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PETRONAS GAS BERHAD198301006447 (101671-H)

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PUSHING

ACCELERATING MOMENTUM

P E T R O N A S G A S B E R H A DI N T E G R A T E D R E P O R T 2 0 1 9

PETRONAS GAS BERHAD (PGB) continues to operate at world-class

standards befitting our role as a Leading Gas Infrastructure and

Centralised Utilities Company. With the liberalisation of the Malaysian

gas market, we foresee exciting new developments ahead for the

industry and we are accelerating momentum towards being a more

competitive solutions provider in this new era.

We will continue pushing forward in elevating our operational and

commercial efficiencies across our four core businesses as well as

achieving our growth aspirations. We will also continue our pursuit to

expand our customer base by targeting both existing and emerging

industrial hubs. With digitalisation, underpinned by our strong systems

and processes to maintain world-class standards, we are confident that

our strategies will continue to strengthen our presence and provide

a sustainable future for PGB.

We remain committed in delivering value to our stakeholders and meeting

the nation’s needs in a responsible manner.

PETGAS AR2019 IR COV FA_13032020.indd 6 14/03/2020 2:15 PM

PETRONAS GAS BERHAD INTEGRATED REPORT

SCOPE AND BOUNDARY OF REPORTING

This report covers the primary activities of the Group, our business segments and our subsidiaries as well as joint venture operations, with the aim to address the information requirement of long term investors. We also present information relevant to the way we create value for other key stakeholders, including our employees, customers, government agencies and authorities, suppliers and communities.

This report covers the period from 1 January to 31 December 2019, unless otherwise stated.

At PETRONAS Gas Berhad (PGB), we advocate transparency to

stakeholders and we are honoured to present this report as the

primary source of information on our Group’s financial and non-

financial performance for 2019. It forms part of our reporting suite

which comprises:

REGULATIONS COMPLIED

• Bursa Malaysia Main Market Listing Requirements• Companies Act 2016 • Malaysian Code on Corporate Governance 2017• Corporate Governance (3rd Edition) issued by

Bursa Malaysia• Malaysian Financial Reporting Standards• International Financial Reporting Standards

INTEGRATED REPORT<IR>

GOVERNANCE& FINANCIALREPORT

SUSTAINABILITYREPORT

AboutThis Report

Our Integrated Report is the primary report to our stakeholders, showcasing our value creation proposition and delivery.

Our Governance and Financial Report provides our comprehensive approach towards protection of value in our activities, together with our financial performance of the year.

Our Sustainability Report details our efforts and commitment towards creating a sustainable business, positioned for long term success.

RATIONALE

PETRONAS Gas Berhad continues to operate at world-class standards befitting our role as a Leading Gas Infrastructure and Centralised Utilities Company. With the liberalisation of the Malaysian gas market, we foresee exciting new developments ahead for the industry and we are accelerating momentum towards being a more competitive solutions provider in this new era.

We will continue pushing forward in elevating our operational and commercial efficiencies across our four core businesses as well as achieving our growth aspirations. We will also continue our pursuit to expand our customer base by targeting both existing and emerging industrial hubs. With digitalisation, underpinned by our strong systems and processes to maintain world-class standards, we are confident that our strategies will continue to strengthen our presence and provide a sustainable future for PGB.

We remain committed in delivering value to our stakeholders and meeting the nation’s needs in a responsible manner.

Scan this QR code with your smart device to access our Integrated Report suite.

Integrated Reporting cross-referencing

1 Strategy

2 Performance

3 Business Review

4 Financials

5 Investor Relations

6 Corporate Governance

7 Sustainability

8 Operating Environment

9 Key Stakeholders

10 Material Matters

11 Risk Management

12 Our Value Creation

We create value through these six identified capitals:

Financial

Nature

Asset

Intellectual

Human Capital

Discussions that relate to our stakeholders have beenidentified and highlighted with the following icons:

Investors and Funding Institutions

Customers

Business Partners

Suppliers and Vendors

Employees and Unions

Government Agencies and Authorities

Communities

ANNUAL GENERAL MEETING FOR PETRONAS GAS BERHAD

The Majestic Hotel Kuala Lumpur

Thursday, 25 June 2020

10.00 a.m.37 th

SUSTAINABILITY

Consistent with our commitment to sustainability, we also provide extensive report on how we respond to stakeholders in relation to economic, environmental, social and governance aspects.

Social and Relationship

8 About PETRONAS Gas Berhad8 Who We Are10 What We Do12 Where We Operate

14 Our Group Business Activities and Processes

18 Our Key Milestones20 Our Group Corporate Structure21 Why Invest in Us

A. Forward Strategies52 Our Operating Environment 56 Stakeholders Engagement58 Material Matters60 Key Risks and Mitigation64 Strategic Blueprint66 Strategic Focus Areas and Key Performance Indicators68 Performance Scorecard

24 Chairman’s Statement28 Message from MD/CEO 34 Group Financial Review40 2019 Key Highlights

40 Business Highlights40 Financial Highlights41 Sustainability Highlights

OUR APPROACH TO INTEGRATED REPORTING

What’sInside THIS REPORT

44 Our Value Creating Business Model46 Key Resource Capitals:

Role and Scoreboard48 Stakeholder Value Creation

1

4

2 3OVERVIEW OF PGB

OUR VALUE PROPOSITION

KEY MESSAGES VALUE WE CREATE

B. Forward Driven Performance74 5-year Group Financial Analysis76 5-year Financial Summary78 5-year Group Financial Information79 Group Quarterly Performance80 Simplified Group Statement of

Financial Position82 Key Interest Bearing Assets and

Liabilities82 Statement of Value Added83 Distribution of Value Added84 Investor Relations87 Financial Calendar88 Share Price Performance

C. Forward Focused90 Business Review

90 Gas Processing92 Gas Transportation94 Regasification96 Utilities98 Ancillary Services

132 Enriching Lives Through Sustainable Practices

102 Board of Directors104 Board at a Glance106 Profile of the Board of Directors114 Leadership Team116 Profile of Leadership Team120 Organisation Structure

124 Value Creation Through Good Governance

140 Corporate Information141 Corporate Directory 142 Notice of Annual General Meeting 145 Administrative Details for the 37th AGM150 Glossary

• Proxy Form

Chairman’s Statement

2019 Key Highlights

Strategic Focus Areas & Key Performance Indicators

Stakeholder Value Creation

page 24

page 40

page 66

page 48

HIGHLIGHT:

7 8

5 6

TOWARDS A SUSTAINABLE FUTURE

OTHER INFORMATION

OUR LEADERSHIP

RESPONSIBLEGOVERNANCE

STATEMENT OF PURPOSE

INFLUENCING OUR INTEGRATED THINKING

EXTERNAL FACTORS

OUR BUSINESS APPROACH

A progressive energy and solutions partner enriching lives for a sustainable future

Operating Environment

Key external factors which include aspects of legal, commercial, social, environment and political context, that could affect PGB’s ability to create value in the short, medium and long term.

8 Read more on page 52.

Stakeholders Engagement

The outcome of our communications with key stakeholders, including how and to what extent we understand, take into account and respond to their legitimate needs and interests.


Our Strategic Thrusts

• Operational Excellence• Commercial Excellence• Growth• People, Systems and Culture


MATERIAL MATTERS IMPACTING THE GROUP

PROCESS

Identify

We conduct the necessary research to analyse our business context, considering our operating environment, the resources we rely on, as well as feedback from our stakeholders (internal and external) to assess matters that can be of financial, reputational, operational, environmental, social, strategic or legislative significance. Based on the matters identified, we discuss our risks and opportunities to each component accordingly.

Prioritise

Using the outcome of the aforementioned analysis as well as the key risks and opportunities identified, we prioritise those matters that are most material to our ability to create sustained value in the short, medium and long term.

Integrate

We integrate our material matters into our strategy, and track our performance against this strategy using clearly identified strategic focus areas and key performance indicators (KPIs) that are cascaded and monitored throughout the organisation.

Our Approach to Integrated Reporting

GOVERNANCE& SUSTAINABILITYAPPROACH

Our Ability to Create and Protect Value

Our governance approach promotes strategic decision-making that combines long term and short term outcomes to reconcile the interests of the Group and the society in our pursuit of sustainable value. Our governance framework supports the creation and protection of value in our activities which enables ethical and effective leadership, corporate citizenship and sustainable organisation.

Similarly, our sustainability approach reflects our concerted efforts to promote long term value creation.

Read more on Corporate Governance in our Governance & Financial Report

Read more on Sustainability in our Sustainability Report6 7

INTEGRATED REPORT 2019p.4

KEY PERFORMANCE INDICATORS

STRATEGY

We present the list of measurable values, both leading and lagging, used to gauge our effectiveness in achieving targets under identified strategic focus areas.


OUR RESPONSEMATERIAL MATTERS IMPACTING THE GROUP

PROCESS

OUTCOME

OperationalReliability, Delivery

and Efficiency

Health, Safety, Security and

Environment (HSSE)

Business Growth

Gas Market Liberalisation

Human Capital

Compliance to Regulation

Sustainability

Gas Market Dynamics

We elaborate on PGB’s ‘R2 Game Plan: 301Q99 Pushing Foward’ as the response to address Material Matters, based on the Group’s strategic thrusts i.e. Operational Excellence, Commercial Excellence and Growth, underpinned by People, Systems and Culture.


Read more on Material Matters on page 58.

Read more on our Key Risks and Mitigation on page 60.

10

11

Scorecard

We prepare periodic tracking of our progress against the agreed KPIs for performance assessment and corrective actions, if required.


Business Review

We conduct detailed periodic analysis on respective businesses including operational highlights, challenges/risks and initiatives for performance assessment and corrective actions, if required.


Financial Performance

We report financial-related performance metrics as well as capital market activities.

4 Read more on Financial Performance on page 74.

5 Read more on Investor Relations on page 84.

Key Resource Capitals

Our integration between capitals and processes, including the necessary trade-offs in order to create value over time for our stakeholders.

Read more on page 46.12

Read more on page 48.12


Our showcase of stakeholder engagement initiatives and the corresponding results, as way of value we offer to our stakeholders.

2 3 4 5 6p.51

PUSHING FORWARD ACCELERATING MOMENTUM

PGBOverview of

8 About PETRONAS Gas Berhad8 Who We Are10 What We Do12 Where We Operate

14 Our Group Business Activities and Processes18 Our Key Milestones20 Our Group Corporate Structure21 Why Invest in Us

1

OVERVIEW OF PGB INTEGRATED REPORT 2019p.8

STATEMENT OF PURPOSE

A progressiveenergy andsolutions partner enriching lives fora sustainablefuture

WHO WE ARE

We are Malaysia’s Leading Gas Infrastructure and Centralised Utilities Company and one of the largest companies on the local bourse in terms of market capitalisation, with core businesses in Gas Processing, Gas Transportation, Regasification and Utilities.

A Leading Gas Infrastructure and Utilities Company

• We are a Business Entity

• Gas Infrastructure and Utilities is our Core Business

• We Operate Safely, Reliably and Competitively

• We Optimise the Gas Value Chain to Maximise Returns for our Stakeholders

VISION

MISSION

LOYALTY

PROFESSIONALISM

COHESIVENESS

INTEGRITY

SHARED VALUES

About PETRONAS Gas Berhad

2 3 4 5 6p.91


HOW WE CREATE SUSTAINABLE VALUE

HOW WE DIFFERENTIATE OURSELVES

PETRONAS CULTURAL BELIEFS

VISION AND MISSION

STRATEGIC OBJECTIVES

MATERIAL MATTERS

TARGETS, RESULTS & PRIORITISATIONS

STRATEGIC THRUSTS

GOVERNANCE

OUR INTEGRATED GAS INFRASTRUCTURE AND

UTILITIES FACILITIES

OUR OPERATIONAL EXCELLENCE & RELIABLE PRODUCT DELIVERY AT

COMPETITIVE COST

OUR PROFITABLE AND BALANCED BUSINESS

PORTFOLIO

OURHIGH-PERFORMING

PEOPLE

FOCUSED EXECUTION

OWN IT!

I plan, commit and deliver with discipline

I own the results and don’t blame others

RESULTS MATTERI stretch my limits to

deliver superior results

TELL ME

NURTURE TRUST

SHARED SUCCESS

I seek, give and act positively on feedback

I always keep my promise and build mutual trust

I collaborate for the greater good of PETRONAS


GAS PROCESSING

GAS TRANSPORTATION

UTILITIES

Process PETRONAS’ upstream natural gas from offshore

Peninsular Malaysia into salesgas, ethane, propane and

butane

Transport salesgas to shippers’ end-customers through Peninsular Gas Utilisation (PGU) pipeline network and Pengerang Gas Pipeline (PGP)

REGASIFICATION

Receive capacity users’ imported Liquefied Natural Gas (LNG), store it in LNG Regasification Terminal Sungai Udang’s (RGTSU) floating storage units and LNG Regasification Terminal Pengerang’s (RGTP) storage tanks and convert the LNG to salesgas

Produce, market and supply electricity, steam, industrial gases and other utility products to various petrochemical businesses and third parties in Kertih and Gebeng

BUSINESS UNITS AND HIGHLIGHTS

WHAT WE DO


2 3 4 5 6p.111


GROSS PROFIT

REVENUE

RM1.7

MILLION

BILLION

RM816.5 RM799.5

RM1.2REVENUE

RM611.0 RM160.1

RM1.2BILLION

GROSS PROFIT GROSS PROFIT

REVENUE

RM1.4

MILLION MILLION

BILLION

GROSS PROFIT

REVENUE

MILLION

BILLION

SABAHKimanis

SOUTH CHINA SEA

SARAWAK

GPS

UtilitiesKertih

SOUTH CHINA SEA

TERENGGANU

VRSBUtilities Gebeng

GPK

PAHANG

OF MELAKA

SELANGOR

MELAKA

JOHOR

SINGAPORE

NEGERISEMBILANSTRAITS

PULAUPINANG

PERAK

KEDAH

KELANTAN

PERLIS



Headquartered at

PETRONAS Twin Towers,

Kuala Lumpur

Eight operating sites across

Malaysia

Two gas processing

complexes in Kertih and

Santong, Terengganu

Two utilities facilities in

Kertih, Terengganu and

Gebeng, Pahang

2,623 km of pipeline in

Peninsular Malaysia

Two LNG regasification

terminals in Sungai Udang,

Melaka and Pengerang,

Johor

Operations and

maintenance (O&M) service

provider

WHERE WE OPERATE

OUR PRESENCE

Industry

Compressor Station

Gas Processing Plant

Utilities Plant

Tenaga Nasional Berhad Power Station

Independent Power Producer Power Station

Kimanis Power Plant

Offshore LNG Regasification Terminal

Onshore LNG Regasification Terminal

Air Separation Unit

O&M Services

LEGENDS

MAIN PGU PIPELINE LENGTH GAS – IN

PGU I : Kertih – Teluk Kalong 32 km 1983

PGU II 714 km

Sector I : Teluk Kalong – Segamat 265 km 1991

Sector II : Segamat – Kapar 241 km 1991

Sector III : Segamat – Plentong 208 km 1991

PGU III 450 km

Sector I : Meru – Lumut 184 km 1996

Sector II : Lumut – Gurun 130 km 1996

Sector III : Gurun – Pauh 136 km 1996

Loop 1 : Kertih – Segamat 266 km 1999

Loop 2 : Segamat – Meru 228 km 2000

Total 1,690 km

OVERALL PIPELINE LENGTH (KM)

Main PGU 1,690

Lateral 458

Liquid 373

Sungai Udang 30

Pengerang 72

Total 2,623

SABAHKimanis

SOUTH CHINA SEA

SARAWAK

GPS

UtilitiesKertih

SOUTH CHINA SEA

TERENGGANU

VRSBUtilities Gebeng

GPK

PAHANG

OF MELAKA

SELANGOR

MELAKA

JOHOR

SINGAPORE

NEGERISEMBILANSTRAITS

PULAUPINANG

PERAK

KEDAH

KELANTAN

PERLIS

2 3 4 5 6p.131


N

COMPLEX GPP CAPACITY (mmscfd)

Gas Processing Kertih (GPK)

1 310

2 250

3 250

4 250

Gas Processing Santong (GPS)5 500

6 500

Total 2,060

OPERATIONS & MAINTENANCE (O&M) SERVICES

1. Trans Thai-Malaysia (M) Sdn Bhd (TTM)2. Voltage Renewables Sdn Bhd (VRSB)

COMPLEX

PRODUCT CAPACITY

Electricity (MW)

Steam (t/h)

Oxygen(Nm3/h)

Nitrogen(Nm3/h)

Utilities Kertih (UK) 160 600 32,000 54,500

Utilities Gebeng (UG) 96 360 – 8,240

Total 256 960 32,000 62,740

LNG REGASIFICATION TERMINALCAPACITY(mmscfd)

Sungai Udang, Melaka 530

Pengerang, Johor 490


Our Group Business Activities and Processes

ACTIVITIES AND PROCESSESSOURCES

UPSTREAM

WATER AIR

FUEL GAS

LNG CARGOES

MALAYSIA - THAILAND

JOINT DEVELOPMENT

AREA

RE

GA

SIF

ICA

TIO

N

(RG

T)

GA

S T

RA

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PO

RT

AT

ION

(G

T)

UT

ILIT

IES

(U

T)

GA

S P

RO

CE

SS

ING

(G

P) Feedgas

LNG

Salesgas

Salesgas Chemical

Raw Water Air

Gas Transportation (GT)

RGTP

OnshorePipeline

OffshorePipeline


GPS

UK

UG

GPK

ASU

KIMANIS

RGTSU

Butane

Propane

Ethane

Salesgas

Steam

Industrial gases

Others

Industrial gases

Electricity

Salesgas

2 3 4 5 6p.151


ACTIVITIES AND PROCESSES PETRONAS AND PGB CUSTOMERS GROWTH



Export Terminal

New Nitrogen

Generation Unit*

Ancillary Services:

– LNG Bunkering*

– Gassing Up Cooling Down (GUCD)

– LNG Reloading

– LNG Truck Loading*

*In progress

Legend

Resources

Products

Salesgas pipeline

Products pipeline

LNG pipeline

UT delivery to Customers

Electricity Transmission Grid

RAPID

Small industries

Small commercial

Residential

SESB

TNB

Domestic to Independent Power Producers (IPP)

Export to Senoko/Keppel

Petrochemical plants

Large industries

Export

Power Substation

Pengerang Gas Pipeline


Pip

elin

e n

etw

ork

mo

re t

han

2,5

00

km

acr

oss

Pen

insu

lar

Mal

aysi

a

Salesgas

Salesgas

Salesgas


Our Group Business Activities and Processes

FEEDGASFEED LIQUID

*Resources and products belong to customer

FEED PRE-TREATMENT UNIT

ACID GAS REMOVAL UNIT

DEHYDRATION &MERCURY REMOVAL UNIT

LOW TEMPERATURESEPARATION UNIT:

1. De-Methaniser Column

PRODUCT RECOVERY UNIT: 1. De-Ethaniser Column 2. De-Propaniser 3. De-Buthaniser Column

CONDENSATE STRIPPER

Carbon Dioxide

Remove

Moisture

Water & Chloride

Mercury

Hydrogen Sulphide

Liquid

Gas

Product

Contaminants

By-product

PGU PIPELINE

TERENGGANU CRUDE OIL TERMINAL

PETROCHEMICAL PLANTS

LARGE INDUSTRIES

STABILISEDCONDENSATE

SALESGAS

ETHANE

PROPANE

BUTANE

Salesgas from:

GAS PROCESSING PLANTS

LNG REGASIFICATIONTERMINALS

MALAYSIA-THAILANDJOINT DEVELOPMENT AREA


PIPELINE

COMPRESSOR STATION

METERING STATION

Tenaga Nasional Berhad

Gas Malaysia Berhad

Independant Power Producers (IPP)

Petrochemical Plants

Senoko/Keppel

Large Industries

POWER

NON-POWER

SERVICESRESOURCES* TRANSPORTATION SYSTEM

Salesgas Delivered to Customer

PRODUCTS*RESOURCES* GAS PROCESSING PLANT

2 3 4 5 6p.171


PENGERANGINTEGRATED

COMPLEX

PGU PIPELINE

SALESGAS

(offshore) (onshore)

STORAGE UNIT

REGASIFICATION UNIT

RGTSU RGTP

LIQUIFIED NATURAL GAS


REGASIFICATION PLANTRESOURCES* SERVICES

WATER

AIR

FUEL GAS

Product

By-product

HHP : High High Pressure

HP : High Pressure

LP : Low Pressure

IP : Intermediate Pressure

NGU : Nitrogen Generation Unit

N2 : Nitrogen

O2 : Oxygen

Natural Gas

Treated Water

Ambient Air

Effluent Water

DEMIN PLANT

EFFLUENT WATER PLANT

COOLING WATER PLANT

AIR SEPARATION / NITROGEN GENERATION UNIT

COGENERATION PLANT

Electricity

Condensate water

Electricity / LP SteamIP Steam / HP Steam / HHP Steam

• Demineralised Water • Treated Water• Fire Water

• LP Nitrogen• HP Nitrogen• LP Oxygen

• Liquid Nitrogen• Liquid Oxygen• Liquid Argon

Waste Water

TNB

PETROCHEMICAL PLANTS

INDUSTRIES

INDUSTRIES

UTILITIES PLANT PRODUCTSRESOURCES*


Our Key Milestones

First salesgas delivery to Senoko Power Station in Singapore via submarine pipeline.

Commencement of operations of GPP2, GPP3 and GPP4.

19

87

-19

91

19

92

-19

94 Incorporation of

PETRONAS Gas Sdn Bhd (PGSB) as a wholly-owned subsidiary of Petroliam Nasional Berhad (PETRONAS) in 1983.

Commencement of operations of Peninsular Gas Utilisation (PGU) 1 and commissioning of Gas Processing Plant (GPP) 1.

Appointment of PGSB as a throughput and servicing agent to PETRONAS for PGU via Throughput Agreement.

Commencement of operations of PGU2.

Officiation of Segamat Gas Transmission Centre by the Prime Minister of Malaysia.

20

19

Execution of the 2nd term of GPA with PETRONAS.

Execution of Gas Transportation Agreement (GTA) for PGU, Terminal Use Agreement (TUA) for RGTSU and TUA for RGTP with PETRONAS Energy & Gas Trading Sdn Bhd (PEGT).

Successful delivery of maiden LNG third party cargo at RGTSU.

Introduction of new integrated ancillary services at RGTP.

Commencement of full commercial operation at ASU, Pengerang.

Commencement of operations at LNG Regasification Terminal Pengerang (RGTP).

Execution of a 20-year Operation and Maintenance (O&M) Agreement with PETRONAS Carigali Sdn Bhd for operation and maintenance of the Sabah-Sarawak Gas Pipeline (SSGP).

Regulation of the Group’s Gas Transportation and Regasification businesses by the Malaysian Government pursuant to the Gas Supply (Amendment) Act 2016.

Commencement of commercial operation at Train 1, Air Separation Unit (ASU), Pengerang.

20

17

-20

18

19

83

-19

84

2 3 4 5 6p.191


Execution of a 20-year Gas Processing and Gas Transmission Agreement (GPTA) between PGSB and PETRONAS.

Listing of PETRONAS Gas Berhad (PGB) on the main board of the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia Securities Berhad).

Completion of PGU3.

Execution of the first Sale and Purchase Agreement with Centralised Utility Facilities (CUF).

Execution of Operation and Maintenance Services Agreement with Trans Thai-Malaysia (M) Sdn Bhd.

Ground breaking ceremony of Kimanis Power Plant project by Chief Minister of Sabah.

Commencement of operations of GPP5 and GPP6.

First delivery of electricity to customers from CUF Kertih and CUF Gebeng.

Secured RM1.4 billion worth of Islamic Financing from the domestic private debt securities to partly finance CUF project.

Completion of Plant Rejuvenation and Revamp Project for GPP2, GPP3 and GPP4.

Secured USD500 million Term Loan Facility from Mizuho Bank to fund capital projects.

Signing of Shareholders Agreement between PGB and Linde Malaysia Sdn Bhd for the development of Air Separation Unit (ASU) project in Pengerang, Johor.

20

15

-20

16

20

13

-20

14

20

10

-20

11

Commencement of operations at RGTSU.

Commencement of operations of Kimanis Power Plant.

Execution of new Gas Processing Agreement (GPA) and Gas Transportation Agreement (GTA) with PETRONAS for another 20 years.

Announcement of the development of Malaysia’s first liquefied natural gas (LNG) Regasification Terminal in Sungai Udang, Melaka (RGTSU) by Prime Minister of Malaysia.

Announcement of PGB Network Code to Bursa Malaysia.

19

99

-20

00

20

05

-20

09

19

95

-19

98

REGAS TERMINAL

(SG. UDANG) SDN BHD

100%PETRONAS GAS BERHAD

REGAS TERMINAL

(PENGERANG) SDN BHD


REGAS TERMINAL

(LAHAD DATU) SDN BHD


PENGERANG LNG (TWO)

SDN BHD


25%DIALOG LNG SDN BHD

10%PERMODALAN DARUL TA’ZIM SDN BHD

GAS MALAYSIA

BERHAD

35.77%PUBLIC SHAREHOLDERS

30.93%MMC CORPORATION BERHAD

18.5%TOKYO GAS-MITSUI & CO HOLDINGS SDN BHD

14.8%PETRONAS GAS BERHAD

PETRONASGAS

BERHAD

* Although the Group has more than 50% ownership, the Group treats these companies as joint ventures in accordance with Malaysian Financial Reporting Standard 10.

Our Group Corporate Structure

KIMANIS POWER

SDN BHD*

KIMANIS O&M SDN BHD*

PENGERANG GAS SOLUTIONS

SDN BHD*

INDUSTRIAL GASES

SOLUTIONS SDN BHD


40%NRG CONSORTIUM (SABAH) SDN BHD


40%NRG CONSORTIUM (SABAH) SDN BHD


49%LINDE MALAYSIA SDN BHD


50%LINDE MALAYSIA SDN BHD

SUBSIDIARY ASSOCIATEJOINT VENTURE


2 3 4 5 6p.211


ROBUSTBALANCESHEET

Underpinned by Long Term Contracts

STABILITYOF EARNINGS

to Shareholders

SUSTAINABLE RETURNS

High Reliability Across All Assets

WORLD CLASSPERFORMANCEOwner and

Operations & Maintenance (O&M)Service Provider

LEADING GASINFRASTRUCTURE

Providing Agility to Capture Opportunities

OUR VALUE PROPOSITION

Why Invest In Us

MessagesKey

24 Chairman’s Statement28 Message from MD/CEO 34 Group Financial Review40 2019 Key Highlights

40 Business Highlights40 Financial Highlights41 Sustainability Highlights

2

DEAR SHAREHOLDERS


It gives me great pleasure to present an overview of PGB’s performance for

the year 2019. It was a milestone year for us, as we entered into a game-

changing era of the gas industry. Our operating environment has become

increasingly dynamic, largely characterised by the recent gas market liberalisation

and availability of competing alternatives such as coal and solar as fuel source.

We fully embrace the industry’s liberalisation in anticipation of the positive results it will bring, yet recognise the need to challenge ourselves in the way we manage the accompanying changes. As of 1 January 2019, our gas transportation and regasification businesses were subjected to the Incentive-based Regulation (IBR) Pilot Regulatory Period. While faced with lower tariffs which led to lower revenue for the Group, our response, however, proves that every challenge truly brings opportunities. We continued to focus our effort to become the solutions partner to our customers, while sustaining good operational performance at all our assets. Additionally, we have been intensifying all efforts to operate at optimal efficiencies while stretching our boundaries as we seek new sources of income, exploring every possible avenue to further monetise our assets.

For the first time ever, in October 2019, 3.5 trillion British thermal units of gas was delivered to the Tuanku Jaafar Power Station in Port Dickson and Connaught Bridge Power Station in Klang by a third party shipper using our LNG Regasification Terminal Sungai Udang and Peninsular Gas Utilisation (PGU) pipeline network. The historic delivery marks the beginning of true liberalisation of the industry, heralding a new era not only for gas users but also PGB as the leading provider of regasification and gas transportation services in the country.

DIVIDEND PER SHARE

EARNINGS PER SHARE

82

97.8 sen

2018: 72 sen

2018: 90.6 sen

DIVIDEND DECLARED

RM1.6billion

sen

2018: RM1.4 billion

INTEGRATED REPORT 2019KEY MESSAGESp.24

ADIF ZULKIFLIChairman

PETRONAS Gas Berhad

1 2 3 4 5 6 7 8


p.25

...we seek to leverage our extensive background

in the gas value chain to offer integrated gas and

utilities solutions...


We believe there is potential for Malaysia to become a leading LNG hub in Southeast Asia and are capitalising on our regasification terminals to provide various LNG-related services. We also seek to leverage our extensive background in the gas value chain, and the support of PETRONAS group of companies, to offer integrated gas and utilities solutions thus connecting the dots for local and international players for LNG or power projects either as a project owner, investor or joint venture partner. Meanwhile, as the power industry is being liberalised under the Malaysian Electricity Supply Industry (MESI 2.0) programme, we are also looking towards expanding our presence in this sector.

These developments are very exciting and are set to change the face of PGB, transforming us into a more dynamic energy solutions partner. We have outlined a new four-year strategy, called R2 Game Plan: 301Q99 Pushing Forward, to help us navigate the new operating landscape and have already begun to see some positive outcomes. These are reflected in our financial performance for the year, which defied general expectations. Despite the lower tariffs, our revenue remained comparable to the previous year at RM5.5 billion while profit after tax improved by 5% at RM2.0 billion.

Based on our resilient performance, we declared interim dividends of 16 sen per share for the first and second quarters of the year, and upped it to 18 sen per share in the third quarter. For the fourth quarter the Board has approved a final dividend of 22 sen and a special dividend of 10 sen, which brought our total dividend for the year to 82 sen, translating into RM1.6 billion of total dividend declared.


Our operational and financial successes are premised on sound governance which underlines our sustainability. Together with my colleagues on the Board, we continue to ensure PGB adheres to the Malaysian Code on Corporate Governance (MCCG) 2017. As a result of continued vigilance on integrity and transparency, we were placed fourth in terms of Excellence for Corporate Governance Disclosure, and sixth for Overall Corporate Disclosure and Performance by the Minority Shareholders Watch Group (MSWG) – ASEAN Corporate Governance in 2019. The corporate governance body also presented us with the Industry Excellence Award for the Energy and Utilities category. The ASEAN Corporate Governance Scorecard applies global standards, adopting the OECD Principles of Corporate Governance as its main benchmark. To boot, PGB is placed as one of the top 10 listed companies in corporate reporting transparency in Malaysian Institute of Corporate Governance’s (MICG) report, entitled ‘Transparency in Corporate Reporting: Assessing Malaysia’s Top 100 Public Listed Companies’ (TRAC Report 2019).

