Effective Role Played by Petronas Oil Company in Malaysia's Economic Development

Malaysia's PETRONAS Company, Asia's most profitable oil company, has been able to confirm and promote its position among the world's giant oil companies and in addition to collaborating with a number of global oil companies in other countries' oil projects, it has also been involved in the development of Malaysia's marine oil reserves. PETRONAS has been able to absorb foreign capital and to increase Malaysia's economic growth rate.
In 2008, PETRONAS was introduced as the world's 95th largest, eighth most profitable and Asia's most profitable company by Global Fortune magazine. The construction of PETRONAS' Twin Towers, which were inaugurated in 1998 and were considered the world's tallest buildings in the world at the time, was carried out by PETRONAS and at the moment, the central offices of this company are located in this building.
Since PETRONAS was established, the company has become a uniformly international company in the field of gas and oil, which has economic resources in 31 countries. By the end of March 2005, the PETRONAS group took complete possession of 103 companies, part possession of 19 companies and half possession of 57 affiliated companies. These affiliated companies constitute the PETRONAS Group, which engages in a variety of oil and gas activities.
PETRONAS Group activities cover a wide spectrum of oil activities including exploration in upstream sectors, the production of gasoil in downstream refineries, marketing and distribution of oil products, trade, processing, and gas liquefaction, operations for the installation of pipelines for the transfer of gas, marketing for natural liquid gas, production of petrochemical products and their marketing, marine transport, car engineering and investment in property.
History
PETRONAS is the not the first company that has engaged in the exploration of oil and gas in Malaysia. Previously, at the end of the 19th century, the Royal Dutch Shell Company was engaged in oil exploration in the colony of Sarawak and in 1910, the first oil well was drilled in Sarawak. The Shell Company continued with its activities until 1963 as the only oil company in the region until Malaysia gained independence. Officials of the newly independent Malaysia continued their connection with the Royal Dutch Shell Company until Malaysia's first marine oil field became operational in 1968. The central government also gave permits for exploration in Terengganu, the most populous province and the power hub of the central government. In 1974, ESSO succeeded in discovering natural gas in the province of Terengganu and in the same year, the production of crude oil in Malaysia reached around 81,000 barrels (12,900 cubic meters) per day.
According to a plan approved in 1971, the objectives behind the establishment of PETRONAS include the following: protecting national rule over oil and gas resources, planning for supplying the country's present and future gas and oil needs, participation in the distribution of petrochemical products and marketing for these products at acceptable prices, encouraging Malaysian companies for supplying machineries and services, the production of azote fertilizers and generating profit from oil industries across the country.
Level of Export
In 1976, Malaysia turned into an exporter of oil but its level of export was not such that it could join the group of OPEC countries. This led to some interests for Malaysia and PETRONAS in particular because on the one hand it resulted in relative economic and political flexibility for PETRONAS and on the other hand, it strengthened the company's main objective which was for Malaysia to obtain self-reliance.
Until 1997, PETRONAS was managing the oil activities of its partners and until government tried to establish a company called PETRONAS CARIGALI, affiliated to PETRONAS in the field of oil exploration and production, it played no direct role in production. PETRONAS continued its supervision over all economic oil and gas activities, particularly in issues relat ed to health, safety and protection of the environment.
In 1990, oil and gas constituted 24% of Malaysia's overall exports; therefore, government became determined to impose a 25% tax on oil and gas exports. Government's new policy in addition to the implementation of 25% tax meant a decrease in the production and export of Malaysia's crude oil in 1981 for the first time since PETRONAS was established; although in later years, the level of exports and imports improved compared with 1980. In 1982, PETRONAS turned to refining and distributing oil. The objective behind this move was to reduce dependency on the Royal Dutch Shell refinery in Port Dickson and the Esso refinery in Sarawak and Malaysia itself established refineries in Malacca and Kerte.
International Reserves
In 1996, PETRONAS entered the aromatic market through joint investment. In 1997, this company increased the variety of its activities and established three petrochemical companies in Kuantan and an acetic factory in Kerte. In the same year, PETRONAS' first joint investment with China in the field of Liquefied Natural Gas called TIGA, took away Algeria's rank as the second biggest producer of this product.
The PETRONAS Group continues to emphasize the importance of carrying out international oil exploration projects because in 2008, 40% of this company's revenues were obtained through international projects in countries such as Iran, Sudan, Chad and Mauritania.
PETRONAS' international reserves reached the figure of 6.24 billion barrels of oil in 2008 and it has more than 100 affiliated companies and approximately 40 joint investment companies, a minimum of 50% of whose shares are under the control of PETRONAS.

