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JEFF OOI says: We probably have been sleeping through it while the Earth span for the last 33 years. Let;s start a new wave of awareness and get prepared for the worse. When the oil wells dry, what we have left would be the Umnoputras.

I already blogged about this on 11/10/2006 based on a report by prof Goose, World Exports of Oil.
url=http://www.theoildrum.com/story/2006/10/5/215316.
It also states that by 2020 Malaysia is almost dry!
But probably all will be blamed on foreigners trying to recolonize Malaysia.

this is old news.
there will be two conclusion to this scenario.
either

a) new wells are discovered (it keep on popping out of nowhere when all indication are that oil is running out, and there is a vast amount of oil and gas just of SIPADAN if only we can sort out our problem with indonesia)

b) we become a net importer. By then, if no major fields are found worldwide, oil will be too expensive for the typivcal family for everyday use, which should be good for the environment, but bad for convenience. Maybe then we may consider hydrogen seriously (palm oil as alternative will be too expensive as its price will be pegged to carbon fuel sourced diesel).

On electricity generation, we have vast amount of potential hydro electricity sites. the only problem is that it cost more to buid these than the normal carbon fuel power stations.

It is a fact that once Petroleum money dries up, UMNO will have to fund their corruption from elsewhere.

GSTs, VATs and other indirect taxes will soon come online. Tax audits are becoming the norm as collection targets are raised indsicriminately. All manner of subsidies will be reduced, assessment rates, sin taxes will be raised to increase government (UMNO) revenue.

The only thing they will not be looking at will be fat government contracts given out to cronies and friends. Pork barrel politics will thrive, Islam Hadhari or no.

But most of you would have figured this one out already.

Using google search and look for Malaysia oil reserve , we will get a few figures, 2010, 2015 and 2020.

It seems Malaysian, especially those in rural area, don't care about this issue. Most of them don't know the current government are actually running heavy subsidiaries rather than incentive, e.g. fuel for factory, fertilizer for agriculture, etc. It is this subsidiaries that help many Malaysia company stay afloat from the competition.

Apparently, FDI are aware of this. If the subsidiaries lift off in (very) near future, the investment will hit huge jump in cost.

Jeff,

Malaysia will become a net importer by 2010 does not mean that our oil reserve is running out or totally dry up. It only means that we are consuming more than we are producing. Production rate migth still be increasing but not as fast as consumption.

JEF OOI says: A net importer status would also mean a shortfall in net national revenue to fund national "development projects", a source we have grown addicted to to in the last 33 years. We need to fund ways to fill the gap. I can't suggest any yet possibly in the next three years.

But we should start to really worry if the country does not manage the oil money well, which with due reminder that we are planning to spend lavishly on mega projects which in the end might not make economics sense. It serves only one purpose, not by building wealth for the nation but making a few individuals extremely rich.

"If Hassan was true in his forecast, that we becomes a net importer by 2010, the ‘Resource Curse’ may come biting us pretty soon. When the oil-wells dry up and the country is thrown off the global competitive curve, it would be a double-whammy of conflicts and chaotic disputes."

Scary last sentence there. I wish that will never happen. But as you said Jeff, I don't see any gap filler in coming years. Where are Malaysian global firms to sustain us? Have not the rich also began to move their funds out in big ways past years? Currently the oil fills in all the cracks from latest pay hikes to other subsidies (as moo_t pointed out). Maybe as a country we are in the position like 'telur di hujung tanduk'. The egg has not been broken and maybe we're balancing very well at the tip. 5-10 years down the road is a short time for a nation to find out the painful truth. Common everyone. Common Mr. Government. Though we're 26 million strong here but only represents 0.4% of the world population. To survive, we need to be better than 99.6% in some services or products. Think long-term instead of fattening yourselves. Your children and grandchildren will still be here to survive you. Don't waste the resources away. Create sustaining growth industries; attract talent to sustain the system; minimise wastage and unnecessary projects; incubate and grow global firms (not blood sucking ones like proton); etc.

Only 27% of PETRONAS profit (after tax) is re-used by PETRONAS for its expansion. The rest are given in one form or another to the Federal Government and the respective state governments (a measly 5% each).

I tend to be territorial when it comes to issues like this, i.e. the wealth of Sabah and Sarawak is used to fund growth (either corruptibly or not) in Semenanjung.

Ask any Sarawakian or Sabahan, regardless of their race or religion, this is a part of the animosity on the ground.

Even my wife, who is from Semenanjung, but has since acquired citizenship status (yes! 20-point Malaysia Agreement stated that Sarawak/Sabah has its own immigration control, and if you do not know this, then the Malaysian Education System has sorely failed you), feels that it is most unfair for Sarawakian and Sabahan to suffer at the expense of Semenanjung people and worse still, in the hands of UMNOPutras.

I forget to add, that PETRONAS 40% return on average is on the back of extremely poorly paid workforce, compared to oil majors. An engineer with any oil majors is easily paid three times more than a PETRONAS engineer, when you compare the same number of experience. Remuneration package in PETRONAS is very, very much below what the oil majors are paying.

It doesn't help that PETRONAS employs more than 90% Malays, which in itself is a contentious issue. I am a Malay, but a dominance of one race in any particular endeavour tend to make a mediocrity out of things.

If you think the situation is bad in Malaysian public universities and Malaysian Civil Service(with its Malay dominance), do you think it is any better in PETRONAS? Statistics does not lie.

In 2005, PETRONAS paid 6 months bonus across the board to its employees. In 2006 it was 4 months across the board. With this much bonus do you think the remuneration package is better? No. I know this for a fact.

