Hantu Laut
Staged or real?
This is your future leader if Pakatan take-over Putrajaya.
Staged or real?
This is your future leader if Pakatan take-over Putrajaya.
Showing posts with label Crude. Show all posts
Showing posts with label Crude. Show all posts
Thursday, April 4, 2013
Friday, November 23, 2012
Bung The Kampong Boy: No Stiff Upper Lip
Hantu Laut
A 'foot in the mouth' MP.
Bung Mokhtar is king leper of the Malaysian parliament. Uncouth, uncultured and crude as the crudest oil.
Buat malu orang Sabah.
I shall not waste too many words and prolixity on this boorish, loutish, oafish and brutish man. Synonyms that could fill up a ship's hull to the brim of its free board would be a waste on him.
He is a sorry case of "familiarity breeds contempt"
Yang berhormat!
Bung, does not live up to his august position........ the honourable man, the yang berhormat.
He claimed here that he retaliates in such vulgar manner because a tweet made by some unknown person insulted him first using the "F" word.
Even so, there is no reason to for him to behave in such uncouth, brutish and ill manner.
MP is expected to exercise "stiff upper lip" in the face of adversity.
Needless to say, he and that "I am handsome and people are jealous of me" minister need schooling and grooming in social etiquette and proper conduct of honourable member.
As they say "you can take Ahmad out of the kampong but you can't take the kampong out of Ahmad" rings true with Bung.
Why the fixation with Tony Fernandes ?
He is Malaysia's best example of a success story, a man with outstanding entrepreneurial skills, amazing rag to riches success story that have revolutionised air travel for the masses and have made him and his airline a household name in this region.
Tony Fernandez, is no thief, he is a businessman, who knows how to make money and who is not dependent on the gravy train and government handouts enjoyed by people like Bung and that of his ilk.
Malaysian politicians should learn not to be envious of other people's success, instead, they should learn from it, how to be successful in business.
There'll be less thieves in this country if more politicians earn honest living like Tony Fernandez and Syed Mokhtar Al-Bukhary.
A 'foot in the mouth' MP.
Bung Mokhtar is king leper of the Malaysian parliament. Uncouth, uncultured and crude as the crudest oil.
Buat malu orang Sabah.
I shall not waste too many words and prolixity on this boorish, loutish, oafish and brutish man. Synonyms that could fill up a ship's hull to the brim of its free board would be a waste on him.
He is a sorry case of "familiarity breeds contempt"
Yang berhormat!
Bung, does not live up to his august position........ the honourable man, the yang berhormat.
He claimed here that he retaliates in such vulgar manner because a tweet made by some unknown person insulted him first using the "F" word.
Even so, there is no reason to for him to behave in such uncouth, brutish and ill manner.
MP is expected to exercise "stiff upper lip" in the face of adversity.
Needless to say, he and that "I am handsome and people are jealous of me" minister need schooling and grooming in social etiquette and proper conduct of honourable member.
As they say "you can take Ahmad out of the kampong but you can't take the kampong out of Ahmad" rings true with Bung.
Why the fixation with Tony Fernandes ?
He is Malaysia's best example of a success story, a man with outstanding entrepreneurial skills, amazing rag to riches success story that have revolutionised air travel for the masses and have made him and his airline a household name in this region.
Tony Fernandez, is no thief, he is a businessman, who knows how to make money and who is not dependent on the gravy train and government handouts enjoyed by people like Bung and that of his ilk.
Malaysian politicians should learn not to be envious of other people's success, instead, they should learn from it, how to be successful in business.
There'll be less thieves in this country if more politicians earn honest living like Tony Fernandez and Syed Mokhtar Al-Bukhary.
Wednesday, September 5, 2012
Stirring The Hornet's Nest ! The "BIADAB" Culture
Hantu Laut
It is indeed something that we should not teach our children to do, it is not our culture, it is not our ways.
There are better and civilised ways to oppose the government without resorting to the "kurang ajar" culture that could lead to widespread unrest.
Stepping on our leaders' photos and desecrating them has never been our political culture.
Malaysians are taking their new found freedom too far and such behaviour if not curtailed may have dire consequence in this multiracial nation.
Whether you are Malays, Chinese or Indians, all cultures teach you the same thing of respecting elders and filial piety towards your parents.
Do not for one moment think all cultures are the same. There can be vast differences even among Asian cultures.
Do you know in Thailand and most Buddish countries the head is considered most sacred and touching someone's head is considered rude and insulting.
In Thai culture like most other Asian culture using your feet to point at people is also considered rude.
My personal experience had shown what can happen when two different cultures clashed.
Some years ago I went trekking/camping into the jungle of Borneo with a group of people who are members of the same society. With the group was a couple of Westerners. One morning while a few of us were having breakfast with our food placed on the ground, one "orang putih" trying to get out of the tent just walked over our food, but his girlfriend, who was a Chinese girl went around us to find her way out. My Chinese friend from Sarawak went livid and a fight almost broke our between him and the white man, who was still clueless, what have triggered my friend's anger.
In Asian culture, not only you must not walk over food, it is also tabooed to walk over anyone laying on the floor.
