by Dr. Chen Man Hin
The latest jump in pump pricing by 42% has caused an upheaval in the economy and much unhappiness among motorists and the people. businesses are stalling, and there is undertainty about the future. the sudden severe rise has caused a social and economic earthquake.
The shocking increase was unnecesary, and here are the reasons why it was a bad mistake.
MARKED DISPARITY OF PUMP PRICES BETWEEN MALAYSIA AND OTHER OIL PRODUCING COUNTRIES.
Malaysia’s pump price should be equilvalent to pump prices in other oil producing countries, as for example:-
Saudi Arabia RM 0.38 per litre
UAE 1.19 / litre
Egypt 1.03 / litre
Bahrain 0.87
Qatar 0.68
Kuwait 0.67
Iran 0.35
Nigeria 0.32
Turkmenistan 0.25
Venezuela 0.16/litre
MALAYSIA 2.70/LITRE
COST OF PRODUCTION PER BARREL OF OIL
Statistics indicate that the production cost per barrel of oil for the above countries vary around US$ 4 per barrel. The world average is US$ 7 per barrel.
A barrel contains 44 gallons or 176 litres oil, which works out at US 2.27 cents per litre or 2.27 x 3.3 = 7.49 sen per litre.
As the production cost per litre is only 7.49 sen, it is beyond comprehension to see how the pump price could be raised astronomically to RM2.70 per litre.
There is no justification for pump price of petrol to be RM2.70 which is way above the price set in other oil producing countries in Middle East, Africa or South America.
This is an example of bad governance. Our natural resources should be used to help people and not to profit recklessly at their expense. Prime Minister Abdullah has a lot of explaining to do.
Petronas should be more transparent and be people frieidly.
Petronas is making huge sums of money. Tun Mahathir claims that Petronas made a profit of well over RM70 billion last year, and should therefore be able to keep down fuel prices instead of unreasonable price increases.
OIL PRODUCTION. Petronas produces 650,000 barrels of oil each day, out of which 250,000 barrels were for export and the balance of 450,000 barrels for domestic consumption.
At US$130 per barrel, less US$10 for production cost, profit per barrel would be US$120.
Estimated profit per year would be 250,000 x 120 x 365 x 3.3= RMR 36.1 billion
If we include profits from natural gas, investments in other countries, Petronas’s earnings would reach record levels.
PETRONAS WEALTH TO REDUCE SUFFERING OF THE PEOPLE INSTEAD OF RAISING OIL PRICES
The evidence is definitely against any increase of pump prices for Malaysians. Pump prices should return to a reasonable level – the same as in other oil producing countries.
Instead of spending money on subsidies for fuel, the funds should be used for the benefit of the people and marginalised poor with better schools, more hospitals for the sick and housing for the homeless.
PETRONAS TO REFORM
Since its inauguration in Parliament in mid seventies, its operations have been shrouded in secrecy. It is time for Petronas to be answerable to Parliament, to open its accounts to the people and to institute new policies for a healthy and vibrant industry.
#1 by AirJ on Wednesday, 18 June 2008 - 9:47 am
sj
I have no qualms if Petronas are to table its expenditures to Parliament etc – we have nothing to hide. However, do you really think Petronas should bare all its information to public? Come on, you know better than that. If we are trying to acquire a company, thinking of investing somewhere do you think our competitors won’t take note and gain advantage here? Whatever price we pay to operate in Sudan or Turkmenistan is very much a valuable secret MANY other companies would like to know. We will surely lose our competitive edge. Petronas is a first and foremost a business entity so our obligation is to make profit, period. Then whatever we had profited we give back to our shareholders, the Government. Is it still our faults if those money are not well spent? Is Petronas above the Government to dictate how and where the Government spends the money we give? Move to have your chosen MP or representative in the Board is a much better option wouldn’t it? Do that, work towards that.
I completely agree that the oils belong to the rakyat and we have a huge amanah on our shoulder trying to add value to this precious resources that God has given us but we are NOT the government. Please have that ingrained into your head. Even then we do more than our fair share of social obligation to the community. Why Petronas? Why not call for other GLCs to bare all?
Malaysian oil has been coming out from our land since early 1900. Only since Petronas formation has a huge chunk been returned back to Malaysia. The likes of Shell and Esso has reaped more than their fair share of oil and bring the profits back to their country for nearly 100 years!! How much oil money did you see 50 years ago? HELLO? Think man before you post, don’t make a complete idiocy of yourself. You think these companies give a rat-ass of Malaysian people well-being? Their obligation is to their shareholders, not rakyat of Malaysia. You think if we give all the contracts to them, they will pay each Malaysian RM1,000 directly like some kind of charity? You are more naive than a five-year old!
When I say about not politicising Petronas I mean don’t let MP meddle with the day-to-day business. If you understand business then you’d understand this statement. Why LGE gave some posts to Gerakan (now ex-Gerakan) person in Penang? Coz he is the best person to manage that company – no political sentiment, it’s purely business sense. Leave the business part to those who KNOW the business and KNOW how to run the business. As good as LGE is, he would be the first to admit he cannot run Petronas as good as current Petronas President. Learn the demise of Pertamina, a huge giant in OPEC once – due to meddling of politicians.
Lastly I’d have to say sometimes you have to put your emotions aside and think with your brain. I know it’s difficult times with all goods prices rising and people are angry. Channel that energy into a more positive and beneficial acts. Don’t equate Petronas with the government. We are not.
#2 by AirJ on Wednesday, 18 June 2008 - 10:00 am
taiking
that’s not entirely true. If I am not mistaken, if you find some valuable minerals/oil within 2 feet depth on your land, then it’s yours.
You are saying as if the oil belongs to YOU alone. You alone do not constitute Malaysia. I might have a different say on what should be done with the oil found. So would any Tom, Dick and Harry. Point is, if you ask the 26 million Malaysians, each of them will have their own say on what to be done with it. So what should you do then? Petronas is entrusted to take care of this resources. We have acquired the necessary skills and knowledge to do so. Are we the best people to it? Well, if you don’t think so, then you as a Malaysian have the right to vote for whichever party to become Government, whom in turn would appoint the correct or suitable people. That is the process.