Not just Hassan Merican was from MCKK, but he is also a trained accountant. Do you know what they say about accountants? They only understand numbers. So PETRONAS percentage-wise may perform better than world oil majors, but in absolute terms, when you dig deeper, you will find some worms and definitely skeletons.

When oil in Malaysia peaked (it has actually peaked, some have said), PETRONAS will have to rely totally on foreign adventures. That's a different ball game together.

In the final analysis, what does PETRONAS want to be? A National Oil Company or a multinational company? Loyalty to which Nation?

Harping about patriotic issues will bring PETRONAS down.

Engineers who left PETRONAS for greener pastures are labelled "TRAITORS" by PETRONAS, and will never be welcomed back into PETRONAS, which in itself is a defeatist policy.

You think PETRONAS manages our national (or Sarawak/Sabah oil/gas) well? Think again.

The profit above also includes profit from production-sharing. Meaning whatever other oil companies find in Malaysia, PETRONAS takes away 50% of the profit (depending on the PSC), just by virtue of 1974 Petroleum Development Act.

Just by sitting pretty in Twin Tower 1 (Tower 2 belongs to Ananda), PETRONAS gets lotsa money without breaking a sweat.

You think that is performing?

Petronas started off with RM 10 million fund and now is a multibillion company. Jeff, this is an amazing feat...if Petronas has been operating in the world for 100 year maybe Shell or Exxon will be second class to them.

Petronas has managed to show the world that the finest Malay brain will succeed internationally and indeed Petronas contained many cream of Malay intellectual.

Petronas success is also attributed to her visionary leader.. when many public or government link companies are afraid to venture overseas, Petronas has ventured successfully... this shows the quality of the human resource in Petronas from the CEO to the accountant and to the man on the field.

So, even if we will be net importer of oil in the future, the visionary of the leader will always ensure that more than 30 % of Petronas revenue will come from overseas operation. Haaaahhh.... even netherland (Shell) and USA (Exxon Mobile) are both net importer of oil. Holland does not have oil in their country...... so why should we be afraid .. as long as PETRONAS is still PETRONAS of today , it is a vibrant economic company which will search and accumulate WEALTH from all over the world for the Malaysian.. and if PETRONAS could be as big as SHELL or EXXON MOBIL ... then with its financial ratio ... all the PROFIT could be used for the development of Malays..and Malaysian... God is GREAT as GOD has given Oil to majority muslim country... Muslim has money deep buried under the ground.

Of Course .. we should be GRATEFUL to the person who has advised PETRONAS to venture overseas which is no other than Dr. Mahathir and the person who lead the marketing effort which are Tan Sri Azizan and Dato Hassan Merican..

Apart from mind-numbing thing about Malaysia being a net oil importer in three years time, Hassan Merican also said that Petronas had to cut off some projects overseas and wait for staff not trained in specific disciplines to become operational in the posts of those disciplines.

As to how many overseas projects, he didn't say. As to how many critical position staff, likewise.

While these are operational issues, it behoves all to be concerned that they show Petronas' staffing and project evaluation policies need to be refined.

Making it a predominantly malay domain does not make sense in such a resource-critical national entity.

Opacity about overseas projects doesn't also help because those running them are wont to hide what has been bleeding money that's also not theirs.

One notes that there seems to be some Petronas presence in Latin America. Argentina was mentioned. That outpost was manned by locals there who then report to a Petronas manager who is not stationed there but flew in now and then for meetings. If this be the way this behemoth runs overseas operations, everyone should ask whether stellar numbers alone are hiding downline troubles ahead.

Exactly how MANY of the overseas investments have returned handsome profit?

Over here, we have a PM who talks about achieving Vision 2020; he proceeds with the 9MP, mentions open tenders, and then we see a slew of PFI projects come out, too many of which given to concessionaires (in all but name) like Scomi (him), Gamuda (Samy), and UEM. Big billion-ringgit projects with only INDIRECT and LONG-TERM impacts on this country's ability to nullify the IMMEDIATE and SHORT-TERM negative effects from becoming a net oil importer in ...3 years time.

The matter of Petronas and what will happen to this country after 2010 is helluva important to the rakyat. If this government persists in treating the rakyat as assinine, the rakyat should start its own watch over the issue and snowball greater concern.

It's like your main salary provider not telling you the true story or showing nonchalance when business is going down.

Thanks, Mr Ooi.

Many developed countries are net importer of oil. It includes US, Japan, china, germany (Dominant 4 economic powerhouse).
Many poor countires are net exporter of oil. they include sudan and chad, whereby in order to exploit their resouces, the oil companies get 90% of the concession (due to risk involved, otherwise, no investors will ply there)and government only 10%.

JEFF OOI says: You need to stand corrected. Being a net importer or exporter of oil will only have bearing if oil revenues has become an over-dependent source of national budget. In the case of Malaysia is circa 40%. In the case of the best-performing economy in ASEAN, that's Singapore which is neither an oil-endowed economy, was forced to generate other source of revenue to power national development. That's the context.

Malaysia is currently not benefitting any wealth from oil as it imports as nearly as much as it exports.

JEFF OOI says: Again, you need to stand corrected. There is a revenue differential to Malaysia's favour as we export sweet crude and import inferior crude with higher sulphur content.

Main benefit comes from LNG export from bintulu, which is the largest such facility in the world. The LNG supplies from sarawak will last for the next 30 years or so.
Due to high oil prices, oil field deemed non-profitable are now exploited.