Yesterday, the president and chief executive officer of Petronas had little choice. With pressure on the ground against the Abdullah administration mounting over the 40 per cent fuel price hike and the possibility of street protests growing by the day, he was directed by top government officials to lift the veil of secrecy that shrouds the operations of Petronas.
Speaking to editors and senior reporters at a special briefing on Petronas’ contribution to the country, Hassan said that at the close of its financial year in March last year, the national petroleum company had given the Government RM52.3 billion in taxes, royalties and dividends which worked out to be 32% of the Federal Government’s revenue.
“Since the formation of Petronas in 1974 to last year, the company gave the Government RM335.7 billion out of a total profit of RM570 billion,” he noted.
He argued that the oil company needed to reinvest its profits in new technologies and in search of new oil reserves. To date, Petronas has reinvested RM178.9 billion of its profits.
"There is one company, which I don't want to name, that gives back every dollar it made to the government concerned. Now it is suffering," he said.
"Any business if you don't reinvest, you cannot expand... so what do you do? The impact is on the shareholders, which in this case is the government. They will be getting less and less, and eventually zero," he added.
Hassan said continental shelf production and reserves have been coming down, being replaced by deep and ultra-deep water explorations.
"Going forward, it will be tougher. Resources will deplete for sure. Malaysia has been a producer of oil for more than 100 years," he said.
He also dismissed claims by critics of the government that because the price of crude oil was US$130 per barrel, Petronas was making more money than ever and well-placed to continue subsidising fuel prices in Malaysia.
“A lot of focus is placed on the high oil prices. There is very little talk about costs. The costs to explore and to drill for oil have increased by about 200% over the past three years.”
Hassan said Exxon Mobil made about US$40 billion (RM130.31 billion) last year, an increase of only US$1 billion from 2006, in an environment of higher crude oil prices.
“That is the world’s biggest, most efficient and most well-run oil company. Margins have eroded,” he said.
Hassan said Petronas was now “scraping the bottom of the barrel” as far as finding and extracting oil was concerned.
He challenged critics who said that Petronas was not transparent, saying that the corporation published a very detailed annual report which was deposited in the Parliament library.
“For all intents and purposes, Petronas is a public-listed company because we are rated by agencies like Standards and Poor, and Moody. We do not hide anything,” he added.
In the days ahead, the government may come under severe pressure to explain how it has spent the RM335 billion that it has received from Petronas since 1974. Such a disclosure is going to make many people in the government, past and present leaders, sweat.
Sarawak Headhunter's Comments:
Please explain clearly to the rakyat so that they will understand.
At the same time, please explain to Sarawakians, Sabahans and Terengganuans why in spite of being oil-producing states they are burdened with higher prices as well. Does this not mean that they are "subsidising" all the other more developed states as well? Is this fair, especially when Sarawak, Sabah and Terengganu themselves still have high levels of poverty?
Please also explain why Terengganu has to literally beg for a share of its own oil revenues through the so-called "Wang Ehsan". Explain in detail how this "Wang Ehsan" was spent over the years and why RM4 billion of it (that we know of) is unaccounted for. Then we can talk about who's subsidising what and whom.
PETRONAS contributes 32% of the Federal Government’s revenue but has the Federal Government used this money for the full benefit of the rakyat?
Please explain why PETRONAS's contribution to the Federal Government is used to subsidise mismanagement, misgovernance, inefficiency, waste and corruption to the tune of RM335.7 billion between 1974 to last year.
We are not arguing about PETRONAS's need "to reinvest its profits in new technologies and in search of new oil reserves".
Hassan Merican is wrong. The impact is NOT on the shareholders, which he says are the government. The real impact is on the ordinary rakyat who are getting less and less, and eventually zero.
Who is Hassan trying to fool when he said continental shelf production and reserves have been coming down, being replaced by deep and ultra-deep water explorations and that resources will deplete for sure?
There is oil offshore of Kelantan for sure, otherwise there wouldn't be a joint concession area with the Thais at the international boundary which is producing oil, but why doesn't PETRONAS conduct any real exploration and production elsewhere there? The map from its website appears to show that there are exploration areas offshore Kelantan but are they really doing anything there? This map (shown above) actually dates back to August 2005 (Click on it for a larger version).
Why doesn't Kelantan get any royalties or even "Wang Ehsan" from the Malaysian-Thai Joint Development Area? The map also shows the presence of gasfields offshore Kelantan but in non-concession areas. Why haven't these been developed? Is PETRONAS practising directional drilling techniques to siphon off oil from Kelantan waters from oil rigs located in Trengganu waters to avoid paying Kelantan any royalty?
If the costs to explore and to drill for oil have really increased by about 200% over the past three years, ALL oil companies would be losing money unless oil prices have also increased by more than 200%, true or not? Does this idiot Hassan Merican think we are all fools?
Don't try to sidetrack us with the story that Exxon Mobil made about US$40 billion (RM130.31 billion) last year, an increase of only US$1 billion from 2006, in an environment of higher crude oil prices. That is a different story and probably has its own causes.
If PETRONAS was really now “scraping the bottom of the barrel” as far as finding and extracting oil was concerned, can Hassan please tell us how much of Malaysian territory, both onshore and offshore has really been explored, 5%, 50% or 90%?
How many people really have access to PETRONAS's annual reports which are deposited in the Parliament library? Sarawak Headhunter has recently found a link to PETRONAS's annual reports on its website, through the Investor Relations section: PETRONAS Annual Reports. As someone has pointed out, these are very basic and not detailed accounts.
Even if PETRONAS really does not hide anything, the truth of the matter is that it is not easy to get pertinent information from PETRONAS about anything, especially when its own CEO and other of its senior management mislead the press and the public.
We had not too long ago a Director and VP of PETRONAS telling us that PETRONAS "does not fund bridges". This is an outright lie. What about the bridges in Putrajaya, in fact what about the whole of Putrajaya itself? Are they telling us that PETRONAS's money did not fund the development of Putrajaya?
We really need better, clearer and more transparent explanations. It is not only PETRONAS which is answerable to the public but the whole government as well.
The rakyat deserves better explanations about how the nation's wealth is being spent. We would really like to know who is subsidising what and whom and how.
Or is the BN Government now really scraping the bottom of the barrel?