These are cultures of the East that some Westerners have no clue about and found it ludicrously outdated, which they often make fun of.
Those protesting at Padang Merdeka and stomping on the Prime Minister's photos were not ignorant 'orang putihs' but were Malaysians who should have known better that what they did was against the 'adat' of this country.
This country is not run by a tyrannical leader for him to deserve such treatment.
It is sad that some pro-Pakatan supporters have resorted to the "kurang ajar" and "biadab" culture toward the national flag and Prime Minister Najib Tun Razak.
Anwar Ibrahim supported the flag bearers and called it a lesson in history here. Lim Guan Eng demanded why no action was taken against Perkasa when they burned his photos.
Who is Anwar trying to fool? Is he promoting his culture of protests and defiance that has been his trademark from his younger days and a man who never kept his words, changing at his whims and fancies.
Like monkeys do we have to ape the West and copy the negative aspects of their culture.
Some opposition leaders called it creativity.
Sad to say, some never learn from history that what they have done was exactly what trigger off the race riot on 13th May 1969.
Vote for "PAKATAN" and vote for the "BIADAB" culture.
It is indeed something that we should not teach our children to do, it is not our culture, it is not our ways.
There are better and civilised ways to oppose the government without resorting to the "kurang ajar" culture that could lead to widespread unrest.
Stepping on our leaders' photos and desecrating them has never been our political culture.
Malaysians are taking their new found freedom too far and such behaviour if not curtailed may have dire consequence in this multiracial nation.
Whether you are Malays, Chinese or Indians, all cultures teach you the same thing of respecting elders and filial piety towards your parents.
Do not for one moment think all cultures are the same. There can be vast differences even among Asian cultures.
Do you know in Thailand and most Buddish countries the head is considered most sacred and touching someone's head is considered rude and insulting.
In Thai culture like most other Asian culture using your feet to point at people is also considered rude.
My personal experience had shown what can happen when two different cultures clashed.
Some years ago I went trekking/camping into the jungle of Borneo with a group of people who are members of the same society. With the group was a couple of Westerners. One morning while a few of us were having breakfast with our food placed on the ground, one "orang putih" trying to get out of the tent just walked over our food, but his girlfriend, who was a Chinese girl went around us to find her way out. My Chinese friend from Sarawak went livid and a fight almost broke our between him and the white man, who was still clueless, what have triggered my friend's anger.
In Asian culture, not only you must not walk over food, it is also tabooed to walk over anyone laying on the floor.
These are cultures of the East that some Westerners have no clue about and found it ludicrously outdated, which they often make fun of.
Those protesting at Padang Merdeka and stomping on the Prime Minister's photos were not ignorant 'orang putihs' but were Malaysians who should have known better that what they did was against the 'adat' of this country.
This country is not run by a tyrannical leader for him to deserve such treatment.
It is sad that some pro-Pakatan supporters have resorted to the "kurang ajar" and "biadab" culture toward the national flag and Prime Minister Najib Tun Razak.
Anwar Ibrahim supported the flag bearers and called it a lesson in history here. Lim Guan Eng demanded why no action was taken against Perkasa when they burned his photos.
Who is Anwar trying to fool? Is he promoting his culture of protests and defiance that has been his trademark from his younger days and a man who never kept his words, changing at his whims and fancies.
Guess who set leadership by example?
Stepping on and desecrating Najib's photo, though not criminal act, is considered an insult in our culture.
Belittling the national flag and aggrandising the flag of Malaya.
Some opposition leaders called it creativity.
Sad to say, some never learn from history that what they have done was exactly what trigger off the race riot on 13th May 1969.
Vote for "PAKATAN" and vote for the "BIADAB" culture.
Sunday, September 2, 2012
Sultan Redundancy:Malaysia's First Step To A Republic ?
Hantu Laut
What has been said before by certain quarters that Malaysia under Pakatan may see the country moving toward becoming a republic was dismissed by Pakatan leaders as absolute nonsense.
When a state ignored its sultan to grace an important state function, it's a clear sign that the government is showing disrespect to the sultan as head of state.
Homage, was instead accorded to Anwar Ibrahim who has no high-ranking status in Selangor.
The Menteri Besar of Selangor Khalid Ibrahim should resign his position for showing disrespect and redundancy of the Sultan status as head of state.
The Sultan has expressed his displeasure.
What has been said before by certain quarters that Malaysia under Pakatan may see the country moving toward becoming a republic was dismissed by Pakatan leaders as absolute nonsense.
When a state ignored its sultan to grace an important state function, it's a clear sign that the government is showing disrespect to the sultan as head of state.
Homage, was instead accorded to Anwar Ibrahim who has no high-ranking status in Selangor.
The Menteri Besar of Selangor Khalid Ibrahim should resign his position for showing disrespect and redundancy of the Sultan status as head of state.
The Sultan has expressed his displeasure.
Selangor Sultan questions state invite to Anwar for N-Day celeb
KUALA LUMPUR, Sept 2 — The Sultan of Selangor has questioned the state’s decision to invite Datuk Seri Anwar Ibrahim to grace an official National Day celebration last week, a Malay daily reported today as controversy grows over the Pakatan Rakyat (PR) government’s treatment of the palace.