While maintaining a high level of trust through strong corporate governance, we further strengthen our stakeholder relationships via regular engagements and value creation. Among the key issues today are climate change and the responsibil ity of al l organisations – specifically governments and corporations – to play our parts in minimising greenhouse gas (GHG) emissions. Our Government has pledged to reduce the country’s GHG emissions intensity by 45% as a measure of gross domestic product (GDP) by the year 2030 from the 2005 baseline. PGB is fully supportive of nurturing a low-carbon economy. Towards this end, in so far as the country is still reliant on hydrocarbons to fuel our energy needs, we are advocating greater use of gas which is known to be the cleanest type of fossil fuel. At the same time, we are establishing optimal energy efficiency in our operations to reduce our GHG emissions, and have set a target to cap our emissions for PGB and subsidiaries at 5.0 million tonnes of CO

2 equivalent by 2024.

Our environmental stewardship extends to the preservation of important ecosystems. In 2019, we entered the second year of our collaboration with the Malaysian Nature Society (MNS) to rehabilitate the mangrove network in Kampung Sungai Latoh. Through this five-year programme we hope to restore the health of the ecosystem for its own sake as well as for the benefit of the local community, whose livelihood is dependent on healthy ecosystem.

The importance of sustainability to PGB is further emphasised by the debut of our first standalone Sustainability Report. I urge you to read this report and provide feedback on how we can further improve our social and environmental scorecards.

All our stakeholders are important to us and we are committed to creating value for you. Before ending this statement, I would like to thank Suruhanjaya Tenaga for engaging with us; our shareholders for your trust in our ability to deliver; and our business partners as well as suppliers for ensuring our safe and reliable operations. At the same time, I would like to express my gratitude to all our Directors for your wise counsel in steering PGB as we move into uncharted territories. To our capable Management, it is encouraging to see the manner in which you are leading the charge in transforming PGB. Finally, to all our employees, thank you for your hard work and commitment to our shared goals.

PGB has come a long way, but we still have far to go. Let us continue to work together in Pushing Forward: Accelerating Momentum as we grow in our role as a leading gas infrastructure and utilities company serving the nation and its people today, tomorrow and many years in the future.

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p.27

2019 was a commendable year for PGB as we proved to be resilient entering

into the Pilot Regulatory Period under the Incentive-based Regulation (IBR) for

our regulated Gas Transportation and Regasification business segments.

Building on our transformation efforts and supported

by digitalisation initiatives, we continued to record

excellent operational performance whilst making

several significant steps towards securing our future

revenue streams. These include acquisition of new

customers for steam and electricity for our utilities

in Gebeng as well as the introduction of new ancillary services at our regasification terminals.

These shall strengthen PGB’s future position in

becoming an integrated energy solutions

partner.

KAMAL BAHRIN AHMADManaging Director/

Chief Executive Officer

DEAR SHAREHOLDERS

Message from MD/CEO


Although our gas transportation and regasification tariffs were regulated, we were compensated by higher remuneration via the second term of the 20-year Gas Processing Agreement with PETRONAS commencing on 1 January 2019, which influences our operating targets and planned expenditure over the next five years. Additionally, we achieved higher selling prices for our utilities products. As a result, despite expectations to the contrary, we achieved comparable revenue against the year 2018 and grew our profit after tax (PAT) by 5%.

Our resilience was the result of operational and commercial excellence driven by the ongoing R2 Game Plan: 301Q99 Pushing Forward. By adhering to this game plan and pushing forward with growth initiatives, we continue to grow from strength to strength, becoming a leaner, more efficient and diversified organisation that is prepared for market liberalisation and the accompanying challenges.

OUR OPERATING ENVIRONMENT

Our operating environment is getting more excit ing as we embrace gas market liberalisation and look forward to the new future that power market liberalisation under the Malaysian Electricity Supply Industry (MESI 2.0) shall bring. We believe that gas market liberalisation will introduce competitive gas prices into domestic market, encouraging it to grow further. While under the MESI 2.0 programme, being an experienced utilities player, there are opportunities available for us to expand and play our part to ensure a competitive landscape for the benefit of our nation.

On top of that, the liberalisation of the gas industry brings about new tariff structures for gas transportation and regasif ication businesses. Under the IBR, these tariffs are to be regulated by Suruhanjaya Tenaga, with the intention to provide a more level playing field while attracting new players to enter the domestic gas market.

In order to sustain our business financially, it is imperative for us to operate at the highest level of efficiency and to actively explore new sources of revenue. At the same time, we believe it is important to create greater awareness on the potential of which natural gas can play being the cleanest source of hydrocarbon-based energy and its contribution to support the nation’s transition to a low-carbon economy. Natural gas generally offers a faster solution to fulfil Malaysia’s commitment in reducing our carbon emissions intensity by 45% by the year 2030 from the 2005 baseline, under the Paris Agreement.

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page 52.

HIGH PLANT RELIABILITY SUSTAINED AT >99%

NEW REMUNERATION TERMS

ANCILLARY SERVICES AT RGTP

NEW NITROGEN GENERATION UNIT TO SUPPORT DEMAND

Excellent Plant Performance

2nd Term Gas Processing Agreement

New Revenue Stream

Expansion of Utilities business

Achieved performance incentives

Higher Reservation Charge and new Agreed Ethane Target Incentive

First Gassing Up Cooling Down (GUCD) and reloading

Extension and new contracts secured for electricity and steam

ACHIEVEMENTS

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p.29


Message from MD/CEO

OUR STRATEGY – R2 GAME PLAN: 301Q99 PUSHING FORWARD

In the face of rapid transformation of the gas industry, we launched a new four-year strategic blueprint to guide us from 2019 to 2022, namely R2 Game Plan: 301Q99 Pushing Forward. The Game Plan focuses on three areas:

• ‘30’ which represents improvement of plant utilisation gap by 30%, to be achieved by retaining existing while capturing new customers for our business;

• ‘1Q’ which represents driving the energy and cost efficiency to achieve top quartile performance at all our plants; and

• ‘99’ which represents protecting PETRONAS enterprise value by sustaining our asset reliability.

More than 70 Key Result Areas (KRAs) have been outlined in order to achieve these three strategic priorities, with signposts for each year of the four-year journey to track our progress. It gives me great pleasure to share that all goals set for the year 2019 were met, enabling us to realise approximately RM68.0 million in value creation.

Broadly, our responses to the challenges posed in the current operating environment are twofold. Firstly, we seek to diversify into ancillary services related to our regasification operations. Secondly, we strive to expand our utilities capacity in line with our marketing initiatives in order to increase our customer base, together with demand for the products and services we provide.

STRATEGY HIGHLIGHTS

In terms of diversifying into ancillary services, we outlined four projects that will enable us to fully leverage the capacity of our LNG regasification terminals in Sungai Udang, Melaka (RGTSU) and Pengerang, Johor (RGTP). Of these, gassing up cooling down (GUCD) service at RGTP commenced operations in April 2019, and to date we have completed eight GUCD services. GUCD is a specialised service to displace inert gas from an LNG vessel before it is cooled down. This process is required, typically post-dry docking, prior to loading the vessel’s next LNG cargo.

We also introduced LNG reloading services, from our storage tanks into vessels at RGTP in August 2019, as part of LNG bunkering/breakbulking value chain. Through the launch of this service, we provide the opportunities to capacity users of RGTP to also export LNG. This will help to position RGTP as an LNG hub in the region by way of offering wide range of services to its customers. In 2019, RGTP has successfully completed three reloading services.

The other two projects, i.e. LNG bunkering at RGTSU and LNG truck loading at RGTP are well underway and slated for completion in the second quarter of 2020. The introduction of LNG bunkering service will result in higher utilisation rate at RGTSU.

Meanwhile, we are also expanding our unregulated businesses, particularly the Utilities segment. There are opportunities in the cogeneration sector given the high efficiency of the assets in generating electricity. We recently secured new contracts to extend our supply of electricity and steam to our long term customers for 20 years, while at the same time obtained licence to supply power to a potential customer beyond our traditional captive areas in Gebeng, Kuantan. This marks a significant milestone as we make our move outside our comfort zone. On the industrial gases front, we successfully achieved Final

Investment Decision (FID) for the construction of a nitrogen plant in Kertih, to capture demand as well as improve back-up supply to existing customers. The new nitrogen facility is expected to begin its commercial operation in 2021.

On another note, we recently expanded the facility at our Tanjung Sulong Export Terminal (TSET) in Kemaman, Terengganu to allow our sister company to import propane (C3) and butane (C4). The import facility will provide PGB with a terminal utilisation contract for 15 years while assisting to address any supply imbalance for PETRONAS.

1 Read more on Our Strategy on page 64.

BUSINESS REVIEW

While focusing on building our business, PGB also continued to place emphasis on maintaining our world-class operations across all four core businesses, with encouraging results.

GAS PROCESSING

We sustained 100% salesgas reliability for both processing and delivery to our customers. Plant reliability, meanwhile, remained high with salesgas averaging 99.7%, ethane 99.0%, and propane as well as butane at 99.2%. Our Operational Equipment Effectiveness (OEE) for all gases was commendable, with ethane, propane and butane averaging more than 98%, contributing to higher incentives from both Performance Based Structure (PBS) as well as additional ethane target effective 1 January 2019.

GAS TRANSPORTATION

Within the Gas Transportation segment, our PGU recorded zero supply curtailment with 100% sales gas delivery. Our national pipeline has sustained world-class reliability performance at 99.99% since 2018. To uphold safe and reliable operations, we continue to run regular maintenance programmes and in 2019, embarked on an exercise to replace our 37-year PGU1 pipeline measuring up to 35 km in length.

UTILITIES

Our Utilities plants achieved their top reliability performance, with electricity reliability averaging 99.8%, steam 99.7% and industrial gases 99.0%. We also recorded 100% OEE for electricity, 99.8% for steam, and 98.0% for industrial gases. Electricity and steam OEE exceeded 2018 performance. Product Delivery Reliability (PDR) for electricity and steam were 100%. We have secured new contracts to extend our supply of electricity and steam in Gebeng, Kuantan with Kaneka (Malaysia) Sdn. Bhd. and Polyplastics Asia Pacific Sdn. Bhd. for 20 years.

REGASIFICATION

Both RGTSU and RGTP maintained 100% OEE as well as Reliability and Availability at more than 99% since 2018. In 2019, we received a total of 45 cargoes at both terminals combined, an increase from 23 cargoes recorded in 2018.

3 Read more on Business Review on page 90.

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p.31

OUR DIGITAL JOURNEY

Further enhancing our operations, we continue to build on our process of digitalisation in line with PETRONAS’ enterprise digital agenda.

With the aim to unlock greater value from our assets, we are currently implementing the PETRONAS Integrated Vision for Operational Excellence and Technology (PIVOT) programme. Essentially, PIVOT is used to track and anticipate potential issues in the plants through descriptive and advanced analytics dashboard. PIVOT utilises big data and data analytics to manage our physical assets more efficiently.

As for our pipeline integrity, the implementation of PiriGIS software provides a gateway to comprehensive Geospatial Information System (GIS) and non-spatial data that visualises all of our Gas Transportation and Regasification (GTR) assets. PiriGIS allows us to explore, analyse and retrieve data and perform simple analytics with enhanced confidence on PGB’s entire pipeline network. At our GTR operations, real time data is provided for ease of our personnel to make prompt decisions. This will also enable us to pinpoint and address issues proactively which contributes immensely to our Health, Safety, Security and Environment (HSSE) performance by safeguarding our people, environment, assets and reputation.

2 Read more on Scorecard on page 68.

SAFETY: OUR TOP PRIORITY

Whilst we are proud of PGB’s continued excellent operational results, it is even more heartening to see that this has been accomplished without any compromise on safety. Safety is given top priority in the Company, and we strive constantly to reinforce safe behaviours through programmes such as Jom Patuh dan Tegur (Let’s Comply and Intervene). To further reinforce a safety culture, we also embarked on Generative HSSE Culture Programme this year, which aims to ensure all employees assume responsibility for their own safety as well as for others.

In addition to PIVOT and PiriGIS, we subscribe to various other PETRONAS digital solutions such as its Fatigue Management System (FMS), electronic Permit To Work (ePTW), Plant Operational Integrated Tools (POINT), and Machinery Monitoring Prediction and Detection system (MMPD) to enhance and sustain safety along with reliability and efficiency.

In 2019, we were pleased to have recorded zero fatality, zero major loss of primary containment (LOPC) and zero major fire. Unfortunately, we experienced two lost time injury (LTI) incidents. There is more to be done to ensure zero LTI in future, and PGB is taking steps to enhance our safety culture as a way to mitigate future occurrences.

FINANCIAL PERFORMANCE

It gives me great pleasure to share that, PGB achieved revenue for the year of RM5.5 billion, which was comparable to the revenue in 2018 despite lower tariffs for gas transportation and regasification businesses under the IBR. This was mainly driven from higher revenue from the Gas Processing and Utilities segments, which negated the lower revenue received from Gas Transportation and Regasification segments.

At the same time, we recorded a PAT of RM2.0 billion, 5% higher than RM1.9 billion in 2018. This came on the back of higher share of profit from joint ventures, unrealised foreign exchange gains, and higher interest income from fund investments.

Along with the increase in PAT, our earnings per share (EPS) grew by 8%, reflecting higher profits attributable to shareholders of the Company.

BUILDING OUR CAPABILITIES

As we grow and expand our business into new, more exciting areas, we need to ensure that our people are equipped with the skills to sustain our ongoing success. Recognising their immense value, we are investing into their professional development through various programmes.

Among the newer initiatives launched is RESCISCO, which was introduced at the PETRONAS Group level in 2018. The programme seeks to create a paradigm shift in developing competencies via fit-for-purpose, flexible career pathing to deliver empowered, enabled and agile talent. RESCISCO was implemented as a pilot involving Mechanical disciplines. In 2019, it was expanded to include Technical disciplines Groupwide.

AWARDS & RECOGNITION

While our results speak for themselves, it is always encouraging to receive affirmation of our performance from external parties. Throughout the years, PGB has accumulated an impressive string of accolades, and continued to do so in 2019. We were privileged to be the leaders in areas related to HSSE, corporate governance, and transparency reporting.

SUSTAINABILITY & ENRICHING LIVES

The importance of sustainability to PGB is further demonstrated in our first standalone Sustainability Report which emphasises three key thrusts – Sustainable Business, Social Responsibility and Resource Efficiency.

We also acknowledge the value and impact of our business to the various stakeholders surrounding us and aspire that our presence will positively benefit them. Thus, our highest commitment is towards meeting their expectations and requirements in reaching out through various Corporate Social Responsibility (CSR) initiatives in educational, environment as well as community well-being and development.

INTEGRATED REPORT 2019KEY MESSAGES

Message from MD/CEO

p.32

Our collaboration with Yayasan PETRONAS benefitted approximately 1,000 school children in Negeri Sembilan and Perlis in which school uniforms, backpacks and stationeries were distributed through the Sentuhan Ilmu – Back-To-School programme. Our environmental efforts continue with the preservation of important ecosystems through our ongoing partnership with the Malaysian Nature Society (MNS) to rehabilitate the mangrove and preserve a healthy ecosystem in Kampung Sungai Latoh, Johor. Whilst PGB’s annual “Free Market” programme has continued to help ease the burden of underprivileged families with participation of our employees in contributing cash and in-kind.

Further elaboration on the various initiatives are detailed out in our official website at www.petronasgas.com

OUTLOOK

The operating environment in 2020 looks set to continue along the same vein as in 2019. Gas market liberalisation has truly taken shape with the delivery of our first consignment of gas from a third party supplier. The process is likely to be repeated so long as buyers are able to secure gas at competitive rates.

Within this open landscape, PGB will play our part to ensure the success of TPA. At the same time, we will continue to focus on growing our business as we step up on our R2 Game Plan: 301Q99 Pushing Forward to ensure we sustain safe, reliable and efficient operations. A number of projects initiated in 2019 will be completed and commissioned in 2020 – such as the LNG bunkering project at RGTSU and LNG truck loading service at RGTP.

These, together with the new propane/butane import facilities in Kemaman, which were completed in November 2019, will enhance our revenue beginning from 2020. Meanwhile, we will ensure the successful completion of other growth projects undertaken while looking out for even more opportunities that we can tap into using our expertise. One potential area is the power supply market which is also being opened up under MESI 2.0. Given our expertise in running power plants, we believe we are well-positioned to participate as a key player in this space.

ACKNOWLEDGEMENTS

I would like to take this opportunity to thank everyone who has been associated with the Company in particular, our current Board of Directors for your wise counsel; our Management for your leadership; and all our employees for your hard work and commitment to our shared goals.

In addition, I would like to thank the various government agencies and regulatory bodies, our shareholders, customers business partners and contractors and business partners for your steady and invaluable support throughout the years.

It is with all the support, that we managed to secure reasonable tariff for Regulatory Period 1 that will ensure a stable revenue for the Group for the next three years. It is also important to note that, as the majority of our business is fully secured by long term contracts, it will minimise the impact due to the challenging and uncertainties of the market.

With everyone’s continued collaboration I believe we can truly Push Forward and Accelerate the Momentum to supply the needs of our stakeholders. Gas has a role to play in a sustainable tomorrow, and we will play our part to see that it continues to fuel the nation.

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p.33

PGB Group turned in a resilient financial performance for the year ended 31 December 2019, amidst structural changes in its operating environment.

The Incentive-based Regulation (IBR) was in full force for the Group’s regulated business segments – Gas Transportation and Regasification – with the Pilot Regulatory Period (PRP) in 2019. For PRP, Suruhanjaya Tenaga has determined tariffs of RM1.072/GJ for the Group’s PGU pipeline, RM3.518/mmBtu for LNG Regasification Terminal Sungai Udang and USD0.637/mmBtu for LNG Regasification Terminal Pengerang. This translated to lower revenue overall for both business segments.

The IBR impact was, however, cushioned by higher revenue for the Group’s Gas Processing business segment following improved terms concluded under the 2nd term Gas Processing Agreement, effective 1 January 2019.

Hence the Group’s operating profit remained comparable against 2018 at RM2.6 billion. Profit for the year increased by 5% to RM2.0 billion on higher contribution from the Group’s joint venture companies, supported by favourable foreign exchange movements and higher fund investment income. Meanwhile, the Group’s total assets continued to grow, increasing by RM1.3 billion to RM19.6 billion.

With higher profits and strengthened balance sheet, the Group declared total dividends of 82 sen per share for the year, including a special dividend of 10 sen per share. This translates to a dividend payout ratio of 84% compared to 80% last year, the highest ever in history.

As the Group forges ahead, the primary focus areas on the financial end are as follows:

EFFICIENT CAPITAL AND CASH MANAGEMENT

The Group’s f inancial standing and fundamentals remain very strong. Gearing as at 31 December 2019 remains prudent at 22% (including arrangement accounted for as leases under MFRS), providing sufficient headroom for the Group to raise funds should the need arise. In so far as funding is concerned, the Group gives due consideration between equity and debt funding, depending on the specific nature and requirements.

Current external borrowings relate primarily to a USD500 million Term Loan Facility with Mizuho Bank Limited, used to finance the LNG Regasification Terminal and Air Separation Unit in Pengerang via on-lending to our subsidiary and joint venture companies respectively. Both companies are performing well financially, contributing healthy earnings to the Group. The Term Loan is due to be repaid in 2021 with a balance outstanding of USD434.6 million as at 31 December 2019.

The Group’s cash and bank balances are predominantly held in In-House Accounts managed by PETRONAS Integrated Financial Shared Service Centre. This enables more efficient cash management at an operational level. As at 31 December 2019, cash and cash equivalents stood at just over RM4.0 billion.

PROFIT AFTER TAX

REVENUE

RM2.0

RM5.5

5%

-1%

billion

billion

2018: RM1.9 billion

2018: RM5.5 billion


Group Financial Review

p.34

Nevertheless, strategic decisions on capital and cash flow management continue to remain under the purview of the Group. Capital and cash flow requirements are rigorously prepared and monitored, and working capital levels are reviewed on annual basis. This ensures timely repatriation and compliance to minimum cash requirement levels set, while taking into account potential business opportunities as well as variability.

The Group also has a dividend policy now in place, as recently approved by the Board on 18 February 2020. The dividend policy - a payout ratio of around 50% consolidated profit after tax and non-controlling interest - underlines our commitment to ensure sustained level of returns to our shareholders. Notwithstanding the policy, the Group’s actual dividend payout ratio has consistently been more than 70% over the last five years.

Moving forward, we will continuously review and adapt our capital structure to ensure efficient capital management and optimum returns for the Group and its shareholders.

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SHARIZA SHARIS MOHD YUSOF

Chief Financial Officer


p.35


ENHANCED FISCAL DISCIPLINE AND GOVERNANCE

We continued to strengthen fiscal discipline and governance across the Group throughout the year under review. This is especially relevant in view of our target to achieve and sustain first quartile cost performance and considering two of our business segments are now under economic regulatory control.

Costs discipline and monitoring was a key area across the businesses. With various initiatives to promote efficiency and keep operating costs down, the Group recorded total operating expenditure (OPEX) excluding depreciation of RM1.1 billion, slightly higher by 4.8% compared to 2018 amidst higher intensity of plant activities during the year following several planned statutory turnarounds and shutdowns. Indeed, for the five-year period from 2015 to 2019, total Group OPEX excluding depreciation has remained more or less flat with a cumulative average growth rate or CAGR of only 0.9%.

Total capital expenditure (CAPEX) for 2019 was RM1.3 billion, similarly higher compared to 2018 due to increased level of activities throughout the Group. This includes CAPEX for on-going growth projects, namely the new Nitrogen Generation Unit and ancillary services at our regasification terminals.

The IBR has required us to be even more meticulous when it comes to costs relating to the regulated businesses or assets for the Gas Transportation and Regasification segments. Furthermore, as the industry landscape continues to evolve, we will need to continue driving fiscal discipline and look for more cost effective solutions across the Group so as to ensure we remain in the forefront in terms of competitiveness.

During the year, we have also revised PGB’s Limits of Authority to address new business requirements, tighten controls as well as align our CAPEX and OPEX budgeting and spending with Third Party Access (TPA) guidelines for Gas Transportation and Regasification businesses, and with Gas Processing Agreement terms for Gas Processing business. This should allow for efficient decision making while at the same time ensuring compliance as well as appropriate line of sight.

EFFECTIVE FINANCIAL RISK MANAGEMENT

Whilst the Group is subject to several financial risks arising from the normal course of business, in particular credit risk, liquidity risk and market risk, these continue to be timely and proactively managed.

Credit risk

Credit risk is minimised as we only enter into contracts with counterparties with high credit standing. We also implement other credit enhancement measures where applicable, such as cash deposits and bank guarantees.

With potential new shippers and capacity users under TPA, we acknowledge that the Group’s customer credit profile will change in the future. To this end, we have strengthened our credit management process and procedures during the year. A Credit Risk Committee has been established to oversee, deliberate and where necessary, mitigate customer credit risks. The Group’s Credit Guidelines have also been reviewed and updated.

Liquidity Risk

With sufficient cash and liquid marketable assets to ensure smooth running of our business, the Group’s liquidity position remains robust. Underpinned by long-term contracts and with over 90% of our business based on fixed returns, our core business model remains cash accretive. Investment funding is done via internal equity, external term loans and loans from corporate shareholders of our joint venture company.

Market Risk

The market risks to which we are exposed primarily relate to foreign currency exchange rates and interest rates.

While most of our business is Ringgit-based, we undertake foreign exchange hedging arrangements on foreign exchange transactions where applicable to manage exchange rate fluctuations.

We also have in place interest rate hedging arrangements with hedge counterparties to manage and mitigate the interest risk on our USD500 million Term Loan facility, which is floating rate borrowing. The hedging arrangements enable PGB to effectively pay a fixed interest rate on the Term Loan regardless of interest rate fluctuations.

In undertaking hedging activities, the Group leverages on PETRONAS Group Treasury Division, which has the necessary knowledge and expert ise on such transactions. Transactions entered into are non-speculative and are in accordance with PETRONAS Groupwide policies and guidelines.


ENRICHED MARKET ENGAGEMENT AND ACTIVITIES

With PRP well underway, we continued to step-up on investor relations activities and engagements in terms of frequency as well as content sharing. With the aim of providing timely and relevant information to our current and potential investors, capital market communications were also made more external, targeted and forward-focused.

This began with a special face-to-face engagement session on TPA conducted early in 2019, held in conjunction with our Q4 2018 results briefing. Besides providing access to PGB Management, we shared on how the TPA would work as well as on how it may impact our performance.

We are pleased to note that the response from the capital market has been positive and we saw a notable uptick in terms of level of interest and lines of query during the year. Indeed the number of engagements both at events and one-to-one has increased.

With the three-year Regulatory Period tariffs now set for 2020 to 2022 and with some new sources of revenue also coming in, we foresee there will be a need for further increased engagements in terms of providing guidance in the years ahead.

Having achieved various milestones with close to 25 years post-listing, PGB Group has an indubitable strong track record of operational and financial performance. While the next few years will be an interesting one for the Group not just operationally but also financially, we have proven ourselves to be resilient in terms of results and returns. As one of the top counters in Bursa Malaysia, our commitment remains, first and foremost, to ensure sustainable returns to our shareholders.

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84.

GROUP FINANCIAL PERFORMANCE REVIEW

2019RM’000

2018RM’000

Restated

Variance%

Revenue 5,458,250 5,498,074 -1%

Cost of revenue (3,071,201) (2,962,141) 4%

Gross profit 2,387,049 2,535,933 -6%

Administration expenses (94,825) (90,051) 5%

Other expenses – (21,360) >100%

Other income 263,621 146,107 80%

Financing costs (229,684) (169,387) 36%

Profit before taxation 2,462,885 2,334,588 6%

Taxation (478,833) (443,715) 8%

Profit after taxation 1,984,052 1,890,873 5%

Profit or Loss

Group revenue remained comparable at RM5.5 billion for the financial year ended 31 December 2019, registering a marginal decrease of 0.7% against 2018.

Lower revenue from Gas Transportation and LNG Regasification Terminal Pengerang (RGTP) as a result of lower tariffs as determined by Suruhanjaya Tenaga for the Pilot Regulatory Period (PRP) was offset by higher revenue from Gas Processing and Utilities segments arising from improved reservation charge under the 2nd term Gas Processing Agreement and higher selling prices respectively.

Cost of revenue registered a slight increase of 3.7% or RM109.0 million mainly due to higher fuel gas costs to produce electricity, steam and industrial gases in line with upward fuel gas price revision on 1 January and 1 July 2019.

Gross profit decreased by 5.9% or RM148.8 mi l l ion, largely at t r ibutable to Gas Transportation, Regasification and Utilities segment results amidst improved results from Gas Processing segment.

Other expenses for 2018 were largely due to impairment loss on assets totaling RM16.9 million following change of business at one of the Group’s customer after all efforts to find alternative use for the facilities were exhausted.

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p.37


Other income surged by 80.4% or RM117.5 million attributable to unrealised foreign exchange gains and higher interest income from fund investments. The unrealised foreign exchange gains mainly arose from the discontinuance of hedge accounting on translation of USD lease liabilities for floating storage units at the Group’s LNG regasification terminal in Sungai Udang, Melaka (RGTSU). The higher interest income is in line wiith higher cash and bank balances.

Financing costs recorded an increase of 35.6% or RM60.3 million due to interest expense from recognition of finance lease liabilities relating to jetty facilities at RGTP following adoption of MFRS 16 Leases effective 1 January 2019.

Share of profit from joint ventures and associate improved significantly by RM203.4 million from loss of RM66.7 million last year to profit of RM136.7 million as the Group saw improved contribution from Kimanis Power Sdn Bhd (KPSB) and Pengerang Gas Solutions Sdn Bhd (PGSSB). Last year, KPSB de-recognised deferred tax assets due to time utilisation limit on certain tax benefits whilst PGSSB recorded higher profit with first full year of earnings from its Air Separation Unit in Pengerang, Johor.

Profit before tax improved by 5.5% or RM128.3 million, mainly driven by improved contribution from joint ventures, unrealised foreign exchange gains from translation of USD denominated lease liabilities and higher interest income from fund investment.

Against profit after tax, tax expense of RM478.8 million resulted in an effective tax rate lower that the statutory tax rate of 24%. This was mainly due to tax incentives granted for RGTP.

Correspondingly, profit for the year improved by 4.9% or RM93.2 million to RM2.0 billion.

Segment revenue grew by 8.4% or RM131.3 million on the back of higher reservation charge under the 2nd term Gas Processing Agreement effective 1 January 2019, supported by higher Performance Based Structure (PBS) revenue in line with strong operational performance throughout the year.

Segment results surged by 27.7% or RM177.2 million driven by higher revenue coupled with lower depreciation expense.

Under TPA, new tariffs are applicable for both RGTSU and RGTP effective 1 January to 31 December 2019.

Segment revenue was comparable to last year at RM1,237.9 million as decrease in revenue from RGTP was offset by higher revenue from RGTSU.

Segment results declined by 12.5% or RM87.0 million mainly attributable to higher depreciation upon recognition of jetty facilities as right-of-use assets at RGTP under new Malaysian accounting standard and higher operating costs.

Segment revenue was 15.3% or RM208.1 million lower in line with lower gas transportation tariff for Peninsular Malaysia effective 1 January to 31 December 2019 under TPA.

Segment results were correspondingly lower by 21.5% or RM218.5 million on the back of lower revenue and higher operating costs.

Segment revenue for the year rose by 3.4% or RM44.5 million, attributable to higher selling prices to customers following upward revision of fuel gas price on 1 January and 1 July 2019, coupled with additional surcharge on national electricity tariff. This was offset by lower volumes following the planned statutory turnaround in the third quarter of the year.

Segment results nevertheless declined by 11.4% or RM20.5 million on higher cost of sales following upward revision of fuel gas price.

REGASIFICATION

UTILITIES

GAS PROCESSING

GAS TRANSPORTATION

SEGMENTAL REVIEW


Financial Position

Assets

The Group’s total assets grew by 7.2% or RM1.3 billion to RM19.6 billion, mainly contributed by higher property plant and equipment balance following adoption of MFRS 16 Leases which resulted in the recognition of right-of-use (ROU) assets and corresponding lease liabilities effective from 1 January 2019 and higher cash and cash equivalents generated from operating activities.

Liabilities

Group total liabilities increased by 18.6% at RM942.8 million, mainly attributable to recognition of finance lease liabilities for ROU assets.

Equities

Total equity attributable to shareholders of the Company of RM13.2 billion was higher by 3.3% or RM421.9 million in line with profit recorded during the year, partially offset by dividend payments to shareholders.

Cash Flows

The Group’s cash and cash equivalents stood at RM4.0 billion as at 31 December 2019, an increase of 11.2% or RM405.7 million from RM3.6 billion as at 31 December 2018.

Net cash generated from operating activities was higher by 1.4% or RM46.1 million, mainly contributed by higher interest income from fund investments offset by lower revenue from Gas Transportation and Regasification segment and higher tax paid.

