Jun 21, 2008

Petronas -- A victim of its own success

Morning bloggers. I must add this opinion that i extract from The Star related to Petronas. I honestly think that Petronas shall not be influence by any political policy & also against the call by political leaders about Petronas having to report with the Parliement.

Enough is enough. Do we malaysian want to se our beloved oil company end up like state government own water concession or like other GLC. Petronas is a unique company with quite a number of dedicated staff which cannot be touch for the sake of future gerations on malaysian to come.

MUCH has been bandied recently in the press about Petronas and it would appear that in a rather unfair way Petronas has been a victim of its own success.
Having worked in Petronas in the 80s through the mid-90s, I think I am in a position to offer certain insights about Petronas.

First, if Petronas was not formed way back in 1974, petroleum resources in this country would have ended up in the same current state of affairs as timber i.e. in the control of the respective state governments.

Why has it not dawned upon any politician or NGO to question what has happened to or, more pertinently, who have been the beneficiaries of timber revenues? Why is there no similar call for transparency on the accounts of the state governments or their statutory agencies entrusted with regulating or managing the timber resources, which are also the assets of the rakyat?
Secondly, with the ownership and management of all petroleum resources consolidated under a company, not a statutory agency, the former Prime Minister Tun Razak created the opportunity for Petronas to be run as a business by professionals. And this was well before the privatisation era of Tun Dr Mahathir.

This opportunity was not fully exploited in the formative years of Petronas as its management and staff were on the learning curve in understanding the oil business and dealing with the multi-national oil companies. With the entry of Tan Sri Azizan in the mid-80s and subsequently Tan Sri Hassan Marican, that opportunity was exploited and, as we now know, with much ensuing success.

Having worked through those earlier formative years of Petronas, I wish to highlight that the public ought to realise that it has taken a lot of hard work for Petronas to be now accepted by the oil majors as a company they can and wish to do business with, in particular outside Malaysia.
By the same token, just like any professionally managed company, there are certain confidential information and trade secrets that Petronas cannot divulge without adverse impact on its own business.

Most importantly, I must on behalf of all right-thinking Malaysians salute Tun Razak for his wisdom and temerity to push through the resistance of certain states, in particular Sabah, to consolidate the ownership of petroleum resources in this country under Petronas.
Look at how difficult it is today to deal with the consolidation of management of inter-state water utilisation, water being another state-owned resource like timber.

Without Petronas, we could have ended up not quite differently from the timber situation and the petroleum resources would selectively produce some individual oil barons in oil-producing states, not unlike our timber tycoons.

K H LIM,Petaling Jaya. comments

Jun 18, 2008

Petronas Staff Speaks-- Other Perspektif

I've received an explanation by petronas staff on how they fell at the moment especially against allegation to Petronas.. Please spare your thoughts on how they feel.

Dear all, After reading all the chain mai ls and blogs, I feel called to reply, because of the relentless attacks and allegations -- most of which are inaccurate or baseless -- against


1) The salaries paid to PETRONAS' employees are not as high as people think. At best, they are just industry average. And these are not attractive enough for some who left PETRONAS to find work at other companies ( mai nly from the Middle East ) which are willing to pay more. Why do they pay more? The oil and gas industry worldwide has been facing acute shortage of qualified or experienced personnel, so most companies are willing to pay lots of money to entice and pinch staff from their competitors.Bonus? There has NEVER been a bonus amounting to 6 months or 12 months throughout the 33 years. On average, it is 2 months. But don't ever think we don't deserve it. We more than deserve it. A lot of us work really hard, some in the most extreme of conditions. Those who have been to and worked in northern Sudan , for example, would testify that it's like working in a huge blower oven. Southern Sudan , on the other hand, is almost all swamps and mud. Imagine having to go through that kind of heat, or waddling in muddy swamps, day in and day out.


2) Malaysia produces about 600,000 barrels of crude oil per day (and about 100,000 barrels condensate). Of this crude volume, 339,000 barrels are refined locally for local consumption. The rest is exported (and yes, because it has lower sulphur content it fetches higher prices).Malaysia also imports about 230,000 barrels of crude oil per day, mai nly from the Middle East , to be refined here. This crude oil contains higher sulphur and is less expensive (so the country gains more by exporting our crudes). In Malaysia , this crude is processed by PETRONAS at its second refinery in Melaka, and also by Shell at its Port Dickson refinery.Different refineries are built and configurated to refine different types of crude. And each crude type yields different percentage of products (diesel, gasoline, kerosene, cooking gas etc) per barrel. But most importantly, products that come out at the end of the refining process have the same good quality regardless of the crude types. That's why PETRONAS, Shell and Exxon Mobil share the same pipeline to transport the finished products from their refineries to a distribution centre in the Klang Valley . The three companies collect the products at this centre accordingly to be distributed to their respective distribution networks. What makes PETRONAS' petrol different from Shell's, for example, is the additive that each company adds.


