Malaysia’s oil drying up, Petronas told US envoys
(The Malaysian Insider) – Malaysia’s limited oil and gas reserves are running dry, spelling trouble for the government as it relies on national oil company Petronas for nearly half its revenue, said a leaked United States diplomatic cable.
According to the cable released by whistleblower website WikiLeaks, a Petronas board member admitted to US embassy officers here in 2008 that the company “feels tremendous pressure to grow its business in order to maintain Malaysia’s political status quo.”
“Petronas wants to stay insulated from politics but must comply with GOM (the government of Malaysia) policy,” Datuk Mohd Azhar Osman Khairuddin, now a vice president at Petronas, was quoted as saying in the cable published in full by the Malaysia Today news portal today.
“Azhar told us that Malaysian O&G reserves are not large and are running out soon. (Note: Conoco Philips Malaysia confirmed that without new discoveries, Malaysian oil production will decline at approximately 10 per cent per year, from 550,000 bpd in 2008 to roughly 490,000 bpd in 2009 and 450,000 bpd in 2010.)
“Azhar noted that revenues from Petronas accounted for 45 per cent of the GOM budget last year and stated that the GOM is over-reliant on Petronas to fund its operations,” said the document classified by the embassy’s then economic counsellor, Matt Matthews.
Petronas made a pre-tax profit of RM90.5 billion for the year ending March 31, 2011. On top of taxes, Petronas has been paying the government a dividend of RM30 billion since 2009, up from RM24 billion in 2008, RM20 billion in 2007, RM13 billion in 2006 and just RM9.1 billion in 2005.
However, a new proposal expected to take effect in 2013 will see dividends paid by the state-owned oil company fixed at 30 per cent of net profit.
According to the cable, Azhar said that Petronas wanted to invest in productive O&G assets to “promote future profitability rather than be spent now on domestic programmes for political gain.”
