When the brightest and sharpest come

together nothing is impossible

Operational Discipline Key to

Business Excellence & Sustainability

Downstream Asia 2010

27th 29th OCTOBER 2010

2010 PETROLIAM NASIONAL BERHAD (PETRONAS)

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Agenda

Journey to achieve Operational

Excellence
Development of Operational
Excellence Framework
Approach to institutionalise
operational standards
Targets
Conclusion

What is Operational Discipline?

Back to Basics
Consistently & diligently
deploying all the basic
practices
Perseverance in perfecting
and internalising the simple
practices

Plant Operations is one amongst selected institutional

capabilities to be enhanced to achieve High Performing
Capability-Driven Organisation
2010/15
DESIRED STATE

2002/03
STARTING POINT

PETRONAS has not yet succeeded in

extracting full operational stand-alone
and synergy values
Gap between PETRONAS and the
benchmark companies
Inadequate distinctive capabilities
necessary to compete and enhance
portfolio value internationally
Gap in talent pool and leaders bench

Implementation of
Capability
Development Plan with
Plant Operations as
one of 9 institutional
capabilities

High Performing
Capability-Driven
Organisation

High proficiencies in all 9

Institutional capabilities to
distinctive and competitive
levels

Capabilities are embedded in

the organisation to be reliable,
repeatable and replicable

Superior performing assets and

operations capability

Previously, PETRONAS did not have a common plant

operations framework / standards

PETRONAS Penapisan
Melaka Sdn. Bhd.

Ethylene /
Polyethylene Malaysia
Sdn. Bhd.

All OPUs have their own plant

operating standards partly
due to different technology /
joint venture partners
Sharing of knowledge and best
practices but not consistently
captured or documented

Malaysia Liquefied
Natural Gas

PETRONAS Gas Berhad

OPUs have to spend valuable

time and resources to redevelop
similar operating processes
As a result, target setting are
inconsistent and may not yield
the desired outcome

ASEAN Bintulu
Fertilisers Sdn. Bhd
Upstream

PETRONAS has taken steps to embark on its own journey to

achieve plant Operational Excellence
Operating Performance Improvement (OPI)
Plant Operation Capability
Standards (POCS)
Integrated Plant
Operation Capability
System (iPOCS)
Recognised the need
for Group-wide KPIs,
tools, and standards
for Plant Operations
Capability
Focused only on
addressing
performance gaps
Need to emphasise
on institutionalising
systems and
capability standards

Source: iPOCS Team

Plant Operations
Capability Standards
(POCS) was developed to
institutionalise systems
and capabilities to sustain
superior plant
performance
POCS cover six capability
elements that are
important for plants to
deliver superior
performance
All PETRONAS operating
units were assessed and
common group-wide gaps
were identified

Enhanced the POCS

framework into a
comprehensive system of
codified best practices,
systems, process and tools
Integrated Plant
Operations Capability
System (iPOCS )
iPOCS covers 6 capabilities
(4 Technical Governance
capabilities and 2
Optimization capabilities)
essential to facilitate
sustainable Operational
Excellence

PETRONAS
ENDORSED

The PETRONAS
Operational Excellence
(OE) framework
iPOCS (integrated Plant
Operations Capability
System) as the
governance system for all
PETRONAS Plants
The target for all plants
to achieve a
COMPETITIVE rating in
Plant Operations
Capability by end
FY2011/12
The iPOCS deployment
approach and way
forward
6

Key focus areas to be a high performing capabilitydriven

Organisation through Operational Excellence

Key Focus Areas

Define a framework for Operational Excellence to create and extract full
operational stand alone and synergy values among PETRONAS Plants
Create a common framework to realise Operational Excellence by providing
clear expectations, direction, aspirations and targets to be achieved to
improve PETRONAS portfolio value
Ensure efforts are deployed effectively to result in best-in-class performing
assets
Clear linkages between practices / work efforts and performance results
which enables opportunities and gaps to be easily identified and closed

Creating a sense of urgency and performance drive culture to accelerate

capability building and stay among the 1st quartile in the industry
7

Operational Excellence in PETRONAS encompasses

measurement of performance in 5 key premises

HSE
There is a pervasive HSE culture, where our people feel
safe to work in any facilities

Production

Our operations are continuously improved and optimised based

on best practices

Production
Production
Production focused and reliable

Operational
Excellence

Technical Capability
Our people demonstrate high levels of proficiency in their various
disciplines and are competent and capable of delivering results

Cost
We produce at optimal cost without comprising on quality

Asset Reliability & Integrity

Our assets are safeguarded and integrity is assured such that
the risk of failure has been reduced to as low as reasonably
practicable
8

