On 6 September 1974, Malaysia's then prime minister, Tun Abdul Razak, announced the appointment of Tengku Razaleigh Hamzah as chairman and chief executive of PETRONAS. Tun Razak said: "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. I have decided to appoint him as chairman and chief executive of PETRONAS, which is equivalent to being a cabinet Minister.".Subsequently, Razaleigh had to relinquish his job as Chairman of PERNAS which he held from 1970, but retained the chairmanship of Bank Bumiputra. Having created PETRONAS, the government had to choose what forms its dealings with private oil companies would take. Starting with its legal monopoly on oil and gas activities and resources, it had several options: it could simply award concessions without taking part in production, management, or profits; it could try offering services at the supply end; or it could make contracts to cover profit-sharing, production-sharing, joint ventures-sharing both profits and costs-or all stages of the process, under "carried-interest" contracts. PETRONAS' first move was to negotiate the replacement of the leases granted to Royal DutchlShell on Borneo and to Esso in the Peninsula with production-sharing contracts, which have been the favoured instrument, alongside joint ventures, ever since. These first contracts came into effect in 1976. Allowing for royalties to both federal and state governments, and for cost recovery arrangements, they laid down that the remainder would go 70% to PETRONAS and 30% to the foreign company. Esso began oil production in two offshore fields in 1978, exporting its share of the supply, unlike PETRONAS, whose share was consumed within the country