3) A lot of people also do not understand the role and function of PETRONAS, which is essentially a company, a business entity, which operates on a commercial manner, to mai nly generate income and value for its shareholder. In this case, PETRONAS' shareholder is the Government. In 1974, when PETRONAS was set up, the Government gave PETRONAS RM10 million (peanuts, right?) as seed capital. From 1974 to 2007, PETRONAS made RM570 billion in accumulated profits, and returned to the Government a total of RM335.7 billion. That is about 65% of the profits. That means for every RM1 that PETRONAS makes, 65 sen goes back to the Government.Last year, PETRONAS made a pre-tax profit of RM86.8 billion. The amount given back to the Government (in royalty, dividends, corporate income tax, petroleum products income tax and export duty) was RM52.3 billion. The rest of the profit was used to pay off minority interests and taxes in foreign countries (about RM7.8 billion - PETRONAS now operates in more than 30 countries), and the re mai ning RM26.7 billion was reinvested. The amount reinvested seems a lot, but the oil and gas industry is technology- and capital-intensive. Costs have gone up exponentially in the last couple of years. Previously, to drill a well, it cost about US$3 million; now it costs US$7 million. The use of rigs was US$200,000 a day a couple of years ago; now it costs US$600,000 a day. A lot of people also do not realise that the amount returned by PETRONAS to the Government makes up 35% of the Government's total annual income, to be used by the Government for expenditures, development, operations, and yes, for the various subsidies. That means for every RM1 the Government makes, 35 sen is contributed by PETRONAS. So, instead of asking what happens to PETRIONAS' money or profits, people should be questioning how the money paid by PETRONAS to the Government is allocated.


4) A lot of people also ask, why Malaysia exports its crude oil. Shouldn't we just stop exporting and sell at cheaper prices to local refiners? If Malaysia is an oil exporting country, why can't we sell petrol or diesel at cheaper prices like other oil producing countries in the Middle East ?I guess I don't have to answer the first couple of questions. It's simple economics, and crude oil is a global commodity.Why can't we sell petrol and diesel at lower prices like in the Middle East ? Well, comparing Saudi Arabia and other big producers to Malaysia is like comparing kurma to durian, because these Middle Eastern countries have much, much, much bigger oil and gas reserves.Malaysia has only 5.4 billion barrels of oil reserves, and about 89 trillion cubic feet of gas. Compare that to Saudi Arabia 's 260 billion barrels of oil and 240 trillion cubic feet of gas. Malaysia only produces 600,000 barrels per day of oil. Saudi Arabia produces 9 million barrels per day. At this rate, Saudi Arabia 's crude oil sales revenue could amount to US$1.2 billion per day! At this rate, it can practically afford almost everything -- free education, healthcare, etc, and subsidies -- for its people.But if we look at these countries closely, they have in the past few years started to come up with policies and strategies designed to prolong their reserves and diversify their income bases. In this sense, Malaysia (and PETRONAS) has had a good head start, as we have been doing this a long time.Fuel prices in Malaysia is controlled by the Government based on a formula under the Automatic Pricing Mechanism introduced more than a couple of decades ago. It is under this mechanism that the complex calculation of prices is made, based on the actual cost of petrol or diesel, the operating costs, margin for dealers, margin for retail oil companies (including PETRONAS Dagangan Bhd) and the balancing number of duty or subsidy. No retail oil companies or dealers actually make money from the hike of the fuel prices. Oil companies pay for the products at market prices, but have to sell low, so the Government reimburses the difference -- thus subsidy.Subsidy as a concept is OK as long as it benefits the really deserving segment of the population. But there has to be a limit to how much and how long the Government should bear and sustain subsidy. An environment where prices are kept artificially low indefinitely will not do anyone any good. That's why countries like Indonesia are more pro-active in removing subsidies. Even Vietnam (which is a socialist country, by the way) is selling fuel at market prices.