I have never said Petronas should not be asked to do the right thing with the oil profits/money. I just said you have to understand Petronas jurisdiction. We HAVE to give the profits back to the Government as our shareholders. We have NO CONTROL on how the money given being spent. We cannot simply give the money directly to the people even if that is what we want to do. Please understand that.
#3 by rainbowseahorse on Wednesday, 18 June 2008 - 10:11 am
AirJ Says: “…Dont politicise Petronas. It contribute nearly 40% to Malaysia’s economy. Don’t let it die like Pertamina or otherwise we will all regret it”.
Dear Airj, we mean to tell us to leave Petronas entirely in the hands of the government, and not to politicise this issue?
OK, you do have a fair view of the situation, now I want to ask whether you really trust our government that much with the wealth of Petronas? As with any project left entirely in the hands of our government without due transparencies & accountability, how many more years do you think Petronas will survive past local oil reserves?? Then I have to ask you this: Tell me which has been a success story of a government entity project/company? Most of us know that anything the government managed to lay their crummy hands on, these projects/companies turned to big white elephants and the government goes no end in trumpeting their ‘successes’ while we know that it costs a fortune just to keep these projects going and the companies running. It’s the old “Style mimang mau, kalah tak apa!” mentality, plus of course, opportunities for gross corruption and mismanagement of government funds made available to these white elephants.
“…Petronas is much like the government’s – the pay is average. Typical Chinese grads who excel in their studies don’t want to join Petronas as the pay was not up to their likings. The likes of Shell & Esso & others pay better…”
Airj, you sound rather cautious there in your statement! I think you would like to say there is indeed racism n Petronas as almost ALL new trainees are Malay and that Chinese & Indians form maybe a 0.1 percent in Petronas’s work force mainly due to racism in Petronas. Salaries for Trainees & Junior staffs in Petronas is what would be expected in industries, but salaries for skilled and senior staffs are definitely below par compared to other oil players. So what does this tells you? Petronas is not being that smart nor wise in attracting and having well qualified staffs in the company. That would bring the question as to why this is being practiced in Petronas, wouldn’t it? To answer that would need some in-depth studies into the operating systems of Petronas which I won’t partake.
#4 by AirJ on Wednesday, 18 June 2008 - 11:19 am
rainbowseahorse
I was not cautious. I call it as it is. I had interviewed one chinese grad for an exec job. We asked him why he chose Petronas and would he stay long in Petronas (He had a very good academic credentials and his father has a successful family business). But he said he would want to join & stay so we hired him. He was a performer too and I had rewarded him with merits and was the top-ranked exec that I had. After a few year he got an offer somewhere else with hefty payrise and he left. I talked to him and he said the higher salary (more than 2 times) in the big factor.
That’s just the reality. If you had talked to insider you will know that many Petronas staff has left to join other oil companies, mainly in the middle-east. It’s the law of supply & demand. On the racist thing, I said it in my post. I said I will not deny racism exists in Petronas because in all probability it does but no more or no less than what exists in other companies dominated by Chinese. I hate it but it’s not a perfect world.
Do you have proof chinese grads applied to Petronas and was rejected based on race? I am just saying perhaps there are other reasons as to why there are not many chinese in Petronas or applying for Petronas. My money is on the average pay. It could be due to geography as most of the Petronas positions are in the East Coast of Malaysia and many chinese live on the West Coast. I can also say the same about ExxonMobil or Shell, can’t I?
Do I trust the Government to spend the money given correctly? I have answered that with my vote during recent GE. What do you think? Being native Terengganu with all the Wang Ehsan fracas :-) I am just saying here that it’s not fair to blame Petronas when it is not within our control on how to spend the profits generated from Petronas.
Corruptions are everywhere and it’s rife. To say that Petronas is free from corruption would probably be a lie but to my knowledge I can earnestly say that Petronas is one of the most efficient of all GLCs. If corruption is so rife in Petronas would we have been a Fortune 500 company? Bear in mind the size of Malaysia and oil reserves compared to other countries such as China, Brazil, Venezuela, Saudi Arabia, Nigeria etc. We are not in OPEC and yet our National Oil Company is among the top ten in the world. Says it all really. Even the Government by and large leaves us to conduct our business as we have been successful.
#5 by rainbowseahorse on Wednesday, 18 June 2008 - 12:13 pm
Airj,
Ok, you got your point there in saying what amounts to other races uses Petronas as a stepping stone and would not stay long due to the lower salaries structure. This is most probably the prime reason why there are so many more Malay Trainees then from other races because of this risk factor. I will not furnished proof of Chinese and Indians grads who applied to Petronas and was rejected based on race as this would entails too many complications. We know the reality and we shall just leave it at that.
No, you and I and the other ordinary Malaysians have no control and say over whatsoever and howsoever in Petronas spending. But your statement: “…not fair to blame Petronas when it is not within our control on how to spend the profits generated from Petronas.” intrigues me! Hmmm, this can be open to many interpretations as you, who is obviously a Petronas employee, is implying that Petronas has not much control on how to spend the profits generated from Petronas either. So please tell me, who does the controlling then? I guess it’s our PM, right?
Corruption is rife in our Malaysian society and indeed accepted facts of life. However this does not mean that we condone or like the practice. We Malaysians have placed so much hope and faith on Pak Lah to make good his 2004 election pledges, but he seem to have negate on those pledges. To give him credit, some attempts and inroads has been made, but hardly enough to have any significant impact.
You asked, “If corruption is so rife in Petronas would we have been a Fortune 500 company?”. Is the ranking based on assets, oil & gas reserves, investments, or the total financial strength of Petronas? I can see and know the blatant wastages and huge projects costs overruns in Petronas, and whilst these funds might not significantly impact upon Petronas bottom line for now due to their huge earnings from LNG and oil, in the years to come when LNG and oil becomes limited, then the acid test is on where Petronas would rank in Fortune 500. For now, 50 billion ringgit is not that much to Petronas as earnings are very much more than that. But, as we all know, history will eventually reveal the scale of those excesses and the impact on the fortunes of Petronas.
Do you really think that Petronas is that well managed?? I don’t think nor believe so. Time will tell!
