INTERNATIONAL BACCALAUREATE

EXTENDED ESSAY
ECONOMICS
TITLE:
To what extent has PETRONAS
Petroleum Integrated Complex
(PPIC) ensured sustainable
development of Kerteh,
Terengganu?

CANDIDATE NAME

: HASSIM, MOHD FAIZ

CANDIDATE NUMBER

: 000592 133

CENTRE

: MARA COLLEGE BANTING,

42700 BANTING,
SELANGOR DARUL EHSAN.

NUMBER OF WORDS

: 3994 words

NUMBER OF PAGES

: 74 pages

United Nation Environment Programmes Executive Director Klaus Toepfer:

Industry is a key partner for sustainable development. We rely on industry, not

only for reducing the environmental impacts of the products and services it
provides us with, we also increasingly depend upon industry for the innovative
and entrepreneurial skills that are needed to help meet sustainability
challenges.1

1 Taken from Class of 2006: Industry Report Cards on environment and social
responsibility (UNEP, 2006)

Triple Bottom Line highlighted in Royal Dutch Shell 2000 CSR Obligations Reports:

Excellent environmental performance is meaningless if no wealth is created.

Wealth in a destroyed environment is equally senseless.
No matter how wealthy, a society fundamentally lacking in social equity cannot
be sustained.2

2 Taken from Royal Dutch Shell 2000 Community Service Responsibility

Obligations Reports

Abstract
Kerteh once a sleepy fishing village has transformed economically into a city of oil after
the discovery of petroleum and natural gas. In 2002, PETRONAS Petroleum Integrated
Complex (PPIC) was commissioned, housing for world-scale petroleum-based manufacturing
facilities. The aim of this research was to investigate the integrated world-class complex as
key partner in sustainable development. Hence, the research question is To what extent has
PETRONAS Petroleum Integrated Complex (PPIC) ensured sustainable development of
Kerteh, Terengganu?
The areas of investigation were branched into three main components namely
economically viable, socially responsible and environmentally compatible to ensure
sustainable development. The theoretical framework proposed was derived from various
sustainable indicators and sustainability framework practised by oil and gas companies
globally. Certain modifications were made relevant to scope research. However, due to
limitation of data and word limits, not all economic criteria were presented.
The sustainability practises implemented by PPIC in balancing commercial,
environment and social objectives were analyzed to determine the impact on sustainable
development of Kerteh. Various sources were used to obtain data and statistics. Primary data
were obtained from interviews with six relevant authorities, surveys distributed to 150
respondents in Kerteh and based on own observation through visits. Secondary data were
collected from government agency and department websites, annual reports and published
materials.
Through critical analysis, it is discovered that PETRONAS Petroleum Integrated
Complex has ensured sustainable development of Kerteh to be economically viable, socially
responsible and environmentally compatible. However, the net welfare gain by stakeholders
in Kerteh might not be as high as expected due to welfare loss in environmental degradation
especially deterioration of mangrove ecosystem and greenhouse gases emission. Hence, more
initiatives should be taken in balancing all three components of sustainable development in
Kerteh without focusing only on maximizing profits in short term.
(295 words)
Table of Contents

1.
2.
3.
4.
5.
6.

Introduction..................................................................................................................1
1.1
Topic justification..............................................................................................1
1.2
Scope of research justification...........................................................................2
Objectives......................................................................................................................3
Hypothesis.....................................................................................................................3
Theoretical Framework...............................................................................................4
Methodology.................................................................................................................6
Results and Evaluations...............................................................................................7
6.1
Economically viable..........................................................................................7
6.1.1 Gross Domestic Output..........................................................................7
6.1.2 Infrastructure and utilities....................................................................12
6.1.3 Preparation for the future.....................................................................14
6.2

6.3

6.4

Socially Responsible.......................................................................................17
6.2.1 Societal Needs......................................................................................17
6.2.2 Education and Training........................................................................18
6.2.3 Employment and Income Distribution.................................................21
Environmentally Compatible........................................................................25
6.3.1 Air Quality............................................................................................25
6.3.2 Water Quality.......................................................................................28
6.3.3 Odour Concerns....................................................................................30
6.3.4 Greenhouse Gases Emissions...............................................................30
6.3.5 Biodiversity..........................................................................................31
Balancing Economic, Social and Environment Dimensions.......................34

7.0

Limitations..................................................................................................................35

8.0

Conclusion...................................................................................................................36

9.0

Bibliography...............................................................................................................38

10.0

Table of Figures..........................................................................................................42

11.0

Appendixes..................................................................................................................43