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Sakmongkol ak 47

Wednesday 2 March 2011

PETRONAS in the news-1

In the last 2 weeks, PETRONAS was in the news for the wrong (?) reasons.
First- PETRONAS was ranked badly in a 2010 Report on Promoting Revenue Transparency in Oil & Gas companies. The report is published by Transparency International (TI) and Revenue Watch Institute (RWI). PETRONAS performed badly in all three key sections.
These are 'Reporting on Anti-Corruption Programme', 'Organizational Disclosure' and 'Country-Level Disclosure for International Operations'. PETRONAS' respective scores were 30, 38 and zero percent, compared to the average scores of 43, 65 and 16 percent. UK's BG Group, India's Oil and Natural Gas Corporation and Norway's Statoil top the three sections respectively with scores of 93, 100 and 69 percent. PETRONAS was ranked in the bottom 25 percent of the 20 international and 24 national oil companies surveyed.
Reporting on Anti-Corruption Programmes' refers to companies reporting their anti-corruption programmes according to the TI-UN Global Compact Reporting Guidance on the 10th Principle against Corruption.
Organizational Disclosure' measures reporting of a company's organizational structure, operations, partnerships and standards used for published financial accounts.
Country-level Disclosure for International Operations' refers to companies' reporting on meaningful country-level financial and technical data relating to their international operations.
What is the purpose of the Report? I think we need to look at it positively and not succumbed to a xenophobic reaction treating the Report as work of some insidious organization out to discredit Malaysia. As Malaysians concerned over the management of a national asset, we have every reason to be circumspect. PETRONAS is the biggest revenue earner for this country.
The report aims to promote accountability in resource-rich countries by improving awareness of the importance of revenue transparency of major oil and gas companies. We have to remember that Oil and gas producers generate and transfer considerable funds to national and host governments. Natural resources wealth can fuel large-scale corruption and mismanagement, if not properly managed.
Second- PETRONAS is in the news for its announcement in introducing the new commercial methodology of RSC- risk sharing Contract. What is that?
In introducing the Risk Sharing Contract, PETRONAS has this to say. It said that in not too many words. We are left to second guess what our national company means and intends.
"The RSC model strikes a balance in sharing of risks with fair returns for development and production of already discovered fields. In this arrangement, PETRONAS remains the project owner while contractors are the service provider. Upfront capital investment will be contributed by the contractors who will receive payment commencing from first production and throughout the duration of the contract," PETRONAS said.
"The new arrangement facilitates direct participation of Malaysian companies in the country's upstream oil and gas activities, in line with PETRONAS' efforts to leverage on their existing capacity while fast-tracking their capability in development and production in a structured manner," it added.
We haven't been told- how is the marginal field defined? How are the local players chosen? How is the foreign technology partner selected? How did we come up with a ballpark figure of RM 800 million? Who provided that figure? Why can't it assign PETRONAS Carigali for instance to partner with the Petrofac for instance?
Unless the consortium of the 3 companies in unison proposed to PETRONAS to work on the marginal fields, then I think the choice of the 3 can be defended. We can't fault the private companies for coming out with a commercially viable solution to PETRONAS when PETRONAS itself feels further work on the fields is uneconomical.
But unless PETRONAS is forthcoming with more revelation, its silence will only fuel speculation and wild guesses.
So if I were to second guess and translate it into simple language, perhaps it can be this way: hey guys, you want to make money? Here's the deal. We want to appoint a foreign player to extract oil and gas from our marginal fields. Don't worry marginal is a misnomer- plenty of oil and gas there. But you people can share by being equity partners to these people. Just get the capital and join them. They are your technology partner. They do the work, maybe you get to supply support services and other things. PETRONAS will oversee and make sure you make money. And we will also be fulfilling our political objectives- fast tracking the capabilities of the chosen local ones.
PETRONAS has come some way from Production Sharing Contract to Risk Sharing Contract. The he contractors now assume all the risks (?) and get compensated when they strike oil or gas? Will they get to recover all their set up costs? They get to share the value that's above the costs? How will the sharing be structured?
Let's study a little bit of history.
The production sharing contract (PSC) is a scheme where the resource owner contracts out the extraction and production of oil and gas to exploration companies. Basically the idea is this. The exploration companies or contractors do all the work to extract and produce oil. Hence the term produced oil. Once oil is produced, the contractor gets to recover all the costs incurred in extraction and producing the oil- this is termed as cost oil. After all the costs are deducted, you get to share the profit- hence the term profit oil. It's divided between the resource owner and contractor on an agreed basis. Usually 80% to the owner and 20% to the contractor.
This idea was first introduced in Malaysia by Tengku Razaleigh Hamzah when PETRONAS was formed in 1974. The Petroleum Development Act 1974 empowers PETRONAS to be the custodian of our oil and gas reserves. It sets out to manage and operate our oil and gas reserves. It owns the oil and gas on our behalf.
Tengku Razaleigh worked hard to convince the oil majors operating in Malaysia then to accept the arrangement. The Americans were of course livid and complained to the then PM, Tun Abdul Razak. But Razak chose to stay the course with Razaleigh.

Update: I hear sound whispers that the whole cost of the project is financed by Petrofac. Haiya, cilaka, saya pun boleh bikin ini marginal field punya projek ma...


Anonymous,  2 March 2011 at 08:45  

The likes of Tengku Razaleigh, Tun Razak, Hussein Onn are no more in UMNO today.

Now we have robbers, thieves, rent-seekers, liars, and even rapists in UMNO.
The present UMNO leadership will dismantle everything assembled by their fore fathers. Just you wait. It is already happening.
UMNO is a party without a soul.