#6 by sj on Wednesday, 18 June 2008 - 12:53 pm
“The likes of Shell and Esso has reaped more than their fair share of oil and bring the profits back to their country for nearly 100 years!! How much oil money did you see 50 years ago? HELLO? Think man before you post, don’t make a complete idiocy of yourself. You think these companies give a rat-ass of Malaysian people well-being? Their obligation is to their shareholders, not rakyat of Malaysia. You think if we give all the contracts to them, they will pay each Malaysian RM1,000 directly like some kind of charity? You are more naive than a five-year old!”
Shell and Esso has been reaping it for the pass 100 years in Malaysia was because Malaysia lack the technology, people and funds and was not even in the position to talk. SO therefore is another issue dont try and simply mix and match stuff around. Petronas owns all the field in Malaysia currently, other oil and gas company does not own anything except their own technology, people and profit sharing with Petronas. As far as I know, these company initially did not give a rat’s ass to people but they are slowly changing that. They are involved in charity work. The new way of managing a company is it must have social obligations to give back to the people. Of course they would use this opportunity to promote their company. Who wont. So to say that they completely ignore the people is not really painting the real picture here. Shell, and others at least have reputation of helping people. Does Petronas has that kind of reputation? Start asking yourself that. Besides your very own Petronas scholarship which people also view as a tool of discrimination what else do you have? Do you spearhead alternative energy initiative? Do you propose to have hybrid car imported? Do you help build schools? Do you give to the poor? Petronas is not known for that kind of reputation at all. What is well known and Petronas has a reputation for is, PIGGY BANK FOR THE PM OF MALAYSIA. So will people blame you and be angry at you guys for that? I would say absolutely.
I however do agree that maybe putting the representative of the people in the board in order to have some influence in the company to give back to the people. There is no check and balance there that is why corruption is so rampant.
“However, do you really think Petronas should bare all its information to public? Come on, you know better than that. If we are trying to acquire a company, thinking of investing somewhere do you think our competitors won’t take note and gain advantage here? Whatever price we pay to operate in Sudan or Turkmenistan is very much a valuable secret MANY other companies would like to know.”
I did not say bare all its information to the public until you lose competitive advantage. Stop twisting my words. I said they need to be scrutinised inside out in order to ensure there is no hanky panky going on. Again you said it yourself, they report to the goverment, if the goverment is corrupted and is strong arming Petronas to give them more cash why continue the dealings when the bussiness is illegal to begin with? There is no integrity in that. What DAP has been fighting for about Petronas showing out what dealings they have with the goverment is the thing here. We all want to know what happen to the money. Otherwise you and I wont having this conversation about corruption and price hike to begin with.
“Don’t equate Petronas with the government. We are not.”
MAKE A FREAKING MEDIA STATEMENT. CALL FOR A PRESS CONFERENCE AND TELL THIS TO THE PUBLIC DAMN IT. WHEN THE PM ANNOUNCED THE PRICE HIKE WHAT DID YOU PEOPLE DO? KEEP QUIET AND SAT BACK.
#7 by lakilompat on Wednesday, 18 June 2008 - 12:59 pm
THERE ARE MANY STUPID EXCUSE even in Multi national today?
THE SALES FOLKS LOAD THE SALES FORECAST, THE PLANNER LOAD ALL THE MATERIALS TO FULFILL THE SALES FORECAST IN THE SYSTEM. WELL, HOW STUPID IS IT TO BOAST SALES THIS WAY WITHOUT GETTING REAL CONCRETE PURCHASE ORDER. THIS IS A BUSINESS RISK BECOS AT THE END OF THE DAY, THERE MIGHT NOT BE REAL PURCHASE ORDER FROM CUSTOMER. ALL ARE JUST A SHAM, OR FALLACY.
#8 by limkamput on Wednesday, 18 June 2008 - 1:42 pm
“It contribute nearly 40% to Malaysia’s economy. Don’t let it die like Pertamina or otherwise we will all regret it”. Airj
hello, may i know where you get this from? contributing 40% to Malaysia economy? Please, contributing 40% to Federal Government revenue is very different from 40% of Malaysian economy.
#9 by limkamput on Wednesday, 18 June 2008 - 1:55 pm
There is no need to discuss long and wide. One said Petronas is not well managed or its fund have been abused by the Government. The other said no. To him, Petronas is Fortune 500 company, and unlike foreign oil companies who reap profits without caring much for the people at large, Petronas has been a responsible company for the general good of Malaysians.
We all want to know who is more right or who is less wrong. So, let open the books of Petronas, and from now on let Parliament scrutinise the operations of Petronas. How about it? When the going is good, it is difficult to detect fats and excesses.
#10 by lakilompat on Wednesday, 18 June 2008 - 1:56 pm
Looks like many ppl. has forgot abt. Project Perwaja steel, and MV Augusta. For each dollar we gain we lost twice that amount.
For each billion Petronas earn, we lost twice as much as that amount.
#11 by gundam on Wednesday, 18 June 2008 - 2:19 pm
petronas is dealing with oil, oil is a commodity.
it doesnt take a genius to run a company like tis.
wat is there to be so proud of jst by making it to the Fortune 500?
#12 by donng55 on Wednesday, 18 June 2008 - 2:54 pm
Hi folks
I must say I find Airj’s message – “Don’t equate Petronas with the government. We are not” – understandable and reasonable.
His big boss Petronas CEO Tan Sri Mohd Hassan Marican clearly explained to the nation last night live over television that “Petronas is subject to the control and direction of the Prime Minster under the Petroleum Development Act 1974 — WHICH WAS PASSED BY PARLIAMENT”.
The message is therefore very clear : Petronas will do what the PM asks of it under the 1974 Act; and any changes to be made to the way Petronas is run must first be approved by the PM who is responsible to the Parliament.
So you see, it is back to the MPs who we have voted for for enabling the government to continue to deny rakyat’s access to Petronas’ income and expense information. (To AirJ: Hope this will address your concerns that Petronas would be rendered less competitive should sensitive financial info be made public.)
And ultimately, it is back to us, yes all of us, for repeatedly voting in the MPs who genuflect and are suffered from herd-poisoning.
Thus, it is clear now who we should jump on and what we should do to set things right.
In the heat of our “Summer of discontent,” it is hoped that we remain calm and open-minded when engaged in public discourse such as this to avoid hurting feelings of others, especially those from other communities. I am of the view that AirJ is genuinely trying to share his views on the subject matter and we should welcome his input in a positive way.
