GANAS Response to PETRONAS Statement on Royalty by BERNAMA


Kota Kinabalu:”It is unbecoming for a Conglomerate to use lame excuses to garner public sympathy, PETRONAS sustainability to contribute to the Nation will not be affected if the present rate of 5% is increased, and this is because after 37 years, the industry in Malaysia is matured.  Otherwise PETRONAS should not have ventured into Iraq or even Africa” said Zainnal Ajamain, the spokeman for Gerakan Nasionales Sabah or GANAS in short.

According to Zainnal, profits will not be reduced because once a field is identified some are purposely capped for future extraction.  Therefore the cost is in maintenance and start-up of that field instead of exploration where there are risks and thus more expensive.  These expenses however are already taken care of in the Petroleum Sharing Contract (PSC).  Therefore, the possibility of lower tax payment by PETRONAS, is just a lame excuse.

By the same token, this will not deter PSC contractors from further investing in up-stream oil and gas activities in Malaysia.  The risk borne by the contractors are managed through the rate agreed upon as the “cost of production”.

In terms of the possible risk of cancelling the RM170 billion investments in Malaysia is not a justification to maintain the present 5% rate of payment.  This is because the investment PETRONAS refers to is dependent upon the volume of supply for crude petroleum and the demand for the finish products in the global market.  These are not affected by the increase in the present rate of payment to the oil producing states.

“In the case of declining production from maturing fields, PETRONAS failed to mention their operations on marginal fields and unexplored fields closer to shores” said Zainnal, according to him this brings up a pertinent question “If it is that difficult for PETRONAS to manage the petroleum industry in Malaysia, why should PETRONAS continue managing it.  They may as well give these rights back to each of the oil producing states, let them manage it themselves.  This is consistent with the Malaysia Constitution as well as the Malaysia Agreement 1963”.

Zainnal Ajamain

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