Achievement of Operational Excellence is supported

collectively by the integrated Plant Operating System
(iPOCS )

iPOCS defines the standards for management in the areas of

Technical Governance and Plant Optimisation as follows:

Technical Governance
HSE
Physical Assets
Production & Hydrocarbon
Technical Capability

Plant Optimisation
Business Process
Cost & Yield

Note: There are a total of 29 standards supporting the capability areas

above
9

iPOCS is the governance system for PETRONAS,

providing a holistic and sustainable approach to
plant operations
Technical Governance : Defines the minimum standards that shall
be complied with to assure sustainability in operating performance
Optimisation : Defines the systems which when implemented will
facilitate optimised operations of the plants

Production
Production
Production focused and reliable

Operational
Excellence

Systematic way to identify, collect and codify best practices

processes and tools to build Reliable, Repeatable and Replicable
(3R) practices

A standardised methodology to assess compliance and

effectiveness of implementation

Operational
Excellence

The PETRONAS WAY A group wide common language and

approach for operating plants
10

A structured and comprehensive approach has been

developed to ensure the institutionalisation and smooth
delivery of iPOCS
The integrated Operational Excellence delivery model connects and aligns the activities
within GTS and OPUs in a structured manner to systematically deploy iPOCS

Define
Develop systems,
tools and
processes

Measure
OE Reports
Benchmarking

Improve
Using key metrics to
measure and
benchmark
performance

Standards
Management
System
Guidelines
Tools

Assess
Situational
Assessment
Ad-hoc Reviews

Management Control

Situational
assessments/reviews to
identify gaps, confirm
root cause and identify
solutions

Adopt best
practices and
develop
competencies
through
structured peerassist
mechanism
Gap Closure

iPOCS Assessment

Compliance assessment for governance and gap closure recommendation

Change Management

Communication

Enablement

Ownership

Engage leadership, create awareness

and promote ownership at all levels to effect consistent implementation
11

A structured and comprehensive approach has been

developed to ensure the institutionalisation and smooth
delivery of iPOCS
The integrated Operational Excellence delivery model connects and aligns the activities
within GTS and OPUs in a structured manner to systematically deploy iPOCS

Define
Develop systems,
tools and
processes

Measure
OE Reports

Benchmarking

Using key metrics to

measure and
benchmark
performance

Standards
Management
System
Guidelines
Tools

Assess
Situational
Assessment
Ad-hoc Reviews

Situational
assessments/reviews to
identify gaps, confirm
root cause and identify
solutions

Management Control

Improve
Adopt best
practices and
develop
competencies
through
structured peerassist
mechanism
Gap Closure

iPOCS Assessment

Compliance assessment for governance and gap closure recommendation

Change Management

Communication

Enablement

Ownership

Engage leadership, create awareness

and promote ownership at all levels to effect consistent implementation
12

A structured and comprehensive approach has been

developed to ensure the institutionalisation and smooth
delivery of iPOCS
The integrated Operational Excellence delivery model connects and aligns the activities
within GTS and OPUs in a structured manner to systematically deploy iPOCS

Define
Develop systems,
tools and
processes

Measure
OE Reports

Benchmarking

Using key metrics to

measure and
benchmark
performance

Standards
Management
System
Guidelines
Tools

Assess
Situational
Assessment
Ad-hoc Reviews

Situational
assessments/reviews to
identify gaps, confirm
root cause and identify
solutions

Management Control

Improve
Adopt best
practices and
develop
competencies
through
structured peerassist
mechanism
Gap Closure

iPOCS Assessment

Compliance assessment for governance and gap closure recommendation

Change Management

Communication

Enablement

Ownership

Engage leadership, create awareness

and promote ownership at all levels to effect consistent implementation
13

A structured and comprehensive approach has been

developed to ensure the institutionalisation and smooth
delivery of iPOCS
The integrated Operational Excellence delivery model connects and aligns the activities
within GTS and OPUs in a structured manner to systematically deploy iPOCS

Define
Develop systems,
tools and
processes

Measure
OE Reports

Benchmarking

Using key metrics to

measure and
benchmark
performance

Standards
Management
System
Guidelines
Tools

Assess
Situational
Assessment
Ad-hoc Reviews

Situational
assessments/reviews to
identify gaps, confirm
root cause and identify
solutions