I didn’t mean to make a speech here, but if it appeared to be so you have my apologies.
#13 by lakilompat on Wednesday, 18 June 2008 - 3:50 pm
dongg55 did made a point there. Well many donkeys are still mulling around for that lil piece of carrots govt. is guiding them.
#14 by ch on Wednesday, 18 June 2008 - 3:59 pm
Dear All,
We should not lose focus on the core subject of this blog and refrain from using expletives when providing/posting comment. I have been informed by a friend working in the US that Malaysia produces 751,800 barrel of oil per day with an average consumption of 501,000 barrel per day. Malaysia is also importing 278,600 barrels of oil per day from various sources and they are being blended into the locally produced oil. The blended products would then be introduced into the local market. However, one must be informed that Malaysia exports 611,200 barrel of oil per day to various destinations as well. From simple arithmetics, one will soon find out that Malaysia requires only 140,600 barrel of locally produced oil for its own consumption as the balance are being made up of the 278,600 barrel of oil imported into the country.
In short, Malaysia requires only 419,200 barrel of oil to produce 501,000 barrel for its local use i.e. 140,600 + 278,600 i.e. a blend ratio of 56% imports and 44% local produced to produce 501,000 barrel. It is also goes to show that the oil produced by Petronas is of higher quality hence the 81.29% export ratio vis-a-vis import of 55.60%. It is believed that Malaysia has a reserve of 3 billion barrel and would last for another 3,990 days or ten years if Petronas continues with the same pace as of now. Ten years is just a matter of two general elections.
However, we must pose several questions that I deemed pertinent viz:-
1) Has Petronas succesfully discover new oil fields after years of explorations?
2) If yes, are the 3 billion reserves included into the variations?,
3) CM Nik Aziz alleges that BN is trying very hard to conquer Kelantan in the last general election for its oil reserves. If this is true then I wonder if they are able to verify as to the amount of reserves in Kelantan would last? If the above 3 billion reserves are not inclusive of Kelantan then maybe Malaysia has a couple of more years before the wells dry up.
#15 by buyabest on Wednesday, 18 June 2008 - 9:58 pm
Dear all,
I just wonder how lack of economic knowledge all those readers are. Do all of you aware that by paying more and more subsidy, which mostly received by foreign company such as Shell, Exxon etc (Malaysian never appreciate local brand), will resulted very bad result in our long term economic performance. The government pay subsidy, those Company which received the money will bring it to their own country. Then, will weaken our ringgit value which subsequently increase import product’s price.
Do all of you learned any basic economic theory? Subsidy is a one off transaction that won’t bring any further benefit to our country. So, rather than increase the subsidy, it’s better for the government to spend the money by way of normal transaction – projects, educations etc. Why? In theory, every RM1 spend by the government will bring back approximately RM5 for our GDP (provided the money not flow out of the country). So, it’s a kind of investment for the future. What about subsidy? one off, once the government paid to foreign company, they send home the money and finish…
Since Pak Lah become PM and come out with the intention of “balance budget”, I already expected the development rate will slow down. At that time, people complaining about less project, termination of mega project and so on. So, the government splash cash and build up so called “mega project”. And now, people complaining about those project. Pity government, everything is wrong/incorrect move…
Increase in petrol price of RM0.78 per liter, people says it’s suppose to be piecemeal increment rather than jump up the price. Do people aware that every time petrol price increase, regardless the scale, will increase other price. If the government implement piecemeal increment, let say 5 stages, then for every stage of increase will resulted increase in price of others. Imagine, “roti canai” will normally increase for every time increase in petrol will cost us RM1.50 in mamak stall at the end of the piecemeal increment.
After all, not everything done by the government was wrong. I agreed that they make mistakes. Who don’t? For the assault made, please come out with evident. Even Mr Karpal Singh, a lawyer unable to prove any wrongdoing. If he got prove, I 100% believed he will bring it to the court, local or international. “cakap-cakap with out prove, everybody can lor…”
#16 by AirJ on Thursday, 19 June 2008 - 12:06 am
There are two companies, one is local and the other is foreign. Company A shareholders are local rakyat and the other foreign investors, who do you think have the people at heart? Ask Petronas staff why are they still in Petronas when they can jump ship and obtain better pay in other/foreign companies? Because we want to help OUR nation, we want to leave our legacy as Malaysians.
Sj
I am guessing you are from one of the foreign oil companies. Don’t say the likes of Shell and Esso contribute more towards the well being of Malaysia because it is just not true. How many thousands of students are getting education at University Petronas @ Tronoh? How many more students are being sponsored in Malaysia by Petronas, be it Secondary Schools or Universities? Many Petronas subsidiaries adopt one local school whereby they contribute by sponsoring the expenses, tutoring students (on their weekends), adopting a brother/sister to help their studies further and awarding their achievements. There are Petronas staff who holds free tutions at night to local kids. How many rumah anak yatim being helped, how many skilled Malaysians being trained/educated at our local Petroleum Institute in Terengganu?
Petronas was set-up to guard Malaysia’s interests in our natural resources. How do you think the previous PSC (production sharing contract) between Shell and Sarawak dulu? It’s ok for them to practically take all the oil away from us and benefited tremendously because we were not technologically astute back then? They used to be evil back then but they have since turned good? Put yourself in their position and tell me straight you wouldnt be tempted to wiggle a little bit into your account if you could “bend” the law/rule/contract a bit. They are business entity, not welfare company. Their business is to make money, more money for their shareholders. Name me one school Shell or Esso has built in Malaysia?
Look, I understand you are angry with the price increase. Dont you think I am not too? I also have children to feed, houses to pay etc etc and no, unfortunately we dont get discounts for petrol (I definitely think we should be hey…life is not about getting all things in your way). I truly believe many Petronas staff have sacrificed (either by not jumping ship to another well-paying company or working at the oil rig for 2 weeks not have the comfort of family or safeguarding Petronas projects under the 50 degC bake of Sudan sun with the sounds of guns from the tribal-fighting looming behind you) so that they can contribute to OUR nation. We dont ask for thank-yous, we dont ask for accolades but some people like you blame US for this? Now you can understand my little rage here my man.
