fiercely protect.
  • Shell Refining Company in Port Dickson recently achieved a record profit - in the third quarter despite very tough refining business conditions around the world. The SRC share price has appreciated this year and I am determined that the Port Dickson refinery will be the most admired refinery in Asia Pacific. We paid out USD 800 million in dividends to our shareholders. We are, most definitely on-track towards delivering that objective.
  • SRC has also recently won - for the second year running - the Best Environmental Reporting Award of all listed companies in Malaysia. I understand we are aiming for a hattrick next year.
  • We were given the honour by the Group to be the first company in the Shell World to launch the global positioning campaigns for Helix Motor Oils and for our fuels, Shell Super and Shell V Power.

In Exploration and Production we are investing at record levels, ...

  • Today SM-EP is producing over 3,200 MMscf/d of gas and over 80,000 bbl/d of oil - we are producing at extremely impressive levels in both Sabah and Sarawak. We have also secured an extension of our right to participate in the Baram Delta fields.
  • Looking at Development projects, SM-EP implemented several major projects, notably the B11 project involving “Twister”, a separator with no moving parts - an innovative technology - the first in any Shell Group offshore development. Also SM-EP recently obtain secured Shell shareholder support to develop, or rather redevelop E11 - the largest investment project in Asia Pacific this year - RM 1.6 Billion Capital investment in the coming years.
  • Exploration - we made several significant discoveries in offshore Sarawak, Sabah and we are about to announce our very first discovery in Peninsular Malaysia. Our discoveries are in increasingly deeper waters. This will undoubtedly improve our reserves position. In 2004, a significant proportion of SM-EP’s budget, more than 2003, will be allocated for exploration activities. We are particularly excited on some of the opportunities in Sabah waters.
  • We are also participating in EP activities offshore Peninsular Malaysia. This is a breakthrough for Shell Malaysia ... as you know, up till recently, all our work has been concentrated offshore Sabah and Sarawak.
  • SM-EP is undergoing a re-organization…… in a nutshell - similar to Shell’s Oil Products business, we will restructure into a regional entity with a functional set up. My boss…. On the EP side ….. will be in Singapore. Miri has become the technical hub for all Shell’s upstream activities in the Asia Pacific region - another recognition of the tremendous talents of Malaysian staff.

In our Downstream Gas business ...

  • We continue to make headway. The Gas-to-Liquids products that we produce in Bintulu earned recognition as the official fuel at next year’s Olympic Games in Athens.
  • We have sold products all over the globe this year. Our SMDS sales team has been very aggressive in the international markets and 2004 will surely show the fruits of their labour.
  • SMDS has experienced some difficult times in the past but things are looking up. Plans are in place to improve the profitability. Hock Cheng, now Shell’s Chairman in China, has been replaced by Idris Jala, a Sarawakian - another testimony to the great talents of our Malaysian staff - talent which is well recognized in the Shell Group. This country is exporting home-grown talent - Shell people - all around the world, and I am again, very proud of this unparalleled quality we have.
  • Our LNG business has also done well this year - when the Japanese had their nuclear crisis, they turned to Bintulu and we met their increased supply needs.

And some very notable Global Service Hubs…

  • SITI in Cyberjaya, one of the three Global IT centers in the Shell Group, is delivering first class services around the globe and rapidly expanding. From under 200 staff mid last year, SITI has now grown to over 800 staff today. It will have over 1200 staff by the end of next year. 85% of these Shell staff are bright young Malaysians - the average age is 31. SITI has established itself as a prominent player in the business community in Cyberjaya - we are always mentioned in the media and by the Government when it comes to credible MSC players.
  • ATRACC, providing back office financial service, is now serving Shell companies across Asia Pacific. 300 young staff and a management team of 1 man and 7 ladies run this shop.
  • Shell People Services and Global Solutions are also growing their signature in Malaysia.
  • Shell Services East Zone, Shell Finance Services and Shell Treasury, SuperKad Services and the Retail Learning Academy in Shah Alam - Ladies and gentlemen, all these centres of excellence are right here in Malaysia and supporting the Shell Group across the Businesses. Additionally, our BonusLink Loyalty Programme is the largest in Asia. They are all growing and glowing the Brand.
  • We now have over 1,800 staff in hub businesses providing recruitment and learning, engineering, IT support, as well as financial services.

And where are we going for 2004 ...

We want grow! And to do so, we will continue to invest materially in Malaysia and in Malaysians. We are looking at the most successful Malaysianisation programme among FDIs in this country. In Shell we have a 5% Mat Salleh ratio to a 95% Malaysian workfore.

More deepwater exploration, more production ... we are looking at higher volumes from our GtL plant, maximising our downstream profitability and looking at SRC to reinvent itself to be the most admired refinery in Asia Pacific.

Shell Malaysia has its more than fair share of issues and challenges that I foresee ahead of us...

  • Business wise, we will continue to experience a difficult business environment challenged by increasingly aggressive competition and more demanding customers’ who continue to change their preferences. Additionally, we fight a global refining surplus (which is particularly bad in Asia Pacific) and we face volatile oil prices ... despite the capture of and speculation surrounding Saddam Hussein.
  • Reputation wise, there will be a major challenge to sustain our stakeholders’ favorable and supportive view of us as our aspirations are ambitious - we have big plans for Malaysia.
  • Staff must work harder and harder ... and still harder to maintain our cost-competitiveness.
  • HSSE - in spite of having the most stringent standards and management systems in the world, our road fatalities and third-party injuries still tragically happen.
  • Security - yes national and international security issues are now on the meeting agenda more than they used to be.
  • Petronas is a very serious competitor - increasingly well managed and increasingly aggressive. Don't forget, we are fighting the global giant in its home base.
  • Our hubs on the global map, with their 'pioneering' and infrastructural challenges, have high expectations and service levels to live up to.
  • In EP, we are maximising our reserves and looking at replacing the matured ones

Ladies and Gentlemen,

Shell has been in Malaysia for over 113 years - we are very proud of our past and our plans for the future. I recently went with my boss, Malcolm Brinded, to see Pak Lah in his office in Putrajaya. Malcolm said “Shell has been here for over 100 years and we would like to be here for another 100”. And Pak Lah replied “Why put a limit on it?!”

We have more Malaysians outside than expatriates in Malaysia - a fabulous achievement. Malaysia Boleh! This must be heartening to hear because what it means is that we doing our best to continue the tradition of everyday excellence and performance established by the earlier generations of Shell employees……. you! What else can I say, folks. SHELL BOLEH!

My final message to you is to continue to put into practice and promote what has made, and continues to make you so driven and so special, and how you have made Shell different and successful in this wonderful country. More power to all of you and your loved ones, and I hope you have a fabulous or "groovy" time tonight. I know Lilian and I will. Thank you very much for your time and your consideration.

Issued by Shell Malaysia Corporate Affairs.

For more information, please contact:
Lina Yap Abdullah at tel. 03 20912252, h/p. 012 3020221, fax. 03 20912990
Or email: lina.yap-abdullah@shell.com

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