Net cash used in investing activities increased by 29.6% or RM250.5 million, largely attributable to higher level of planned statutory turnaround activities at the Group’s facilities.

Net cash used in financing activities was higher by 37.3% or RM502.9 million mainly due to lower term loan drawdown, higher dividends paid, higher redemption of preference shares by a subsidiary to a non-controlling interest and higher finance cost paid in line with higher term loan balance.

4 Read more on Financial Performance on page 74.

1,571.01,702.3

885.8 816.5931.7

639.3

2018

Revenue COR Gross Profit2019 2018 2019 2018 2019

1,245.41,237.9

626.9 611.0547.4

698.0

2018


1,360.6

1,152.5

353.0

799.5

342.6

1,018.0

2018


1,321.11,365.6

1,205.5

160.11,140.5 180.6

2018


Gas Processing (RM million)

Gas Transportation (RM million)

Regasification (RM million)

Utilities (RM million)

1 2 3 4 5 6 7 8


p.39

> RESILIENT FINANCIAL RESULTS SUPPORTED BY IMPROVED GPA RESERVATION CHARGE AND HIGHER UTILITIES PRICES AMIDST LOWER TARIFFS FOR GAS TRANSPORTATION AND REGASIFICATION BUSINESSES

> PUSHING FORWARD, ACCELERATING MOMENTUM TOWARDS BECOMING A SUSTAINABLE SOLUTIONS PARTNER

Stellar plant and facility reliability performance across all segments at par with world-class standards

Smooth implementation of Incentive-based Regulation (IBR) and successful regasification of maiden third party LNG cargo at RGTSU as

well as delivery via PGU

REGULATION UNDER THIRD

PARTY ACCESS

Higher processing fees and remuneration to enhance collaboration across the gas value chain

• New revenue stream from integrated ancillary services comprising Gassing Up Cooling Down and LNG Reloading at RGTP

• First full year of revenue stream from Air Separation Unit, Pengerang

CONTRIBUTION FROM GROWTH

PROJECTS

DIVIDENDS REVENUE MARKET CAPITALISATION

PROFIT AFTER TAX

TOTAL ASSETS

82 RM5.5 RM32.9RM2.0 RM19.6-1% 5% 7%

sen/share billion billionbillion billion2018: 72 sen/share 2018: RM5.5 billion 2018: RM38.0 billion2018: RM1.9 billion 2018: RM18.3 billion

BUSINESS HIGHLIGHTS

FINANCIAL HIGHLIGHTS

SUSTAINED OPERATIONAL EXCELLENCE

SECOND TERM OF GAS PROCESSING AGREEMENT (GPA)


2019 Key Highlights

p.40

2018: 4.6 million tonnes CO2e

2018: 62%

2018: RM1.7 million

Carbon Emission

4.4 million tonnes CO

2e

SAYANGI SUNGAI LATOH

WASTE RECYCLED

Ecosystem baseline assessment

Achieved Reduction in

Waste Disposal

spent for waste disposal effort

RM1.9million

28%

48%COMMUNITIES

PROGRAM SENTUHAN KASIH PETRONAS

PROGRAM SENTUHAN ALAM PETRONAS

PROGRAM SENTUHAN ILMU PETRONAS

HSSE

Fatalities

2018: 0

0DIVIDENDS PAID

RM1.4 billion2018: RM1.4 billion

4,961 hectares2018: 4,961 hectares

LAND

RM429.8 million2018: RM386.7 million

TAX PAID

2,272 mmscfd2018: 2,060 mmscfd

SALESGAS DELIVERED

100%2018: 100%

PRODUCT DELIVERY RELIABILITY(C1, C3, C4, Electricity)

RM426.8 million2018: RM403.2 million

EMPLOYEE COMPENSATION

1,829 employees2018: 1,959 employees

WORKFORCE

MajorFire 2018: 0

02018: 0

2Lost Time Injury

LEAD SELFLEAD OTHERSLEAD BUSINESS

HARVARD MANAGEMENTOR

2018: 11%

SKILL

2018: 89%TECHNICAL

88%

12%NON-TECHNICAL

ECONOMIC ENVIRONMENT SOCIAL

2018: 33%

2018: 50%

GENDER DIVERSITY

Women Composition

BOARD

LEADERSHIP TEAM

50%

33%

SUSTAINABILITY HIGHLIGHTS

1 2 3 4 5 6 7 8

Note: Carbon emission stated above is for PGB and its subsidiaries.


p.41

3

CreateValue We

44 Our Value Creating Business Model46 Key Resource Capitals:

Role and Scoreboard48 Stakeholder Value Creation

INTEGRATED REPORT 2019VALUE WE CREATEp.44

COST STRUCTURE Depreciation and operational costs such as repair and maintenance, materials and supplies, as well as professional and purchased services

GAS PROCESSING (GP)

Process PETRONAS’ upstream natural gas delivered from offshore Peninsular Malaysia into salesgas, ethane, propane and butane to be transported to PETRONAS’ customers by our GT business

RESOURCESPRODUCTS/

SERVICES

UTILITIES (UT)

Produce, market and supply electricity, steam, industrial gases and other utility products to various petrochemical businesses and third parties

GAS TRANSPORTATION (GT)

Transport salesgas from our Gas Processing Plants (GPPs), Joint Development Area (JDA) in Thailand and LNG regasification terminals (RGTs) in Sungai Udang, Melaka and Pengerang, Johor to shippers’ end customers in Peninsular Malaysia and Singapore through Peninsular Gas Utilisation (PGU) pipeline network and Pengerang Gas Pipeline (PGP)

REGASIFICATION (RGT)

Receive capacity users’ imported Liquefied Natural Gas (LNG), stores in Regasification Terminal Sungai Udang’s (RGTSU) floating storage units and Regasification Terminal Pengerang’s (RGTP) storage tanks, converts the LNG into salesgas and injects into PGU pipeline network to be delivered to shippers’ customers by our GT business

OUR CORE BUSINESSES AND ACTIVITIES

• Natural gas from offshore platforms

• Salesgas from GPPs and JDA

• Ethane, propane and butane from GPPs

• Regasified LNG from RGTs

• LNG

• Fuel gas • Chemicals• Raw water • Air

• Salesgas• Ethane• Propane• Butane

• Transported salesgas

• Regasified LNG

• Electricity & steam• Industrial gases

such as oxygen & nitrogen • Demineralised

water, raw water, cooling water & boiler feed water

HUMAN CAPITAL

ASSETS

• Gas Processing Kertih (GPP1, 2, 3 and 4)

• Gas Processing Santong (GPP5 and 6)

• Tanjung Sulong Export Terminal at Kemaman, Terengganu

• 2,590 km Peninsular Gas Utilisation (PGU) pipeline network

Male90%

Female10%

1,023EMPLOYEES

Male87%

Female13%

328EMPLOYEES

Male94%

Female6%

114EMPLOYEES

Male92%

Female8%

240EMPLOYEES

Facilities located at both Sungai Udang and Pengerang: • Offshore and onshore LNG

regasification terminal• 30 km onshore and 3 km

offshore pipeline• 2 leased Floating Storage

Units (FSU) and 2 LNG storage tanks

• LNG Jetty

Facilities located at both Kertih and Gebeng:• Cogeneration Plant (COGEN)• Air Separation Unit (ASU)• Demin and Cooling Water Unit• Nitrogen Generation Unit (NGU)• Effluent Treatment Plant

Our Value Creating Business Model

1 4 5 6 7 82p.45


3

Our business model is built across four strategic business units which actively interact and integrate with one

another, thus ensuring resources are utilised to the fullest. It allows for dynamic decision making as

well as focused execution and growth, enabling us to deliver value to both PETRONAS Group

and to our own stakeholders.

REVENUE STRUCTURE

GAS PROCESSING (GP)

• Reservation charge (fixed)• Flowrate charge (variable)• Performance Based Structure income• Additional Ethane Target incentive• Internal Gas Consumption incentive

GAS TRANSPORTATION (GT)

• Transportation fee (fixed)

REGASIFICATION (RGT)

• Regasification fee (fixed)

UTILITIES (UT)

• Sales of utilities

Read more about our business segment performance on pages 90 to 99.

CUSTOMERS

PETRONAS

PGB distributes the output to PETRONAS’ customers – power and non-power sector including the petrochemical sector

SHIPPERS

PGB distributes the output to shippers’ customers – power and non-power sector including the petrochemical sector

CAPACITY USERS

PGB distributes the output to capacity users’ customers – power and non-power sector, including the petrochemical sector

UTILITIES CUSTOMERS

Petrochemical and industrial customers in Kertih Integrated Petrochemical Complex, Terengganu and Gebeng Industrial Area, Pahang

Nature 2018 2019

Natural gas (mmscfd) 1,999 1,604Freshwater withdrawal (m3) 6.4 6.1Land area (hectare) 4,961 4,961

Asset 2018 2019

Plants and pipelines value (RM million) 10,856 11,394Project in progress value (RM million) 688 891CAPEX (RM million) 1,047 1,318

Intellectual

• Systems and processes

• Digitalisation

• Skills, experience and technically qualified employees, industry

thought leaders and experts

Social and Relationship

• Business Partners

• Communities

• Customers

• Employees and Unions

• Government Agencies/

Authorities

• Investors and Funding

Institutions

• Suppliers and Vendors

Financial 2018 2019

Equity funding 80% 78%Debt funding 20% 22%WACC* 8.1% 7.2%Interest earned from investment (RM million) 113 154Interest expense paid (RM million) 175 230Market capitalisation (RM billion) 38 33

* as published by Bloomberg

Human Capital 2018 2019

Number of employees 1,959 1,829

2018 2019

Greenhouse gas emission (million tonnes/CO2e

) 5.4 5.1Waste generated (tonnes) 2,359 2,437Waste recycled (tonnes) 1,466 1,179Percentage of waste recycled 62% 48%Energy Efficiency Index 103 92

2018 2019

Number of Work Processes 5 5Number of coaches/mentors 19 59

2018 2019

Revenue (RM million) 5,498 5,458Gross Profit margin 46% 44%Tax paid to the government (RM million) 387 430Corporate Social Responsibility programmes 33 39Corporate Governance Disclosure rating Top 30

ASEAN

Top 4

ASEAN

2018 2019

Operating profit (RM million) 2,571 2,556Cash from operating activities (RM million) 3,311 3,357EBITDA (RM million) 3,612 3,503Dividend paid to shareholders (RM million) 1,365 1,425EPS (sen) 90.6 97.8

2018 2019

Salesgas delivered (mmscfd) 2,060 2,272Electricity (RM million) 595 652Depreciation (RM million) 1,137 1,138Industrial gases (RM million) 246 234Product delivery 100% 100%Reliability 99% 100%OEE 99% 99%HSSE Total Recordable Cases (TRC) 1 4Number of national power disruption – –

2018 2019

Training mandays per employee 6 7Total wages and salaries (RM million) 403 427Investment in training (RM’000) 5.2 8.4Number of work-related fatalities – –In-house training programme introduced – 2

SIX INPUT CAPITALS OUTPUT/OUTCOME

INTEGRATED REPORT 2019VALUE WE CREATE

Key Resource Capitals: Role and Scoreboard

p.46

Propane Butane Electricity

Sale

sga

s

Eth

an

e

Ste

am

NATURAL GAS

WATER

AIR

Nitro

ge

n

Ox

yg

en

We invest in social & relationship capital for long term financial capital growth. However, in the short term, both financial and human capitals are required.

We affect natural resources through our business processes as well as emission. Addressing the impact requires utilisation of our financial, assets and human capitals.

Investing in intellectual capital reduces our financial capital in the short term. Nevertheless, in the longer term, financial, natural resources, human and social & relationship capitals will be enhanced.

Optimisation for efficiency has required us to increase our investment on capability and leadership, depleting financial capital. However, in the long run, intellectual and financial capitals will be positively impacted, as we become more capable and cost efficient.

By applying our financial capital to create value, there will be positive impact on asset, human, intellectual and social & relationship capitals. This, however, may result in depletion of natural resources.

Improving our asset performance requires financial capital in the short term but will positively contribute to financial, natural resources, human and social & relationship capitals in a longer term.

Involves various processes such as

gas processing, gas transportation, regasification and utilities to convert natural resources utilising all other key inputs into

valuable products and output

Integration between capitals and external environment to create value over time from our key resources whilst meeting stakeholders needs in a responsible manner.

KEY PROCESS ACTIONS TO ENHANCE OUTCOMES TRADE OFFS

Optimising financial capital

• Sustainable returns via dividend distribution to shareholders in line with industry dividend payout ratio

• Optimum hedging strategy through continuous assessment on various funding alternatives to cater for growth opportunities

Elevating asset performance

• Investment on LNG Regasification Terminal and Air Separation Unit (ASU) projects in Pengerang, Johor

• Implementation of R2 Gameplan: 301Q99 focusing on operational and commercial excellence

• Plant rejuvenation for GPS

Nurturing people

• Enhanced Leadership programme• World-class working environment, culture and ethics in

nurturing leadership capability• Highly engaged, capable and diversified workforce

Engaging stakeholders

• National energy security• Gas advocacy efforts• Well-established corporate reputation via effective

engagements with stakeholders and corporate social responsibility programmes

• PETRONAS Vendor Development Programme

Leveraging intellectual capital

• Implementation of standardised Work Process (WP) and Operational Excellence Management System (OEMS) Platform

• Automation of processes to eliminate errors, enhance quality and free resources for more value-added tasks

• Outsourcing of project management, procurement and transactional finance functions to PETRONAS for efficiency and best practices

Managing natural resources

• Investment in research and development as well as technologies to improve energy efficiency and address negative impact on natural elements by minimising pollution and promoting water stewardship

• RM2 million allocated for effective waste disposal with 28% target on annual reduction in waste disposal

• ‘Sayangi Sungai Latoh’ programme to preserve the biodiversity of rivers near our operating sites

• Investment in clean air regulation requirements

1 4 5 6 7 82p.47


3

KEY STAKEHOLDER GROUP VALUE FOR US VALUE FOR THEM STAKEHOLDER ENGAGEMENT INITIATIVES RESULTS

INVESTORS AND FUNDING INSTITUTIONS

• Access to equity and debt funding• Liquidity of our shares• Fair rating of our shares• Open dialogue to understand and address their

concerns

• Solid investment case and understanding of the business strategy

• Continued, sustained growth in capital and distributions• Assurance that business activities and decisions are

aligned to strategy in creating sustained value• Assurance that sustainability and compliance with

governance principles is considered and integrated into business strategy

• Ability to pay interest and repay debt capital

• Guided disclosure on company focus, financial performance and progress of growth projects

• Special briefing session on Third Party Access• Issuance of media release for PGB quarterly results• Increased engagement with investors and funding institutions• Disclosure of ESG practices in the Annual Report

• Greater awareness and increased interaction with the capital market:– Increased number of meetings with investors and analysts (2019 = 83 vs.

2018 = 66)– Increased participation in investor conferences, both domestic and

international (2019 = 3 vs. 2018 = 1)– Increased number of analyst coverage (2019 = 15 vs. 2018 = 14)– Increased nomination for Malaysian Investor Relations Association (MIRA)

Awards (2019 = 5 vs. 2018 = 0)

CUSTOMERS

• Deliver a superior offering that reflects our operational and commercial excellence

• Extension of contracts• Secure new contracts

• Product Delivery Reliability (PDR)• Competitive rates and product offering

• Close integration along the value chain to ensure reliability and PDR

• Increased offering of customer centric-solutions for both products and prices

• Increased customer engagement and visits • Increased marketing activities and outreach to customers

• Increased positive and constructive feedback from customers• New and extension of contracts from customers• Secured Heads of Agreement for new product offtake• Successful delivery of Malaysia’s maiden third party LNG cargo

BUSINESS PARTNERS

• Responsible, compliant business partner • Mutually beneficial partnerships• Quality relationships and support in business

operations

• Assimilation of operational and commercial excellence to drive performance

• Identification of potential business opportunities• Mutual secondment of staff• Focused effort on managing existing and potential partners

• Commercial operation of Pengerang Air Separation Unit ahead of schedule• Strong performance of joint venture entities• Mutual understanding towards common goals• Transfer of knowledge and skills

SUPPLIERS AND VENDORS

• Delivery of services aligned to PETRONAS/PGB values and with a positive impact on brand and reputation

• Fair opportunities and negotiation processes• Opportunities and partnerships that assist in growing

their business

• Leverage on PETRONAS Group Procurement services• Communications and guidance of standards through:

– PETRONAS Code of Conduct and Business Ethics (COBE);– PETRONAS Anti-Bribery and Corruption Manual (ABC); and– PETRONAS Vendor Development Programme.

• Improved delivery of services• Improved two-way communication between suppliers/vendors and PGB

EMPLOYEES AND UNIONS

• Engaged employees that make valuable contributions to deliver on business strategy, achieve strategic goals and act as brand custodians

• Employees who generate and implement innovative ideas and solutions to ensure we remain relevant

• Filling the skills gap: nurturing and developing future talent

• A work environment that promotes sustainability• Opportunities for learning, development and growth• Career growth prospects• Opportunity to make valuable contributions and

achieve personal fulfilment and satisfaction

• “Workplace for Tomorrow” to encourage openness and collaborative workforce

• Increased flexibility in working arrangements• Revision and introduction of benefits e.g. medical, pilgrimage

for all religions• Structured leadership development framework• Internal programmes to encourage staff participation and

understanding of PGB’s strategy and business plans

• Positive barometer survey results specifically relating to leadership, HSSE, culture and system

• Implementation of talent mix strategy, addressing Diversity and Inclusion (DNI) and mobility

GOVERNMENT AGENCIES/ AUTHORITIES

• Acceptance of PGB’s role in delivering sustainable energy for the nation

• Consultative partner in defining the role of gas in the energy market

• Extensive gas delivery network in Peninsular Malaysia• Cleaner energy from cogeneration plants• Safe, reliable and efficient operations across all

facilities

• Formal and informal engagements• Joint emergency response exercises• Familiarisation visit to PGB facilities• Regular reporting to government agencies

• Better understanding and appreciation of PGB business operations• Increased involvement and contribution towards gas market needs• Successful testing of PGB readiness to implement Third Party Access (TPA)

system• Successful delivery of Malaysia’s maiden third party LNG cargo• Approval of Regulatory Period 1 (RP1) tariffs with consideration of protecting

shareholders’ interests• Emergency response preparedness tested and executed successfully with

relevant parties

COMMUNITIES

• Engaged communities who understand PGB’s business and operations

• Positive image of the Company

• Health and safety of PGB operations with no impact to surrounding communities

• Education and social support• Environmental protection and biodiversity preservation

• Implementation of Corporate Social Responsibilty (CSR) programmes in the areas of education, environment and social support– Back-to-school programmes– ‘Sayangi Sungai Latoh’ mangrove planting programme– Free market of which the proceeds were channelled to B40

recipients• Sponsorships and donations• Outreach programmes to foster good relationship with community

• Increased engagement and awareness of PGB operations• Increased outreach programmes with positive feedback• Amicable resolutions of issues and concerns with the local communities

INTEGRATED REPORT 2019VALUE WE CREATE


p.48

KEY STAKEHOLDER GROUP VALUE FOR US VALUE FOR THEM STAKEHOLDER ENGAGEMENT INITIATIVES RESULTS


• Access to equity and debt funding• Liquidity of our shares• Fair rating of our shares• Open dialogue to understand and address their

concerns

• Solid investment case and understanding of the business strategy

• Continued, sustained growth in capital and distributions• Assurance that business activities and decisions are

aligned to strategy in creating sustained value• Assurance that sustainability and compliance with

governance principles is considered and integrated into business strategy

• Ability to pay interest and repay debt capital

• Guided disclosure on company focus, financial performance and progress of growth projects

• Special briefing session on Third Party Access• Issuance of media release for PGB quarterly results• Increased engagement with investors and funding institutions• Disclosure of ESG practices in the Annual Report

• Greater awareness and increased interaction with the capital market:– Increased number of meetings with investors and analysts (2019 = 83 vs.

2018 = 66)– Increased participation in investor conferences, both domestic and

international (2019 = 3 vs. 2018 = 1)– Increased number of analyst coverage (2019 = 15 vs. 2018 = 14)– Increased nomination for Malaysian Investor Relations Association (MIRA)

Awards (2019 = 5 vs. 2018 = 0)

CUSTOMERS

• Deliver a superior offering that reflects our operational and commercial excellence

• Extension of contracts• Secure new contracts

• Product Delivery Reliability (PDR)• Competitive rates and product offering

• Close integration along the value chain to ensure reliability and PDR

• Increased offering of customer centric-solutions for both products and prices

• Increased customer engagement and visits • Increased marketing activities and outreach to customers

• Increased positive and constructive feedback from customers• New and extension of contracts from customers• Secured Heads of Agreement for new product offtake• Successful delivery of Malaysia’s maiden third party LNG cargo

BUSINESS PARTNERS

• Responsible, compliant business partner • Mutually beneficial partnerships• Quality relationships and support in business

operations

• Assimilation of operational and commercial excellence to drive performance

• Identification of potential business opportunities• Mutual secondment of staff• Focused effort on managing existing and potential partners

• Commercial operation of Pengerang Air Separation Unit ahead of schedule• Strong performance of joint venture entities• Mutual understanding towards common goals• Transfer of knowledge and skills


• Delivery of services aligned to PETRONAS/PGB values and with a positive impact on brand and reputation

• Fair opportunities and negotiation processes• Opportunities and partnerships that assist in growing

their business

• Leverage on PETRONAS Group Procurement services• Communications and guidance of standards through:

– PETRONAS Code of Conduct and Business Ethics (COBE);– PETRONAS Anti-Bribery and Corruption Manual (ABC); and– PETRONAS Vendor Development Programme.

• Improved delivery of services• Improved two-way communication between suppliers/vendors and PGB


• Engaged employees that make valuable contributions to deliver on business strategy, achieve strategic goals and act as brand custodians

• Employees who generate and implement innovative ideas and solutions to ensure we remain relevant

• Filling the skills gap: nurturing and developing future talent

• A work environment that promotes sustainability• Opportunities for learning, development and growth• Career growth prospects• Opportunity to make valuable contributions and

achieve personal fulfilment and satisfaction

• “Workplace for Tomorrow” to encourage openness and collaborative workforce

• Increased flexibility in working arrangements• Revision and introduction of benefits e.g. medical, pilgrimage

for all religions• Structured leadership development framework• Internal programmes to encourage staff participation and

understanding of PGB’s strategy and business plans

• Positive barometer survey results specifically relating to leadership, HSSE, culture and system

• Implementation of talent mix strategy, addressing Diversity and Inclusion (DNI) and mobility

GOVERNMENT AGENCIES/ AUTHORITIES

• Acceptance of PGB’s role in delivering sustainable energy for the nation

• Consultative partner in defining the role of gas in the energy market

• Extensive gas delivery network in Peninsular Malaysia• Cleaner energy from cogeneration plants• Safe, reliable and efficient operations across all

facilities

• Formal and informal engagements• Joint emergency response exercises• Familiarisation visit to PGB facilities• Regular reporting to government agencies

• Better understanding and appreciation of PGB business operations• Increased involvement and contribution towards gas market needs• Successful testing of PGB readiness to implement Third Party Access (TPA)

system• Successful delivery of Malaysia’s maiden third party LNG cargo• Approval of Regulatory Period 1 (RP1) tariffs with consideration of protecting

shareholders’ interests• Emergency response preparedness tested and executed successfully with

relevant parties

COMMUNITIES

• Engaged communities who understand PGB’s business and operations

• Positive image of the Company

• Health and safety of PGB operations with no impact to surrounding communities

• Education and social support• Environmental protection and biodiversity preservation

• Implementation of Corporate Social Responsibilty (CSR) programmes in the areas of education, environment and social support– Back-to-school programmes– ‘Sayangi Sungai Latoh’ mangrove planting programme– Free market of which the proceeds were channelled to B40

recipients• Sponsorships and donations• Outreach programmes to foster good relationship with community

• Increased engagement and awareness of PGB operations• Increased outreach programmes with positive feedback• Amicable resolutions of issues and concerns with the local communities

Read more about our Stakeholders Engagement on page 56.9

1 4 5 6 7 82p.49


3

A. Forward Strategies52 Our Operating Environment 56 Stakeholders Engagement58 Material Matters60 Key Risks and Mitigation64 Strategic Blueprint66 Strategic Focus Areas and Key Performance Indicators68 Performance Scorecard

B. Forward Driven Performance74 5-year Group Financial Analysis76 5-year Financial Summary78 5-year Group Financial Information79 Group Quarterly Performance80 Simplified Group Statement of

Financial Position82 Key Interest Bearing Assets and

Liabilities82 Statement of Value Added83 Distribution of Value Added84 Investor Relations87 Financial Calendar88 Share Price Performance

C. Forward Focused90 Business Review

90 Gas Processing92 Gas Transportation94 Regasification96 Utilities98 Ancillary Services

PropositionOur Value4

OUR VALUE PROPOSITION – FORWARD STRATEGIES


MALAYSIAN GAS SUPPLY & DEMAND OUTLOOK

• With the onstream of several coal power plants, and continued push by the Government for higher share of renewables in the energy mix, we expect slowing demand for gas from the power industry.

• However, this will be offset by higher demand from non-power sector.

Impact on our business

• Re-focus our strategy towards non-power industry for expansion such as new industrial hubs.• Increasing focus on asset optimisation, operating efficiencies and value-adding activities to our existing assets.• Potential growth in other related space, capitalising on our plant operating experience.

How we responded

• Creating greater awareness of the benefits of gas as a clean source of energy and its role as a transitional fuel as Malaysia moves towards low-carbon economy.

• Close engagement with the relevant stakeholders such as government ministries and state agencies to advocate on the importance of gas as part of Malaysia’s economic policies and masterplan.

• Diversifying into other areas related to our core business such as Gassing Up and Cooling Down (GUCD), invested in infrastructure to support LNG bunkering/reloading and LNG truck loading businesses at our regasification terminals.

Outlook

• Gas will remain a critical fuel component of power industry as it provides stability to the national grid.• As a cleaner fuel alternative, it will play a significant role in Malaysia’s efforts towards compliance with the

Paris Agreement to reduce Greenhouse Gas (GHG) emissions by 45% by 2030 in relation to 2005 GDP.

Our operating environment is becoming increasingly dynamic, largely characterised by the recent gas market liberalisation and rising challenges from competing alternatives, such as coal and solar, as a fuel source. PGB monitors changes in our operating environment and reflects them in our material matters which, in turn, influence our strategy to become a leading gas infrastructure and utilities company.

Our Operating Environment

7 81 2 5 63p.53


4

MALAYSIAN GAS MARKET LIBERALISATION

• Gas market liberalisation will encourage participation from new gas players and promote competition in the domestic gas market.

• External gas suppliers can now import gas into Malaysia and compete with domestic gas suppliers.• This provides a competitive environment for gas supply and price while ensuring security of supply for Malaysia.• To ensure a level playing field, Suruhanjaya Tenaga has regulated the tariff for Gas Transportation and Regasification

segments.


• Change in our tariff formula for Transportation and Regasification businesses.• Potential variability in revenue due to changes in tariff for regulated businesses.

How we responded

• Collaborated effectively with Suruhanjaya Tenaga to ensure that our infrastructure and systems are ready to accept third party cargoes.

• Strengthen our operations and reduce costs with 301Q99 Pushing Forward game plan to mitigate impact to revenue.• Diversification into ancillary services.• Expansion of our Utilities business by securing electricity supply licenses outside our traditional captive area

to a new customer.

Outlook

• Increased usage of our regasification terminals for LNG imports will position the terminals as emerging regional hubs for gas.

• Increased demand for related gas hub services such as GUCD, LNG bunkering/breakbulking and storage at our terminals.

THIRD PARTY ACCESS PROVIDES MORE OPTIONS FOR CONSUMERS TO PURCHASE NATURAL GAS

• Shippers can engage the services of gas facilities licensees to send their gas to consumers

Regasification Terminals

Transmission Pipelines

Distribution Pipelines

• Any party can be an importer and/or shipper and sell directly to consumers

• Consumers have the option to choose from any of the licensed shippers registered with Suruhanjaya Tenaga

Electricity Sector

Commercial Sector

Transportation Sector

Retail Sector

Industrial Sector

ResidentialSector

LICENSED LNG IMPORTERS& SHIPPERS

GAS FACILITIES GAS CONSUMERS



POWER MARKET LIBERALISATION

• Power market liberalisation under MESI 2.0 aims to provide power consumers with choices and control while ensuring competitive electricity prices.

• This is done through opening up of the power segments to allow greater participation by market players.• Transmission and Distribution networks will be accessible to the third party electricity producers to allow them to sell

direct to end customers.• This provides consumers with more choices of electricity supplier which in turn will boost market efficiencies.

Our Operating Environment


• Opportunity for PGB to access new growth area to cushion any impact on regulated business.• Launchpad for the next stage of growth for PGB in Utilities business.

How we responded

• Set up dedicated team to study the next stage of Utilities business in PGB and beyond.• Explore areas of potential participation and identify PGB’s inherent strengths and value propositions.• Close monitoring of MESI 2.0 development and continuous engagement with MyPower and Suruhanjaya Tenaga for updates.

Outlook

• Opening up of the market will happen in phases, with several studies and pilots currently being conducted by MyPower.

• MyPower is expected to commence a pilot period for a third party access for renewables in the first half of 2020.

• Under the plan, green energy buyers can sign a third party contract with renewable energy power producers and directly purchase up to a total of 100MW from them.

• It will set up the stage for a Third Party Access into Malaysia’s electric power transmission and distribution lines for other power producers.

TNB-FUEL PETRONAS

TNBGENERATION

IPPS(INCLUDING RE)

TNB Retail

MALAYSIA ELECTRICITY SUPLLY INDUSTRY (MESI)

FUE

LG

RID

GE

NE

RA

TIO

N

TNB Transmission

TNB Distribution

TNB Retail

FUE

LG

RID

GE

NE

RA

TIO

N

TNB Transmission

TNB Distribution

TNB-FUEL

TNB-GEN

GAS SUPPLIER

COALSUPPLIER

IPPs

PETRONAS

GENTAILER

New Retailer Gentailer

ISB IGSO

(Including Renewable Energy) (Generator-Retailer)

NEDA

MESI 1.0 (2010 - 2014) MESI 2.0 (Recommendation) (2019 - 2025)

NEDA RF-SB RF-GSO

Source: Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC)Note: Full details on abbreviation are available in the Glossary.

7 8

AUTONOMOUSROBOTS

BIG DATAANALYTICS

SIMULATION

CYBER SECURITY

AUGMENTEDREALITY

ADDITIVE MANUFACTURINGCLOUD COMPUTING

INDUSTRY 4.0INTERNET

OF THINGS

SYSTEMINTEGRATION

1 2 5 63p.55


4

INDUSTRIAL REVOLUTION 4.0

• The Fourth Industrial Revolution is rapidly driving transformational disruption across every sector.• Industry structures and business models are being disrupted by innovation in new products and services,

changing cost structures and lower barriers to entry.• It changes the way we operate and the characteristics of talents and culture required.