If I can persuade my President to give each and everyone of us RM1,000 to alleviate our hardship, I would. If I can tell my President to reduce petrol price to 20 sen/liter, I would. Heck I would rob a bank and give the poor and needy people the money they crave to live-by but we are living in a world where there are rules and regulations. Not satisfied? Take it to your MPs/ADUNs and ask them to table the motion to Parliament. Yes, Petronas is the cash cow, the money spinning/making machine for the Government. Yours and mine, elected by you and me. If DAP were the Government, we would be glad to make more money and contribute the same because our responsibility is to the nation, not to BN, DAP, PKR or PAS or whatever. Blaming Petronas on how the Government spend is like putting the blame on the mother of a convict/criminal for giving birth to the person.
Rainbowseahorse
You are entitled to your own opinion as to whether Petronas is well run or not as do I and others. How many President/CEO have been changed at MAS? At TNB? At Telekom? At JBA? All these are GLCs. Yet for the past 15 yrs at Petronas helm remains one person, hasnt been replaced. It’s quite a feat for someone who doesnt seem to like politics a lot. FYI, there are several factors a company being rated in the Fortune500, total earnings, total assets, highest ROI or ROC to name a few major ones. Check out their websites to know more. For a few years Petronas remains the only one company from Malaysia in the Fortune500.
#17 by Ronson on Thursday, 19 June 2008 - 12:29 am
ch, your answers.
Exploration and Production
Malaysia’s proven oil reserves have declined in recent years, despite growth in E&P activities. Petronas and its various PSC partners have been most active exploring offshore areas, especially in deepwater zones that pose high operating costs and require substantial technical expertise. Despite several new projects that are set to come onstream in the next several years, EIA forecasts that Malaysia’s oil production will fall to 693,000 bbl/d in 2008, a 13 percent decrease from 2006 levels.
Malaysia’s new oil production projects include the Kikeh block, the country’s first deepwater oil and natural gas discovery. Field operator Murphy Oil expects initial production of 40,000 bbl/d in January 2008, ramping up to 120,000 bbl/d later in the year. The Shell-operated Gumusut/Kakap deepwater fields are scheduled to begin production in 2010, possibly reaching 150,000 bbl/d by 2011. Shell also expects to begin oil production at the deepwater Malikai field by 2012, although no production timetable is set.
In February 2007, Petronas started construction of the new Sabah Oil and Gas Terminal (SOGT), which will have a capacity to handle 300,000 bbl/d of oil and 1 Bcf/d of natural gas. The construction of the SOGT terminal has led many analysts to believe that new deepwater oil and natural gas production slated to come onstream over the next several years in Sabah will be destined for export markets.
Overseas E&P
In an effort to offset declining domestic oil reserves, Petronas has initiated several overseas E&P projects. At present, Petronas is invested in 29 countries, with an upstream component in 23 of these countries. Much of the company’s international involvement is conducted by its overseas investment arm, Petronas Carigali.
From http://www.eia.doe.gov/cabs/Malaysia/Oil.html
#18 by AirJ on Thursday, 19 June 2008 - 12:30 am
ch
fyi 1 barrel (bbl) of crude oil does not equate to 1 bbl of product. Malaysia’s crude is sweet (low in sulfur) and sells at better price (not twice but several dollars higher) than middleast’s sour crude. Crude oil is refined to LPG (C3 & C4), Naphtha (C5-C9), Kerosene, Diesel and Heavies. Naphtha in turn is upgraded to Reformate which form the base of Petrol. Petrol itself is a blend of several products such as MTBE, Alcohols, Alkyls, Naphtha and Butane. Depending on which type of crude is being distilled you get different percentages of above products so 1 bbl of crude oil does not equate to 1 bbl of petrol so simple arithmetic cannot be applied.
To answer your question, yes Petronas has discovered new fields but thus it’s getting harder and harder to do so. We are moving into deepwater exploration now to do it. The rate of findings is less than the rate of production, so in any way you see it the resources is dwindling. Even the notion that we are currently net exporter is not entirely true as for some products we need to import sometimes to fulfill local requirements. We are also trying to acquire reserves from overseas. However to do business with them is difficult. They normally questions why should we give the contract to explore to you when Shell & ExxonMobil have been around for a while and are more known. Here comes the reason why we are investing in F1. It has the biggest viewers in sport that can be connected to oil/petroleum. We have to make known of ourselves. For those in marketing you’d know the power of brands. You can easily see Shell and ExxonMobil logos in many F1 cars too. As for Kelantan case I am not involved in the study there so I dont know if there are a lot of reserves there. I’d like to think so being close proximity with Terengganu but I am not too sure. The thing is Malaysian laws are heavily favoring the Federal. Anything outside 1.5 km from the shore (I think) belongs to Federal and not the state. It’s the same reason why the oil discovered offshore of Terengganu belongs to Government and Trg gets back “Royalty” of 5% only. Who wrote and approve this law? That you have to ask MPs la kot. I have to bid good night to all as I need my rest. I’ll try to answer questions if there are any from you guys as best as I can tomorrow.
#19 by qookhoo on Thursday, 19 June 2008 - 1:12 am
Don’t you all see that AirJ is on Petronas payroll…
Keep on respond as “WE”…
“WE” = “Petronas” = “BN” milking cow… + malaysian money sucker…
Sorry for you to be defending such employer…
cheers…
#20 by cheng on soo on Thursday, 19 June 2008 - 10:42 am
AirJ
It is fair to compare Petronas with other big companies in other business..
a). Petronas hv practically no competitor to undercut the price of their product (petrol) to very low price (near zero profit, or even loss)).
b). Petrol business do hv risk, problems (less production, rising cost),yes, but if one add up all the cost of producing petrol, this cost is still far below selling price (even if it is only US$49 per barrel).
In short, it is one of the most profitable (if not the MOST) legal business that can be ! ppl in oil producing business are one of luckiest.
Work in off shore, under hot Sun?/, yes, but are U ppl not highly rewarded with big $$$ ??
#21 by cheng on soo on Thursday, 19 June 2008 - 10:42 am
Oh sorry, should be “It is NOT fair to compare….”
#22 by rainbowseahorse on Thursday, 19 June 2008 - 11:39 am
Looks like a battle of wits and views between corporate Petronas and the ordinary Rakyat.
