Friday, June 13, 2008


LDP urges Petronas to be more transparent


A call was made for Petronas to be more transparent in its operation by providing all the facts and figures, especially the royalty payments given to the Government. Liberal Democratic Party (LDP) Api Api Division Secretary Dr Chang Sui Loong, who made the call yesterday, said that what the Second Finance Minister had stated in his explanation on the necessity to reduce Government oil subsidies can only confuse the people if the facts and figures did not provide the full picture of Petronas’ operation. Chang noted that according to the Government, last year, Petronas contributed RM48 billion to the Federal Government and RM4.14 billion to the State Governments in terms of royalty payments. This year, RM55.7 billion is expected for the Federal Government and RM6.2 billion for State Governments. Last year, the Government spent RM30.8 billion on subsidies. This year, the subsidy payout is estimated to more than double to RM65 billion based on oil price save raging USD125 per barrel. Chang said: “If the people can recall, crude oil price for most part of last year stayed at around USD60 per barrel. Now, it is around USD130 per barrel. In other words, crude oil price has surged by over 217 per cent in the last 12 months. “If Petronas’ production cost has been kept under control, the additional USD70 per barrel should be a clean profit for the Company. Given that oil price increases on a staggered basis this year, the average increase can be taken at say USD50 per barrel (83 per cent increase). “The Advisor of Petronas said in his blog that according to his estimate, Malaysia produces 650,000 barrels of crude oil per day, of which 250,000 barrels are for export. Thus, the total additional profit that can be earned from export for this year as a result of the price increase should be around USD4.56 billion or RM14.5 billion. (250,000 x USD 50 x 365 days). This additional profit coupled with the profit earned in the last three years which the Advisor claimed to be over USD70 billion should be about USD74.56 billion or RM238.6 billion. “Yet, the Second Finance Minister said he expected Petronas to only increase its contribution to RM55.7 billion (a mere increase of 16 per cent) in 2008. “Moreover, if the royalty rebate to the oil producing States can only increase by 49 per cent from RM4.14 billion to RM6.2 billion as estimated, it is inconsistent with the hefty 217 per cent increase (or 83 per cent increase on average) in crude oil price.” Chang also noted that Malaysia’s pump prices now stand at RM2.70 for petrol and RM2.58 for diesel. He pointed out that there are huge differences between these prices and the prices of other oil producing countries as follows: U A Emirates (RM1.19), Egypt (RM1.03), Bahrain (RM0.87), Qatar (RM0.68), Kuwait (RM0.67),Saudi Arabia (RM0.35), Nigeria (RM0.32), Turkmenistan (RM0.25) and Venezuela (RM0.16). Chang said that in stead of comparing our petrol prices with those of non-