In 1970, nearly half of Malaysians lived in poverty. Meanwhile, beneath their feet sat billions in oil wealth.

Shell had been drilling in Malaysia since 1910. Exxon controlled the contracts. Foreign companies extracted the oil, foreign shareholders captured most of the profits.

At the 2025 São Paulo Grand Prix, Kimi Antonelli crossed the line P2 for Mercedes F1, turquoise (Petronas green) blazing across the car.

Most Western F1 fans assume it's European, especially given the Mercedes partnership.

But Petronas is Malaysian. Fifty years ago, it started as a small team who'd never run an oil company.

Today, it's Malaysia's only Fortune Global 500 company with $76B ($343.6B MYR) in annual revenue.

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🌊 Foreign wealth, local poverty

In October 1973, oil prices quadrupled after the OPEC embargo, jumping from around $3 per barrel to over $11 by early 1974. For oil-producing nations, this was a windfall. But for a country like Malaysia, it was salt in a wound.

Shell had been drilling in Sarawak, Malaysia since 1910, and foreign companies controlled every barrel, every contract, every decision. Malaysian oil enriched Shell shareholders in London and Exxon executives in Texas.

But the very Malaysians who lived above the oil were still poor.

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🎯 The impossible mission

So, Malaysia decided to take back control of its oil.

They had to create a national oil company and make it work. But, how do you build an oil company when you don't know how to drill? How do you negotiate with giants when you have zero leverage?

Prime Minister Abdul Razak Hussein understood the stakes. Success would secure Malaysia's economic future. Failure would cement foreign control for another generation and destroy his political career in the process.

On August 17, 1974, Petronas was incorporated under the Petroleum Development Act with $2.2M ($10M MYR).

He needed someone to take on the job, and he turned to Malaysian Tengku Razaleigh Hamzah (just 37, a descendant of Kelantan royalty, known as "The People's Prince").

On September 6, Prime Minister Razak announced Razaleigh's appointment: "From among the new blood, I intended to bring Tengku Razaleigh into the Cabinet. However, I have an important job for him, a job as important as that of a Cabinet Minister."

On paper, Malaysia now owned its oil.

But owning its oil was just the beginning. Malaysia had no refineries, no drilling equipment, no trained engineers, and no idea how to get oil out of the ground.

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🏢 Small team, big mission

But with an official company and a mission, they could get started.

Petronas started in modest offices within the Prime Minister's Office complex on Jalan Raja Chulan with a small founding team. Most had government backgrounds in policy, administration, and planning. Almost none had touched an oil rig or read a seismic survey.

By mid-1975, they'd moved to an even smaller office. The space felt like it was shrinking as the pressure mounted.

Years later, Razaleigh would reflect on those early days: "We'd heard of national oil companies going down the tube thanks to incompetence, ignorance of market forces or because of greed and corruption. I needed good people to start with. The start is very important. If you start with a bad habit, you will end up with a bad habit."

Every morning brought the same anxiety: if we fail, Malaysia stays dependent forever.

Every decision carried impossible stakes.

Hire too many people too fast? We’ll burn through the budget. Move too slowly? Foreign companies might tighten their grip.

They were literally burning the midnight oil.

The team worked through weekends, skipped meals, took files home and studied foreign oil contracts late into the night. They were building something unprecedented in Southeast Asia (a national oil company that would actually operate independently).

And they had no blueprint.

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😤 The big guns

And the hardest part was convincing giants like Shell and Exxon to negotiate. The first meetings happened in Singapore and Kuala Lumpur through 1974 and 1975.

Exxon and Shell executives flew in decades of expertise and briefcases full of contracts from Venezuela to Saudi Arabia, with experience negotiating with kings to corporations.

Across the table sat Razaleigh's team of government bureaucrats, a handful of engineers, and basically zero oil field experience among them.

Shell and Exxon came to the table as a courtesy. They had no intention of giving ground. Why would they? They held all the technical knowledge, operated the rigs, had the capital, the expertise, the relationships.

Petronas had a new law and a lot of nerve.

Foreign oil giants refused to negotiate seriously. According to later accounts, they treated the fledgling company's negotiators as inexperienced novices due to their limited technical expertise.

Completely out of their depth, and not worth serious discussion. Then they packed up their briefcases and walked out.