Perhaps saudara Kasim would like to take a crack at this?
Godfather, any comments? Cheng on soo has already put in some of his thoughts. And me?? I shall have to get back to you later AirJ. You have all the figures of Petronas at your finger tips while we ordinary Rakyat have no access to Petronas books, remember? But I chuckle at your writing “..not jumping ship to another well-paying company or working at the oil rig for 2 weeks not have the comfort of family or safeguarding Petronas projects under the 50 degC bake of Sudan sun with the sounds of guns from the tribal-fighting looming behind you…” as you seem to imply that Petronas employees are the ONLY ones who works under very difficult & dangerous situation, and who sacrifices a lot for the sack of the nation. Well, like I said, I’ll have to get back to you later. Have to work for a living, you know!
#23 by AirJ on Thursday, 19 June 2008 - 12:26 pm
qookhoo
I thought I had made it absolutely clear that I work with Petronas, I never tried to hide it. What differentiate you and I? You also work right? You and your company also pay tax to the Government (BN or not it was you and me who voted for them). What makes me and Petronas sucker and you and your company not? If your company make billions of dollars and pay huge amount to tax to the Government can I blame you too?
cheng on soo
True the commodity being oil, it’s easier to have higher profit. Also true the current high price equates to higher profit but law of supply and demand prevail. We need equipment/technology etc to produce and sell oil. Once the supplier knows the price of oil is high, they mark up their prices. At the end of the day, it is the margin that counts. As good and large (more efficient yes?) as ExxonMobil is, the increase of profit from last year compared to this year is only USD 1 billion. Bear in mind price of oil nearly doubled (I think?) within the same period.
I did say compare to other National Oil Companies in the world who have more oil & gas reserves, Petronas is still in top ten. In some categories it is number 1 (Returns on Capital – ROC). We are lucky to be in this business? Yes, we thank God for that. We are rewarded for our hardship? Well I would say yes though some staff may disagree. It’s not that we are complaining on our remuneration (ok we do complain a bit). We only ask for consideration of our feelings. Are we different Malaysians just because we work with Petronas? Are we vile, scary, money-sucking mongrels because our company happens to pay high dividends to the BN Government?
rainbowseahorse
I am sorry if you misunderstood me. I never tried to imply that. I know there are other people who have far harder/dangerous jobs with less securities & remuneration than mine and for that I thank my God that I have this job. I am only saying why suddenly we are being treated like criminals/thieves and accused of so many things for something that we cannot even control? How would you feel if being put is same position? Bonus of 30 months, Salary of RM30k are some of the things being thrown around. Man, if I get that why do I ride KTM/LRT to work?
#24 by qookhoo on Thursday, 19 June 2008 - 12:57 pm
AirJ,
Firstly, I don’t work for a malaysian company. I’m just born & stay here. It’s a sad country, there is no competitiveness. Everything is just lay back, reminds me of NZ. If it’s not done today, maybe tomorrow or the day after.
Secondly, there is no regards for talent & knowledge worker in malaysia. This is why many people prefer to work aboard.
Lets all look into this equation;
Outflow of talents = sub standard talents leftover = lower wages = low earning power + higher cost of living + escalating economical pressure (better planned infrastructure + transparency + higher level of EQ + mentality) from neighboring country = “Rulers” + “BN” cronies need to increase “income + status” = increasing pricing of daily goods & kinds of the people = Petronas as the one of the tool…
There will be more to come from this current govt, as the “the change in hand” kicks in. The possibility of using “that the past PM, now I’m running the show, – SO, IT’S MY WAY OR THE HIGHWAY -”.
Lets not go into the highway yet, that’s another story…
cheers…
#25 by rainbowseahorse on Thursday, 19 June 2008 - 2:31 pm
AirJ, ok, for me it’s not a question of whether Petronas is better than the other foreign oil companies in Malaysia. If pitted against the other oil companies, I’ll stand by Petronas any time.
Without elaborating, corruption is rife in Petronas with many senior personnel becoming millionaires received from contractors and sub-contractors for expensive project works.
Petronas practice employment of contract staffs (as do the other oil companies) some of whom have been with Petronas for over ten years.
True that for the past 15 years, Petronas helm remains with one person and who has not been replaced. But to say “It’s quite a feat for someone who doesn’t seem to like politics a lot” leaves me with doubt over that statement as no Malaysian business, least of all Petronas, is untouched by politics. What we ordinary Rakyat wants to know is what Petronas, being the trustee of the nation’s immense oil wealth, do with all the profits? Yes, it’s all very well to tell us Rakyat that all the money is in good hands as they are well invested for our future generation and other reassurances. But the big question is, are these and will the profits be accountable to the people? If so, when and how can we know that our very tainted government, and Petronas top executives, are not siphoning off some of that profits for themselves? When billions are involved, it’s just too much to ask the people to “trust us, we know what we are doing!”.
Bear in mind that I am not saying that Petronas profits should be used up for the people as, Petronas being a business entity, reinvestments is very necessary. All I am saying is that there should be accountability and responsibility in Petronas business which belongs to all Malaysians. If our “elected” government cannot be trusted with money concern, how so with Petronas?
#26 by ch on Thursday, 19 June 2008 - 2:55 pm
Dear All,
This sounds more like it as we blog with facts and constructive comments.
#27 by lopez on Thursday, 19 June 2008 - 4:15 pm
how would it be like to a petronas sponsored student,
what is it like after graduation, how do they fair relative to the bolihlanf graduit.
Do you know once you get admitted , you are practically just like winning a lottery ticket, only differerence is that almost all of them cannot patronise lottery by their upbringing and they is not need to.
Your future is planned at the xpense of others,
study and get paid and get better pay after graduit and eve better if you in the right camp, even better if you excel acamedically, the list of hopes dont stop till you go six under.
Who owns and stays in those bungalows neighbhood, of course the business man and towkays, it is understandable he worked for it,
Among them also got salary man in the neighborhood, a handout parasite.