Management Control

Improve
Adopt best
practices and
develop
competencies
through
structured peerassist
mechanism
Gap Closure

iPOCS Assessment

Compliance assessment for governance and gap closure recommendation

Change Management

Communication

Enablement

Ownership

Engage leadership, create awareness

and promote ownership at all levels to effect consistent implementation
14

A structured and comprehensive approach has been

developed to ensure the institutionalisation and smooth
delivery of iPOCS
The integrated Operational Excellence delivery model connects and aligns the activities
within GTS and OPUs in a structured manner to systematically deploy iPOCS

Define
Develop systems,
tools and
processes

Measure
OE Reports

Benchmarking

Using key metrics to

measure and
benchmark
performance

Standards
Management
System
Guidelines
Tools

Assess
Situational
Assessment
Ad-hoc Reviews

Situational
assessments/reviews to
identify gaps, confirm
root cause and identify
solutions

Management Control

Improve
Adopt best
practices and
develop
competencies
through
structured peerassist
mechanism
Gap Closure

iPOCS Assessment

Compliance assessment for governance and gap closure recommendation

Change Management

Communication

Enablement

Ownership

Engage leadership, create awareness

and promote ownership at all levels to effect consistent implementation
15

A structured and comprehensive approach has been

developed to ensure the institutionalisation and smooth
delivery of iPOCS
The integrated Operational Excellence delivery model connects and aligns the activities
within GTS and OPUs in a structured manner to systematically deploy iPOCS

Define
Develop systems,
tools and
processes

Measure
OE Reports

Benchmarking

Using key metrics to

measure and
benchmark
performance

Standards
Management
System
Guidelines
Tools

Assess
Situational
Assessment
Ad-hoc Reviews

Situational
assessments/reviews to
identify gaps, confirm
root cause and identify
solutions

Management Control

Improve
Adopt best
practices and
develop
competencies
through
structured peerassist
mechanism
Gap Closure

iPOCS Assessment

Compliance assessment for governance and gap closure recommendation

Change Management

Communication

Enablement

Ownership

Engage leadership, create awareness

and promote ownership at all levels to effect consistent implementation
16

A structured and comprehensive approach has been

developed to ensure the institutionalisation and smooth
delivery of iPOCS
The integrated Operational Excellence delivery model connects and aligns the activities
within GTS and OPUs in a structured manner to systematically deploy iPOCS

Define
Develop systems,
tools and
processes

Measure
OE Reports

Benchmarking

Using key metrics to

measure and
benchmark
performance

Standards
Management
System
Guidelines
Tools

Assess
Situational
Assessment
Ad-hoc Reviews

Situational
assessments/reviews to
identify gaps, confirm
root cause and identify
solutions

Management Control

Improve
Adopt best
practices and
develop
competencies
through
structured peerassist
mechanism
Gap Closure

iPOCS Assessment

Compliance assessment for governance and gap closure recommendation

Change Management

Communication

Enablement

Ownership

Engage leadership, create awareness

and promote ownership at all levels to effect consistent implementation
17

Elements of the Physical Asset Management pillar has been

deployed following the integrated delivery model
Selected Instruments for
Physical Asset Management to deliver value to the OPUs

Define
Develop systems, tools and
processes

The Suite of Physical Asset

Management Framework

Measure
Using key metrics to measure
and benchmark performance

Maintenance Management
Performance Scorecard

Assess
Situational assessments/reviews
to identify gaps, confirm root
cause and identify solutions

Guidelines and best practices as reference

(RIMS, Maintenance Mgt, TA Mgt & Materials
& Inventory Mgt)
Minimum requirements to ensure
sustainability of plant performance

The Maintenance Management Performance

Scorecard provides standardised
performance metrics for maintenance across
OPUs
Single reporting platform for benchmarking
through the PETRONAS Maintenance
Management System (PMMS)
Specific capability gaps identified through the
Maintenance Effectiveness Reviews (MER)
for continuous improvement towards
excellence

Maintenance Effectiveness
Review
18

Embrace iPOCS in PETRONASs journey to achieve

Operational Excellence

All plants must achieve COMPETITIVE level rating in

Plant Operations Capability by the end of FY 2011/12, a
revised target from FY 08/09.
For new plants, they must achieve FAIR rating in Plant
Operations Capability within three (3) years and
COMPETITIVE level within five (5) years.
iPOCS assessments shall be conducted once every
three (3) years for all plants.

19

Conclusion

Strong corporate level

endorsement and commitment to
instill operational discipline is
vital to effect operational control
on all Business Units

A structured and disciplined

implementation of an Operational
Excellence framework is required
to achieve and sustain business
excellence
A number of PETRONAS plants
have already achieved world
class levels in plant performance
through rigorous implementation
of operating standards
20

Thank you
21

Any Questions?

22