5) I feel I also need to say something on the allegation that PETRONAS is not transparent in terms of its accounts, business transactions etc.PETRONAS is first and foremost a company, operating under the rules and regulations of the authorities including the Registrar of Companies, and the Securities Commission and Bursa Malaysia for its listed four subsidiaries (PETRONAS Dagangan Bhd, PETRONAS Gas Bhd, MISC Bhd and KLCC Property Holdings Bhd.PETRONAS the holding company produces annual reports which are made to whomever wants them, and are distributed to many parties and places; including to the library at the Parliament House for perusal and reading pleasure of all Yang Berhormat MPs (if they care to read). PETRONAS also makes the annual report available on its website, for those who bother to look. The accounts are duly audited. The website also contains a lot of useful information, if people really care to find out. Although PETRONAS is not listed on Bursa Malaysia , for all intents and purposes, it could be considered a listed entity as its bonds and financial papers are traded overseas. This requires scrutiny from investors, and from rating agencies such as Standard & Poor and Moody's.


6) The last time I checked, this is still a democratic country, where people are free to spend their money wherever they like. For those who like to see more of the money that they spend go back to the local economy and benefiting their fellow Malaysians, perhaps they should consider sticking to local products or companies. For those who like to see that the money they spend go back to foreign shareholders of the foreign companies overseas, they should continue buying foreign products.


I'm sorry this is rather long, but I just have to convey it. I hope this would help some of you out there understand something. The oil and gas industry, apart from being very capital intensive, is also very complex and volatile. I'm learning new things almost every single day.Appreciate if you could help to forward this response to as many contacts as possible to counter the subversive proposal out there. Thank you. comments

Jun 12, 2008

What the Singaporean Says

I was in Singapore for few days for business purpose. Within that few days I've use 4 Taxi's for travelling purposes. Most of the time i will take that opportunity to let say talk a.k.a interview them regarding any issues.

Among the words that still in my mind are..

Taxi 1 (Airport-Hotel)
Fuel & Malaysia:-
- "Malaysian are being pampered to much, its about time malaysian government rid this subsidy. Only the rich people benefit with the subsidy"
- "Abdullah is not as smart as Mahathir. He is a burden to the country"
Opposition Singapore declare bankcrupt & Singapore story:-
- "Malaysia is lucky. At least they have strong opposition. In Singapore u will die if u become the opposition. Because the Lee family wont give you face. We also want opposition. But who can fight? , All declare bankcrupt. They will find fault in you untill u die."
- "I cannot say that Lee is smart. Its quite easy to manage Singapore because its small. Try let him rule state of Johor. It will be difficult for him."

Taxi2 (Hotel-Workplace)
Fuel :-
- "All political party is the same. Its a global effect nothing that malaysian government can do. Just that is it unpopular choice. What choice do they have. I think if the opposition rule also will be the same. Even here is also expensive. We taxi driver also dont dare to increase the price. We have to live with it or face the consequences.
Singapore Country:
-"Singapore is a Law country. Nobody fight. Or dare to fight because you might end up bankcrupt. No point. Just live with it".
-"Singapore is really smart. They always plans 10 year ahead. Do you know that fuel we bought 10 years in advance. It means that fuel now is actually the price purchase 10 years back.
Singapore plan 10 years in advance. In everything & anything."

Taxi 3 - (Workplace to Airport)
Fuel story :-
- "Why need subsidy, only the rich will use it largely. The poor does not benefit from it. Same like singapore.
Their opposition being declare bankrupt story :-
-"That guy is stupid. He know the government control everything why he try to fight. Its like throwing an egg to a rock. You cannot win. Even if u rich also will be declare bankcrupt if he tries to fight.
Singaporean & Government :-
-"Singaporean are very sellfish ppl. They dont care about others when they are rich. As long as they can live happily.
-"You are lucky to live in Malaysia. In singapore we work till we die. Example are like puchasing a apartment. You take loan for 30yrs for 200k apartment. And then after 20yrs the government will say that they want to demolish the house. At that time you still have money owing the goverment yet u need to buy a new house which wil cost you maybe 250k-300k.. You will end up living thru your entire life living to pay your debts. It never stops."
-"Taxi driver do not have EPF (i cant remember the term in singapore). So we need to really safe money"