#28 by Kasim Amat on Thursday, 19 June 2008 - 6:34 pm
Saudara-saudari, cuba sabar sikit. Saya dapat rakyat perlu berfikir dengan baik-baik dan perlu berfikir dengan rasional . Memang benar harga petrol di negara-negara pengeluar minyak lain amat rendah jika dibanding dengan Malaysia. Tetapi kita mesti juga mengambil kira rizab atau simpanan minyak yang ada di negara-negara tersebut. Simpanan tersebut pula perlu dibahagikan dengan jumlah penduduk untuk mendapat simpanan minyak untuk setiap penduduk (per kapita). Negara-negara seperti Arab Saudi, Kuwait, UAE dan Qatar mempunyai simpanan per kapita yang cukup tinggi. Maknanya, rizab minyak mereka tidak akan habis, telaga minyak mereka tidak akan kering, dalam masa berpuluh-puluh atau mungkin sejauh seratus tahun akan datang. Dengan simpanan khazanah asli yang cukup banyak, kerajaan mereka boleh menggunakan sebahagian besar daripada keuntungan minyak mereka untuk memberi subsidi petrol kepada rakyatnya. Satu lagi perkara yang perlu difahami ialah jumlah minyak yang diekspot oleh negara-negara tersebut dan nisbah ekspot-impot minyak. Sekali lagi amat jelas bahawa bagi negara-negara tersebut, mereka ekspot lebih banyak minyak dari Malaysia dan mempunyai nisbah ekspot-impot yang lebih menguntungkan (senang kata ekspot mereka lebih besar dari import mereka) jika dibanding dengan Malaysia. Ini bermakna hasil pendapatan negara-negara tersebut daripada pasaran antarabangsa tentulah lebih tinggi dari Malaysia dan mereka mampu memberi subsidi yang begitu banyak.
Malaysia pula hanya mempunyai simpanan kecil yang dilaporkan akan habis pada tahun 2030. Kerajaan juga telah menganggarkan kemungkinan kita menjadi pengimpot-bersih minyak pada tahun 2014. Namun begitu, Petronas telah memberi amaran kemungkinan Negara menjadi pengimpot-bersih minyak pada tahun 2010 seandainya kadar pertumbuhan penggunaan minyak negara kekal pada tahap 4%. Sudah tentu dengan simpanan yang begitu terhad dan nisbah ekspot-impot yang kecil, amat tidak relevan untuk membandingkan Malaysia dengan negara-negara yang mempunyai rizab yang cukup besar dan mampu mempertahankan sumber emas hitam ini dalam jangkamasa yang jauh lebih lama lagi. Itulah sebab Malaysia tidak dapat dibandingkan dengan negara-negara pengeluar minyak yang lain. Tambahan pula, kos mencarigali minyak di kebanyakan negara-negara tersebut jauh lebih rendah daripada kos yang dihadapi oleh Petronas dan syarikat-syarikat lain yang mencari minyak di Malaysia. Memang benar, apabila harga minyak mentah di pasaran dunia naik, pendapatan Petronas juga meningkat. Tetapi pembaca perlu sedar bahawa pendapatan itu lain dari keuntungan dimana Petronas perlu juga menanggung kos operasi perniagaan terutamanya kos carigali dan pengeluaran yang semakin meningkat. Secara kasarnya, keuntungan itu adalah pendapatan tolak perbelanjaan atau kos. Baru-baru ini Ketua Pegawai Eksekutif Petronas, Tan Sri Hassan Merican, memberi tahu bahawa kos operasi termasuk kos cari gali dan produksi telah meningkat dengan begitu banyak. Ini sudah tentu akan memberi kesan kepada keuntungan Petronas walaupun harga minyak mentah telah naik. Sebagai contoh, dari tahun 2005 ke 2007, perbelanjaan modalnya (capital expenditure) meningkat tinggi dari USD1,426 juta atau 31.23% daripada USD4,566 juta kepada USD5,992 juta. Daripada pertambahan kos ini, carigali dan pengeluaran merupakan komponen terbesar dengan kenaikan sebanyak USD651 juta atau 45.65% daripada jumlah kenaikan kos perbelanjaan modal 2005-2007. Dalam suasana dimana kos operasi naik dengan begitu tinggi, kita tidak boleh mengandaikan bahawa keuntungan Petronas juga naik dengan mendadak.
Walaubagaimanapun, Petronas telah membuktikan bahawa apabila ia mendapat keutungan yang lebih dan kos operasi dapat dikawal, sumbangannya kepada Kerajaan juga naik. Contohnya pada bagi tahun kewangan berakhir pada 31 Mac 2007, Kumpulan Petronas telah menyumbang kepada Kerajaan sebanyak RM52.3 bilion atau 66.2% daripada jumlah keuntungan telah dibayar kepada Kerajaan.
Kita mesti ingat, walaupun pendapatan Kerajaan meningkat sebanyak 11.17% CAGR (Compounded Annual Growth Rate) dari 2002 ke 2007, perbelanjaan mengurus Kerajaan – yang merangkumi pembayaran segala subsidi – telah meningkat dengan kadar 12.52%. Ini bermakna pendapatan Kerajaan tidak meningkat dengan kadar yang sama dengan perbelanjaan mengurus. Jika tidak dikawal perbelanjaan mengurus dengan mengurangkan subsidi yang makin meningkat, jurang antara kadar peningkatan pendapatan Kerajaan dan perbelanjaan mengurus Kerajaan akan menjadi lebih besar. Ini bermakna defisit Kerajaan akan meningkat atau bajet pembangunan Kerajaan akan dikurangkan. Inilah pilihan yang dihadapi oleh Kerajaan BN dan mereka telah buat pilihan yang paling sesuai tentang cabaran-cabaran yang dihadapi oleh Petronas dan Kerajaan dalam iklim inflasi dunia semasa.
#29 by citizenwatch on Thursday, 19 June 2008 - 7:18 pm
With the ongoing polemic, let’s ponder on one thing. WHO GAINS FROM THE FUEL REBATE THE GOVT IS GIVING OUT? Please note that POS Malaysia is being given the responsibility to disburse the rebates and it gets commission for doing so. Pos Malaysia happens to be part of ECM LIBRA, associated with Khairy and Tingkat 4 young Turks. Seems like they get endless benefits from rakyats suffering!
#30 by lopez on Thursday, 19 June 2008 - 7:46 pm
I say man, unless those who can support their reference to the statistics quoted herein, and that the data and exercise is obtained and gathered by an independent party then might as well forget quoting them and pretend to be intelligent and a harvard or MBhair wannabe.