• Enhanced operational efficiencies contributing to improved profitability.• Increased effectiveness in monitoring of plant operations through one-stop online digital dashboard.• Safer and more efficient management of plant turnarounds.

How we responded

• Focus on transforming into a data-driven organisation employing descriptive and advanced analytics.• Implementation of PIVOT initiatives to:

– Strengthen barrier management to prevent plant interruption.– Build solid foundation for efficient plant operations through effective plant safety monitoring.

Outlook

• PGB will continue to innovate to stay ahead in plant operations and in providing solutions to customers.• Big data analytics and use of clouds in managing our operations will allow PGB to make better and quicker

decisions in operations.• Increasing digitalisation will transform our work processes and drive depth in data insights.


CUSTOMERS

BUSINESS PARTNERS



GOVERNMENT AGENCIES AND AUTHORITIES

COMMUNITIES

KEY STAKEHOLDER GROUPS

CHANNEL & FREQUENCY OF ENGAGEMENT

• Annual Report and Annual General Meeting• Quarterly analyst briefings• Investor roadshows and conferences• One-on-one meetings• Site visits• PGB website

• Annual customer experience survey• Customer visits• Industry conferences, forums and events• One-on-one meetings

• Board meetings• Management committee meetings• Strategic dialogues, conferences, forums and events• One-on-one meetings

• Toolbox sessions• Project sponsor meetings

• Annual townhall• Union engagement and activities• Monthly engagement with the Leadership Team• Periodic employee engagement with Human Resources Department• Intranet and Internal newsletters• Bi-annual PGB Barometer survey• R2C2 monthly message sharing

• Quarterly engagement programmes• Consultative sessions• One-on-one meetings

• Quarterly Corporate Social Responsibility (CSR) programmes• Periodic briefings and engagements with local communities


INTEGRATED REPORT 2019

Stakeholders Engagement

p.56

7 8

OUR RESPONSE

12Read more on our Stakeholder Value Creation on page 48

KEY CONCERNS

• Shareholders’ return• Third Party Access and regulatory risks to

business• Future growth strategy• Environment, Social and Governance (ESG)

practice

• Product Delivery Reliability (PDR)• Product quality• Competitive product offering

• Performance and returns of business ventures• Opportunity for growth and value creation• Sustaining long-term partnership• Regulatory compliance

• Fair procurement and pricing practice• Project delivery performance

• Conducive working environment• Diversity and Inclusivity (DNI)• Staff understanding on their contribution to

company’s strategy and business plans

• Gas supply, security and reliability• Economic impact to consumers• Regulatory compliance• Health and safety of PGB operations and

impact to surrounding communities• Ethical business practice

• Health and safety of PGB operations and impact to surrounding communities

• Education and social support• Environmental protection and biodiversity

preservation

We are cognisant of the need to engage our stakeholders and obtain their feedback on material sustainability areas in deriving and implementing our strategies. We will continue to engage our various stakeholder groups to ensure alignment of expectation for best outcomes.

1 2 5 63p.57


4

Sustainability

Complia

nce to Regulation

Human Capital

Business Growth

Gas

Mar

ket Lib

eralis

ation

Gas

Mark

et Dynamics

Operati

onal

Rel

iab

ilit

y, D

eliv

ery

and E

�ciency

Health, Safety

, Sec

uri

ty a

nd

En

viro

nmen

t (HSSE)

08

07

06

05

04

03

02

01

> IDENTIFICATION

> PRIORITISATION

> INTEGRATION

CA

PIT

ALS

STR

AT

EG

YST

AK

EH

OLD

ER

GR

OU

PS

IMP

AC

T

Immediate Medium

Me

diu

m

Long

MATERIALITY MATRIX

TIMEFRAME

Hig

hLo

w

Health, Safety, Security and Environment (HSSE)


Operational Reliability, Delivery and Efficiency

Business Growth

Human Capital

Gas Market Dynamics

Sustainability


Material Matters

are matters that

have the greatest

impact on an

organisation’s

financial

performance

and on the

organisation’s

ability to create

value and deliver

on its Strategy.

1

2

3

65 7

4

8

1

2

3

4

5

6

7

8



Material Matters

p.58

7 8

MATERIAL MATTERS

WHAT ARE THE RISKSWHAT ARE THE OPPORTUNITIES

OUR RESPONSE LINKS TO:

Health, Safety, Security and Environment

(HSSE)

Occurrence of major HSSE incidents affecting PGB business and reputation

Inculcation of behavioural safety culture with commitment from all staff, leading to increasing operational reliability and efficiency

Strengthen HSSE practices via identified key focus areas, which include:

• HSSE compliance improvement via digitalisation;• Efficient functional assurance;• Upskilling HSSE capability; and• Effective communication programme.

Concerted and continued efforts to strengthen behaviour towards Generative HSSE Culture.

1

Read more on our Strategic Focus Areas on page 66

11

Read more on our Risk Management on page 60

7

Read more on our Sustainability practices on page 132

Operational Reliability,

Delivery and Efficiency

Unsustainable operational performance and non-competitive costs impacting customers

Development of key operational strategies to achieve and sustain world-class standard which can be leveraged upon to generate additional revenue

Development of initiatives to ensure cost-competitiveness

Identification and timely completion of operational initiatives under R2 Game Plan:301Q99 Pushing Forward.

Implementation of digital solutions for effective monitoring and intervention.

Gas Market Dynamics

Low asset utilisation arising from reduced demand for gas, use of alternative fuels, and increasing call for renewables

Advocacy on the use of natural gas towards achieving sustainable energy mix in Malaysia to generate business opportunities

Explore growth opportunities to add further value to existing assets and future-proof the business.


Pressure on tariffs and earnings for regulated businesses

Potential growth opportunities in non-regulated areas, such as utilities, power and ancillary services

Undertake efforts in ensuring fair tariff development through continuous engagement with Suruhanjaya Tenaga, Ministry of Economic Affairs (MEA) and economic consultant.

Identification and effective implementation of commercial initiatives under R2 Game Plan: 301Q99 Pushing Forward.

Business Growth

Challenges in achieving growth targets to support PGB business

Potential growth opportunities in core and adjacent plays to add further value to the business

Strategic engagements with various parties to explore potential collaboration opportunities.

Establishment of Result Delivery Steering Committee to closely monitor growth progress.

Human Capital

Readiness of competent and capable talents to drive value in business operations and strategies

Robust talent management strategies and plans to produce capable and continuous pipeline of talents

Development and implementation of Talent Mix Strategy which enables empowered organisation, agile workforce as well as diversity and inclusion.

Management of talent competencies through RESCISCO implementation.


Potential breaches of critical laws, regulations and licenses resulting in reputational damage and financial loss

Adherence to critical laws and regulations resulting in strong reputation and standing

Execution of awareness and communication programmes on laws, regulations and licenses across PGB.

Sustainability

Inability to ensure and balance sustainability from economic, social and governance standpoints

Potential collaboration with all stakeholders along the value chain to deliver sustainable solutions

Identification and monitoring of annual sustainability targets.

Deliberate on sustainability practices at PGB Leadership Team meeting.

Alignment of sustainability targets and initiatives with PETRONAS.

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CONTINUOUS IMPROVEMENTS

We continue to enhance risk management awareness and capabilities across the Group through continued engagement and application of best practices.

In addition, we benefit from being part of PETRONAS Group where PGB is part of various Community of Practice (CoP) discussions which provides platforms to share and learn best practices as well as discuss on issues and improvements relating to Risk Management and Business Continuity Management implementation. Implementation on risk assurance exercises are in place within the Group to safeguard, control and mitigate risks, as part of its aspirations to achieve safe, reliable and efficient organisation.

We continue to focus on institutionalisation of risk management practice throughout the organisation.

Key risks identified under the PGB Enterprise Risk Profile as well as other risk focus areas are regularly monitored to ensure timely completion of their mitigations.

TYPE OF RISK

TYPE OF RISK

HSSE

Occurrence of major HSSE incidents affecting PGB business and reputation

Unsustainable operational performance could result in supply interruptions to customers

RISK DESCRIPTION

RISK DESCRIPTION

MITIGATION ACTIONS

MITIGATION ACTIONS

Strengthening HSSE practices via identified key focus areas which includes HSSE compliance improvement via digitalisation, efficient functional assurance, upskilling HSSE capability and effective communication programme.

Continuous efforts are also in place in strengthening behavioural-based safety towards Generative Safety Culture.

Close monitoring and reporting of progress and ensure timely completion of operational Key Result Areas (KRAs) for improvement initiatives under PGB R2 Game Plan: 301Q99 Pushing Forward, and implementation of digital solutions for effective monitoring and tracking. Physical asset, safety and equipment risk were monitored under Plant Facilities Risk Management mitigations.

RESULT

RESULT

HSSE performance recorded two LTIs incidents which was below the allowable limit and despite higher manhours as compared to previous year.

Sustainable improvement of key operational indicators on higher product delivery reliability to customers and Overall Equipment Effectiveness (OEE) which translated into uninterrupted delivery.

Operational

Key Risks and Mitigation



7 8

TYPE OF RISK

TYPE OF RISK

TYPE OF RISK

Variability of tariff for the next regulatory period

Possible breaches of critical laws, regulations and licenses resulting in reputational damage

Variability of PBT post-TPA regime roll-out and credit risk exposure

Challenges in achieving growth targets to support PGB business

RISK DESCRIPTION

RISK DESCRIPTION

RISK DESCRIPTION

MITIGATION ACTIONS

MITIGATION ACTIONS

MITIGATION ACTIONS

Undertake efforts in ensuring fair tariff development through continuous engagement with the regulator, relevant government ministries and economic consultant as well as effective implementation of R2 Game Plan: 301Q99 Pushing Forward.

Adhering to the critical laws and regulations through awareness communications on new laws, regulations and licenses across PGB i.e. PETRONAS Third Party Risk Management and PETRONAS Personal Data Protection Act and Anti-Competition Act & GSA 2016.

Close monitoring and reporting to ensure timely completion of PGB 301Q99 Pushing Forward target in reducing operation and maintenance costs.

Continues to apply the Credit Risk Management processes following Third Party Access (TPA) implementation which exposed the company to potential losses in the event of non-payment by customers.

Establishment of Growth Working Committee to closely monitor Growth progress and progress monthly reporting to R2 Steering Committee (R2SC).

RESULT

RESULT

RESULT

Proposed Regulatory Period (RP1) was approved by Suruhanjaya Tenaga.

No breaches of current critical laws, regulations and licenses.

Sustained world-class reliability at lower cost which resulted in higher PBT than previous years thus cushioning the current impact from TPA.

Credit Risk Management Committee (CRMC) established and Credit Risk Guidelines enhanced.

Implementation of current undergoing growth activities on track.

Strategy

Regulatory

Financial

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4

Market

TYPE OF RISK

TYPE OF RISK

TYPE OF RISK

Pressure on profitability for utilities business due to cost creep

Potential leakage of confidential data and exposure to operations system arising from cyber security threats

Potential inability to conform to sustainability requirements impacting PGB reputation

RISK DESCRIPTION

RISK DESCRIPTION

RISK DESCRIPTION

MITIGATION ACTIONS

MITIGATION ACTIONS

MITIGATION ACTIONS

Perform assessment on overall Utilities pricing mechanism and business model, continuous stakeholder management and negotiations, close monitoring of Utilities 301Q99 KRA efforts in reducing operating cost as well as Commercial Excellence (CX) initiatives to retain existing customers and capture new customers.

PETRONAS Groupwide Cyber Security Assurance Programme in strengthening current measures and continued regular interactions with various parties for corporate digital initiative alignment.

Continuous monitoring of sustainability targets and deliberation on sustainability practices at PGB Leadership Team meeting and aligning sustainability targets and initiatives with PETRONAS.

Sustainable utilities PBT through ongoing effort to sustain its existing business and secured new future business for the supply of power and steam.

Zero cases of cyber security breach.

PGB’s listing in FTSE4GOOD reflects good sustainability practices.

Technology

Governance

Key Risks and Mitigation

RESULT

RESULT

RESULT



7 81 2 5 63p.63


4



Strategic Blueprint

• Achieve superior and sustainable plant performance focusing on:

– Safe, reliable and efficient operations while reducing costs to ensure price competitiveness.

– Improve plant reliability performance to secure higher PBS amount.

• Deliver superior and competitive service to retain and extend new products to existing customers.

• Secure new customers by being:– customer centric; and– a solutions provider of choice in terms of cost, pace and service.

• Advocate the role of natural gas towards sustainable energy mix.

• Leverage on our capabilities and strengths to compete and secure new growth opportunities in our existing space.

• Step out into adjacent play that can add value to our existing assets.

• Transform Employee Experience through talent mobility and agile workforce.

• Promote Diversity and Inclusion as enablers to grow a diverse and inclusive workforce in a supportive working environment.

• Efficient leadership and capability development.

• Efficient and sustainable management systems and work processes.

PEOPLE,SYSTEMS AND CULTURE

OPERATIONAL EXCELLENCE

COMMERCIAL EXCELLENCE

GROWTH

ST

RA

TE

GIC

T

HR

US

TS

7 81 2 5 63p.65


4

Gas AdvocacyPGB is pushing forward to explore growth opportunities that can add further value to existing assets and future-proof the business. To this end, PGB is actively advocating towards the use of natural gas in achieving sustainable energy mix in Malaysia.

LONG TERM

The action plans are translated to Key Result Areas (KRAs) to del iver the target value creation for each element. OE R2 3Play (Work Process, Management System and Empowerment) and Digital solutions will act as strategic drivers to sustain the value creation of PGB R2 Game

Plan.

More than 70 Key Result Areas

(KRAs) were identified.A total of

RM68.0 million

value creationwas achieved from PGB R2

Game Plan

2 0 1 9

PGB R2 GAME PLAN 301Q99 PUSHING FORWARD IS A FOUR-YEAR JOURNEY STARTING FROM 2019 TO 2022 WITH FOCUS AREA OF MAXIMISING ASSET UTILISATION IN A SAFE, RELIABLE AND EFFICIENT MANNER.

‘1Q’ represents driving the energy and cost efficiency to achieve Quartile 1 target in order to bring down the unit production cost.

• Energy Index (EI)• Maintenance Cost over Current Plant

Replacement Value (MC/CPRV) • Maximising productivity through empowerment

‘30’ represents improvement of plant utilisation gap by 30%. The focus being to:

• Retain existing customers by improving product delivery reliability and HSSE

• Capture new customers by expanding PGB resources to increase product sales

‘99’ represents protecting enterprise value by sustaining asset reliability at 99%. It also focuses on maximising Performance Based Structure (PBS) incentives through higher plant reliability.

301Q99 PUSHING FORWARD

STRATEGIC FOCUS AREAS KEY PERFORMANCE INDICATORS 2019 INITIATIVES AND RESULTS 2020 PRIORITIES

• Ensure safe operations at all facilities Zero HSSE Incident* Four (4) TRC Incidents• Sustain the momentum of 2019 value creation

and initiatives

• Identify and execute more initiatives through Key Results Area (KRA) to maximise the value creation

• Drive efficiencies and improve plant utilisation

• Improve plant reliability performance to secure higher PBS revenue

Plant reliability and efficiency:

(a) Average OEE – GP, UT & RGT(b) Salesgas PDR – PGU(c) Ethane Utilisation(d) Energy Efficiency Index

Above world-class operational performance:

(a) 99.3%(b) 100% (c) 84.5%(d) 97.24

Obtain approval of Regulatory Period 1 (RP1) tariffs

TPA Regulatory Period 1 Tariffs:

(a) PGU(b) RGTSU (c) RGTP

(a) RM1.129/GJ (b) RM3.455/GJ (c) RM3.485/GJ

• Renewal of Utilities contracts in 2020

• Secure new Utilities customers outside of captive area

• Proactive identification of new opportunities

Retain existing customers Expand resources to capture new customers

Extension of existing contracts New sales contracts

Extended long term contracts and secured new sales with existing customers for electricity and steam

Advocate the role of natural gas towards sustainable energy mix

Engagements with statutory bodies Participation in industry conferences

Active participation at high level industry platform such as:

(a) Malaysian Gas Association (MGA) Industry Talk on the Journey towards Natural Gas Market Liberalisation

(b) Malaysian Gas Symposium 2019(c) International Gas Union (IGU) Council Workshop 2019 (d) MGA Forum on Cogeneration

Explore growth opportunities in existing businesses and adjacent space

Achievement of key milestones for projects and opportunities identified

(a) Additional Nitrogen Generation Unit at Kertih (b) Gassing Up Cooling Down at RGTP (c) LNG Reloading at RGTP

• Execution and completion of endorsed projects

• LNG bunkering at RGTSU

• LNG truck loading at RGTP


Transform Employee Experience through talent mobility and agile workforce

Promote Diversity and Inclusion towards supportive working environment

Effective leadership and capability development

(a) No. of Ready Talent for Business Critical Positions

(b) Implementation of Talent Mix Strategy

(c) PGB Barometer score

(a) 5.2 :1(b) Implementation of Talent Mix Strategy (i) Development of agile workforce initiative (ii) Empowerment of female workforce in technical and

managerial position(c) Score 3.49 out of maximum 4.00

Continued implementation of talent strategy and initiatives

Implement efficient and sustainable system and work process

(a) Digital Initiatives (b) OE R2 Initial Implementation Readiness

Assessment to reach above threshold of 50%

(a) (i) PETRONAS Integrated Vision for Operational Excellence (PIVOT)

(ii) Geospatial Information System (PiriGIS) (iii) Active participation in PETRONAS digital platform i.e.

SWITCH(b) (i) Utilities Gebeng: 86% (ii) Tanjung Sulong Export Terminal: 91%

Continued improvements toward self-empowered organisation

In realising our strategy, we focus on four strategic thrusts to ensure a robust and fundamentally resilient business that can respond quickly to changes in the business environment.

ST

RA

TE

GIC

TH

RU

ST

S

OPERATIONAL EXCELLENCE

COMMERCIAL EXCELLENCE

PEOPLE, SYSTEMS AND CULTURE

GROWTH

* Fatal Accident, Major Fire, Loss of Primary Containment and regulatory compound.



Strategic Focus Areas and Key Performance Indicators

p.66

7 8

STRATEGIC FOCUS AREAS KEY PERFORMANCE INDICATORS 2019 INITIATIVES AND RESULTS 2020 PRIORITIES

• Ensure safe operations at all facilities Zero HSSE Incident* Four (4) TRC Incidents• Sustain the momentum of 2019 value creation

and initiatives

• Identify and execute more initiatives through Key Results Area (KRA) to maximise the value creation

• Drive efficiencies and improve plant utilisation

• Improve plant reliability performance to secure higher PBS revenue

Plant reliability and efficiency:

(a) Average OEE – GP, UT & RGT(b) Salesgas PDR – PGU(c) Ethane Utilisation(d) Energy Efficiency Index

Above world-class operational performance:

(a) 99.3%(b) 100% (c) 84.5%(d) 97.24

Obtain approval of Regulatory Period 1 (RP1) tariffs

TPA Regulatory Period 1 Tariffs:

(a) PGU(b) RGTSU (c) RGTP

(a) RM1.129/GJ (b) RM3.455/GJ (c) RM3.485/GJ

• Renewal of Utilities contracts in 2020

• Secure new Utilities customers outside of captive area


Retain existing customers Expand resources to capture new customers

Extension of existing contracts New sales contracts

Extended long term contracts and secured new sales with existing customers for electricity and steam

Advocate the role of natural gas towards sustainable energy mix

Engagements with statutory bodies Participation in industry conferences

Active participation at high level industry platform such as:

(a) Malaysian Gas Association (MGA) Industry Talk on the Journey towards Natural Gas Market Liberalisation

(b) Malaysian Gas Symposium 2019(c) International Gas Union (IGU) Council Workshop 2019 (d) MGA Forum on Cogeneration

Explore growth opportunities in existing businesses and adjacent space

Achievement of key milestones for projects and opportunities identified

(a) Additional Nitrogen Generation Unit at Kertih (b) Gassing Up Cooling Down at RGTP (c) LNG Reloading at RGTP

• Execution and completion of endorsed projects

• LNG bunkering at RGTSU

• LNG truck loading at RGTP


Transform Employee Experience through talent mobility and agile workforce

Promote Diversity and Inclusion towards supportive working environment

Effective leadership and capability development

(a) No. of Ready Talent for Business Critical Positions

(b) Implementation of Talent Mix Strategy

(c) PGB Barometer score

(a) 5.2 :1(b) Implementation of Talent Mix Strategy (i) Development of agile workforce initiative (ii) Empowerment of female workforce in technical and

managerial position(c) Score 3.49 out of maximum 4.00

Continued implementation of talent strategy and initiatives

Implement efficient and sustainable system and work process

(a) Digital Initiatives (b) OE R2 Initial Implementation Readiness

Assessment to reach above threshold of 50%

(a) (i) PETRONAS Integrated Vision for Operational Excellence (PIVOT)

(ii) Geospatial Information System (PiriGIS) (iii) Active participation in PETRONAS digital platform i.e.

SWITCH(b) (i) Utilities Gebeng: 86% (ii) Tanjung Sulong Export Terminal: 91%

Continued improvements toward self-empowered organisation

1 2 5 63p.67


4

Performance Scorecard

Zero Fatality, Major LOPC and Major Fire Incident, However two Lost Time Injury (LTI) incidents were recorded during the year.>

CategoryUnits of

measurement Description 2015 2016 2017 2018 2019 YoY Trend

Fatality Number of incidents

Total number of reportable fatalities (staff, contractor and third party)

3 0 3 0 0

Lost Time Injury (LTI)

Number of incidents

An injury is assessed to be on LTI when the injured person cannot return for duty during next shift or next day

5 6 2 0 2

Major Lost of Primary Containment (LOPC)

Number of incidents

Total number of LOPC related to process safety incidents with the greatest consequences

3 0 0 0 0

Major Fire Incident

Number of incidents

Total number of fire or explosion resulting in the greatest consequences

1 0 0 0 0

Total Recordable Cases (TRCs)

Number of incidents

The sum of fatalities and total injuries resulting in Permanent Total Disabilities (PTD), Permanent Partial Disabilities (PPD), Lost Work Day Cases (LWC), Restricted Work Cases (RWC) and Medical Treatment Cases (MTC)

7 10 5 1 4

HEALTH, SAFETY, SECURITY AND ENVIRONMENT (HSSE)



7 8

• OEE – A measure of plant performance against

its limits and identified sources of loss within

the plant and a measure of how well equipment

is used when available.

• World-class performance benchmark for OEE

is 95%.

• Reliability – A measure to determine the impact

of unscheduled downtime on the availability

of the plant.

• World-class performance benchmark for

Reliability is 98%.

ObjectivesUnits of

Measurement Description 2015 2016 2017 2018 2019 YoY Trend

Salesgas PDR %

Product delivered as per customers’

nomination

100.0 100.0 100.0 100.0 100.0

Electricity PDR % 99.98 100.0 100.0 100.0 99.99

Steam PDR % 99.91 100.0 99.8 99.98 99.76

Ethane Production (MT/hr)Annual average ethane production

from the gas processing plants135 142 134 142 144

Gas Processing OEE (%)

Regasification OEE (%)

2018 2019

RGTSU RGTP

100.0

100.0

100.0

100.0

Utilities OEE (%)

2018 2019

Electricity Steam Ind. Gases

99.799.499.7

98.0

99.099.1

Gas Transportation

Reliability (%)

Overall

2018 2019

99.9999.99

Salesgas (without standby)C2 C3 C4

2018 2019

99.8 99.7 99.3

99.0

98.7 98.7

98.7 98.6

Higher Operational Equipment Effectiveness (OEE) achieved for Gas Processing, Utilities and Regasification has translated into higher Product Delivery Reliability (PDR) to customers. Higher transmission reliability demonstrated our world-class performance in transmission operations, ensuring security of gas supply to the nation.

OPERATIONS

>

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Baby Boomers

632018 : 942017 : 116

Gen X

6452018 : 6852017 : 701

Millenials

1,1002018 : 1,1642017 : 1,138

Post Millenials

202018 : 162017 : 1

* Manpower generation data 2018 is based on the new definition i.e Baby Boomers (1965 and before), Gen X (1966-1979), Millenials (1980-1994), Post Millenials (1995 and after).

Objectives Units of measurement 2015 2016 2017 2018 2019

Total employees Number of staff 2,187 2,117 1,956 1,959 1,829

Other nationality Number of staff 14 14 9 8 3

Employee turnover % 1.1 0.7 0.5 0.6 0.56

Staff costs RM million 374.5 324.5 353.5 403.2 388.5

Mandays training per employee days 9.8 10.3 6.4 6.2 7.4

Training investment per employee RM’000 7.8 6.3 3.6 5.2 8.4

> We have adopted an empowered organisation model, we continue to review the effectiveness of our organisation as we strive to achieve world-class competitiveness.

> We provide continuous Leadership and Technical Capability Development programmes to enhance staff capability in building a highly engaged and capable workforce to realise our aspiration to become a world-class organisation. Harvard Manage Mentor (HMM) is a digital learning platform which encourages our staff to drive their own learning and capability development.

1,8292018 : 1,9062017 : 1,897

33%2018 : 33%2017 : 33%

50% 2018 : 50%2017 : 43%

Women in Leadership

TeamPermanent

Women in Board

Composition

HUMAN CAPITAL




p.70

7 8

DIGITAL INITIATIVES

> Digital revolution has already fundamentally affected the environment we are in and how we operate our business. In order to meet the rapidly evolving expectations of customers, PGB aspires to adopt digitalisation in applicable aspects of our business to improve plant performance, drive innovation and create sustainable value.

PIVOT

PGB began implementing the PETRONAS Integrated Vision for Operational Excellence Technology (PIVOT) programme in 2017, as part of PETRONAS enterprise digital agenda to support new ways of working towards becoming a data-driven organisation.

Launched at PGB’s gas processing plants, PIVOT is a persona-driven performance and insights dashboard with the objective of allowing the users to see relevant operational indicators and barriers from a single platform throughout their daily operations.

By having the descriptive analytics on a digital dashboard, we practice data transparency and integrity as all information are accessible to all users encompassing from the top management down to the operating level.

PIVOT has also reduced reporting layers and at the same time allowed the staff to allocate more time to analyse things better. This consequently led to a timely and more accurate decision making process. PiriGIS™

The new PiriGIS software opens a gateway to comprehensive Geospatial Information System (GIS) and non-spatial data that visualises all of our Gas Transportation and Regasification (GTR) assets.

PiriGIS allows us to explore, analyse, retrieve data and perform simple analytics with increased confidence on PGB’s entire pipeline network.

At our GTR operations, real time data is provided for ease of our personnel to inspect and examine the state and healthiness of our pipelines that will provide prompt decision making.

This will also enable us to proactively pinpoint and address issues which contributes immensely to our HSSE performance by safeguarding our people, environment and assets.

PGB’s PiriGIS™ was awarded the prestigious GeoInnovation Awards in 2019, an award that is conferred only to selected organisations.

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Lower due to Incentive-based Regulation (IBR)

on GT & RGT Segments.

Lower, albeit still very healthy, due to higher payable balances at the year end.

Higher mainly due to increase in utilities cost of sales in line with upward fuel gas price revision.

Higher mainly due to share of profit from joint ventures.

Comparable reflecting business model with fixed returns.

46.1% 43.7%

2018 2019

7.0

5.2

2018 2019

53.9%56.3%

2018 2019

Gross profit margin is defined as a ratio of gross

profit to revenue.

Current ratio is defined as the Company’s ability to meet its

short term obligations.

Cost to Income (CTI) is a measure of cost of revenue

divided by revenue.

Net profit margin is defined as a ratio of net profit after

tax to revenue.

Return on Asset (ROA) is an indicator that measures the

Company’s efficiency in using the total assets to generate profit.

34.4% 36.4%

2018 2019

10.3% 10.1%

2018 2019

FINANCIAL




p.72

7 8

Comparable reflecting stability of earnings.

Higher in tandem with higher dividends declared.

Higher with increased distribution to shareholders, including special dividends

Higher in line with improved profits for the year.

Declining share price trend during the year reflecting general market

movements.

72 sen 82 sen

2018 2019

Return on Equity (ROE) is defined as profit attributable to shareholders

divided by the average shareholders’ equity for the financial year.

Dividend Payout Ratio (DPR) is defined as the percentage

of earnings paid to shareholders in dividend.

Dividends Per Share (DPS) is dividends declared to the

shareholders divided by the number of ordinary shares issued.

Earnings Per Share (EPS) represents the portion of the

Company’s distributable income allocated to each equity share.

Total Shareholders’ Return (TSR) is measure of share price performance and dividends paid during the year, divided by the opening share prices.

14.0% 14.6%

2018 2019

90.6 sen97.8 sen

2018 2019

79.5%83.8%

2018 2019

14.0%

-9.2%

2018

2019

1 2 5 63p.73


4

ANALYSIS

2015

• Completion of the last series of plant revamp and rejuvenation project (PRR) for GP segment (PRR for Gas Processing Plant (GPP) 2 and 3 was completed in 2013 and PRR for GPP4 was completed in 2015).

• Compared to 2014, the Group’s profit increased as a result of recognition of tax incentives arising from ITA and reinvestment allowances granted by MIDA on PRR totalling RM443.1 million.

• This was partially offset by unrealised foreign exchange (forex) loss on USD finance lease liabilities totalling RM199.9 million due to weakening of the Ringgit.

• Excluding impact of tax incentives and forex, profit remained strong at RM1.7 billion.

Item 2015 2016 2017 2018 2019

Profit After Tax (RM million) 1,985.9 1,736.3 1,816.9 1,890.9 1,984.1

2016

• Compared to 2015, excluding impact of tax incentives and forex, profit remained steady at RM1.7 billion.

2017

• Achieved commercial operations of Malaysia’s second LNG regasification terminal in Pengerang, Johor on November 2017.

• Compared to 2016, profit was higher as a result of new revenue stream from RGT Pengerang.

2018

• Regulation of the Group’s Gas Transportation and Regasification businesses under Gas Supply (Amendment) Act 2016 which includes economic, safety and technical regulation by Suruhanjaya Tenaga.

1,985.9*

1,736.3

2015 2016 2017 2018 2019

1,816.9

1,984.11,890.9

Profit After Tax(RM million)

• Compared to 2017, profit was higher driven by second LNG regasification terminal in Pengerang, Johor which commenced commercial operations in November 2017 and being further supported by higher revenue from all other segments.

2019

• Achieved full commercial operations for Air Separation Unit project in Pengerang, Johor under Pengerang Gas Solutions Sdn. Bhd., a 51% joint venture of the Group.

• Compared to 2018, profit was higher driven by higher share of profit from joint ventures, unrealised foreign exchange gains from translation of USD denominated lease liabilities and higher interest income from fund investment.

* Includes tax incentives and forex impact of RM243.2 million.