For Razaleigh's team, the humiliation stung for days. But it also ignited something. Fine. We'll learn, master this, and you’ll see us get it done.

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⏰ The line in the sand

Razaleigh made a decision that could save Malaysia or end his career (and possibly trigger an economic crisis).

In early 1975, Petronas served formal notice to all foreign oil companies operating in Malaysian waters: starting April 1, 1975, any company drilling without a signed agreement with Petronas would be operating illegally. Full stop.

It was the ultimate game of chicken. If Shell and Exxon called the bluff and walked away, Malaysia would own oil it couldn't extract. Production would halt, revenue would disappear, the economy would stagger. Razaleigh would be blamed for gambling away Malaysia's future on pride.

Razaleigh's hardline, nationalistic stance reportedly irked foreign oil companies; later accounts say some firms lobbied Prime Minister Hussein Onn to remove Razaleigh as Petronas chairman. The pressure was immense.

But if Petronas backed down now (like extending the deadline or softening the terms), every future negotiation wouldn’t be taken seriously. Foreign companies would know Malaysia would always blink first.

April 1, 1975 arrived. Razaleigh waited, his team waited, and Malaysia waited. Shell and Exxon didn't sign.

Days turned into weeks, and weeks into months. Would today be the day Shell announced they were abandoning Malaysian operations? Every cabinet meeting brought pointed questions, and the newspapers questioned Razaleigh’s judgment.

For Razaleigh personally, the stakes couldn't have been higher.

He'd given up his chairmanship of PERNAS (the government's flagship investment arm) and staked his entire political future on Petronas. Even at the office, staff questioned whether the gamble would pay off. In cabinet meetings, ministers demanded answers.

The silence was excruciating. Was the gamble working or collapsing?

Then, in November 1976 (nineteen months after the deadline), Shell signed the first Production Sharing Contract, and Exxon followed shortly after.

Through sheer determination and patience, and months of silence that could have ended in disaster, Petronas had won the right to Malaysia's oil.

But this was another new beginning, just like when they finally owned Malaysian oil. Having the legal right to drill and actually knowing how to extract oil were two very different problems.

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🛢️ What’s the deal

Razaleigh wanted more than just for Shell and Exxon to acknowledge Malaysian sovereignty. He wanted to build a company that could eventually operate without them.

That meant solving an impossible puzzle: how do you get foreign companies to share their most valuable asset (technical knowledge) when they have every incentive to keep you dependent?

His answer was the Production Sharing Contract (PSC). Today, it's studied in business schools worldwide. In 1976, it was completely untested.

The PSCs gave foreign companies cost recovery, while the Malaysian government received royalties and Petronas took the majority share of profit oil.

The exact terms varied by field, but the structure consistently favored Malaysian control and revenue.

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🎓 The hidden school

The PSC wasn’t your typical deal. It was also learning program disguised as a business contract.

Foreign companies were required to do all the technical work and take all the operational risk, but they had to do it in partnership with Petronas, under Petronas oversight, with Petronas engineers involved throughout the process.

Shell and Exxon got enough profit to keep drilling. Petronas got control, the majority of revenue, and something more valuable than immediate profit: access to decades of operational expertise.

The PSC solved three problems simultaneously: control (Malaysia owned its oil), cash (immediate revenue to the government), and capability (Petronas engineers learning from the best in the business).

Petronas had negotiated access to the classroom. Now came the hardest part: actually learning the subject.

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🚢 Selling oil they couldn't extract

On September 1, 1975, Petronas made its first export shipment: 358,000 barrels to Japan. This happened fourteen months before Shell signed the first PSC.

Petronas was selling oil they technically didn't yet control and certainly couldn't extract themselves. It was bold and bordering on reckless.

By June 1976, Petronas had committed to supplying 8,000 to 10,000 barrels daily to the Philippines. They were making promises to foreign customers while still negotiating with the companies that actually knew how to get the oil out of the ground.

Why take such a risk? Two reasons.

First, customer commitments created urgency. Shell and Exxon knew Petronas had buyers waiting. Walking away would mean losing Malaysian operations entirely.

Second, export revenue helped prove Petronas could be commercially viable. They needed cash flow to build legitimacy.

But it was a knife's edge. If the PSC negotiations had collapsed, Petronas would have faced angry customers, empty promises, and national humiliation.