Anonymous,  2 March 2011 at 09:47  


‘..80% to the owner and 20% to the contractor..’

‘The Petroleum Development Act 1974 empowers PETRONAS to be the custodian of our oil and gas reserves.’

Here lies a ‘grey’ area of the so called Petronas’s profit!

How much is the profit a ‘reserve’ collection on behalf of the country, how much is the REAL profit generated by Petronas true inputs, both management & investment.

Nothing much can be CLEARLY distinguished from the accounting mess in the Petronas annual reports.

Perhaps the mess is/was intentional!

Anonymous,  2 March 2011 at 12:44  

Looks like Petronas will end up the way of the Nigerian Oil Company - loosing money.

donplaypuks 2 March 2011 at 13:12  

"The RSC model strikes a balance in sharing of risks with fair returns..."

Sounds like APCOspinspeak to me. Looks like Petronas is taking a leaf out of Rosemajib's RM100 million book (funded fully by taxpayers) and indulging in deliberate obfuscation.

But then, even under Merican, Petronas was never completely transparent. When you looked up their "accepted by international banks and published accounts available in the library of Parliament" half the report and information was always missing!

Seriously, I would like to know if Petronas BoD was arm-twisted by Mahathir into bailing out his son's Plc Perkapalan for $1.7 billion or was it a genuine commercial decsion?

And what else has Petronas been milked for by successive PM's without proper legal authority?

That's what happens when THE people's asset is controlled totally by one person, the PM!

Check out my latest on cover ups with the Sighfull Special and Maha Firaun condoms at

we are all of 1 Race, the Human Race

Red Alfa 2 March 2011 at 18:10  

Salam Dato'

Back then, the PM had said there was no basis/logic/requirement for PETRONAS to report anything to anybody except that PETRONAS shall be answerable only to the very highest ELECTED executive in the nation. Nobody/No institutions who was not ELECTED like He was had dared to question such Final Say.

And was PM No.5 sleepless in blissful happening? So why not PM No.6 now making it happily business as usual?

What CAN we say about our National Institutions (NSM, Judiciary and Parliament) remaining in so happy acquiescence?

Suci Dalam Debu 2 March 2011 at 19:44  


Petronas used to hire many experts from developed countries. Now they have been displaced with many from Nigeria,Indonesia and many others of similar ranking.

Sooner or later we will be performing at the level where these people come from.
Our BN government also teaches Petronas not to honour their agreement with states like Kelantan and Terengganu.

So the latest rating from TI is expected. While the coffers is still in the black, may hay while the sun shines!

Anonymous,  2 March 2011 at 22:19  

Suci Dalam Debu,

Petronas has its own scholarship programme enticing the best talents of the Malaysian National Education system and its own university.

WTF would Petronas wmploy Indonesians and Nigerians.

Seriously some self hating Malaysia cannot use common sense and bash without using their brain. the self hating Malaysians can continue with their 'Malaysia is doom'm orgasmic writing.

Anonymous,  3 March 2011 at 01:22  

The issue is that Petronas is run by the for the few. Initially non malays were left out of its development and many of us thought that it was the right thing to do. Now 90% of the Malays feel that they have been left out of its development. Frankly, if this company had been run in the interest of the the state malaysia's percapita income should have incresed from RM400.00 in 1966 to RM44,000.00 today. All that is under water and we can only wonder how that small dot to the south, which did not even have water, was able to achieve exponential growth in percapita income during the same period in question.

I can only say that we are wearing the constitution the wrong way and it is about time we change get it the right way.

dahseriknganpetrol 3 March 2011 at 03:49  

This is intresting dato, keep us informed.

thank you.

also if u hear anymore whispers, could u enlighten us on the block L and M issue, that is some serious BS going on there too.

as for petronas's Real income, you should check out their employee bonuses...bloody hell. 60 billion per anum....sheesh i wonder how much they skim of the top.....seriously dato, this is intresting shite.

Anonymous,  3 March 2011 at 09:25  


We have our 4th Prime Minister to thank for the sickening state of Petronas. Petronas became his and UMNO's bank eversince he took Petronas under his patronage.

Suci Dalam Debu 3 March 2011 at 09:43  

Anon 22:19

***WTF would Petronas wmploy Indonesians and Nigerians*****.

Sorry to say that you have no idea about what you are talking about and it is people like you with shallow but lofty minds that would bring this country to its knees.

There are many many incompetent "consultants" from these countries hired by Petronas and our "bright" engineers are supposed to learn from them.

And the corruption that is taking place? Phew!

Anonymous,  3 March 2011 at 15:04  

Nothing should be surprising anymore.
Under the 4th PM's watch, all expressway contracts were made under OSA. WTF is so secretive about a supposedly commercial BOT contract for a highway ? Your guess is as good as mine.

Anonymous,  3 March 2011 at 19:13  

Seronok betul syarikat kroni berniaga. Nak berniaga guna duit rakyat berbilion ringgit . Elaun n gaji tinggi-tingi, Untung mereka sapu, rugi pun mereka sapu.Nak bangkrap kerajaan umno bn guna duit rakyat utk bail out. Kroni kaya raya. Peniaga kecil dan rakyat biasa susah tak bayar hutang bank tekan habis declare muflis.

Tak cukup dgn itu dianugerah pula gelaran dato, dato seri, tan sri n tun.

Shit..thanks to pengundi felda n org-org kampung yg memberi kuasa kpd umnobn.

Drp; pengundi hantu

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