OUR VALUE PROPOSITION – FORWARD DRIVEN PERFORMANCE


5-year Group Financial Analysis

p.74

Item 2015 2016 2017 2018 2019

Total Assets (RM million) 14,382.0 16,553.6 17,627.5 18,275.6 19,583.5

ANALYSIS

Item 2015 2016 2017 2018 2019

Property, plant and equipment 11,323.8 12,807.5 12,898.6 12,487.6 13,246.5

Fixed assets 9,737.9 9,660.8 12,188.5 11,799.2 12,355.3

Project-in-progress 1,585.9 3,146.7 710.1 688.4 891 .2

Cash and cash equivalents 1,230.8 1,763.1 2,500.4 3,616.0 4,021 .7

2015

• Compared to 2014, total assets of the Group increased mainly attributed to higher property, plant and equipment (PPE) arising from completion of plant revamp and rejuvenation project (PRR) for GPP4 and higher cash balances.

2016

• Compared to 2015, total assets surged to RM16.6 billion as the Group embarked into Malaysia’s Second LNG Regasification Terminal and Air Separation Unit plant projects in Pengerang, Johor.

2017

• Compared to 2016, total assets increased due to higher cash balances contributed by cash generated from operations.

2018

• Compared to 2017, total assets increased mainly contributed by higher cash and cash equivalents generated from the Group’s full year revenue stream from LNG regasification terminal in Pengerang, Johor.

14,382.0

16,553.6

17,627.5

18,275.6

19,583.5

2015 2016 2017 2018 2019

Total Assets(RM million)

2019

• Compared to 2018, total assets grew by 7% mainly contributed by higher PPE balance following adoption of MFRS 16 Leases which resulted in recognition of right-of-use assets effective 1 January 2019 and higher cash and cash equivalents generated from operating activities.

7 81 2 5 63


p.754

Year 2015 2016 2017 2018 2019

Revenue (RM million) 4,455.9 4,561.3 4,896.7 5,498.1 5,458.3

Profit after tax (RM million) 1,985.9 1,736.3 1,816.9 1,890.9* 1,984.1

EBITDA (RM million) 2,762.0 2,960.5 3,183.7 3,611.8 3,502.8

Dividends per share (sen) 60.0 62.0 66.0 72.0 82.0

Earnings per share (sen) 100.4 87.9 90.6 90.6* 97.8

Total assets (RM million) 14,382.0 16,553.6 17,627.5 18,275.6* 19,583.5

Total equity (RM million) 11,594.9 12,161.2 12,762.4 13,200.0* 13,565.2

Market capitalisation (RM billion) 44.9 42.1 34.6 38.0 32.9

Closing share price (RM) 22.70 21.30 17.48 19.20 16.62

* Certain 2018 comparatives have been restated.

REVENUE (RM million)

PROFIT AFTER TAX (RM million)

4,455.9 4,561.34,896.7

5,498.1 5,458.3

2015 2016 2017 2018 2019

2,762.02,960.5

3,183.7

3,611.8 3,502.8

2015 2016 2017 2018 2019

EBITDA (RM million)

1,985.9

1,736.31,816.9

1,890.9 1,984.1

2015 2016 2017 2018 2019



5-year Financial Summary

p.76

44.942.1

34.638.0

32.9

2015 2016 2017 2018 2019

100.4

87.9 90.6 90.697.8

2015 2016 2017 2018 2019

11,594.912,161.2

12,762.4 13,200.0 13,565.2

2015 2016 2017 2018 2019

22.7021.30

17.48

19.20

16.62

2015 2016 2017 2018 2019

DIVIDENDS PER SHARE (sen)

TOTAL ASSETS (RM million)

MARKET CAPITALISATION (RM billion)

EARNINGS PER SHARE (sen)

TOTAL EQUITY (RM million)

SHARE PRICE (RM)

60.0 62.066.0

72.0

82.0

2015 2016 2017 2018 2019

14,382.0

16,553.617,627.5

18,275.6

19,583.5

2015 2016 2017 2018 2019

7 81 2 5 63


p.774

Year 2015 2016 2017 2018 2019

Key results (RM million)

Revenue 4,455.9 4,561.3 4,896.7 5,498.1 5,458.3

By segment:

Gas Processing 1,533.6 1,557.2 1,572.3 1,571.0 1,702.3

Gas Transportation 1,311.6 1,303.9 1,382.4 1,360.6 1,152.5

Regasification 637.1 631.1 773.5 1,245.4 1,237.9

Utilities 973.6 1,069.1 1,168.5 1,321.1 1,365.6

By geography:

Peninsular Malaysia 4,428.8 4,545.4 4,801.3 5,422.0 5,410.3

Sabah & Sarawak 27.1 15.9 95.4 76.1 48.0

Interest income 31.8 54.2 84.8 112.6 154.2

Cost of revenue 2,316.5 2,495.4 2,666.8 2,962.2 3,071.2

By segment:

Gas Processing 836.7 908.8 921.4 931.7 885.8

Gas Transportation 302.4 328.5 331.3 342.6 353.0

Regasification 339.6 344.8 395.5 547.4 626.9

Utilities 837.8 913.2 1,018.6 1,140.5 1,205.5

Financing costs 90.1 93.9 113.5 169.4 229.7

Administration expenses 89.5 93.1 84.3 90.0 94.8

Operating profit 2,016.9 2,137.1 2,278.4 2,570.6 2,555.9

Earnings before interests, taxes, depreciation and amortisation 2,762.0 2,960.5 3,183.7 3,611.8 3,502.8

Profit before taxation 2,002.1 2,106.8 2,252.7 2,334.6 2,462.9

Profit after taxation 1,985.9 1,736.3 1,816.9 1,890.9 1,984.1

Profit attributable to shareholders of the Company 1,987.5 1,739.1 1,792.7 1,793.0 1,935.3

Key statement of financial position (RM million)

Property, plant and equipment 11,323.8 12,807.5 12,898.6 12,487.6 13,246.5

Cash and cash equivalents 1,230.8 1,763.1 2,500.4 3,616.0 4,021.7

Total assets 14,382.0 16,553.6 17,627.5 18,275.6 19,583.5

Borrowings 1,058.3 2,249.5 3,084.3 3,327.0 3,898.9

Total liabilities 2,787.1 4,392.4 4,865.1 5,075.6 6,018.3

Share capital 1,978.7 1,978.7 3,165.2 3,165.2 3,165.2

Reserves 9,460.1 9,988.0 9,349.8 9,658.3 10,080.2

Total equity attributable to shareholders of the Company 11,438.8 11,966.7 12,515.0 12,823.5 13,245.4

Non-controlling interests 156.1 194.5 247.4 376.5 319.8

Total equity 11,594.9 12,161.2 12,762.4 13,200.0 13,565.2

Share information

Earnings per share (sen) 100.4 87.9 90.6 90.6 97.8


Net assets per share (RM) 5.78 6.05 6.32 6.48 6.69

Closing share price (RM) 22.70 21.30 17.48 19.20 16.62

Number of ordinary shares (‘000) 1,978,732 1,978,732 1,978,732 1,978,732 1,978,732

Market capitalisation (RM billion) 44.9 42.1 34.6 38.0 32.9

Note: Certain 2018 comparatives have been restated.



5-year Group Financial Information

p.78

2019

2018

In RM millionFirst

QuarterSecond

QuarterThird

QuarterFourth

QuarterYear 2018

Operating revenue 1,350.8 1,358.3 1,401.8 1,387.2 5,498.1

Operating profit 659.0 658.2 655.0 598.4 2,570.6

Profit before taxation 637.0 632.8 634.8 430.0 2,334.6

Profit after taxation 505.3 537.1 523.4 325.1 1,890.9

Profit attributable to shareholders of the Company 483.3 509.3 499.8 300.6 1,793.0




In RM millionFirst

QuarterSecond

QuarterThird

QuarterFourth

QuarterYear 2019

Operating revenue 1,367.7 1,380.2 1,338.0 1,372.4 5,458.3

Operating profit 691.1 661.5 574.8 628.5 2,555.9

Profit before taxation 670.0 651.3 553.3 588.3 2,462.9

Profit after taxation 530.8 514.8 445.5 493.0 1,984.1

Profit attributable to shareholders of the Company 515.6 502.9 431.5 485.3 1,935.3



Group Quarterly Performance

7 81 2 5 63


p.794

Property, Plant and Equipment 68%

Cash and Cash Equivalents 20%

Trade and Other Receivables 5%

Investment in Joint Ventures 2%

Deferred Tax Assets 2%

Long Term Receivables 2%

Investment in Associate 1%

Trade and Other Inventories 0%*

Tax Recoverable 0%*

Property, Plant and Equipment 68%

Cash and Cash Equivalents 21%

Trade and Other Receivables 5%

Investment in Joint Ventures 3%

Deferred Tax Assets 1%

Long Term Receivables 1%

Investment in Associate 1%

Trade and Other Inventories 0%*

Tax Recoverable 0%*

* Insignificant percentage (%)



1%

5%

2%2% 2%

68%

20%

RM18.3 billion

2018

1%

5%3% 1%1%

68%

21%

RM19.6 billion

2019



Simplified GroupStatement of Financial Position

p.80

TOTAL EQUITY AND LIABILITIES

Reserves 53%

Non-Current Borrowings 18%

Share Capital 17%

Deferred Tax Liabilities 6%

Trade and Other Payables 3%

Non-Controlling Interests 2%

Current Borrowings 1%

Deferred Income 0%*

Reserves 51%

Non-Current Borrowings 19%

Share Capital 16%

Deferred Tax Liabilities 6%

Trade and Other Payables 5%

Non-Controlling Interests 2%

Current Borrowings 1%

Deferred Income 0%*




1%

6%

17%

3% 2%

53%

18%

RM18.3 billion

2018

1%

6%

16%

5%2%

51%

19%

RM19.6 billion

2019

7 81 2 5 63


p.814

2018 2019

As at 31 December

RM million

EffectiveInterest Rate

%

InterestIncome/

(Expenses)RM million

As at 31 December

RM million

EffectiveInterest Rate

%

InterestIncome/

(Expenses)RM million

Interest earning assets

Cash and cash equivalents 3,616.0 3.3 112.6 4,021.7 3.3 154.2

Interest bearing liabilities

Finance lease liabilities 1,014.3 9.1 (91.8) 1,656.7 7.7 (146.6)

Term loan 1,793.6 3.3 (45.1)* 1,781.2 2.5 (50.1)

Loan from corporate shareholder of a subsidiary 519.0 6.5 (33.3)* 461.0 6.5 (33.0)

* Part of interest expenses are being capitalised as part of projects-in-progress.

2018RM million

2019RM million

Revenue 5,498.1 5,458.3

Purchase of goods and services (1,488.8) (1,599.7)

Value added by the Group 4,009.3 3,858.6

Other income and expenses 124.7 263.6

Financing costs (169.4) (229.7)

Share of profit after tax of equity accounted associate and jointly controlled entity (66.6) 136.7

Value added available for distribution 3,898.0 4,029.2



Key Interest Bearing Assets and Liabilities

Statement of Value Added

p.82

10%

10%

38%

42%

2%

10%

10%

37%

43%

2018RM million

2019RM million

To employees

Employment costs 403.2 426.8

To government

Taxation 380.1 383.5

To shareholders

Dividends 1,365.3 1,424.8

Non-controlling interest 97.9 48.8

Retained for reinvestment and future growth

Depreciation, amortisation and impairment 1,160.2 1,139.5

Deferred tax expense 63.6 95.3

Retained profit 427.7 510.5

3,898.0 4,029.2

To employees To government To shareholders Retained for reinvestment and future growth

20192018


7 81 2 5 63

Distribution of Value AddedPUSHING FORWARD ACCELERATING MOMENTUM

p.834

As several key external factors continue to affect the environment and the way we operate, it was essential for PGB to engage with our capital market stakeholders more frequently. Our activities were guided by our investor relations programme, which was developed annually and tailored to address the relevant topics at the time.

Our 36th Annual General Meeting (AGM) was held on 30 April 2019 at the Mandarin Oriental Hotel, Kuala Lumpur. Key highlights of the Group’s performance for the year under review were presented and the 1,696 shareholders and proxies who attended the meeting were given the opportunity to actively participate by raising queries and providing suggestions to the company. This was the third time we utilised digital voting for the meeting resolutions. All proposed resolutions were duly passed and minutes of the AGM is available on our official website at www.petronasgas.com.

RELEVANT INDUSTRY UPDATES ARE SHARED SO AS TO FACILITATE INVESTORS IN MAKING INFORMED INVESTMENT DECISIONS

As one of the top companies by market capitalisation on Bursa Malaysia Securities Berhad (Bursa Malaysia), PGB places utmost importance in establishing and maintaining a strong and transparent relationship with our shareholders and the broader community.

We consistently issue our quarterly financial results to Bursa Malaysia, in line with the Main Market Listing Requirements and the Malaysian Code of Corporate Governance 2017. Subsequently, we conduct quarterly analyst briefings via webcast and conference call to allow further clarification and interaction between the Group’s spokespersons and the capital market. The f inancial results announcements and recordings of webcast and conference calls are available on our website for reference.

For 2019, it was imperative for PGB to engage and provide more clarifications related to the Third Party Access (TPA) Pilot Regulatory Per iod and the impact to our Gas Transportation and Regasification businesses. Hence, we organised a special face-to-face briefing session to provide company updates on the topic as well as to address the capital market queries directly.

Relating to TPA, we also announced the updated agreements which have adopted the new tariffs as approved by Suruhanjaya Tenaga.

We consequently announced the approved tariffs for the first Regulatory Period (RP1) for all three facilities, effective 1 January 2020 until 31 December 2022.

Aside from the above topic, we also communicated on PGB’s business ventures, such as the execution of Heads of Agreement (HoA) to supply nitrogen to PETRONAS Chemicals Group’s subsidiaries. In addition, the Group had also introduced ancillary services consisting of Gassing Up Cooling Down (GUCD) and LNG reloading at our LNG Regasification Terminal Pengerang to complement our service offering to the customers.

We recognise the need for our stakeholders to appreciate the nature of our business. During the year under review, we received 24 of our retail shareholders at our Segamat Operation Centre in Segamat, Johor. The event received positive feedback from the attendees who appreciated the role PGB plays in ensuring gas supply delivery and reliability for the nation.

As a result, Investor Relations conducted over 20% more engagements with various investors and analysts via one-on-one meetings, group meetings, conference calls, analyst briefings, investor conferences and site visit in 2019. All sessions were led by our designated spokespersons, namely our MD/CEO, CFO and Head of Investor Relations.

Overall, 2019 proved to be a notable year for us as our efforts to communicate effectively had been acknowledged via a number of awards received during the year, including:

• MSWG-ASEAN Corporate Governance 2018– Excellence Award for Corporate

Governance disclosure – ranked 4th place

– Industry Excellence Award – Energy and Utilities

– Overall Corporate Governance & Performance – ranked 6th place

• Malays ian Inst i tute of Corporate Governance (MICG)– Transparency in Corporate Reporting

– Top 10

• National Annual Corporate Report Awards (NACRA) – Platinum Award for Best Designed

Annual Report

We continuously strive to maintain accessibility to our stakeholders. For more specific investor-related queries and feedback, we can be reached at [email protected].



Investor Relations

p.84

INVESTOR RELATIONS ACTIVITIES

Quarterly Results and Analyst Briefing

RESULTS ANNOUNCEMENT DATE BRIEFING DATE TYPE OF MEETING

Q1 28 May 2019 28 May 2019 Webcast and conference call

Q2 27 August 2019 27 August 2019 Webcast and conference call

Q3 19 November 2019 20 November 2019 Webcast and conference call

Q4 18 February 2020 19 February 2020 Webcast and conference call

Investor Conferences

DATE EVENT LOCATION

3 – 4 January 2019 CIMB 11th Annual Malaysia Corporate Day 2019 Kuala Lumpur, Malaysia

24 – 25 January 2019 Invest Malaysia Tokyo 2019 Tokyo, Japan

19 March 2019 Invest Malaysia Kuala Lumpur 2019 Kuala Lumpur, Malaysia

Investor Day

DATE EVENT LOCATION

19 February 2019 Third Party Access Sharing Session Kuala Lumpur, Malaysia

Site Visit

DATE EVENT SITE LOCATION

13 January 2020 Retail Shareholders Visit Segamat Operation Centre Johor, Malaysia

Annual General Meeting (AGM)30 April 2019, Mandarin Oriental Hotel, Kuala Lumpur

Shareholders and proxies attended: 1,696

36TH

Analyst & Institutional Investor Meetings

Face-to-face meeting Conference call/Tele-conference

652018

12018

812019

22019

7 81 2 5 63


p.854

SIGNIFICANT ANNOUNCEMENTS

Date Event

15 April 2019Update on Fire Incident at Pengerang Integrated Complex, which had no operational nor financial impact to PGB.

Bursa Announcement

16 April 2019

Announcement on the updated:

i. Gas Transportation Agreement (GTA) for Peninsular Gas Utilisation (PGU) Pipeline;

ii. Terminal Use Agreement (TUA) for LNG Regasification Terminal Sungai Udang (RGTSU), Melaka; and

iii. Terminal Use Agreement (TUA) for LNG Regasification Terminal Pengerang (RGTP), Johor

in respect of the Third Party Access agreements.

Bursa Announcement

28 May 2019Q1 2019 results and announcement of new Gassing Up and Cooling Down service at RGTP.

Quarterly Analyst Briefing

3 June 2019

Memorandum of Understanding for the execution of Heads of Agreements for the supply of nitrogen to PETRONAS Chemicals Group’s subsidiaries.

Bursa Announcement

19 August 2019Q2 2019 results and announcement of new LNG reloading service at RGTP. Quarterly

Analyst Briefing

17 September 2019

Q3 2019 results and announcement of successful delivery of PGB’s maiden third party LNG cargo, shipped by Shell Malaysia Trading Sdn. Bhd. for Tenaga Nasional Berhad (TNB).

The cargo was received and regasified at RGTSU, and subsequently transported via PGU pipeline to TNB’s power stations in Port Dickson and Klang.

Quarterly Analyst Briefing

29 November 2019

Execution of Heads of Agreements for the supply of nitrogen to PETRONAS Chemicals Group’s subsidiaries.

Bursa Announcement

29 November 2019

Notice of arbitration to PGB on the claim relating to the Procurement, Construction and Commissioning of Pengerang Gas Pipeline Project.

Bursa Announcement

20 December 2019

Publication of Regulatory Period 1 (RP1) Tariffs for PGU, RGTSU, and RGTP under the TPA regime.

Bursa Announcement



Investor Relations

p.86

2019

2020

Date of payment of the interim dividend for the first quarter ended 31 March 2019

Date of payment of the interim dividend for the fourth quarter ended 31 December 2019

Date of payment of the interim dividend for the second quarter ended 30 June 2019

37thAnnual GeneralMeeting

Date of payment of the interim dividend for the third quarter ended 30 September 2019

Date of payment of the interim dividend for the fourth quarter ended 31 December 2018

Announcement of the unaudited consolidated results for the fourth quarter ended 31 December 2019

36th Annual General Meeting

Date of Notice of the 37th Annual General Meeting and date of issuance of Integrated Report 2019

Announcement of the unaudited consolidated results for the second quarter ended 30 June 2019

Announcement of the unaudited consolidated results for the third quarter ended 30 September 2019

18 FEBRUARY 30 MARCH 28 MAY

27 SEPTEMBER

25 JUNE

15 MARCH

18 FEBRUARY

30 APRIL

20 MARCH

27 JUNE

26 MARCH

27 AUGUST 19 NOVEMBER

18 DECEMBER

Announcement of the unaudited consolidated results for the fourth quarter ended 31 December 2018

Date of Notice of the 36th Annual General Meeting and date of issuance of 2018 Annual Report

Announcement of the unaudited consolidated results for the first quarter ended31 March 2019

7 81 2 5 63

Financial CalendarPUSHING FORWARD ACCELERATING MOMENTUM

p.874

MARKET CAPITALISATION

RM32.9 billion – 2019RM38.0 billion – 2018

RM19.20 – Opening

RM16.62 – Closing

RM18.58 – Peak

866,900 – 2019817,625 – 2018

97.8 sen – 201990.6 sen – 2018

82 sen – 201972 sen – 2018

-9.2% – 201914.0% – 2018

SHARE PRICE

AVERAGE DAILY TRADED VOLUME (ADTV)

EARNINGS PER SHARE

DIVIDEND PER SHARE

TOTAL SHAREHOLDER RETURN

SHARE PRICE PERFORMANCE

1,450

1,500

1,550

1,600

1,650

1,700

1,750

14.00

15.00

16.00

17.00

18.00

19.00

20.00

Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19

FBMKLCI PGB

31 December 2019Closing Price

RM16.62

Volume Traded

2 January 2019Opening Price

RM19.20

Share Price (RM) FBM KLCI

Share price VolumeFBM KLCI

16 sen27 June 2019

16 sen 27 September 2019

18 sen 18 December 2019

32 sen 26 March 2020

Q1 Q2 Q3 Q4

DIVIDEND PAYMENT DATE



Share Price Performance

p.88

10.1%

51.0%

38.9%

1.2% 2.6%0.7%

4.4%

91.1%

SHAREHOLDINGS RESEARCH COVERAGE

PETRONAS

Other Local

Foreign

51.0%

38.9%

10.1%

Malaysia

USA-Canada

Europe

Asia Pacific

Others

91.1%

4.4%

1.2%

0.7%

2.6%

Source: Symphony and Bloomberg as at 31 December 2019

PGB continues to attract a consistent following from both domestic and foreign investors. We remain a well-covered stock with 15 research houses maintaining core coverage as at end December 2019.

Scan this QR code with your smart device for more Investor FAQ

BY INSTITUTIONS

BY GEOGRAPHY

7 81 2 5 63

Affin Hwang Capital Kenanga Investment Bank

AllianceDBS Research Macquarie Securities

AmInvestment Bank Maybank Investment Bank

BIMB Securities MIDF Amanah Investment Bank

CIMB Investment Bank Nomura Securities

CLSA Securities RHB Research

J.P. Morgan Securities TA Securities

KAF Seagroatt & Campbell Securities

1 Third Party Access (TPA) Pilot Regulatory Period

Confirmation on tariff and earnings for regulated businesses

2 Business Growth

Future growth plans moving forward post the completion of projects at Pengerang

3 Return to Shareholders

Sustainability of business and ability to provide returns to shareholders

KEY DISCUSSION TOPICS:


p.894

4

MOHD KABIR NOORDINHead of Gas Processing andUtilities Division

Product Delivery Reliability for salesgas, propane and butane100%

All achieved OEE above world-class standard

Liquid Production Volume(MT million)

1.31.2

0.8

Ethane Propane Butane

Revenue:

RM1.7billion

Gross Profit:

RM816.5million

Segment Assets:

RM4.3billion

Salesgas:

99.7%2018: 99.99%

Ethane:

99.0%2018: 99.7%

Propane:

98.7%2018: 99.1%

Butane:

98.6%2018: 99.1%


MSOSH OSH Grand Award

Grand Award

• Tanjung Sulong Export Terminal (TSET)

• Utilities Gebeng

Gold Merit Award• GPK

• GPS

British Royal Society of Prevention Accident (RoSPA)

Gold Awards

• Gas Processing Santong

• Tanjung Sulong Export Terminal

Innovation and Improvement

Institut Kimia Malaysia (IKM) Laboratory • Excellence Silver Award for Analytical

Technology Santong

• Excellence Award for Analytical

Technology Kertih and Analytical

Technology Export Terminal

PETRONAS Continuous Improvement Convention (CIC) • Multiple Award Categories in PGB CIC

• Multiple Award Categories in PETRONAS

CIC

Gold Award in Annual Productivity

Improvement Convention (APIC)

Gold Award in Regional Team Excellence

Convention (RTex)

Gold Award in International Convention

of Quality Control Circle (ICQCC), Japan

Male920

Female103

EMPLOYEES1,023

Read more about our segment financial performance on page 39.


OPERATIONAL PERFORMANCE

HUMAN CAPITAL

RECOGNITION/AWARDS

OUR VALUE PROPOSITION – FORWARD FOCUSED


Business Review– GAS PROCESSING

p.90

Challenges/Risks Mitigation Strategies Results

HSSE• Higher major turnaround activities

throughout the year which involved

over 3,000 personnel from staff and

contractors

• Continue digitalisation initiatives for effective

plant and equipment monitoring and tracking

• Digitalisation initiatives are executed as per

plan contributing to safe and reliable operation.

Operational• GPU reliability issues resulting in

interruption to customers

• New ways of working by adoption to digital

solution: Digital Turnaround – RFID, Wide

CCTV coverage & monitoring, intensified

drone surveillance, compliances to Fatigue

Management System, mobile digital billboard,

rigorous HSE audits throughout turnaround

and gate-closing policy

• Turnarounds were completed safely, within

schedule and budget with the value saving of

RM69 million at the following plants; GPP3

(4.4 days), GPP4 (5.5 days) GPP5 (4.9 days)

and GPP6 (1.5 days)

Strategic Objectives Initiatives in 2019 Targets in 2020

Operational Excellence

• Digitalisation of reporting for better

monitoring of plant operation performance,

safety monitoring and financial performance

• Compliance to HSSE governance and

assurance framework, Integrated Assurance

Programme (IAP)

• Further digitalisation enhancement for

improvement in operation performance, safety

performance and financial performance

• Gas Processing Kerteh, Gas Processing Santong,

and Export Terminal ISO45001 certification by

2020

Commercial Excellence

• Plant improvement initiatives under PGB R2

301Q99 FY2019-2022 Initiatives which

contributed to improvement in plant reliability

and integrity resulting to enhanced cost

efficiency

• Further improvement on cost-to-serve to

improve plant margins to allow retention and

capture of customers

Growth

• Optimisation and improvement in equipment

efficiencies which resulted to value creation

• Further equipment optimisation to enhance

efficiencies and increase value creation. For

Utilities, to look into opportunity to supply

electricity to new customers

To sustain best ever financial performance

by further improving our performance in

safety and reliable operation towards

productive, efficient and competitive assets

v ia d ig i ta l i sat ion, cont inuous plant

improvements, preventive maintenance and

efficient turnaround activities.

HIGHLIGHTS 2019

CHALLENGES/RISKS

OUTLOOK AND PROSPECTS

In line with PGB R2 Game Plan: 301Q99 Pushing

Forward activities, GPU will continue to create

value in delivering superior operational excellence

and financial results.

Expect to further improve on operational

excellence by Digitalisation implementation which

will result in further improvement in financial

performance.

7 81 2 5 63p.914




Gold Merit Award• Eastern Operation

– Kuantan Regional Office

• Southern Operation

– Segamat Regional Office

Gold Class 1 Award

• Central Operation

– Shah Alam Regional Office

• Northern Operation

– Gurun Regional Office

Gold Class 2 Award• Northern Operation

– Gurun Regional Office

• Sarawak Operation

– Miri Regional Office


Silver Award• Eastern Operation

– Kuantan Regional Office

• Southern Operation

– Segamat Regional Office

BURHAN ABDULLAHHead of Gas Transmission andRegasification Division

Reliability – A measure to

determine the impact of

unscheduled downtime on the

availability of the pipeline

transmission.

World class performance

benchmark for Reliability is 98%.

99.9% 99.9%

2018 2019

GT Reliability(%)


PETRONAS Continuous Improvement Convention (CIC)

Best OPU of the month (Common

– applicable to GT and RGT)

Leadership Persona (Common –

applicable to GT and RGT)

OPERATIONAL PERFORMANCE RECOGNITION/AWARDS

Male284

Female44

EMPLOYEES328

HUMAN CAPITAL

Revenue:

RM1.2billion

Gross Profit:

RM799.5million

Segment Assets:

RM2.9billion


4




Business Review– GAS TRANSPORTATION

p.92


Business Environment • Amendment of Gas Supply Act i.e.

introduction of TPA which affects operational and commercial aspects of GT Business

• Customer expectation on ZERO interruption

• Regular engagement with Suruhanjaya Tenaga to share concerns and impact to Gas Transportation business

• Competitive GT tariff of RM1.129/GJ for Regulatory Period 1 (RP1) secured

Mindset Change• We are still at Calculative HSE Culture• Adaptability to Work Process System• Non-pervasive empowerment culture

• Eestablishment of a few KRA in order to improve HSE performance as well as to move our HSE culture towards Generative HSSE Culture

• Implementation of GT OFWP and MFWP• Inculcate empowerment culture through the

establishment of GTR Empowerment Implementation Team and continual reporting of progress to R2 Steering Committee

• Safety critical mindset and behaviour programmes implemented as part of continuous effort towards Generative HSSE Culture

Asset Operational• Low assets utilisation of PGU due to

lower demand from power sectors • Managing PGU pipeline integrity and

geo-hazard for safe and reliable operations

• Registered and monitored under PGB 301Q99 Pushing Forward

• Pipeline Integrity assessment and geo-hazard improvement

• Establish dedicated team to focus on improvement of Equipment Reliability Strategy

• Identified growth project executed timely in order to increase gas utilisation and balance the low power sector demand



• Sustaining world-class performance of Reliability with zero HSSE incidents at all times

• Completion of major repair work of Feed Condensate Pipeline for 12 locations with zero HSSE incident recorded attributable to relentless HSSE focus through enhancements of Generative HSSE Culture

• Improved pipeline and land encroachment monitoring through technology and digital i.e. PiriGIS. Drone, CCTV, Parameter Instrusion Detection System (PIDS)

• Strengthening of GTR HSSE and Operational Excellence through Technology and Digital (i.e. PIVOT, MVP) and instil Generative HSSE Culture at all level

• Strengthening of O&M activities through realignment of current Work Process under OE R2 towards safe, reliable and efficient operation of GTR infrastructure

• Embarking on Flexible Working Arrangement (FWA) for Gas Transportation which will lead to increase in wrench time and subsequently reduce waste.


• Plant improvement Key Result Areas (KRAs) i.e. MC/CPRV and Energy Index which contributed to Cost-To-Serve and Energy Efficiency resulted to cost efficiency

• Increase utilisation gap of PGU pipeline• Inaugural of third party gas from third party

shipper under TPA regime

• To continue minimise value leakages and optimise overall asset utilisation through establishment of KRAs i.e. reduction of FSR utilisation for rotating equipment, turbo-health to monitor compressor performance, optimisation of compressor station operation

Growth• Several projects undertaken to connect our

PGU pipeline to new customer e.g. Telok Gong Loop Pipeline

• Further enhancement of overall asset utilisation through pipeline extension to new demand hubs

Sustaining world-class performance of gas pipeline with continuous improvement on asset integrity programme towards safe, reliable and efficient operations

Continuous effort towards operational excellence on implementation of OE R2 Work Process, management system and empowerment to ensure competitiveness against other organisation in global benchmarking.

HIGHLIGHTS 2019

CHALLENGES/RISKS


7 81 2 5 63p.934


BURHAN ABDULLAHHead of Gas Transmission andRegasification Division

Male107

Female7

EMPLOYEES114

OEE – A measure of plant

performance against its limits

and identified sources of loss

within the plant and a measure

of how well equipment is used

when available.