Taxi 4 - (KLIA-House)
- "Itu demo tadak bagusla. Akan bg perspektif tak baik utk negara. Teksi effect jugak. Tapi itu naik minyak juga is to drastic. Mmg itu dunia harga minyak sudah naik. Ini teksi tak effect sgt. Sbb kita pakai NGV. Sekali isi penuh dalam 120km & RM 7-8.
Saya punya abg pun mau beli motor. Mmg org malaysia hidup mewah & senang. Jadi mmg terasa la itu minyak naik. Apa bole buat".
- "Sammy velu punya kawasan sebenarnya dia jaga betul2. Sudah ada university sudah ada kemajuan. Tapi dia silap. Dia ckp besar "Tentera turun pun takdak takut". Jadi semua org benci sama BN. Dia harap itu postal vote. Tapi semua tarak turun. Semua turun bangsar & Rembau. "
- "Kerajaan sama saja BN or PR. Itu janji2 pun tadak tunai. Rakyat pun bukan bodo. Boleh pikir." comments

Jun 7, 2008

Fuel Hike - The Poor Will Benefit Most..

Assalamulaikum & Selamat Pagi to all bloggers..

Biaq saya bg pendapat dr perspektif lain.. CUba fikir2kan..

Subsidi.. persoalannya siapa yg majoritinya benefit dr subsidi yg melampau dr Kerajaan.
Biar saya kupas sikit.

80% drpd kendaraan di malaysia ni kbykannya digunakan oleh org bandaq2 besar.. mcm KL, penang, alor setar dll.
70% dr org bandaq adalah org yg berpendapatan tinggi & sederhana..
70% dr org yg berpendapatan tinggi & sederhana adalah rakyat malaysia yg kebanyakannya kaya raya & pendapatan tinggi compare dgn org kampung.
70% dr yg kaya raya & berpendapatan tinggi adalah yg memakai adalah kereta mewah yg fuel consumptionnya tinggi. jadi siapa yg isi paling byk?

Jadi persoalannya sekarang.. siapa yg paling byk makan subsidi kerajaan (duit rakyat) ? sampai bila nak bagi kat mereka? adakah org2 miskin layak atau org2 bandar yg kaya raya patut diberi subsidi..
jadi kalaula congak cara saya yg kurang cerdik.. kalau cthlah 56billion subsidi sebelum ni..
maksudnya sebenarnya 70% dr 56billion dpt kat org yg tak layak dapat..
ada baiknya subsidi itu dichanel kepada org2 kg & miskin dgn cara yg lain bukan dr segi subsidi minyak..

mmg ada benarnya kenaikan harga minyak ini mengejutkan semua pihak. tapi saya rasakan ia perlu bagi mengelakkan subsidi jatuh ke tangan org yg tak selayaknya.. sampai bila nak harap subsidi.. Dato' Hassan merican pun dah berbunyi dgn nada yg tak sedap sbb rakyat menghentam Petronas (mungkin kwn2 petronas bole bg komen lebih lanjut kot)..

Tetapi perlunya kerajaan sedar duit potongan itu "mesti" dichannelkan subsidi kepada rakyat miskin dr segi :-
1- subsidi makanan (semua rakyat dapat)
2- subsidi baja dll..(org miskin / petani dpt kbykan org melayu)
3- pembangunan luar bandar.. (tak payah utk pembangunan dlm bandar lagi)
4- concentrate kat sabah sarawak dr segi bantuan.. (kbykan org bumiputera miskin)

Kepada semua bloggers .. jgnla politikkan semua isu.. Kalau betul kerajaan PR prihatin kepada rakyat bglah rebat kepada rakyat negeri sendiri demi mengurangkan beban kenaikan harga minyak.. cth rebat mcm hapuskan cukai pintu ka bg free tambang feri, air free ka (selangor mcmana? dpt ke) dll yg bole kerajaan negeri tolong utk ringankan beban rakyat.. (kalau dah prihatin sgtla)..

Kata2 sinis sblm menutup isu:-
Org malaysia.. dah tau pendapatan tak seberapa beli kereta mewah (naikla moto ka, komuter ka)
Org malaysia.. dah tau duit tak seberapa tapi makan semua tempat hebat2 belaka. (belajaq2 la memasak, kurangkan makan luaq tak elok jugak utk kesihatan)
Org malaysia.. biaq papa asalkn bergaya.. (samalah dgn aku)
Org malaysia.. suka salahkan org lain tanpa menyalahkan diri sendiri (kena la belajaq cara menguruskan wang lepaih ni)
Org malaysia.. hutang keliling pinggang (credit card)
Org malaysia.. suka complain tapi takdak cadangan membina..

Wallaqwaqlam. .

p/s: cuba fikirkan.. masih teringat kata2 DSAI anwar nak tolong rakyat miskin.. saya fikir ini salah satu caranya.. DR Perspektif Lain.. comments