New Chapter in Russia-Norway Relations

A new chapter has been added in the relations between Russia and Norway. A 40-year-old negotiation saga has been concluded. But the book is not closed -- there will be more writing in it.
Russian President Dmitry Medvedev emphasizes the point by banging lightly on the table। The page has been turned, he says। A beaming satisfied Prime Minister Jens Stoltenberg has released the news -- there is agreement on where the border will be drawn between Norway and Russia in the Barents Sea and the Arctic Sea; 175,000 sq km of sea floor and ocean area have been divided in two equal parts। It has only taken 40 years. 'A sensation,' the Russian president calls the news. He is not exaggerating.

Beginning of Historic Step
So from here on we must, unfortunately, use the well-worn cliches about what happened in Oslo and, as told by reliable sources, actually took place roughly when the clock had passed midnight, in a negotiating room। That is when the 'boundary line for the continental shelf and the ocean area in the Barents Sea and Arctic Sea' was settled.

It was a historic day। It really marks a new era, even if it is now up to governments as well as business sectors and others to use the potential and possibilities triggered by a clear border agreement. That will be the challenge. The first step is, naturally, to get all the technical details in place. This means, among other things, that the maps must be drawn and checked and stamped by the respective authorities -- which in Russia is the Russian Navy. An extensive body of regulations on, among other things, the exploitation of oil and gas resources that cross the line has been drawn up in both Norwegian and Russian. But it must also be approved in all its details. And, finally, it remains to get the agreement signed and ratified by the Storting in Norway and the Duma in Russia.

International Negotiations
So why did the agreement come now? Something was in the works, which can be seen afterward from the positive statements President Medvedev before the visit। He talked about a 'sensible compromise,' and he said that Russia has considerably more difficult territorial problems with other nations than with Norway. Those would be clear enough signals. 'Compromise' has not always been the most prominent word in the Russian vocabulary. Land areas are difficult to divide; that applies not only to Russia. Then, it is easier, after all, to draw a line on a continental shelf where there are neither reefs nor islands.

But anyone who has participated in or followed complicated international negotiations knows that there are many technical and political reefs in the sea। It is easy to run aground at the last moment. So keeping it secret, as President Medvedev admitted with a smile that Russia has deep traditions for, was necessary because no one was quite sure before it was possible to be quite sure.

It helped that the negotiators agreed that everything they had agreed to over the course of 40 years should remain। No new or unexpected demands or wishes or interpretations appeared at the last moment.

Developing Personal Relationships
But most crucial of all must have been that now there is a Russian leader who thought the time was ripe to resolve a long-standing problem with a neighboring country। A lengthy buildup of trust probably also contributed. So did the well-developed personal relationships between Russian and Norwegian leaders. Stoltenberg and Medvedev have had many meetings, and so have Foreign Ministers Jonas Gahr Store and Sergey Lavrov.

In addition, the lack of a boundary has prevented the development of the energy resources, and that has made it more complicated to administer the stock of cod and other types of fish that literally swim in both the Norwegian and Russian zones। With a border it becomes simpler: On the Norwegian side Norwegian authorities do the checking, on the Russian side Russian authorities monitor.

The temporary gray zone from 1977, which was to regulate fisheries in that part of the region, was not particularly favorable to Norway; it goes very far west। But now that the boundary is in place, for the two countries' economic zones as well, the temporary agreement can be left to the history books, along with the role played by then Undersecretary Arne Trehold behind the scenes.

Positive Political Effects
For Russia and President Medvedev the compromise is probably a diplomatic feather in the cap, after several diplomatic successes recently। For Stoltenberg and Jonas Gahr Store as well. Russia has rid itself of a problem in the relationship with a small and friendly neighbor, who is well anchored in North Atlantic Treaty Organization (NATO) and in a Western community. That could generate positive political effects. Medvedev did not exaggerate when he pointed out that the agreement will also have significance for European security.

One result of the agreement, connected with the development in the gas market, might be that energy from the Barents Sea could be conducted to the continent via an extension of the pipeline grid on the Norwegian continental shelf. In that case it means less investment for Norway and Russia, now that shale gas has made liquefied gas, Liquefied Natural Gas (LNG), from the north less attractive in the United States and internationally in general.