World-class performance

benchmark for OEE is 95%.

100%

20192018RGTP OEE

100% 100%

20192018RGTSU

100%

Regasification OEE(%)



Gold Merit Award• Regasification Terminal (Sg Udang) Sdn

Bhd

Gold Class 2 Award• Pengerang LNG (Two) Sdn Bhd –

Regasification Terminal Pengerang


Silver Award• Regasification Terminal (Sg Udang)

Sdn Bhd

Anugerah Hijau Negeri Melaka 2019

RGT Sungai Udang – Silver Award for

Green Project Category

5S Certification from Malaysia Productivity Corporation

1st ever offshore platform 5S certificated by MPC – RGT Sungai Udang Terminal


PETRONAS Continuous Improvement Convention (CIC)

Best Sustainability Project – Regasification

Terminal (Sg Udang) Sdn Bhd

Gold CIC Showcase – Regasification

Terminal (Sg Udang) Sdn Bhd

Silver CIC Showcase – Pengerang LNG

(Two) Sdn Bhd – Regasification Terminal

Pengerang

Best OPU of the month – (Common –


Leadership Persona – (Common –


OPERATIONAL PERFORMANCE

HUMAN CAPITAL

Revenue:

RM1.2billion

Gross Profit:

RM611.0million

Segment Assets:

RM6.6billion

RECOGNITION / AWARDS


4




Business Review– REGASIFICATION

p.94


Business Environment • Amendment of Gas Supply Act i.e.

introduction of TPA that has changed the fundamental economic model for Regasification business

• Customer expectation on zero interruption

• Regular engagement with Suruhanjaya Tenaga as well as Ministry of Economic Affairs (MEA) to share concerns and impact to Regasification business.

• Sustaining GTR reliability above world-class standards through effective implementation of O&M best practices

• Secured competitive RGTSU and RGIP tariff of RM3.455/GJ and RM3.485/GJ respectively

Mindset Change• We are still at HSSE Calculative Culture• Inflexibility Work Process• Lack of Empowerment Culture

• We have established a few KRA in order to improve HSSE performance as well as to move our HSE culture towards Generative Culture

• Implementation of RGT Operate Facility Work Process (OFWP) and Maintain Facility Work Process (MFWP)

• Inculcate empowerment culture by establishment of GTR Empowerment Implementation Team and progress reported to R2 Steering Committee (R2SC)

• Implement safety critical mindset and behavior programme as part of continuous effort towards Generative HSSE Culture

Asset Operational• Lower asset utilisation of PGU and RGTSU

due to lower demand from Power Sectors • Managing PGU pipeline integrity & geo-

hazard for safe & reliable operations• Incomprehensive Equipment Reliability

Strategy

• Captured under PGB R2 Game Plan: 301Q99 Pushing Forward

• Pipeline Integrity assessment and geo-hazard improvement

• Established dedicated team to focus on improvement of Equipment Reliability Strategy

• Identified growth projects were executed timely in order to increase gas utilisation and balance the low power sector demand



• Sustaining above world-class benchmarks of OEE of 95% and compliance with various HSSE governance and assurance frameworks as well as the PETRONAS Mandatory Control Framework at all time

• Completion of major turnaround at RGTSU with zero HSSE incident recorded attributable to relentless HSE focus through enhancements of HSSE Generative Culture

• Accredited with national and international awards and certification

• Strengthening of the Operational Excellence through Technology and Digital (i.e. PIVOT, RMS) and instill Generative HSSE Culture at all level.

• Sustaining RGTSU and RGTP OEE and reliability through comprehensive integrity programme and work process

• Strengthening of O&M activities through realignment current Work Process under OE R2 towards safe, reliable and efficient operation of GTR infrastructure


• Implementation of Regasification Management System (RMS) to manage multiple capacity users in TPA environment

• Continuous effort to minimise value leakages and optimise overall asset utilisation through establishment of KRAs i.e. RGTEC Optimisation, Sea Water Flow Optimisation etc

Growth

• Successfully completed eight Gassing Up Cooling Down services for various LNG vessels and completed three reloading services at RGTP

• Successfully completed unloading and regasifying 1st third party cargo at RGTSU

• Capture new business growth at Regasification facilities:

– LNG Bunkering at RGTSU – LNG Truck Loading at RGTP

Continue to grow our regasification terminals into world-class LNG hubs to support the Group’s strategy on diversification and mitigate TPA impact on our bottomline

HIGHLIGHTS 2019

CHALLENGES / RISKS


7 81 2 5 63p.954


MOHD KABIR NOORDINHead of Gas Processing andUtilities Division

All achieved OEE above world-class standard

Production Volume

1,866

3,864

524.8

Electricity(GWh)

Steam(kMT)

Industrial Gases(Mil Nm3)

Electricity:

99.7%2018: 99.6%

Steam:

99.7%2018: 99.6%

Male222

Female18

EMPLOYEES240

Industrial Gasses:

98.0%2018: 98.9%

Electricity:

99.99%Steam:

99.8%

Industrial Gasses:

99.2%

Product Delivery Reliability



Grand Award


Gold Merit Award• Utilities Kertih


Gold Award


• Utilities Kertih


Institut Kimia Malaysia (IKM)

Excellence Award for Analytical Technology

Utilities Kertih

Excellence Award for Analytical Technology

Utilities Gebeng

OPERATIONAL PERFORMANCE RECOGNITION / AWARDS

HUMAN CAPITAL

Revenue:

RM1.4billion

Gross Profit:

RM160.1million

Segment Assets:

RM1.3billion


4




Business Review– UTILITIES

p.96


Operational• Sustaining of GPU reliability to prevent

salesgas supply interruption to customers

• To continue on Digitalisation initiatives for effective plant and equipment monitoring and tracking

• Digitalisation initiatives are executed as per plan contributing to safe, reliable and efficient operation.

HSSE• Higher major turnaround activities

throughout the year which involved over 3000 personnel from staff and contractors

• New ways of working by adoption to digital solution: Digital TA – RFID, Wide CCTV coverage & Monitoring, Intensify Drone Surveillance, Compliances to Fatigue Management System, Mobile digital billboard, Rigorous HSE audits throughout TA and Gate closing policy

• Turnarounds were completed ahead of schedule with the value creation of RM69 million. Ahead of schedule at the following plants; ASU1 (2.2 days) and Demin (4.6 days)



• Digitalisation of reporting for better monitoring of plant operation performance, safety monitoring and financial performance

• Complied to HSSE governance and assurance framework, Integrated Assurance (IA)

• Further digitalisation enhancement for further improvement in operation performance, safety performance and financial performance

• Conversion of Utilities Kerteh and Utilities Gebeng from OHSAS18000 to ISO45001


• Plant improvements initiatives under PGB R2 301Q99 FY2019-2022 Initiatives which contributed to improvement in plant reliability and integrity resulting in enhanced cost efficiency

• Further improvement on Cost-To-Serve to be cost competitive

• Retain existing customer through extension of contracts

• Capture new customers and offer new product to existing customer to improve plant utilisation

Growth

• Optimisation and improvement in equipment efficiencies which resulted to value creation

• Further equipment optimisation to enhance efficiencies and increase value creation.

• Searching of opportunity to supply electricity to new customers

To sustain our best ever financial performance by further improve our performance in safety and reliable operation towards productive, efficient and competitive assets via digitalisation, continuous plant improvement, preventive maintenance and efficient turnaround activities.

HIGHLIGHTS 2019

CHALLENGES / RISKS


In line with PGB R2 301Q99 activities, utilities will continue to create value in delivering superior operational excellence and financial results.

Expect to further improve on operational excellence via digitalisation which will result in further improvement in financial performance.

7 81 2 5 63p.974


GASSING UP COOLING DOWN (GUCD)

On 19 April 2019, RGTP welcomed its maiden GUCD vessel, Puteri Zamrud Satu, marking the launch of the first ancillary service offered by PGB.

GUCD is a specialised service to bring the storage tanks on LNG carriers, after dry-docking, to a natural environment and cool it down to cryogenic temperature, -160°C, before loading its next cargo.

With attractive rates and top-quality service, RGTP will be able to attract more LNG vessel operators and owners vessels to utilise its services, and allow the facility to grow as a solutions hub, being strategically located along the Straits of Johor, close to the nearby Pasir Gudang and Singapore dockyards.

In 2019, we successfully completed eight GUCD services for our customers.

LNG RELOADING SERVICE

Beginning August 2019, RGTP commenced a new stream of revenue through LNG reloading services for bunker vessels, mid-size cargoes and conventional LNG carriers.

We introduced the service in October 2018 where we successfully reloaded LNG into the world’s largest LNG bunker vessel, Kairos.

Through the launch of this service, we are able to provide flexibility to capacity users of RGTP to export LNG. This signifies RGTP as an LNG Hub in the region, offering wide range of services to its customers.

In 2019, we successfully completed three reloading services.



Business Review– ANCILLARY SERVICES

p.98

7 81 2 5 63p.994


Leadership102 Board of Directors104 Board at a Glance106 Profile of the Board of Directors114 Leadership Team116 Profile of Leadership Team120 Organisation Structure

Our5

Leadership

Standing, from left to right:

1. MARINA MD TAIB Non-Independent Non-Executive Director

2. DATO’ AB. HALIM MOHYIDDIN Independent Non-Executive Director

3. EMELIANA DALLAN RICE-OXLEY Non-Independent Non-Executive Director

4. KAMAL BAHRIN AHMAD Managing Director/Chief Executive Officer

5. ADIF ZULKIFLI Chairman, Non-Independent Non-Executive Director

OUR LEADERSHIP

Board of Directors

p.102

6. HABIBAH ABDUL Senior Independent Director

7. FARINA FARIKHULLAH KHAN Independent Non-Executive Director

8. DATO’ ABDUL RAZAK ABDUL MAJID Independent Non-Executive Director

9. SYUHAIDA AB RASHID Company Secretary

10. YEAP KOK LEONG Company Secretary

Scan this QR code with your smart device for profile of Directors.

p.103

1 1

33

44

1

1

2

4

1

2

2

3

Senior Independent Director 1

Independent Non-Executive Director 3

Non-Independent Non-Executive Director(including the Chairman)

3

Executive Director 1

Male 4

Female 4

Age 70-79 1

Age 60-69 2

Age 50-59 3

Age 40-49 2

7-9 years 1

4-7 years 1

2-4 years 2

0-2 years 4

COMPOSITION

GENDER TENURE

AGE GROUP

p.104p.104 OUR LEADERSHIP

Board at a Glance

Required Skillsand/or Experience

Adif Zulkifli

Kamal Bahrin Ahmad

HabibahAbdul

FarinaFarikhullah

Khan

Dato’ Ab.Halim

Mohyiddin

Dato’ Abdul Razak

Abdul Majid

EmelianaDallan

Rice-Oxley

Marina Md Taib

Banking & Finance

Commercial/Marketing

Corporate Planning & Development

Economics

Engineering/Technical

Finance/Audit

Human Resource

Legal/Regulatory

Oil & Gas

Operations

Regional/International

Shipping/Logistics

SKILLS AND EXPERIENCE MATRIX

1 2 3 6 7 84p.1055


p.106

Profile of the Board of Directorsas at 10 February 2020

ADIF ZULKIFLIChairman, Non-Independent Non-Executive Director

Academic/Professional Qualifications

• Masters of Business Administration, Kellogg School of Management, Northwestern University, USA

• Bachelor of Science Degree in Petroleum Engineering, Colorado School of Mines, USA

Present Directorships

Listed issuer:

• PETRONAS Gas Berhad

Other public company:

• None

Present Appointments

• Executive Vice President and Chief Executive Officer, PETRONAS Upstream

• Member, PETRONAS Executive Leadership Team• Board Member, various companies in PETRONAS

Past Experience

• Executive Vice President, Gas & Energy• Senior Vice President, PETRONAS Development and Production

Upstream Business• Senior Vice President, PETRONAS Corporate Strategy • Vice President, Malaysia Petroleum Management• Head, Strategy & New Ventures Division in Exploration & Production

Business• 25 years of extensive experience in oil and gas industry

Declaration

• No family relationship with any Director/Major Shareholder• No conflict of interest with PETRONAS Gas Berhad• No conviction of offences within the past five years other than traffic

offences, if any• Does not hold more than 5 directorships in listed issuers

NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE

BOARD MEETING ATTENDED

Malaysian

49/Male

1 July 2019

7 months

3/3

Banking & Finance Commercial/Marketing Corporate Planning & Development Economics

Engineering/Technical Finance/Audit Human Resource Legal/Regulatory Oil & Gas

Operations Regional/International Shipping/Logistics

OUR LEADERSHIP

p.107

KAMAL BAHRIN AHMADManaging Director/Chief Executive Officer


• Bachelor Degree in Chemical Engineering, University of Texas, USA• Advanced Management Programme, Harvard Business School, USA


Listed issuers:

• PETRONAS Gas Berhad• Gas Malaysia Berhad


• None


• Member, Gas & New Energy Executive Leadership Team, PETRONAS• Board Member, various companies in PETRONAS

Past Experience

• Member, Downstream Executive Leadership Team, PETRONAS• MD/CEO, PETRONAS Penapisan (Melaka) Sdn Bhd (PPMSB)• General Manager (Refinery), Engen Limited, South Africa• Head, Project Management & Delivery, Technical & Engineering Division,

PETRONAS• Senior General Manager, Plant Operation Division, PETRONAS

Gas Berhad• General Manager (Production), PPMSB• Project Engineer in Refining Sector, Kertih Refinery Reformer Project

Declaration



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

55/Male

1 June 2017

2 years 8 months

6/6




p.108


HABIBAH ABDULSenior Independent Director


• Bachelor of Economics (Accounting), University Malaya• Fellow, Institute of Chartered Accountants in England and Wales

(ICAEW)• Member, Malaysian Institute of Certified Public Accountants• Member, Malaysian Institute of Accountants


Listed issuers:

• PETRONAS Gas Berhad• KLCC Property Holdings Berhad


• None


• Member, Board Audit Committee, PETRONAS Gas Berhad• Member, Nomination and Remuneration Committee, PETRONAS Gas

Berhad• Member, Board Audit Committee, KLCC Property Holdings Berhad• Member, Nomination and Remuneration Committee, KLCC Property

Holdings Berhad

Past Experience

• Member of Securities Commission• Experienced in providing audit and business advisory services to several

large public listed, multinationals and local corporations• Partner, Arthur Andersen• Partner, Ernst & Young

Declaration



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE





Malaysian

64/Female

13 September 2013

6 years 5 months

6/6

OUR LEADERSHIP

p.109

FARINA FARIKHULLAH KHANIndependent Non-Executive Director


• Bachelor of Commerce (Accounting), University of New South Wales, Australia

• Fellow, Chartered Accountants, Australia & New Zealand (CA ANZ)• Advanced Management Program, Harvard Business School, USA


Listed issuers:

• PETRONAS Gas Berhad• KLCC Property Holdings Berhad• AMMB Holdings Berhad• Icon Offshore Berhad


• Ambank Islamic Berhad


• Chairman, Board Audit Committee of PETRONAS Gas Berhad• Chairman, Audit Committee of KLCC Property Holdings Berhad• Chairman, Risk Management Committee of Ambank Islamic Berhad• Member, Audit Examination Committee of AMMB Holdings Berhad• Member, Group Nomination and Remuneration Committee of AMMB

Holdings Berhad• Member, Audit Committee of Icon Offshore Berhad

Past Experience

• Board Member, Progress Energy Canada Ltd• Chief Financial Officer, PETRONAS Chemicals Group Berhad• Chief Financial Officer, PETRONAS Exploration & Production• Chief Financial Officer, PETRONAS Carigali Group of Companies• Senior Manager, Corporate Planning & Development Division, PETRONAS• Senior Associate, Business Services, Coopers & Lybrand, Australia

Declaration



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

47/Female

1 September 2018

1 year 5 months

6/6




p.110 OUR LEADERSHIP


DATO’ AB. HALIM MOHYIDDINIndependent Non-Executive Director


• Master of Business Administration, University of Alberta, Canada• Bachelor of Economics in Accounting, University Malaya• Diploma in Accountancy, University Malaya• Member, Malaysian Institute of Accountants


Listed issuers:

• PETRONAS Gas Berhad• MISC Berhad• KNM Group Berhad


• None


• Chairman, MISC Berhad• Chairman, KNM Group Berhad• Chairman, Nomination and Remuneration Committee, PETRONAS Gas

Berhad• Chairman, Audit Committee, KNM Group Berhad• Chairman, Nomination Committee, KNM Group Berhad • Member, Board Audit Committee, PETRONAS Gas Berhad• Member, Remuneration Committee, KNM Group Berhad

Past Experience

• Partner, KPMG/KPMG Desa Megat & Co.• Member, Education Committee International Federation of Accountants

Declaration



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

74/Male

4 August 2011

8 years and 6 months

6/6




p.111

DATO’ ABDUL RAZAK ABDUL MAJIDIndependent Non-Executive Director


• Masters Degree in Business Administration, Ohio University, USA• Bachelor of Electrical Engineering, Brighton University, UK


Listed issuer:



• None


• Chairman, Energy Council of Malaysia• Chief Executive Officer, MyPower Corporation MESI 2.0 (Government

of Malaysian Undertaking)

Past Experience

• Chairman, Energy Commission Malaysia• Chief Executive Officer, MyPower Corporation MESI 1.0 (Incorporated

by Ministry of Energy)• Senior Vice President (Corporate Affairs Division), Tenaga Nasional

Berhad• Vice President (Generation), Tenaga Nasional Berhad• Secondment, Economic Planning Unit – Prime Minister’s Department

Declaration



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

69/Male

1 September 2018

1 year 5 months

5/6




p.112


EMELIANA DALLAN RICE-OXLEYNon-Independent Non-Executive Director


• Degree in Geology, University of South Carolina, USA• Advanced Management Programme, Harvard Business School, USA


Listed issuer:



• None


• Vice President, Exploration PETRONAS Upstream Business• Member, Upstream Leadership Team, PETRONAS• Member, Upstream People Development Council, PETRONAS• Champion, PETRONAS Leading Women Network• Board Member, various companies in PETRONAS

Past Experience

• Vice President of Exploration Malaysia, PETRONAS• Led PETRONAS strategy to accelerate monetisation of the gas-rich

resources in East Malaysia as well as international exploration growth• Served numerous technical and managerial roles in Malaysia, Central

North Sea, Brazil, Onshore United States of America and Latin America for Shell

• Exploration Portfolio and Planning Manager for Asia Pacific region for Shell

Declaration



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

57/Female

1 September 2016

3 years and 5 months

5/6




OUR LEADERSHIP

p.113




MARINA MD TAIBNon-Independent Non-Executive Director

NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

47/Female

1 September 2019

5 months

2/2


• Master of Petroleum Business Management, University of Adelaide, Australia

• Bachelor of Social Studies Accountancy, University of Exeter, UK• Fellow, Institute of Chartered Accountants in England and Wales

(ICAEW) • Advanced Management Programme, Harvard Business School


Listed issuer:



• None


• Member, Board Audit Committee, PETRONAS Gas Berhad• Head, Corporate Strategic Planning, PETRONAS• Board Member, various companies in PETRONAS

Past Experience

• Head, Brunei Operations, PETRONAS Carigali Sdn Bhd• Head, Strategic Planning, Petroleum Management Unit, PETRONAS• Senior Manager, Corporate Planning and Development Division,

PETRONAS

Declaration



From left to right:

1. BARISHAH MD HANIPAH Head of Human Resources Management

2. NIK IRWAN IZANEE NIK ABDULLAH Head of Corporate Affairs

3. ABDUL RAZAK SAIM Head of Business Development

and Commercial

4. MOHD KABIR NOORDIN Head of Gas Processing and Utilities

5. SHARIZA SHARIS MOHD YUSOF Chief Financial Officer

OUR LEADERSHIP

Leadership Team

p.114

Scan this QR code with your smart device for Profile of Leadership Team.

6. KAMAL BAHRIN AHMAD* Managing Director/ Chief Executive Officer 7. SYUHAIDA AB RASHID Head of Legal and Corporate Secretariat

8. BURHAN ABDULLAH Head of Gas Transmission and Regasification

9. MUHAMMAD NAZOMI OMAR Head of Business Excellence

* Profile of Kamal Bahrin Ahmad can be referred on page 107.

p.115

OUR LEADERSHIPp.116

MOHD KABIR NOORDINHead of Gas Processing and Utilities

BURHAN ABDULLAHHead of Gas Transmission and Regasification

Nationality/EthnicityAge/GenderDate of AppointmentLength of Service

Malaysian/Malay53/MaleJuly 20154 years 6 months


Malaysian/Malay52/MaleJanuary 20173 years 1 month

Responsibilities

• Overall management and operations of Gas Processing and Utilities facilities by ensuring safe, optimum and efficient plant operations

• Ensure delivery of contracted utilities which satisfies customers’ requirements as well as achieving optimum gas value chain for PETRONAS and PGB

• Ensure compliance with regulations and statutory requirements


• Degree in Chemical Engineering, University of Leeds, United Kingdom


• Chairman, Voltage Renewables Sdn Bhd• Director, Industrial Gases Solutions Sdn Bhd• Director, CEFS Response• Vice President, Kelab Golf dan Rekreasi PETRONAS

Past Experience

• Head of Production, Gas Processing and Utilities, PGB• General Manager, Operations, Malaysia LNG Sdn Bhd• Production Specialist, PETRONAS Penapisan (Melaka) Sdn Bhd• Member, Production Technology, PETRONAS Penapisan (Terengganu)

Sdn Bhd• Various positions within PETRONAS Penapisan (Melaka) Sdn Bhd

Declaration

• No family relationship with any director and/or major shareholder of PGB

• No conflict of interest with PGB• No conviction of offences within the past five years other than traffic

offences, if any

Responsibilities

• Overall management and operations of Gas Transmission and Regasification facilities by ensuring safe, optimum and efficient pipeline network and regasification operations

• Ensure delivery of gas which satisfies PETRONAS customers’ requirements as well as achieving optimum gas value chain for PETRONAS

• Ensure compliance with regulations and statutory requirements


• Bachelor of Chemical Engineering from University of Texas A&I, United States of America

• First Grade Steam Engineer from Malaysian Department of Occupational Safety & Health


• Chief Executive Officer, Regas Terminal (Sg. Udang) Sdn Bhd

Past Experience

• Vice President Operations, Trans-Thai Malaysia (Thailand) Ltd• Senior Operation Manager, PETRONAS Gas Berhad• Shift Supervisor, Ethylene (Malaysia) Sdn Bhd• Operation Engineer, PETRONAS Penapisan (Terengganu) Sdn Bhd

Declaration



offences, if any

Profile of Leadership Teamas at 10 February 2020

1 2 3 6 7 84p.1175


SHARIZA SHARIS MOHD YUSOFChief Financial Officer

ABDUL RAZAK SAIMHead of Business Development and Commercial


Malaysian/Malay45/FemaleSeptember 20172 years 5 months


Malaysian/Malay53/MaleFebruary 20136 years and 11 months

Responsibilities

• Overall Group’s financial and fiscal management as well as investor relations

• Provide strategic partnering and finance advisory to the business particularly on business ventures and commercial arrangements


• Bachelor of Science in Economics and Accounting, University of Bristol, United Kingdom

• Fellow, Institute of Chartered Accountants in England and Wales (ICAEW)

• Member, Malaysian Institute of Accountants


• Director, Kimanis Power Sdn Bhd• Director, Kimanis O&M Sdn Bhd• Director, Pengerang Gas Solutions Sdn Bhd• Director, TTM Sukuk Berhad• Alternate Director, Pengerang LNG (Two) Sdn Bhd• Alternate Director, Gas Malaysia Berhad

Past Experience

• Financial Controller, PETRONAS Chemicals Group Berhad• Senior Manager, Strategic Planning, PETRONAS• Head, Finance and Administration, Dragon LNG, United Kingdom• Manager, Financial Accounting, PETRONAS Dagangan Berhad• Analyst, President/CEO’s Office, PETRONAS• Executive, Corporate Finance, PETRONAS• Auditor, Wenham Major Chartered Accountants, United Kingdom

Declaration



offences, if any

Responsibilities

• Maximise Group’s profitability through effective business development for growth, commercial negotiations and resolutions, business ventures management, land acquisition and management

• Oversee business operations under the Third Party Access (TPA)


• Degree in Mechanical Engineering (Hons), University of Wollongong, New South Wales, Australia


• Director/CEO, Pengerang LNG (Two) Sdn Bhd• Director, Industrial Gases Solutions Sdn Bhd• Director, PETRONAS Energy (India) Ptd Ltd• Director, Gas District Cooling (GDC) Sdn Bhd• Director, Regas Terminal (Lahad Datu) Sdn Bhd• Director, Regas Terminal (Pengerang) Sdn Bhd

Past Experience

• Director, Transasia Pipeline Pvt Ltd• Commissioner, PT Transportasi Gas Indonesia• Chief Operating Officer, BAKIPC Sdn Bhd• General Manager, Gas Business Development, Gas Business Unit, PETRONAS• Head, Malaysia Gas Management, Gas Business Unit, PETRONAS• Manager, Gas Supply Planning, PETRONAS• Manager, Business Planning, PETRONAS Australia Pty Ltd• Senior Executive, Marketing, East Australia Pipeline Marketing Pty Ltd• Various technical positions in PGB on gas compression and facilities

management• Procurement Executive, Gas Transmission Operation, PGB

Declaration



offences, if any

OUR LEADERSHIPp.118

Profile of Leadership Teamas at 10 February 2020

BARISHAH MD HANIPAHHead of Human Resources Management

SYUHAIDA AB RASHIDHead of Legal & Corporate Secretariat


Malaysian/Malay55/FemaleMarch 20136 years 10 months


Malaysian/Malay46/FemaleMay 20181 year 9 months

Responsibilities

• Formulate talent strategies and initiatives in developing competent and capable leaders and workforce across PGB Group including securing, developing and retaining talents

• Provide Human Resources advisory to adapt and adopt the right HR solutions at the strategic, tactical and operational level

• Create positive experience through empowered, agile and enabled talent eco-system


• Bachelor of Business Administration (Cum Laude), University of Toledo, Ohio, USA


• Joint Secretary, Nomination and Remuneration Committee

Past Experience

• Senior Manager, Sponsorship and Talent Sourcing, PETRONAS• Manager, Human Resource Management, PETRONAS Chemicals

Fertiliser (Kedah) Sdn Bhd• Manager, HR Planning and Development, PGB• Manager, Remuneration Administration, PETRONAS• Executive within HRM Division of PETRONAS in the areas of People

Development, Capability Development and HR Information System• Executive, Education Sponsorship, PETRONAS

Declaration



offences, if any

Responsibilities

• Overall management of legal affairs and company secretarial services of PGB Group


• LLB (Hons) International Islamic University Malaysia• Licensed Company Secretary• Professional Certificate on International Intellectual Property, University

of Victoria, Canada BC


• General Counsel, Legal Gas & Energy, Group Legal, PETRONAS• Joint Company Secretary, PGB• Secretary, Board Audit Committee PGB• Joint Secretary, Nomination & Remuneration Committee PGB

Past Experience

• Senior Legal Counsel, PETRONAS Project Delivery & Technology• Senior Legal Counsel, PETRONAS Carigali Sdn Bhd• Senior Legal Counsel, PETRONAS Chemicals Group Berhad• Legal Counsel, (UzGTL) LLC • Legal Counsel, Petchem Business and GTL Project, PETRONAS• Legal Counsel, PETRONAS Research and Scientific Services Sdn Bhd• Executive Business Improvement, PETRONAS Corporate Development

Unit

Declaration



offences, if any

1 2 3 6 7 84p.1195


MUHAMMAD NAZOMI OMARHead of Business Excellence

NIK IRWAN IZANEE NIK ABDULLAHHead of Corporate Affairs


Malaysian/Malay39/MaleJune 20197 months


Malaysian/Malay43/MaleNovember 20181 year 3 months

Responsibilities

• Manage overall PGB strategies and plans implementation, as well as risk management to ensure PGB business continuity while safeguarding and sustaining the long term interests of the shareholders, employees and customers in line with the Company’s direction, policy, procedures and statutory requirements

• Manage deliverable of key business reporting to relevant stakeholders and analyse gaps for business opportunities and portfolio performance

• Ensure the development and effectiveness of PGB management system and business process to improve performance and create value for stakeholders


• Bachelor in Electrical and Electronic Engineering, University Sains Malaysia


• Nil

Past Experience

• Manager, Commercial Plant and Utilities, PETRONAS Gas Berhad• Head, Project Management Office GPU, PGB• Head, Operations GP3/4 and KCS A/B and COGEN, GPU, PGB• Head, Operations COGEN, PGB• Executive, Shift Supervisor, PGB

Declaration



offences, if any

Responsibilities

• Lead and drive the corporate affairs functions which include external stakeholders’ engagement, media management, corporate and crisis management communications, sustainable development, staff & public relations and administration to meet the short, medium and long term objectives of PGB

• Formulate strategies and programmes and the required approach to define the desired reputation and brand positioning to continuously secure shareholders’ satisfaction and confidence towards PGB

• Ensure positive positioning of PGB’s reputation as a socially responsible organisation and the community’s business partner of choice through various Corporate Social Responsibilities (CSR) initiatives


• Bachelor of Business Administration, Western Michigan University, USA


• Nil

Past Experience

• Head, Corporate Affairs & Administration, PETRONAS Carigali Iraq Holding B.V.

• Manager, Stakeholder Relations (International), PETRONAS• Manager, Corporate Brand & Policy, PETRONAS• Executive, Public Relations, Advertising and Promotions, Events

Management, PETRONAS

Declaration



offences, if any

For more details on talent management, refer to our Sustainability Report.7

* Corporate Secretariat functions are undertaken by PETRONAS Group Legal

BOARD OF DIRECTORS

COMPANYSECRETARY*

MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER

BOARD AUDITCOMMITTEE

NOMINATION AND REMUNERATION

COMMITTEE

LEADERSHIP TEAM

CorporateAffairs

BusinessExcellence

Legal AndCorporate

Secretariat*

Human Resources

Management

Business Development

and Commercial

FinanceGas Transmission

and Regasification

Internal Audit

Gas Processing

and Utilities

OUR LEADERSHIP

Organisation Structure

p.120

1 2 3 6 7 84p.1215


NUMBER OF EMPLOYEES

1,829as at 1 December 2019

Male87%

Female13%

GENDER DIVERSITY

NON-TECHNICAL

12%

GEN X

646 (35.3%)

MILLENIALS

1,100 (60.2%)

BABYBOOMERS

63 (3.4%)

POST MILLENIALS

20 (1.1%)

AGE DIVERSITY*

TECHNICAL KNOWLEDGE

DIVERSITY

* Manpower generation data 2019 is based on the new definition i.e Baby Boomers (1965 and before), Gen X (1966-1979), Millenials (1980-1994) and Post Millenials (1995 and after).

