Should Malaysia Liberalise Oil & Gase Sector?

Ensure All get to Share Oil, gas sector benefits ~ MCA Speaks

Article by Tan Sri Dr Fong Chan Onn (chairman of MCA's Institue of Strategic Analysis & Policy Reseach) seems like the oil & gas sector is under threat of progressing.

This the one of the sector in Malaysia which is not rationalise or open for liberalisation. In this sector also we can see lots of Bumi companies grows under the help or regulation of Petroleum Act & under strict Petronas rules. So the statement of saying "full benefit of the resources have not trickled down to all levels of society" is misleading. Probably Fong Chan Onn forget almost all the big players especially fabricator, mill manufacturers & steel importers owned by Chinese. Let me mention some. Some of the big fabricators & supplier like Wah Seong Engineering, Kinsteel, Lion Steel, Oilfab, Alpine manufacturing, An Joo (AP steel imported), Ji Kang & a lot more is owned by whom? All of these owned by Chinese businessman.

So don't tell me that the policy of Petronas & government is not giving other race opportunity to do business in Oil & Gase. All of us have a share. I think it is fair for O&G sector to prioritise Bumi's since all other sector already been conquered by others up to 90% market share (automotive, banking, retailing etc2). Yes, Petronas have implemented Bumiputera participation quota ranging from 50% to 70% not 100%. There're still areas that non-bumi's can have business with. What i can say is the quota have its positive effect at place now & future. Due to this factor there's a lot of professional bumi's have their places in international company & also trending of growing SME (contractors) in rural areas such as Bintulu, Paka & Miri.

FCO also says, with this quota in place it serves as a barrier to the overall growth & development of progress upstream & downstream. I dint understand what barrier he's talking about. Upstream & downstream industry is running well. At the moment there's no hiccups along the way. No complain of short of supply of manpower or oil companies complaining regarding the current contractors that they have. So far the overall growth have been great. With a lot of capable local companies stand up to the challenge & some of them goes beyond expectation. Let me mention some companies like Dayang, Petra, PFCE & others. Please do enlighten me what growth he's talking about.

To continue FCO also said that the barrier discourage the growth of talent pool of local experts. Come on-lah. Didn't he even read the statistic & the policy. By having the quota's will ensure all international company need to have at least 50-70% local entity which will definitely benefits the locals. Without having this policy we might end up like Singapore which majority of the workers are expectorate (for international company) & locals only fill in labour work positions (such as clerks, receptionist etc). And also despite all that, the O&G sector still booming & increasingly created Bumi skilled worker that works around the globe.

FCO also says that our O&G sector still lacking professional skill, skilled worker & manpower to cater the needs of the industry. He even quoted a new group of welder, drillers & oil engineers needed to satisfy the evolving need of O&G company. :) I think either FCO dint know or he's lack of information in O&G sector. Do not underestimate the policy that have created thousand of great Malaysian engineer, technicians, drillers & welders. Because of this policy I have friends working in big international company like Saipem, BP & even Shell overseas. These friends of mine hired due to their talents & not due to Petronas policy. In fact they excell by their own effort to successfully become professional in the international arena.

Come on-lah. The way he say it its like the Oil & Gas sector is fully conquered by Bumi's. This is among the only sector which survive liberalisation by Najib. As a conclusion i can say than FCO merely talks about abolishing the quota which is conquered by Bumi's. What i don't understand why O&G? It is because this is the only sector not conquered by them. Do a reseach & u'll find out that a handfull of other races also in the sector.

To the government & prime minister, one thing i can say is DON'T EVER plan to liberalise this sector which is the heart & soul of majority of Bumi economy. A pie need to be share with all the people. Despite all other cuts already conquered by others, let it be this pie owned by the bumi's.

P/s: Maybe Fong forget that Petronas is among 500 Fortune Company by being Bumi owned.

Read the Full Article here..

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Wang Ehsan ka Royalti? ~ Semua kami yg Punya (PAS Kelantan)

Menjawab soalan daripada MP PAS Kelantan baru-baru ini, Perdana Menteri Malaysia mengumumkan rakyat Kelantan akan diberi wang Ehsan hasil daripada minyak di persisir pantai Kelantan walaupun pada hakikatnya ia berada dibawah kerajaan pusat. Bermacam-macam 'feedback' diterima samaada menyokong @ menentang.

Seperti biasa, PAS dgn lantangnya melalui Husam Musa berkata dgn bongkaknya mewakili rakyat Kelantan mengatakan Kerajaan Negeri tidak mahu menerima wang ehsan tersebut. Pada saya apa masalahnya? Terima ajalah apa-apa bentuk wang. Lagipun Kerajaan Pusat telah berjanji & akan mengadakan perbincangan bersama ttg bagaimana wang tersebut bakal di salurkan ke rakyat Kelantan.

Cek setuju dgn pandangan Ibrahim Ali bahawa "Mana penting politik @ rakyat? Saya pilih kepentingan rakyat. Ia juga merupakan fokus utama Kerajaan Pusat iaitu mengutamakan rakyat". "Siapa dapat nama, pahala, pujian @ undian itu soal kedua, apa yg penting kebajikan rakyat diberi keutamaan" Haa... Inilah cakap-cakap wakil rakyat yg betul.

Kita tgk pulak ada kata Husam. "Kerajaan negeri akan melantik peguam bagi membuat kajian mungkin membatal hak carigali kepada Petronas yang ditandatangani pada 1975 sekiranya tuntutan royalti minyak tidak dipatuhi kerajaan pusat". Tu dia garang sungguh bahasa. Seperti macam cakap bagi duit tu pada kami Kerajaan Negeri. Pandai2 la kami belanjakan.

