Effective Social and Human Rights Risks Management in Upstream Oil and Gas from a Malaysian Perspective

Abstract For decades, the oil and gas industry has grappled with the perception of being a significant contributor to social and human rights risks stemming from its operations. However, in recent times, there has been a noticeable uptick in stakeholder and shareholder awareness, compelling oil and gas entities to showcase a commitment to safe and sustainable practices. Against the backdrop of the Malaysian government's encouragement to leverage the nation's oil and gas resources for added value, PETRONAS Carigali Sdn. Bhd (PCSB), as a Petroleum Arrangement Contractor (PAC), is steadfast in its endeavor to effectively manage all associated risks. While various aspects of risk management are routinely addressed, the management of social and human rights risks often remains overlooked. Recognizing the significance of this aspect, both regulators and businesses are taking proactive measures to ensure adherence to the United Nations Guiding Principles on Business and Human Rights (UNGP-BHR)i. This manuscript aims to illustrate the collaborative efforts between the Malaysian Petroleum Management (MPM) as the regulatory authority and PCSB as the service provider in bolstering effective social and human rights risk management practices. Central to this discourse is the role and strategic actions undertaken by the Social Performance (SP) team in navigating the regulatory landscape and mitigating social and human rights risks. A holistic approach to risk management is advocated, encompassing identification, assessment, mitigation, and systematic tracking to closure. From a regulatory standpoint, emphasis is placed on the incorporation of human rights considerations into PETRONAS Governing Standard for Malaysia Petroleum Operations (GSMPO) alongside the standardization of procedures to facilitate uniformity among Malaysian service providers. PCSB, in demonstrating its commitment to respect human rights, aligns its approach with relevant Malaysian laws, PETRONAS Technical Standards (PTS), and Guidelines, all while adhering to PETRONAS’ sustainability principles aimed at fostering positive social impact. To ensure the continuity of these efforts, PETRONAS has embarked on digitalizing the conduct of Social Risk Assessment (SRA) as part of the HSE Integrated Risk Assessment (HIRA), enabling seamless tracking and closure of identified risks across all PETRONAS Operating Units (OPUs), including PCSB.