TECHNICAL

88%

6GovernanceResponsible

124 Value Creation Through Good Governance

RESPONSIBLE GOVERNANCE INTEGRATED REPORT 2019

Value Creation Through Good Governance

The Board and the Management strive to chart our business direction and createmaximum shared value across all spheres, led by our Statement of Purpose which is

“A Progressive Energy and Solutions Partner Enriching Lives For A Sustainable Future”

as we drive strategic responses and heed market needs.

We anchor on our shared values of Loyalty, Integrity, Professionalismand Cohesiveness which form the backbone of our business conduct,

to deliver results to stakeholders. In the course of doing so, we do notwaver from our goal to create value to our stakeholders.

We respond to risks and opportunities, ensure relevance and sustainability of the business model, monitor the overall environment, the availability and quantity of

capital inputs and acknowledge the needs of all stakeholders. This strategy is executed through our strategic focus areas and enables the Group to remain

steadfast in managing our operations supported by good governance and simultaneously, meeting and delivering financial targets.

PGB is committed to the highest standards of governance, ethics and integrity

p.124

1 2 3 4 7 85

Board of Directors

Adif Zulkifli

Habibah AbdulSenior Independent Director

Member of BAC Member of NRC

Farina Farikhullah KhanIndependent Non-Executive Director

Chairman of BAC

Dato’ Ab. Halim MohyiddinIndependent Non-Executive Director

Chairman of NRCMember of BAC

Dato’ Abdul Razak Abdul MajidIndependent Non-Executive Director

Member of BAC Member of NRC

Emeliana Dallan Rice-OxleyNon-Independent

Non-Executive Director

Kamal Bahrin AhmadManaging Director/

Chief Executive Director

1

Marina Md TaibNon-Independent

Non-Executive DirectorMember of BAC

BAC: Board Audit Committee

NRC: Nomination & Remuneration Committee

Chairman, Non-Independent Non-Executive Director

Note:

p.1256PUSHING FORWARD ACCELERATING MOMENTUM


Value Creation Through Good Governance

VALUE-DRIVEN OBJECTIVES OF OUR BOARD: PILLAR OF SUSTAINABLE VALUE CREATION

Value-driven objectives of our Board are rooted in corporate governance principles and best practices espoused in the Malaysian Code on Corporate Governance 2017 (MCCG 2017), reporting disclosures and increased compliance requirements of the Main Market Listing Requirement (MMLR) of Bursa Malaysia Securities Berhad (Bursa Malaysia), Companies Act 2016 and other applicable regulations.

3

Strong leadership is critical to value creation. The Board sets the tone, provides leadership and vision and leads the Group ethically, effectively and responsibly.

The Board has the power to shape the Group’s direction and culture through its corporate governance philosophy and ethical practices. In this way the Board ensures that the Group plays a significant role in society as an employer, taxpayer and contributor of the country’s economic growth.

The Board takes accountability for the Group’s performance. The Board sets the Group’s strategic aims and ensures that the necessary resources are in place to meet its objectives and review Management’s performance.

The Board supports the Group in its implementation of the Group’s value-driven strategic objectives and the effort put in place in achieving them. The required disclosures are contained in this Integrated Report and other reports available at the Company’s website at www.petronasgas.com

The Board is collectively responsible for delivering sustainable value through oversight of the management of the Group’s business through its Board Committees.

In providing leadership and vision to the Group, the Board ensures sustainable growth and delivery of the Group’s purpose and objectives for the benefit of all stakeholders.

OUR GOVERNANCE POLICY

Our Board is committed to the highest standards and levels of governance, ethics and integrity within the Group.

The Board believes that excellence in corporate governance is vital to achieve the highest standards of professionalism and business ethics across the Company’s spectrum of business activities.

In PGB, we embrace world-class business practices and robust institutional framework and constantly review, enhance and strengthen these practices to ensure we act in the best interest of our stakeholders.

PGB, with four core business segments, ie, gas processing, gas transportation, LNG regasification and utilities has established itself as Malaysia’s leading gas infrastructure and utilities company.

PGB adopts world-class governance practices and globally recognised standards for sustainable practices to ensure sustained strength of our business segments and services. In so doing, we are resilient and at the same time, flexible in adopting new regulatory changes, responding and adapting to the challenging and competitive regional and global business environment.

Our good governance is not a box-ticking exercise. It entails far more than legislative, regulatory compliance and principles of best practices.

We believe that good governance with value-driven objectives as its mainstay, contributes to raising values through enhanced accountability, strong risk and performance management, transparency and effective leadership.

Good corporate governance creates and sustains shareholder value; ensures that our behaviour is ethical and promotes positive outcomes for all stakeholders.

2

Effective Ethical Leadership

Governance Structure and Delegation Sustainable Growth and Stakeholders

Strategy, Performance and Reporting

p.126

• Oversight role

• Reviews the quality of financial information

• Provides an unbiased review of effectiveness and efficiency in the Group’s internal control systems.

• Reviews and recommends to the Board on the structure, size and composition of the Board

• Responsible for the nomination, appointment, assessment, remuneration and compensation of the Board

Board Audit Committee

(BAC)

Nomination and

Remuneration Committee

(NRC)

PGB Group

Board of Directors

1 2 3 4 7 85

COLLECTIVE RESPONSIBILITIES OF THE BOARD

A director, when exercising his/her power, owes a fiduciary duty to the Company and collectively should act honestly in good faith in the best interest of the Company. Our Board is collectively responsible for the long term success of PGB and delivering sustainable value through oversight of the management of the Group’s business.

The main functions of the Board include the following:

• Reviews, approves and monitors strategic business plans, goals and policies

• Ensures appropriate policies are in place, adopted, executed effectively and regularly reviewed

• Provides oversight of the conduct and performance of the Management and the Group’s business

• Ensures and provides accountability to its members or shareholders and to some extent, towards a wider range of stakeholders

Our Board and Board Committees

The Board provides leadership and strategic guidance to safeguard stakeholder value creation within a framework of prudent and effective controls. This makes it possible for the Group to assess and manage risks to ensure long term sustainable development and growth.

The Board is ultimately accountable and responsible for the performance and affairs of PGB and ensures that the Group adheres to high standards of ethical behaviour.

The Board Committees assist the Board in the discharge of its duties and responsibilities.

Each Board Committee has a formal written Terms of Reference that are effectively delegated in respect of some of the Board’s responsibilities.

The Board monitors these responsibilities to ensure effective coverage of and control over, the Group’s operations.

The Board engaged in strategy sessions with Management throughout the year.

The Board also dealt with strategic focus areas such as PGB’s Growth Strategy and Digital Initiative.

The Board deliberated and approved the Company’s Business Plan and Budget.

INVOLVEMENT IN COMPANY’S STRATEGIC MATTERS

Although the Board maintains its independence, it is important that it engages with Management on multiple levels tounderstand fully the Group’s business.

4

5



Value Creation Through Good Governance BOARD DIVERSITY

The Directors bring with them years of experience in managing sustainable business growth and collectively represent leadership with diversity of perspectives that supports effective decision-making.

A diverse Board is necessary to provide unique perspectives, experience and expertise required to achieve effective stewardship thereby, creating value.

Diversity that embraces mixed profiles, age and gender, knowledge, skill, regional and industry experience at Board level are key considerations in the Board selection process.

In addition, each of the director has the character, experience, integrity, competence and time to effectively discharge his/her role as a director.

Female Directors currently represent 50% of the Board composition in line with the Government’s aspiration and Practice 4.1 of the MCCG 2017.

BOARD INDEPENDENCE

The Board is diverse in demographics, skills and experience.

The Board comprises eight Directors, four of whom, represents 50% of Independent Directors who promote independent judgement and diverse mind sets and opinions. All Directors must exercise their judgement independently, irrespective of status and are required to act in the best interests of the Company.

All Directors are assessed annually via the Board Effectiveness Evaluation exercise.

The Independent Directors assessed in 2019 satisfied the independence criteria and therefore, maintained their independent status.

In line with the exemplary practice as recommended by MCCG 2017, the Company has adopted a tenure policy whereby the total tenure of the Independent Directors is capped at nine years.

BOARD SKILLS MATRIX

The Board has members with a broad range of skills and experiences that helps to create value in the interests of the Company and its shareholders.

With the appropriate mix of skills and experience, the Board is assured that it is well-equipped to guide and steer our strategy into the future and thereby, create value.

BOARD TENURE AND AGE DISTRIBUTION

RISK MANAGEMENT

Risks arising from a constantly shifting global industrial and geopolitical landscape are among the major challenges our business faces in progressing with our goal of growing shareholders’ value in a sustainable manner.

Risk management is fundamental to the Group’s strategy and our gas infrastructure and utilities business. The pervasiveness of risk in this industry means that our Board deems risk management as an integral part of our business strategy.

Risk management oversight is carried out by the Board and the Board Audit Committee (BAC) via the Risk Management Unit (RMU) which reports on risk management to the BAC.

The BAC reviews and challenges the Enterprise Risk Report (ERR) which entails among others, the risk profile and status of risk mitigation and implementation.

PGB has adopted the PETRONAS Resiliency Model in managing risks with three focus areas, namely Enterprise Risk Management (ERM), Crisis Management and Business Continuity Model.

The business environment within which we operate, requires us to be vigilant in our risk management and to continuously identify new emerging risks.

6

7

8

10

9




1

2

3

4

5

6

7

8

No

. of

Bo

ard

Me

mb

ers

Required Skills and Experience

Length of Services

1

1

2

4 Age

1

2

2

3

7-9 years 1 4-7 years 1 2-4 years 2 0-2 years 4

Age 70-79 1 Age 60-69 2 Age 50-59 3 Age 40-49 2

p.128

6Read more in our Governance & Financial Report.

1 2 3 4 7 85

CONFLICT OF INTEREST

A Director is prohibited from using his or her position or confidential or price-sensitive information to benefit herself or himself or any related third party, financially or otherwise.

Directors are also required to inform the Board of conflicts or potential conflicts of interest that they may have in relation to particular items of business or other directorships. They must declare any actual or potential conflict of interest at the Board meeting where the matter is being transacted and discussed.

A Director may accept other Board appointments provided the appointments do not conflict with the Group and/or adversely affect the Director’s duties as well as time-commitment.

A Non-Executive Director should not hold more than five directorships in listed entities.

OUR APPROACH TO COMPLIANCE

We comply with and subscribe to various legislations and regulatory requirements, such as MMLR by Bursa Malaysia, MCCG 2017, Companies Act 2016, Malaysian Financial Reporting Standards and International Financial Reporting Standards.

Appropriate procedures and mechanisms are in place to ensure full and continuous adherence to these laws and regulation.

Our business compliance covers a wide range of laws and regulatory areas, including anti-competition, strategic trade, anti-bribery and corruption, international sanctions and data protection.

The principles governing our ethical standards and compliance can be found within CoBe, Whistleblowing Policy and the Anti-Bribery and Corruption Manual.

11

12

COMMITMENT ON ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) MATTERS

We are committed to ensure the highest standards of environmental, social and governance practices.

We believe for a company to be successful and create long term value, sustainable development has to be incorporated in the business value chain.

We progressively keep abreast of evolving social and environmental expectations by continuously engaging with our stakeholders.

13

INTEGRITY AND ETHICS

PGB acknowledges the Board’s role in establishing a corporate culture that encompasses and embraces ethical conduct within the Group. The adoption of these policies is to ensure that the conduct of business and the Company’s employees are consistently carried out ethically and with integrity.

During the year under review, the Company had conducted series of staff engagement to instill awareness on these policies as part of the Company’s annual event.

14

The Board assumes ultimate responsibility

for PGB’s ethics performance and

adherence to human rights principles.

This responsibility is delegated to the

Management which uses various tools to fulfil its

mandate.

Code of Conduct and Business Ethics

(CoBE)

Trading on Insider

Information

Whistleblowing Policy

Selection of Vendors (PETRONAS Tenders

and Contracts Administrative

Manual)

Anti-Bribery and

Corruption Manual

Corporate Liability


SustainableFuture

Towards A

132 Enriching Lives Through Sustainable Practices

7

Future

OUR SUPPORT FOR UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (UNSDGs)

PGB is in support of eight UNSDGs where we believe we can contribute to the greatest possible impact to society. It helps us to coordinate our efforts effectively towards global sustainability agenda whilst enhancing our collaborations with local community to deliver sustainable value creation.

Good health is essential to sustainable development and the newly implemented 2030 Agenda reflects the complexity and interconnectedness of the two. It takes into account widening economic and social inequalities, rapid urbanisation, threats to the climate and the environment, the continuing burden of HIV and other infectious diseases, and emerging challenges such as non-communicable diseases. Universal health coverage will be integral to achieving SDG 3, ending poverty and reducing inequalities. Emerging global health priorities that are not explicitly included in the SDGs, including antimicrobial resistance, also demand for action.

Since 2000, there has been an enormous progress in achieving the target of universal primary education. The total enrolment rate in developing regions have reached 91% in 2015, and the worldwide number of children out-of-school has dropped by almost half. There has also been a dramatic increase in literacy rates, and many more girls are in school than ever before. These are all remarkable successes achieved from the SDG.

The efforts to achieve inclusive and quality education for all reaffirm the belief that education is indeed one of the most powerful instruments for sustainable development. This goal is targeting for all girls and boys to complete free primary and secondary education by 2030. It also aims to provide equal access to affordable vocational training, eliminate gender and wealth disparities, as well as achieve universal access to a quality higher education.

Between 2000 and 2016, the proportion of the global population having access to electricity has increased from 78% to 87%, and the number of people living without electricity dipped to just below one billion.

The demand for cheap energy increases in proportion to the continuous growth of the population. For economies heavily reliant on fossil fuels, this will bring forth drastic changes to our climate.

Investing in solar, wind and thermal power, improving energy productivity, and ensuring energy for all are vital if we are to achieve SDG 7 by 2030.

Infrastructure expansion and technology upgrade in order to provide clean and more efficient energy in every country will promote growth and help the environment.

The goals under SDG 8 promote sustained economic growth, higher levels of productivity and technological innovation. Encouraging entrepreneurship and job creation are key to this, as are effective measures to eradicate forced labour, slavery and human trafficking. With these targets in mind, the goal is to achieve full and productive employment, and decent work, for both women and men by 2030.

Achieving economic growth and sustainable development requires us to urgently reduce our ecological footprint by changing the way we produce and consume goods and resources. Agriculture is the biggest user of water worldwide, and irrigation now claims close to 70% of all freshwater for human use.

The efficient management of our shared natural resources, and the way we dispose of toxic waste and pollutants are important targets for the achievement of SDG 12. Encouraging industries, businesses and consumers to recycle and reduce waste is equally important, as is supporting developing countries to move towards more sustainable patterns of consumption by 2030.

TOWARDS A SUSTAINABLE FUTURE INTEGRATED REPORT 2019

Enriching Lives Through Sustainable Practices

p.132

Greenhouse gas emissions are more than 50% higher than it was in 1990. Global warming is causing long-lasting changes to our climate system, of which our lack of action will bring threats and irreversible consequences which threatens if we do not act.

The annual average economic losses from climate-related disasters are in the hundreds of billions of dollars. SDG 13 aims to mobilise US$100 billion annually by 2020 to address the needs of developing countries to both adapt to climate change and invest in low-carbon development.

The target to limit the increase in global mean temperature to two degrees Celsius above pre-industrial levels, aiming at 1.5 °C is still possible provided that there are strong political will, increased investment and utilisation of the existing technologies. However, this would require urgent and ambitious collective action.

Oceans absorb about 30% of the carbon dioxide produced by humans, and we are seeing a 26% rise in ocean acidification since the beginning of the industrial revolution. Marine pollution, an overwhelming majority of which comes from land-based sources, is reaching alarming levels, with an average of 13,000 pieces of plastic litter to be found on every square kilometre of ocean.

The goals under SDG 14 aim to sustainably manage and protect marine and coastal ecosystems from pollution, as well as to address the impacts of ocean acidification. Enhancing conservation and the sustainable use of ocean-based resources through international law will also help mitigate some of the challenges facing our oceans.

Plant life provides 80% of the human diet, and we rely heavily on agriculture as important economic resources. Forests cover 30% of the Earth’s surface, providing vital habitats for millions of species, and are important sources for clean air and water, as well as being crucial for combating climate change.

Urgent action must be taken to reduce the loss of natural habitats and biodiversity which have been a part of our common heritage and to support global food and water security, climate change mitigation and adaptation, and peace and security.

Source: Sustainable Development Goals, United Nations Development Programme

SUSTAINABILITY FRAMEWORK

We view sustainability or sustainable development as a business imperative. This means looking beyond financial profitability by balancing economic, social and environmental considerations in making sound business decisions.

EnvironmentEconomic Society Governance

S U S T A I N A B I L I T Y F R A M E W O R K

1 2 3 4 85 6p.1337


TOWARDS A SUSTAINABLE FUTURE INTEGRATED REPORT 2019p.134

2011• Certified with MS ISO 14001:2004

(Environmental Management System) • Implemented 4G Initiative (Green

Care, Green Mind, Green Ownership and Green Growth)

2013• 50% reduction of energy

consumption resulted from 4G Initiative

• Seeding Programme to develop future talents by recruiting fresh graduates

• PGB greenhouse gas emission reporting enhancement via SANGEA® software

2012• 32% savings of waste-handling

costs resulted from 4G initiative • Implementation of Program

Bakti Pendidikan PETRONAS (PBPP), which is now rebranded as Program Sentuhan Ilmu PETRONAS

2014• Commissioning of Flare Gas Recovery

Unit (FGRU), resulted in reduction of flaring emission

• Mercury management through HycaptureTM Hg

• Installation of high pressure online washing at gas turbines inlet to reduce energy consumption

2005 – 2010• Implementation of Program Sentuhan

Kasih PETRONAS • Execution of Building Leaders

Programme • Commissioning of Acid Gas Oxidiser

(AGO) to reduce acid gas emissions

KEY MILESTONES


1 2 3 4 85 6p.1357


2015• Installation of cogeneration

(COGEN) unit• Collaboration with

Malaysian Nature Society (MNS) to preserve the biodiversity of Sungai Paka

• Collaboration with Yayasan Salam Malaysia on the Livelihood Programme

2016• Developed a structured Leak

Detection and Repair (LDAR) programme to monitor fugitive emissions

• Installation of Predictive Emission Monitoring System (PEMS)

• Displayed Accelerating Culture Change (ACC) programme

2019• Launching of 301Q99

Pushing Forward Game Plan to improve energy efficiency index, reduction of maintenance cost and increase utilisation

• Implementation generative HSSE culture

• RGTSU Export Compressor (RGTEC) won Silver Award from Anugerah Hijau Negeri Melaka under Green Project Category in Year 2019

• ‘Sayangi Sungai Latoh’ baseline assessment and tree planting in three phases

• Completion of Predictive Emission Monitoring System (PEMS)

• Participation in Hibiscus Award for seven plants

• Completion and commissioning of COGEN E

• Completion and the start of CO

2 recycling project

(COSLA)• Life Cycle Assessment for

GPS and UG

2018• Launched of ‘Sayangi Sungai Latoh’

programme• Conversion of ISO14001:2004 into

ISO14001:2015• Received Green Apple Award for water

conservation project at Utilities Kertih• Diamond Project at GPS bestowed with

the “5 Stars Band Award Project” from Malaysia Productivity Cooperation (MPC)

2017• Launched Mangrove Tree

Planting programme at Hutan Simpan Kekal Kuala Paka

• Organised “Jom Buat Mudball” activity which was one of the activities planned under the Sayangi Sungai Paka programme launched back in 2015

• Utilities Kertih Plant Sustainable Water Management Project announced the winner for Special Project Award (Gold) of the Prime Minister’s Hibiscus Award (PMHA) 2016/2017

SUSTAINABILITY STRATEGY

Sustainability plays a significant role in formulating our business plans and activities. As a leading gas infrastructure and centralised utilities company, we have the responsibility to demonstrate leadership not only in the business areas that we are in, but also with our environment and community. It is with this in mind that we have developed our Sustainability Strategy, which is aligned with our consideration for material matters and net positive impact that it has on our stakeholders.

Our strategy was also developed with reference to UN Sustainable Development Goals (SDGs) to ensure balanced focus and emphasis, as well as reflecting our support for global sustainability agenda. Our Sustainable Strategy focuses on three anchors; Sustainable Business, Social Responsibility and Resource Efficiency.

How each of the strategy addresses our material matters is illustrated below:

Sustainability Strategy

Material Matters Responses ResultLink to

UNSDGs

Sustainable Business

1. Operational Reliability, Delivery and Efficiency

2. Gas Market Dynamics

3. Gas Market Liberalisation

4. Business Growth

5. Compliance to Regulation

6. Sustainability

1. 301Q99 Pushing Forward Game Plan 2. Efficient management of regulated assets3. Business expansions:

a. Expansion of utilities capacity and customer base.

b. Expansion of Tanjung Sulong Export Terminal (TSET)

4. Introduction of ancillary services: a. Gassing Up Cooling Down (GUCD)b. LNG reloadingc. LNG bunkeringd. LNG truck loading

1. Increased profit and higher dividend paid in 2019 despite the challenges faced by the Group

2. Ready infrastructure to support Third Party Access (TPA) at our gas facilities in supplementing domestic gas supply to ensure supply security. We also provide environment for competitive pricing in the liberalised gas market

3. Business growth

4. Diversified business for new revenue streams

Social Responsibility: Commitment to Health, Safety and Security

1. Health, Safety, Security and Environment (HSSE)


3. Compliance to Regulation4. Human Capital5. Sustainability

1. Generative HSSE Culture and PETRONAS Zero Tolerance (ZeTo) Rulesa. Stop Work Policyb. Jom Patuh dan Tegurc. 50,000 Safety Observations

2. Medical privileges:a. Preventive Health Screeningb. Setting up of Kertih Interplant Clinic

(KIC) at Kertih Integrated Petroleum Complex

3. Staff welfare4. Security measures:

a. 200 Emergency Response Exercisesb. Perimeter Intrusion Detection System

(PIDS) and CCTV across all our sites

1. Zero Fatality, zero fire accident with multiple MSOSH Award in 2019 for outstanding OSH performance

2. Award winner for Excellent Occupational Health & Safety (Chief Executive Officer/Private Company) from Department of Safety and Occupational Health

3. Comprehensive medical benefits to staff and PETRONITA Creche for staff children

4. Low security-related incidents and interventions for the past three years

Sustainable Business

Resource Efficiency

Social Responsibility

Progressive partner anchoring on operational and commercial excellence as well as growth.

Commitment towards HSSE, caring for our talents and society

Efficient use of our resources towards sustainable future generation.

SUSTAINABILITYSTRATEGY

TOWARDS A SUSTAINABLE FUTURE INTEGRATED REPORT 2019


p.136

Sustainability Strategy

Material Matters Responses ResultLink to

UNSDGs

Social Responsibility: Caring for Our Talents


2. Human Capital

3. Sustainability

1. Benchmark practice with the United Nations Guiding Principle on Business and Human Right (UNGPs)

2. Effective talent sourcing and people management

3. Pursue diversity in the workforce

4. Comparable staff benefits

1. Employee work-life balance through flexible working hours and Compressed Work Week (CWW) programmes

2. Skilled workforce and quality leaders, with smooth succession planning execution and low staff turnover

3. Improved perspectives in insights and decision making

Social Responsibility: Caring for the Society

1. Human Capital

2. Sustainability

1. School painting activities programme

2. Free market activities

3. Back-to-School programmes

1. Conducive learning environment

2. Improved life for the less-fortunate community in Paka

3. Better school-readiness for more than 200 students

ResourceEfficiency



3. Business Growth

4. Compliance to Regulation

5. Sustainability

1. GHG’s emission target of 5.0 Million tCO2e

by 2024*

2. Installation of Solar Photovoltaic System

3. Installation of Best Available Technique (BAT) for air emission monitoring and control

4. New COGEN with nitrogen oxide removal (deNO

X)

5. 3R Programme – Re-use of spent catalyst and Benfield solution

6. Life Cycle Assessment (LCA)

7. Sayangi Sungai Latoh Programme

1. Reduction of CO2 emission

2. Circular economy by recycling CO

2 for other uses. Reduction in

Energy Intensity under 301Q99 Pushing Forward game plan

3. Cost-saving from electricity generated from sustainable source

4. Efficient management of air emission

5. Reduction of NOx emission intensity

6. RM5.0 million of cost saving from 3R Programme

7. 87% of PGB sites have been certified with MS ISO 14001:2015

8. More than 6,000 mangrove saplings have been planted to improve the ecosystem

* Target for PGB & its subsidiaries

Read more on Our Sustainability Practices in our Sustainability Report.7

1 2 3 4 85 6p.1377


8

InformationOther

140 Corporate Information141 Corporate Directory 142 Notice of Annual General Meeting 145 Administrative Details for the 37th AGM150 Glossary

• Proxy Form

Information

BOARD OF DIRECTORS

Corporate Information

Adif Zulkifli (Chairman)

Kamal Bahrin Ahmad (MD/CEO)

Habibah Abdul (Senior Independent Director)

BOARD AUDIT COMMITTEE

Farina Farikhullah Khan (Chairman)

Habibah AbdulDato’ Ab. Halim MohyiddinDato’ Abdul Razak Abdul MajidMarina Md Taib

NOMINATION AND REMUNERATION COMMITTEE

Dato’ Ab. Halim Mohyiddin (Chairman)

Habibah AbdulDato’ Abdul Razak Abdul Majid

COMPANY SECRETARIES

Syuhaida Ab Rashid (MACS 01582)

Yeap Kok Leong(MAICSA 0862549)

REGISTRAR

Boardroom Share Registrars Sdn Bhd

Registration No. 199601006647 (378993-D)

11th Floor, Menara Symphony

No. 5, Jalan Prof. Khoo Kay Kim

Seksyen 13

46200 Petaling Jaya Selangor

Malaysia

Tel : (+603) 7890 4700

Fax : (+603) 7890 4670

Email address:

[email protected]

REGISTERED OFFICE

Tower 1, PETRONAS Twin TowersKuala Lumpur City Centre50088 Kuala LumpurMalaysiaTel : (+603) 2331 5000

BUSINESS ADDRESS

Level 49 & 50, Tower 1 PETRONAS Twin TowersKuala Lumpur City Centre50088 Kuala LumpurMalaysiaTel : (+603) 2331 5000

STOCK EXCHANGE LISTING

Listed on the Main Market of Bursa Malaysia Securities BerhadListing Date : 4 September 1995Stock Name : PETGASStock Code : 6033Stock Sector : Utilities

BANKING SERVICES PROVIDER

PETRONAS Integrated Financial Shared Services Centre (IFSSC)*

AUDITORS

KPMG PLT(LLP0010081-LCA & AF 0758)

Chartered Accountants

10th Floor, KPMG Tower

Bandar Utama

47800 Petaling Jaya

Selangor Darul Ehsan

Malaysia

Tel : (+603) 7721 3388Fax : (+603) 7721 3399

INVESTOR RELATIONS

Izan Hajar IshakHead of Investor RelationsLevel 49 & 50, Tower 1PETRONAS Twin TowersKuala Lumpur City Centre50088 Kuala Lumpur

Email address:[email protected]

SENIOR INDEPENDENT DIRECTOR

Habibah Abdul

Email address:[email protected]

Farina Farikhullah Khan (Independent Non-Executive Director)

Dato’ Ab. Halim Mohyiddin (Independent Non-Executive Director)

Dato’ Abdul Razak Abdul Majid (Independent Non-Executive Director)

Emeliana Dallan Rice-Oxley (Non-Independent Non-Executive Director)

Marina Md Taib (Non-Independent Non-Executive Director)

* Banking requirements are managed centrally by IFSSC to enable more efficient banking management for PGB Group.

www.petronasgas.comOFFICIAL WEBSITE

OTHER INFORMATION INTEGRATED REPORT 2019p.140

7

GAS PROCESSING

Gas Processing Plant, KertihKM 105, Jalan Kuantan-Kuala Terengganu24300 Kertih, KemamanTerengganu Darul ImanT: +(609) 831 2345F: +(609) 827 1710

Gas Processing Plant, SantongKM 8, Kampung Tok Arun Off Jalan Santong23100 Paka, DungunTerengganu Darul ImanT: +(609) 831 2345F: +(609) 827 4578

Tanjung Sulong Export TerminalTanjung Sulong 24000 KemamanTerengganu Darul ImanT: +(609) 862 4321F: +(609) 863 1146

GAS TRANSPORTATION

Gurun Regional OfficeKM 1, Jalan Jeniang P.O. Box 31 08300 GurunKedah Darul AmanT: +(604) 468 5518F: +(604) 468 5519

Kertih Regional OfficeAras 1, Kompleks Pejabat PETRONAS Wilayah Pantai Timur (PWPT)24300 Kertih, KemamanTerengganu Darul ImanT: +(609) 867 3500F: +(609) 864 0375

PETRONAS GAS BERHAD

Level 49 & 50 Tower 1, PETRONAS Twin Towers Kuala Lumpur City Centre 50088 Kuala Lumpur, MalaysiaT: +(603) 2331 5000F: +(603) 2331 6987 +(603) 2051 6992

Kuantan Regional OfficeLot 1, Sektor 1, Bandar Indera Mahkota25200 KuantanPahang Darul MakmurT: +(609) 573 2811F: +(609) 573 2813

Pasir Gudang Regional OfficePLO 332, Jalan Perak 4Kawasan Perindustrian Pasir Gudang81700 Pasir GudangJohor Darul TakzimT: +(607) 251 0333F: +(607) 251 0400

Segamat Operation CentreKM 10, Lebuhraya Segamat-Kuantan85000 SegamatJohor Darul TakzimT: +(607) 935 3000F: +(607) 931 6521

Seremban Regional OfficeKM 11, Jalan Seremban/Tampin71450 Sungai GadutNegeri Sembilan Darul KhususT: +(606) 677 6777F: +(606) 677 7799

Shah Alam Regional OfficeLot 1, Jalan Jemuju Lima 16/13EKawasan Perindustrian Seksyen 1640200 Shah AlamSelangor Darul EhsanT: +(603) 5510 6222F: +(603) 5510 1528

Sitiawan Regional OfficeLot 33263, Jalan Dato’ Ahmad Yunus32000 SitiawanPerak Darul RidzuanT: +(605) 692 5611/12/13/14F: +(605) 692 5615

REGASIFICATION

Pengerang LNG (Two) Sdn BhdTingkat 2 Bangunan Pengerang Terminal (Two) Sdn BhdLot PTD 4836, Jalan Damai 2 Kampung Sungai Kapal81600 PengerangJohor Darul TakzimT: +(607) 817 7692

Regas Terminal (Sg. Udang) Sdn BhdPejabat Operasi Regas TerminalPETRONAS Penapisan Melaka Persiaran Penapisan 76300 Sungai Udang MelakaT: +(607) 352 3801

UTILITIES

Utilities Plant, KertihKertih Integrated Petrochemical ComplexKM 105, Jalan Kuantan – Kuala Terengganu24300 Kertih, KemamanTerengganu Darul ImanT: +(609) 830 5500F: +(609) 830 5514

Utilities Plant, GebengLot 139A, Gebeng Industrial Area Fasa III26080 KuantanPahang Darul MakmurT: +(609) 586 3300F: +(609) 586 3311

JOINT VENTURES

Kimanis Power Sdn BhdKimanis Operation CentreLot 2, Block A, Ground FloorMembakut Jaya89728 Membakut SabahT : +6087 88 6217/224F : +6087 88 6219

Pengerang Gas Solutions Sdn BhdLot 137, ASU RAPIDPengerang Integrated Complex81600 PengerangJohor Darul TakzimT: +(607) 817 5915

1 2 3 4 5 6

Corporate Directory

p.141


8

ORDINARY BUSINESS

1. To receive the Audited Financial Statements for the financial year ended 31 December 2019 together with the Reports of the Directors and Auditors thereon.