It just too much to compreghend…..stop lying we have been cheated and wrongly lead for 50 years of our lifes and our family’s too,
how can these be compensated…..all good words and voluntarily to repent wont do.
Is it change all just talk, well on the MSee air part, stop saying you represent the chinese communities, you did not and had not been but on that pretext has sold our rights, you are chosen by rahman not the chinese ppl in those times.
#31 by qookhoo on Thursday, 19 June 2008 - 11:27 pm
It seems that Kas Am has stunt double… (speaks fluent bahasa malaysia or bahasa melayu or bahasa baku)??
As long the reply is, it by a pro-petronas again…
cheers…
#32 by AirJ on Friday, 20 June 2008 - 11:15 am
qookhoo
sounds like you are already giving up on Malaysia..no? I do think there are many companies in Malaysia who are extremely competitive.
rainbowseahorse
personally i dont think corruption is rife in Petronas. Why? One person, the late Tan Sri Azizan, former President and Chairman of Petronas. If you knew him he was man of highest integrity. Due to this trait, he managed, steered and envisioned Petronas to the strive to always embody this stature. Uphold the integrity because without it you/your company would buckle, cease to be competitive.
If you do have accounts of any top brass going askew, you can lodge a report with Police or Hassan Marican. I can assure you your report will be treated with highest priority, at least within Petonas. I am not saying there is no corruption in Petronas but I’d like to think it’s not as high as people think there is. Like I said, the proof in hand is Petronas position within Fortune500 survey. Had corruption been rife in here, you can be sure we will not have this position. We would have crumbled a la Perwaja dulu lagi…
cheers
#33 by rainbowseahorse on Friday, 20 June 2008 - 3:37 pm
Yes, yes, and yes Airj!…You must be the ONLY Petronas employee who doe not know what I am saying.
Sure, report it to whoever and whomever you want…it doesn’t matter, but that’s what keeping Malaysian businesses going. And Petronas is no exception!
#34 by ShiokGuy on Friday, 20 June 2008 - 9:12 pm
Never Pump Full Tank..
The safety valve will return part of the petrol back to the sump. Is this true?
Also if you pump full tank, you are transporting petrol around town!
http://shiokguy.blogspot.com/2008/06/do-not-pump-full-tank-of-petrol.html
Shiok Guy
#35 by shamshul anuar on Monday, 23 June 2008 - 11:55 pm
Dear Dr Chen,
Yes Sir. The price of oil is cheaper in Saudsi Arabia or Venezuela. By the way, I am sure you know how much Saudi Arabia produces daily?
Approximately 9.5 million barrels daily. Malaysia produces 700000 daily. Domestic consumption is around 600000 barrels. Suddenly, I notice those who barely know anything about Petronas lashing the entity.
A scapegoat I can say for sure. If there is a mismanagement in Petronas, please explain how Petronas can be listed among 500 biggest companies in the world.
Someons said I maybe Kasim Amat. No I am not. But I admire that man for at least trying to defend Petronas, UMNO from baseless accusation from bloggers here. I am amused to see those who know nothing about oil industry or Petronas speak as if UMNO is milking Petronas for its own benefit.
Cant you believe that. I cant believe that people can be at that moronic level.
By the way, yes sir I am defending UMNO. What is wrong with that. Surely there is nothing wrong in defending UMNO if the accusation is ridiculous.
As for Lopez, perhaps you should try to remember at leat once that Petronas contributes to every Malaysian. Do remember that in its breathtaking university in Tronoh, Malaysians of all races study petroleum engineering.
Give some credit man. And for those who imply that Petronas is less than transparent, well prove it.
#36 by milduser on Friday, 27 June 2008 - 5:04 pm
Petronas is OK. It’s the government that requests and uses the money Petronas makes by means of royalties, dividends, taxes (direct & indirect), special fundings, loans, govt bonds, SPV and what have you that the government used to bail out failed GLC’s (such as BBMB, if you care to remember, etc).
#37 by lopez on Saturday, 28 June 2008 - 11:41 am
Transparency has somewhat a different meaning in bolihland, perhaps
it can start from Petronas or their supporters or agents.
It would be very entertaining to see when and what university in tronoh has done for all malaysians.
#38 by shamshul anuar on Sunday, 29 June 2008 - 12:09 am
Dear Lopez,
Just hold your breath. The university in Tronoh is a new one. Give it several years to produce the much needed talents .
As for Transparency, do tell me whether deep down in your heart, you believe that it can be listed among the biggest entities in the world for nothing .
As for milduser, plese proof what you said. If you said it is wrong for Govt to tax Petronas, please explain why.
#39 by ahbeng79 on Monday, 21 July 2008 - 10:34 pm
I think that whichever coalition that should rule this country should not interfere with Petronas’s, except to just using its returns (dividens and royalties,etc) for Malaysia, (development,etc).
The decisions Petronas has made for the past decades has been justified by its recent profit record. And only an experienced “oil-man” such as Tan Sri Hassan Merican knows how to weight risks and channel its revenues and into investments that will bring more profit to the company (and the goverment) in the future.
Petronas should be left on its own to grow and mature into a top oil and gas company like Shell, Exxon, etc without any political interference, and its returns to the goverment should be managed well.
It does not need to be transparently monitored in where its revenue are going to be invested or used. Making its account more transparent would be useless. A decade ago, we might have not agreed with Petronas’s decision to invest billions in Africa, but look how well that decision proved to be by the overseas revenues achieved. This is because of the work of proper risk analysis and decision making by experience people in the oil industry.
So why should Petronas’s account be anymore transparent. There is no added value. Would a more transparent account be more questionable? if so what questions do you want to ask?
howbout asking yourselves:-
1. If Petronas’s accounts were more transparent, would these billion dollar revenue decisions be made without being heavily questioned/disputed with political input/interest?
2. If Petronas’s was answerable to the Parliament, who do you think would have decided on Petronas’s course; the experienced people managing the company, or the politicians who know “nuts” about the oil industry.
Just let Petronas evolve to a private oil and gas company that is still own by the goverment, whoever that turns out to be ….but let it remain unpoliticised. The biggest company in Malaysia, should not be put under the spectacle of politics……