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.”
“He described Petronas as a stabilising force in Malaysia and in Asean regionally and his desire that the USG recognise the important role Petronas plays in maintaining political stability in the region,” the report added.
According to the leaked document, embassy officials had met Malaysian oil and gas firms due to concerns over business activities in Iran but Petronas said it had no active investments in the Islamic republic.
However, Petronas said in April last year that it sold spot volumes of gasoline from third party traders and suppliers to customers in Iran.
The cable also quoted a foreign ministry official as saying that “Malaysian firms go to Iran with suitcases of money to purchase oil and gas concessions from the Iranians. He said that they bring too much cash to count the money, so they weigh it to determine if the amount is correct.”
It named principal assistant secretary and America desk officer Muhammad Radzi Jamaludin as saying that two private companies, SKS Ventures and Amona, claimed they had no financing sources for their projects in Iran.
However, Radzi “did not offer why Malaysian firms would purchase such concessions for projects they were unable to finance.”