Please refer to Explanatory Note A 2. To re-elect the following Directors who retire by rotation pursuant to Article 107 of the Company’s Constitution:

(a) Dato’ Ab. Halim Mohyiddin

(b) Emeliana Dallan Rice-Oxley

Please refer to Explanatory Note B

3. To re-elect the following Directors who were appointed during the year pursuant to Article 100 of the Company’s Constitution:

(a) Adif Zulkifli

(b) Marina Md Taib

Please refer to Explanatory Note B

4. To approve the Directors’ Fees and Allowances payable to the Non-Executive Directors of up to RM2,600,000 with effect from 26 June 2020 until the next Annual General Meeting of the Company.

Please refer to Explanatory Note C 5. To approve the re-appointment of KPMG PLT, as Auditors of the Company for the financial year ending 31 December

2020 and to authorise the Directors to fix their remuneration.

Please refer to Explanatory Note D

6. To transact any other business of which due notice shall have been given in accordance with the Companies Act 2016 and Company’s Constitution.

NOTICE IS HEREBY GIVEN THAT the 37th Annual General Meeting (AGM) of PETRONAS Gas Berhad will be held at The

Majestic Ballroom, Level 2, The Majestic Hotel Kuala Lumpur, 5, Jalan Sultan Hishamuddin, 50000 Kuala Lumpur, Malaysia

on Thursday, 25 June 2020 at 10.00 a.m. to transact the following businesses:

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)

FURTHER NOTICE IS HEREBY GIVEN THAT for the purposes of determining a member who shall be entitled to attend and vote at the forthcoming 37th AGM, the Company shall be requesting the Record of Depositors as at 19 June 2020. Only a depositor whose name appears on the Record of Depositors as at 19 June 2020 shall be entitled to attend, participate, speak and vote at the meeting as well as for appointment of proxy(ies) to attend, participate, speak and vote on his/her stead.

By Order of the Board

Syuhaida Ab Rashid (MACS 01582) Yeap Kok Leong (MAICSA 0862549)Company Secretary Company Secretary

Kuala Lumpur20 March 2020

OTHER INFORMATION INTEGRATED REPORT 2019

Notice of Annual General Meeting

p.142

7

NOTES:

Proxy and/or Authorised Representative

1. A member of the Company entitled to attend, participate, speak and vote at the meeting may appoint not more than two proxies to attend and vote on his behalf provided that the member specifies the proportion of the member’s shareholdings to be represented by each proxy. There shall be no restriction as to the qualification of the proxy.

2. Where a member of the Company is an Authorised Nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (SICDA), it may appoint at least one proxy in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said Securities accounts.

3. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for the multiple beneficial owners in one Securities Account (omnibus account), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account if holds.

4. Where a member or the authorised nominee appoints two proxies, or where an Exempt Authorised Nominee appoints two or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under seal or under the hand of an officer or attorney duly authorised. The appointment of a proxy may be made in hard copy form or by electronic form. If the appointment is made in hard copy form, the Proxy Form must be deposited with Tricor Investor & Issuing House Services Sdn Bhd at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia or the Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or alternatively to submit your electronic Proxy Form via TIIH Online at https://tiih.online not less than 48 hours before the time fixed for holding the meeting. Please refer to the Annexure of the Proxy Form in the Administrative Details for submission of electronic Proxy Form.

6. If the Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If the Proxy Form is signed by an attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with this Proxy Form.

7. Pursuant to Paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad all resolution set out in the Notice of 37th AGM will be put to vote as a poll.

Explanatory Notes

Note A

Audited Financial Statements for the Financial Year Ended 31 December 2019

The audited financial statements are laid before the shareholders pursuant to the provision of Section 244(2)(a) of the Companies Act 2016 for discussions only. The audited financial statements do not require shareholders’ approval and hence, will not be put forward for voting.

Note B

Re-election of Directors who retire in accordance with Article 100 and Article 107 of the Company’s Constitution

(i) Re-election of Directors who retire in accordance with Article 107 of the Company’s Constitution

Article 107 of the Company’s Constitution provides that one-third of the Directors of the Company for the time being shall retire by rotation at an AGM of the Company provided always that all Directors, shall retire from office once at least in each three years but shall be eligible for re-election at the AGM. A Director retiring at a meeting shall retain office until the close of the meeting whether adjourned or not.

At the forthcoming 37th AGM, two directors will be retiring in accordance with Article 107 of the Company’s Constitution. They are Dato’ Ab. Halim Mohyiddin and Emeliana Dallan Rice-Oxley, whom being eligible for re-election have given their consent for re-election at the AGM.

The Board endorsed the Nomination and Remuneration Committee’s recommendation that the Directors who retire in accordance with Article 107 the Company’s Constitution are eligible to stand for re-election.

(ii) Re-election of Directors who retire in accordance with Article 100 of the Company’s Constitution

Article 100 of the Company’s Constitution provides, that the Board shall have the power to appoint any person to be a Director to fill a casual vacancy or as an addition to the existing Board, and that any Director so appointed shall hold office until the next following AGM and shall be eligible for re-election.

In view that Adif Zulkifli and Marina Md Taib were appointed during the financial year under review, they will be retiring under Article 100 of the Company’s Constitution. They, being eligible for re-election have also given their consent for re-election.

The Board endorsed the Nomination and Remuneration Committee’s recommendation that the Directors who retire in accordance with Article 100 the Company’s Constitution are eligible to stand for re-election.

The profiles of the retiring Directors are set out in the Profile of the Board of Directors in the Our Leadership section of the Integrated Report.

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8

Note C

Non-Executive Directors’ Fees and Allowances

Pursuant to Section 230(1) of the Companies Act 2016, the fees of the directors, and any benefits payable to the directors including any compensation for loss of employment of a director or former director of a public company or a listed company and its subsidiaries, shall be approved at a general meeting.

The fees and allowances structure of the Non-Executive Directors (“NEDs”) of the Company is as follows:

• Monthly fixed fees for duties as Director/Chairman;

• Meeting allowance for each Board/Board Committee attended; and

• Fuel allowance.

The Directors’ fees and meeting allowances for Non-Independent Non-Executive Directors who are also employees of Petroliam Nasional Berhad (PETRONAS) are paid directly to PETRONAS.

The shareholders at the last AGM held on 30 April 2019 approved the Directors’ fees and allowance of up to RM2,500,000 for the period from 1 May 2019 until the next AGM of the Company. The actual Directors’ fees and other benefits paid to NEDs for the said period was RM2,099,000.

The Directors’ fees and allowances for the NEDs for the period from 26 June 2020 until the conclusion of the next AGM of the Company (Mandate Period) are estimated not to exceed RM2,600,000. The calculation is based on the estimated number of scheduled Board and Board Committees’ meetings and on assumption that all the NEDs will remain in office until the next AGM. This resolution is to facilitate payment of the Directors’ fees and allowances for the Mandate Period.

The Board will seek shareholders’ approval at the next AGM in the event the Directors’ fees and allowances proposed are insufficient.

Details of the fees paid to the Non-Executive Directors for the financial year ended 31 December 2019 are published in the Corporate Governance Report on the Company’s official website at www.petronasgas.com.

Note D

Re-appointment of Auditors

On 4 March 2019, the Board Audit Committee (BAC) has endorsed the adoption of PETRONAS Framework on External Auditors (the Framework) for PGB. The Framework states that BAC shall carry out annual assessment on the performance and independence of the external auditors based on the following four key areas:

(a) Quality of engagement team and services;(b) Adequacy of resources;(c) Quality of communication and interaction;

and(d) Independence, objectivity and professional

scepticism.

The assessment was conducted in January 2020 whereby the BAC was satisfied with the performance and independence of the external auditors.

KPMG PLT has also met the criteria prescribed by Paragraph 15.21 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

The Board at its meeting held on 18 February 2020 recommended the re-appointment of KPMG PLT as external auditors of the Company for the financial year ending 31 December 2020 for approval of the shareholders under Resolution 6.

Abstention from Voting

Any NED of the Company who is a shareholder of the Company will abstain from voting on Resolution 5 concerning remuneration of the NEDs at the 37th AGM.

Other Information

The Company has engaged independent scrutineers to count, audit and validate the votes for each proposal presented to shareholders.


Notice of Annual General Meeting

p.144

7

REGISTRATION

(1) Registration will start at 8:00 a.m. on Thursday, 25 June 2020 at The Majestic Ballroom, Level 2, The Majestic Hotel Kuala Lumpur, 5, Jalan Sultan Hishamuddin, 50000 Kuala Lumpur, Malaysia.

(2) Please produce your original MyKad/passport (for foreigners) to the registration staff for verification. Please ensure to collect your MyKad/passport thereafter.

(3) Upon verification, you are required to write your name and sign on the Attendance List placed on the registration table.

(4) You will also be given an identification wristband with personalised passcode for the voting purpose. No person will be allowed to enter the meeting hall without the identification wristband. There will be no replacement in the event that you lose or misplace the identification wristband.

(5) No person will be allowed to register on behalf of another person, even with the original MyKad/passport of that person.

(6) The registration counter will handle only verification of identity and registration.

(7) Please vacate the registration area immediately after registration.

PROXY

(8) A member entitled to attend and vote is entitled to appoint proxy/proxies, to attend and vote instead of him. If you are unable to attend the meeting and wish to appoint a proxy to vote on your behalf, please submit your Proxy Form in accordance with the notes and instructions printed therein.

(9) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under seal or under the hand of an officer or attorney duly authorised. The appointment of a proxy may be made in hard copy form or by electronic form. If the appointment is made in hard copy form, the Proxy Form must be deposited with Tricor Investor & Issuing House Services Sdn Bhd at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia or the Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or alternatively to submit your electronic Proxy Form via TIIH Online at https://tiih.online not less than 48 hours before the time fixed for holding the meeting. Please refer to the Annexure of Proxy Form for submission of the electronic Proxy Form.

(10) If you wish to attend the meeting yourself, please do not submit any Proxy Form. You will not be allowed to attend the meeting together with a proxy appointed by you.

(11) If you have submitted your Proxy Form prior to the meeting and subsequently decided to attend the meeting yourself, please proceed to the Helpdesk to revoke the appointment of your proxy.

POLL VOTING

(12) The voting at the 37th AGM will be conducted by poll in accordance with Paragraph 8.29A of Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The Company has appointed Tricor Investor & Issuing House Services Sdn Bhd (Tricor) as Poll Administrator to conduct the poll by way of electronic voting (e-voting) and Boardroom Share Registrars Sdn Bhd as Scrutineers to verify the poll results.

(13) During the 37th AGM, the Chairman will invite the Poll Administrator to brief you on the e-voting procedures using smartphone or tablet (voting device).

1 2 3 4 5 6

Administrative Details for the 37th Annual General Meeting

p.145


8

(14) Members and proxies who wish to use their own voting device to vote are required to take note of the following e-voting requirements and procedures:

(a) Download Tricor e-Vote App (Version 1.3.7) onto your voting device before attending the meeting. Tricor e-Vote App download is available at no cost from Google Play Store or Apple App Store. If you require assistance on how to download the Tricor e-Vote App, please contact Tricor officers listed in Item 29 below.

(b) When you arrive at the meeting venue, connect to the Wi-Fi network provided by Tricor for use and access to Tricor e-Vote App:

Wi-Fi Name: Tricor e-Vote

Password: PGB2506

(c) Use the camera function of your voting device to capture the passcode on your wristband to access Tricor e-Vote App.

(d) Once logged in, you can proceed to vote on the resolutions and submit your votes at any time from 10.00 a.m. but before the completion of the voting session which will be announced by the Chairman during the meeting.

(15) Members and proxies who do not have voting device to submit their votes, they can do so at the voting kiosks. The Chairman will announce the commencement of voting at the kiosks upon conclusion of the deliberations of all the businesses transacted at the 37th

AGM. Members and proxies will be directed to the kiosks which are equipped with voting devices and polling officers are stationed to assist. The duration of voting at the kiosks is estimated to be 10 minutes.

(16) Upon completion of the voting session for the 37th AGM, the Scrutineers will verify and announce the poll results followed by the Chairman’s declaration whether the resolutions are duly passed.

REMOTE PARTICIPATION AND VOTING (RPV)

(17) Members (individuals only) who are unable or do not wish to be physically present at The Majestic Hotel Kuala Lumpur will have the option to participate and vote remotely at the 37th AGM via the RPV facilities which are available on Tricor’s TIIH Online website at https://tiih.online

(18) If you wish to engage in remote participation through live streaming and online remote voting at the 37th AGM using the RPV facilities, please read and follow the procedures below:

Procedure Action

BEFORE THE AGM DAY

(a) Register as a user with TIIH Online

• Using your computer, access the website at https://tiih.online. Register as a user under the “e-Services”. Refer to the tutorial guide posted on the homepage for assistance.

• If you are already a user with TIIH Online, you are not required to register again. You will receive an e-mail to notify you that the remote participation is available for registration at TIIH Online.

(b) Submit your request

• Registration is open from 10.00 a.m. on Friday, 20 March 2020 up to 10.00 a.m. Tuesday, 23 June 2020.• Login in with your user ID and password and select the corporate event: “(REGISTRATION) PETRONAS GAS

BERHAD 37TH AGM REMOTE PARTICIPATION”.• Read and agree to the Terms & Conditions and confirm the Declaration.• Insert the CDS account number and indicate the number of shares.• Submit to register your remote participation.• System will send an e-mail to notify that your registration for remote participation is received and will be verified.• After verification of your registration against the General Meeting ROD as at 19 June 2020, the system will

send you an e-mail to approve or reject your registration for remote participation.



p.146

7

Procedure Action

ON THE AGM DAY

(c) Login to TIIH Online

• Login with your user ID (i.e e-mail address) and password for remote participation at the 37th AGM at any time from 9.40 a.m. i.e. 20 minutes before the commencement of meeting at 10.00 a.m. on Thursday, 25 June 2020.

(d) Participate through Live Streaming

• Select the corporate event: “(LIVE STREAMING MEETING) PETRONAS GAS BERHAD 37TH AGM” to engage in the proceedings of the 37th AGM remotely.

• If you have any question(s) for the Chairman/Board, you may use the query box to transmit your question(s). The Chairman/Board will try to respond to relevant questions submitted by remote participants during the 37th AGM. If there is time constraint, the responses will be e-mailed to you at the earliest possible, after the meeting.

• Take note that the quality of the live streaming is dependent on the bandwidth and stability of the internet connection at the location of the remote participants.

(e) Online Remote Voting

• Select the corporate event: “(REMOTE VOTING) PETRONAS GAS BERHAD 37TH AGM”.• Read and agree to the Terms & Conditions and confirm the Declaration.• Voting session commences from 10.00 a.m. Thursday, 25 June 2020 until a time when the Chairman

announces the completion of the voting session at the 37th AGM venue.• Select the CDS account that represents your shareholdings.• Indicate your votes for the resolutions that are tabled for voting.• Confirm and submit your votes.

(f) End of remote participation

• Upon the announcement by the Chairman on the closure of the 37th AGM, the live streaming will end.

CORONAVIRUS DISEASE (COVID-19) OUTBREAK

(19) Your safety is the Company’s priority. As you are already aware, the COVID-19 has infected more than 100,000 people globally and there are already 99 cases (as at 8 March 2020) in Malaysia. In view of the COVID-19 outbreak, we advise members to take advantage of the RPV facilities (in items 17 and 18 above) to attend the 37th AGM remotely as a precautionary measure. You may also consider appointing Chairman of the meeting as your proxy to attend and vote on your behalf at the forthcoming 37th AGM.

If you have travelled overseas to China and other affected countries (as and when announced by the World Health Organisation or Malaysia’s Ministry of Health in the past 14 days or if you are unwell with sore throat/fever/flu/cough/shortness of breath, please quarantine yourself at home. Under such circumstances, you are advised to attend the 37th AGM remotely using the RPV facilities.

(20) As a precautionary measure, we will be conducting temperature checks on all persons upon arrival at the AGM venue. If a member has high temperature or showed symptoms of respiratory illness such as coughing and sneezing, we would strongly advise him/her not to attend the 37th AGM.

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(21) PGB’s Integrated Report (IR) for the Financial Year 2019 is available on:

https://www.bursamalaysia.com https://www.petronasgas.com (22) You may request for a printed copy of the IR 2019 at https://tiih.online by selecting “Request for Annual Report” under the “Investor

Services”. Limited copies of the IR 2019 will be available for collection on a first-come-first-served basis, on the date of the 37th AGM.

(23) Nevertheless, we hope you would consider the environment before you decide to print the above reports or request for the printed copy of the IR 2019. The environmental concerns like global warming, deforestation, climate change and many more affect every human, animal and nation on this planet.

HELPDESK

(24) Please proceed to the PGB’s Helpdesk for any clarification or enquiry.

(25) Poll Administrator’s Helpdesk will handle the revocation of a proxy’s appointment.

PARKING

(26) Please take note that PGB will not be providing cash reimbursement for parking. Instead, you are advised to park at The Majestic Hotel Kuala Lumpur. Please bring your original parking ticket for validation at the counter in Majestic Hotel Ballroom on Level 2. Nevertheless, since the parking bays at the hotel are limited, it will be on first-come-first-served basis.

(27) By validating the parking ticket, you will not be charged for parking when you leave. Please be advised, that the parking ticket expires at 3.00 p.m. on 25 June 2020. Any additional costs incurred for parking after 3.00 p.m. will not be borne by PGB.

(28) Please be advised that PGB will not reimburse any parking costs incurred at any other locations nor other types of transportation fees such as fuels, taxi/e-hailing services, LRT/MRT, bus, flight, etc. As such, please observe the abovementioned parking area.

ENQUIRY

(29) If you have any query in relation to printed copy, Proxy Form and RPV facilities prior to the meeting, please contact the following officers during office hours:

Tricor Investor & Issuing House Services Sdn BhdRegistration No. 197101000970 (11324-H)Unit 32-01, Level 32, Tower AVertical Business Suite, Avenue 3, Bangsar South No. 8, Jalan Kerinchi59200 Kuala Lumpur, Malaysia

Telephone Number

General Line 603-2783 9299

Ros Sakila BahariMuhammad Ashraff Mohd Khaizan

603-2783 9277603-2783 9276

Fax Number 603-2783 9222



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ANNEXURE

ELECTRONIC SUBMISSION OF PROXY FORM VIA TIIH ONLINE

Dear Shareholders,

We are pleased to inform that you as a shareholder can have the option to submit your proxy forms by electronic means through our system,

TIIH Online (“e-Proxy”).

TIIH Online is an application that provides an online platform for shareholders (individuals only) to submit document/form electronically which includes

proxy form in paperless form (“e-Submission”). Once you have successfully submitted your e-proxy form, you are no longer required to complete

and submit the physical proxy form to the company or Tricor office.

To assist you on how to engage with e-Proxy, kindly read and follow the guidance notes which are detailed below:

1. Sign up as user of TIIH Online

Using your computer, access our website at https://tiih.online

Sign up as a user by completing the registration form, registration is free

Upload a softcopy of your MyKad (front and back) or your passport

Administrator will approve your registration within one working day and notify you via email

Activate your account by re-setting your password

Notes: (i) If you are already a user of TIIH Online, you are not required to sign up again

(ii) An email address is allowed to be used once to register as a new user account, and the same email cannot be used to register another

user account

(iii) At this juncture, only individual security holders are offered to register as user and participate in e-Proxy

2. Proceed with submission of e-Proxy

After the release of the Notice of Meeting by the Company, login with your user name (i.e. e-mail address) and password

Select the corporate event: “Submission of Proxy Form”

Read and agree to the Terms & Conditions and confirm the Declaration

Select/insert the CDS account number and indicate the number of shares for your proxy(s) to vote on your behalf

Appoint your proxy(s) or chairman and insert the required details of your proxy(s)

Indicate your voting instructions – FOR or AGAINST, otherwise your proxy will decide your vote

Review & confirm your proxy(s) appointment

Print e-proxy for your record

Should you need assistance on our e-Submission, please contact us. Thank you.

Tricor Investor & Issuing House Services Sdn BhdUnit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi,59200 Kuala Lumpur, Malaysia

Telephone No: 03-27839299Fax No: 03-27839222E-mail: [email protected]

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ABC Anti-Bribery and Corruption

ACC Accelerating Cultural Change

AGO Acid Gas Oxidiser

AGRU Acid Gas Removal Unit

ASU Air Separation Unit

BCM Business Continuity Management

BCP Business Continuity Plan

BCP Business Critical Position

BLP Building Leaders Programme

CAPEX Capital Expenditure

CCP Control Critical Position

CEMS Continuous Emission Monitoring System

CFP Corporate Financial Policy

CG Corporate Governance

CoBE Code of Conduct and Business Ethics

COGEN Cogeneration Plant

COP Community of Practice

CoRA Contractor Risk Assessment

CRM Customer Relationship Management

CSC Commercial Steering Committee

CSR Corporate Social Responsibilities

CX Commercial Excellence

DOE Department of Environment

DOSH Department of Occupational Safety and Health

DPR Dividend Payout Ratio

DPS Dividend Per Share

DTA Deferred Tax Assets

EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation

EC Energy Commission

ECER East Coast Economic Region

EIA Environmental Impact Assessment

ELMS Energy Loss Management System

EMS Environmental Management System

EPS Earning Per Share

ERE Emergency Response Exercise

ERM Enterprise Risk Management

ERP Enterprise Risk Profile

ERS Equipment Reliability Strategy

ESG FTSE Environmental, Social and Governance

FEL Front-end Loading

FGRU Flare Gas Recovery Unit

FLL Finance Lease Liabilities

FOREX Foreign Exchange

FRIM Forest Research Institute of Malaysia

FSU Floating Storage Unit

FTSE Financial Times Stock Exchange

GEES Graduate Employability Enhancement Scheme

GHG Greenhouse Gases

GHSE Group Health, Safety and Environment

GIA Group Internal Audit

GPA Gas Processing Agreement

GPK Gas Processing Kertih

GPP Gas Processing Plant

GPS Gas Processing Santong

GPU Gas Processing and Utilities

GSA Gas Supply (Amendment) Act 2016

GTA Gas Transportation Agreement

GTR Gas Transmission and Regasification

GUCD Gassing Up Cooling Down

GWh Gigawatt Hour

HMM Harvard Manage Mentor

HPRT Hydraulic Power Recovery Turbine

HRSG Heat Recovery Steam Generation

HSSE Health, Safety, Security and Environment

ICT Information and Communication Technology

IETS Industrial Effluent Treatment System

IFSSC Integrated Financial Shared Services Centre

IMC Integrated Marketing Communications

IPP Independent Power Producers

ITA Investment Tax Allowance

JMP Journey Management Plan

JV Joint Venture

KAPENAS Kesatuan Kakitangan Petroliam Nasional Berhad

KIPC Kertih Integrated Petrochemical Complex

KMt Kilometric tonnes

KPI Key Performance Indicators

KRA Key Results Area


Glossary

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KRI Key Risk Indicators

KWAP Kumpulan Wang Persaraan (Diperbadankan)/Retirement Fund (Incorporated)

LDAR Leak Detection and Repair

LNG Liquified Natural Gas

LOA Limits of Authority

LOPC Loss of Primary Containment

LT Leadership Team

LTI Lost Time Injury

LTIF Lost Time Injury Frequency

LTIR Lost Time Incident Rate

MAP Mandatory Accreditation Programme

MASB Malaysian Accounting Standards Board

MCCG Malaysian Code on Corporate Governance

MCF Mandatory Control Framework

MFRS Malaysian Financial Reporting Standards

MGA Malaysia Gas Association

MI Mechanical Integrity

MIA Malaysian Institute of Accountants

MICG Malaysian Institute of Corporate Governance

MIDA Malaysian Industrial Development Authority

MMLR Main Market Listing Requirements

MMSCFD Million Standard Cubic Feet Per Day

Nm3 Normal Cubic Meters

MNS Malaysian Nature Society

MSOSH Malaysian Society for Occupational Safety and Health

MSWG Minority Shareholders Watch Group

MTJDA Malaysia-Thailand Joint Development Area

NACRA National Annual Corporate Report Awards

NGU Nitrogen Generation Unit

O&M Operation and Maintenance

OE Operational Excellence

OEE Overall Equipment Effectiveness

OE&I Operational Excellence and Improvement

OEMS Operational Excellence Management System

OHSAS Occupational Health and Safety Assessment Series

OPEX Operating Expenditure

OPU Operating Units

OSH Occupational Safety and Health

PBPP Program Bakti Pendidikan PETRONAS

PBS Performance Based Structure

PCB PETRONAS Cultural Beliefs

PCP Pengerang Cogeneration Plant

PCRRS PETRONAS Credit Risk Rating System

PDR Product Delivery Reliability

PD&T Project Delivery and Technology

PEMS Predictive Emission Monitoring System

PFRM Plant and Facilities Risk Management

PGPP Pengerang Gas Pipeline Project

PGU Peninsular Gas Utilisation

PIC Pengerang Integrated Complex

PIMS Pipeline Integration Management System

PIVOT PETRONAS Integrated Vision for Operational Excellence and Technology

PLT Plant Leadership Team

PPE Property, Plant and Equipment

PPMS PETRONAS Project Management System

PRBI PETRONAS Risk-Based Inspection

ProFIT Product Flaring Improvement Taskforce

PRR Plant Rejuvenation and Revamp

PSC Project Steering Committee

PSIP Program Sentuhan Ilmu PETRONAS

PSKP Program Sentuhan Kasih PETRONAS

PSM Process Safety Management

PTW Permit-To-Work

QA Quality Assurance

QASR Quarterly Audit Status Report

QC Quality Control

R2 Desired Result

RA Reinvestment Allowance

RAPID Refinery and Petrochemicals Integrated Development

RCC Risk and Compliance Committee

RCFA Root Cause Failure Analysis

RGT Regasification Terminal

RGTEC RGT Minimum Sent Out Capability

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RMU Risk Management Unit

ROA Return on Asset

ROE Return on Equity

ROW Right of Way

RSA Regasification Service Agreement

SCE Safety Critical Element

SESB Sabah Electricity Sdn Bhd

SL1M Skim Latihan 1Malaysia

SOGT Sabah Oil-Gas Terminal

SSGP Sabah-Sarawak Gas Pipeline

SSI Special Scheme Inspection

STAR Supplier Tracking Assessment Rating

TA Turnaround

TOR Terms of Reference

TPA Third Party Access

TSET Tanjung Sulong Export Terminal

TSR Total Shareholders’ Return

TTS Technical Trade Specialist

UNGP United Nations Guiding Principles

WACC Weighted Average Cost of Capital

WP Work Process

Y-o-Y Year-on-year

ZeTo PETRONAS Zero Tolerance


Glossary

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No. of Ordinary Shares Held

CDS Account No.

I/We NRIC/Passport No./Company No.: (Full Name In Block Letters)

of Telephone No.: (Full Address)

being a member of PETRONAS Gas Berhad (“the Company”) hereby appoint:

Full Name (in Block Letters) Proportion of Shareholdings

NRIC/Passport No. No. of Shares %

Address

and/or (delete as appropriate)

Full Name (in Block Letters) Proportion of Shareholdings

NRIC/Passport No. No. of Shares %

Address

or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the 37th Annual General Meeting of the Company to be held at The Majestic Ballroom, Level 2, The Majestic Hotel Kuala Lumpur, 5, Jalan Sultan Hishamuddin, 50000 Kuala Lumpur, Malaysia on Thursday, 25 June 2020 at 10.00 a.m. and at any adjournment thereof.

Resolution Ordinary Business For Against

1 Re-election of Dato’ Ab. Halim Mohyiddin as a Director

2 Re-election of Emeliana Dallan Rice-Oxley as a Director

3 Re-election of Adif Zulkifli as a Director

4 Re-election of Marina Md Taib as a Director

5 Directors’ Fees and Allowances of up to RM2,600,000 with effect from 26 June 2020 until the next Annual General Meeting of the Company payable to Non-Executive Directors

6 Re-appointment of KPMG PLT as Auditors of the Company

Note:* Please refer to the Notice of Annual General Meeting for full details of the proposed Resolutions.

(Please indicate with an “X” in the spaces provided whether you wish your vote to be cast for or against the Resolutions. In the absence of specific directions, your proxy will vote or abstain as he/she thinks fit)

Date: 2020. Signature/Common Seal of Shareholders

PETRONAS Gas Berhad Reg No. 198301006447 (101671-H)

Proxy Formfor the 37th Annual General Meeting

FOLD HERE

FOLD HERE

AFFIXSTAMPHERE

NOTES:

Proxy and/or Authorised Representative

1. A member of the Company entitled to attend, participate, speak and vote at the meeting may appoint not more than two proxies to attend and vote on his behalf provided that the member specifies the proportion of the member’s shareholdings to be represented by each proxy. There shall be no restriction as to the qualification of the proxy.

2. Where a member of the Company is an Authorised Nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (SICDA), it may appoint at least one proxy in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said Securities accounts.

3. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for the multiple beneficial owners in one Securities Account (omnibus account), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account if holds.

4. Where a member or the authorised nominee appoints two proxies, or where an Exempt Authorised Nominee appoints two or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.

5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under seal or under the hand of an officer or attorney duly authorised. The appointment of a proxy may be made in hard copy form or by electronic form. If the appointment is made in hard copy form, the Proxy Form must be deposited with Tricor Investor & Issuing House Services Sdn Bhd at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia or the Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or alternatively to submit the electronic Proxy Form via TIIH Online at https://tiih.online not less than 48 hours before the time fixed for holding the meeting. Please refer to the Annexure of the Proxy Form in the Administrative Details for submission of electronic Proxy Form.

6. If the Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If the Proxy Form is signed by an attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with this Proxy Form.

TRICOR INVESTOR & ISSUING HOUSE SERVICES SDN BHD

Unit 32-01, Level 32, Tower A

Vertical Business Suite, Avenue 3, Bangsar South

No. 8, Jalan Kerinchi, 59200 Kuala Lumpur

Malaysia

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