Bercakap macam senang sahaja. Tindakan undang2 terhadap kerajaan mahupun Petronas akan menemui jalan buntu. Sebab kalau idak dah lama Kelantan ambil tindakan undang-undang. Kenapa sekarang dituntut sedangkan Kerajaan Pusat bersetuju utk bagi wang ehsan? Kalau tak silap cekla, mengikut undang-undang 3 batu nautika daripada persisir pantai semua hasil galian adalah tertakluk dibawah pengurusan kerajaan Pusat. Jika kerajaan pusat nak bagi wang ehsan @ royalti adalah tertakluk kepada budi bicara kerajaan pusat. Itu mmg hak dia. Macam juga kalau dia nak bagi peruntukan lebih kepada Pulau Pinang atas World History Heritage.

Jadi mudah saja, kepada tak dapat apa baik dapat 'something'. Orang dah bagi pun syukur. Jadi takyah la dok mintak2. Takkan kelabu mata kot bila Najib umum wang ehsan. Al-maklumlah bila bab duit adik beradik pun boleh gaduh. Inikan pulak org politik. Nasihat cek drpd dok cakap merapu & mintak yg belum tentu dapat, maka terima sajalah apa Kerajaan Pusat nak bagi lepaih tu berbaik-baiklah. Lagipun yg untung org Kelate. Bukan org Kedah pun..

p/s: Tak pernah dgq undang2 kat dunia ni bila jumpa minyak di persisir pantai menjadi hak milik kerajaan negeri. (tapi kalau fakta ni salah tolong betulkan) comments

Research Octane Number: What is RON95?

You might have seen numbers like RON97 and RON92 at your neighborhood petrol station. Fuel with a RON97 rating is more expensive, RM1.92 per liter at time of writing with the lower RON92 rating going for RM1.88. Have you ever wondered what they mean? Why is RON97 more expensive than RON92, and can you use RON92 to save on fuel costs? Let’s have a discussion. What petrol do you use regularly, and why do you like your choice of petrol? Or are they all the same to you?

RON97, RON92, who is this RON person?

You might have seen numbers like RON97 and RON92 at your neighborhood petrol station. Fuel with a RON97 rating is more expensive, RM1.92 per liter at time of writing with the lower RON92 rating going for RM1.88. Have you ever wondered what they mean? Why is RON97 more expensive than RON92, and can you use RON92 to save on fuel costs?

RON stands for Research Octane Number, a rating used to measure a fuels knocking resistance in spark-ignition internal combustion engines. Before we attempt to understand this mumbo-jumbo, we have to know what knocking is. Knocking is what happens when parts or all of the air-fuel mixture prematurely ignites before the flame from the spark plug can reach it. This can be caused by ignition timing that is too early or engine overheating, where the heat from the cylinder itself causes the mixture to combust before the spark plug can burn the mixture. This causes a decrease in performance and might also harm the engine.

It is a misunderstanding to think that RON97 fuels produce more power than RON92 fuels, even more so with the fact that in reality a higher RON number means the fuel burns less easily! RON refers to the ability of the fuel to resist knocking and nothing else.

By pumping the RON97 into a car which engine only requires the RON92, all you’re going to get is an emptier wallet – that hardly counts for performance gains via weight reduction!

Engines are designed to have a minimum RON rating for its fuel. Do check your service manual for the minimum RON rating that it requires. For engines that require a minimum of RON92, you might as well pump RON92 fuel and save abit of money since RON92 is cheaper by 4 cents per liter.

Another common minimum RON rating is RON95, but since we do not have RON95 fuel in our market, we have to use RON97 fuel for the engine. These engines normally have higher compression ratios, like the one found in the Satria GTI so it needs higher knock resistance to withstand higher compression.

If you find that your engine can use RON92 petrol and decide to save abit of money, do check out if a petrol stations RON92 petrol is leaded or unleaded. All RON97 petrol is unleaded, but some RON92 petrol might be leaded although this is very very rare. Buy me a teh tarik with the money you save, thanks!

Sumber RON

More Article
Introducing RON95 a wise move: Chevron
Chevron product engineering specialist Greg Engeler

If a car is designed to run on RON95 but uses RON97, motorists will not get the advantage. And, if a car runs on RON97 and uses RON95, it is not a good thing either. It all comes back to using the fuel that the engine is designed to run.

"The big advantage in the longer term is that when we move to RON95 and when the country moves to Euro 2M specification, that will position Malaysia to follow the rest of the world, particularly Europe.

"And when we go down that track, it becomes much easier to accept the technology that is out there is able to give better performance, better knowledge and cleaner environment," he said.

Comments from Users ~ RON Users

O-P:-
The point is if your car have a minimum spec of RON-95 it means that the car was design to accomodate this spec of FUel. No need to pump for RON-97 fuel as it will have little effect on performance wise unless u pump a V-power formula.

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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.
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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

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
PETRONAS.

PETRONAS' STAFF SALARY & BONUS

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.

QUALITY OF CRUDE & REFINED PRODUCTS

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.

PETRONAS' ROLE, FUNCTION & CONTRIBUTION

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.

CRUDE EXPORTS & FUEL PRICES

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.

PETRONAS & TRANSPARENCY

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.

BOYCOTT PETRONAS?

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.

FINAL WORD (FOR TODAY)

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