They were learning their first lesson in building a company from nothing: sometimes you have to sell before you're ready because promises force you to figure out delivery.

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🏗️ Building their own experts

Signing PSCs with Shell and Exxon solved the immediate problem.

Oil was flowing, revenue was coming in. But Razaleigh understood the deeper game. If Petronas engineers only learned by watching foreign companies, Malaysia would be dependent for decades.

They needed their own operational capability, fast.

In 1978, Petronas formed Petronas Carigali, a subsidiary focused specifically on exploration and production. It started with zero technical capability (just ambition and a mandate to learn).

Three years later, in 1981, Petronas established INSTEP (Institut Teknologi Petroleum PETRONAS) to systematically train fresh graduates.

The approach was comprehensive: theory in classrooms, hands-on practice in workshops, and real on-the-job training at operating plants.

But classroom training wasn't enough. Petronas needed their engineers working on actual operations with actual stakes. So they sent engineers to work directly with Shell and Exxon through various secondment and attachment programs.

Not as observers, but as working engineers on active drilling operations. Young Petronas engineers worked on real offshore rigs, handled actual drilling equipment, and participated in live decision-making.

They learned how Shell engineers approached reservoir management and saw how Exxon teams coordinated complex offshore operations. Knowledge transfer at industrial scale.

By 2014, INSTEP had built the world's first fully integrated Upstream Downstream Training Plant.

$55M ($250M MYR) worth of facilities that replicated actual oil and gas operations. Over the years, INSTEP has supported a technical workforce of about 130,000 people across Petronas and non-Petronas operations.

That foundation of skilled human capital became Petronas's most valuable asset.

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⚡ Flying solo

In the early 1980s, several years after Petronas's founding, came the moment that proved everything was working.

Petronas Carigali discovered the Dulang oilfield (130 kilometers off Terengganu in challenging offshore conditions).

This wasn't a joint venture where Shell did the hard work or foreign companies making the decisions while Petronas watched. This was Petronas operating independently, with their geologists reading the seismic data, their engineers making the drilling decisions, their teams running the platform.

Finally, the Malaysian engineers could prove that they could do what Shell and Exxon said was impossible back in 1975: operate oil fields competently without foreign guidance.

Production began in 1991, marking a key step forward in Petronas Carigali's offshore exploration activities. The Dulang field spans about 24km by 3.5km at water depths of about 76 meters. They were no longer watching from the sidelines or taking notes.

They were drilling, managing reservoirs, running complex operations. And they were darn good at it.

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🌏 Full circle

In 1991, seventeen years after Shell dismissed them, Petronas secured its first major international venture with offshore blocks in Vietnam.

From watching others drill in 1976 to teaching Vietnamese engineers how to operate oil fields in 1991, it was clear that they’ve leveled up. From being rookies who knew nothing, Petronas now showed that they could lead and teach.

Petronas began running operations in foreign countries, training foreign engineers, sharing the expertise they'd built through years of disciplined learning.

Today, Petronas operates in over 20 countries across multiple continents.

Since 1974, Petronas has paid $117B ($529B MYR) to the Malaysian government, becoming one of the nation's largest revenue contributors.

Petronas directly funded thousands of educational scholarships, helping build Malaysia's technical workforce.

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🏙️ The world's tallest

In 1998, twin towers of glass and steel piercing the Kuala Lumpur sky were officially declared the world's tallest buildings.

Standing 451.9 meters high, the Petronas Twin Towers became more than office space (they became a symbol of Malaysia's economic transformation and remain a key tourist attraction and landmark today).

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📊 Petronas today

Fifty years after its founding, Petronas operates in over 20 countries with a significant global presence.

The company reported $76B ($343.6B MYR) in revenue for the 2023 financial year and $18B ($80.7B MYR) in profit after tax. That year, Petronas contributed $8.8B ($40B MYR) in dividends to the government.

Beyond oil exploration, Petronas has shaped entire industries within its supply chain.

New service providers have emerged to meet demands in oil exploration, refining, logistics and retail, creating thousands of direct and indirect jobs across the sector.

In 1970, Malaysians lived above billions in oil wealth they couldn't access.

Fifty years later, that oil funds schools, hospitals, and scholarships across the nation. Petronas didn't just extract oil. It extracted knowledge first.

That's what earned them the right to everything that followed.