“His Royal Highness the Sultan finds it strange that in such a programme, Anwar, who is not part of the state government’s top leadership, was the guest-of-honour.
“The PKR Opposition Leader also does not hold any official portfolio, except as the appointed State Economic Adviser,” Datuk Mohamad Munir Bani, who is private secretary to Sultan Sharafuddin Idris Shah, was reported by Sinar Harian as saying.
“The convention is that if His Royal Highness is unable to attend the state government’s official programmes, the Mentri Besar replaces the Sultan to give speeches and so on. But, why was Anwar invited and gave a speech, when this was an official programme, not a political programme?” the palace official told the Malay daily.
Mohamad was previously reported as saying that the Selangor Sultan was not invited or informed of the state-level celebrations.
“Maybe the people will wonder why in an official programme, the Sultan did not appear, but Anwar became the guest of honor and came forward to speak,” he was quoted as saying.
Prime Minister Datuk Seri Najib Razak had yesterday castigated the PR-led Selangor government for shutting out the state Ruler from its official National Day celebrations at Dataran Shah Alam last Thursday, suggesting that it placed greater importance on Anwar(picture) who was only an economic adviser than the monarch. Read more.
Friday, May 21, 2010
I Am Lawmaker Not Lawbreaker
Hantu Laut
I am not sure what to make out of Bung Mokhtar and his wife's joyful expression every time they meet the media.With grin from ear to ear he failed to see what people are seeing him as____ a clown.
"I am a lawmaker, not a law breaker" he says of himself with a smiley trophy wife in his arm and all that grins and smiles that proclaimed his idiocy.
Why are you going to jail if you are not a law breaker?
His infantilised remarks in Parliament are some of his idiosyncracies that have caused uproar in the august house and public outcry particularly from the ladies who took exception to his rude remarks about women.
This lawmaker not lawbreaker is a nut case of cheap publicity.
Fine him more than RM2000 and see whether he'll be smiling all over.
Taking another wife is his business and Islam allows him the privilege but as a lawmaker he should have known better. He should have been more discreet and exercise some subtlety not only to consider his first wife's feelings but injury to his own reputation.
Would I lie to you, bloody fair dinkum mate, he is now a lawbreaker.
I am not sure what to make out of Bung Mokhtar and his wife's joyful expression every time they meet the media.With grin from ear to ear he failed to see what people are seeing him as____ a clown.
"I am a lawmaker, not a law breaker" he says of himself with a smiley trophy wife in his arm and all that grins and smiles that proclaimed his idiocy.
Why are you going to jail if you are not a law breaker?
His infantilised remarks in Parliament are some of his idiosyncracies that have caused uproar in the august house and public outcry particularly from the ladies who took exception to his rude remarks about women.
This lawmaker not lawbreaker is a nut case of cheap publicity.
Fine him more than RM2000 and see whether he'll be smiling all over.
Taking another wife is his business and Islam allows him the privilege but as a lawmaker he should have known better. He should have been more discreet and exercise some subtlety not only to consider his first wife's feelings but injury to his own reputation.
Would I lie to you, bloody fair dinkum mate, he is now a lawbreaker.
Friday, November 21, 2008
It's The Economists, Stupid !
Hantu Laut
Hooray! The price of crude had fallen below $50 a barrel.The price slid to as low as $48.64 today.Who was right those mumble-jumble sycophantic economists or .........? Than you have those who made foreccasts and predictions but didn't have the balls to put their names on it.
Employing academicians who spent more time trying to please their bosses to listen to what is pleasant to their bosses' ears rather than doing some serious research to predict short and long term economic trends is as good as not having any of those blighters on board.They are not worth their salt.
It is even more disheartening to hear that almost every leader in our government are sold on the idea of the nation's immunity to the global economic meltdown purportedly due to our strong banking/financial system and strong fundamentals whatever that might mean.
Strong finances and healthy foreign reserves are just some of the many components that make up the whole economic pie.There is an array of other things that influence the workings of the economy which eventually boils down to one single objective, the making of money.The more money a nation has the more prosperous the people are .There are only two things money can't buy in this world, the air we breathe and immortality, everything else costs money.
In economics, one must not forget the law of supply and demand, the very essence of market forces.Dearth of supply will increase prices, abundance of supply will depress prices.Than there is a new element, not found in the old economic theory, that have been added to the new scheme of things to influence market and market prices, it is called speculation.Speculation can be a powerful tool in setting market prices.These are the wonderful inventions of the economic gangsters.These are bands of white collar criminals loaded with other people's money to raid the world markets in search of anything they can get their hands on and steal your whole life saving away from you. Would you in your wildest dream ever imagined that the price of palm oil can touch RM4,500 per ton ? Do you honestly think that's the real value of the commodity? Do you think price of crude oil at US$147 a barrel is a reasonable level for optimum economic consumption? Just like a balloon if over inflated it would burst and burst it had.
Over the past two decades the world has been teetering on the verge of an economic disaster never seen before due to over-speculative indulgences in every aspect of its commercial activities.The bubble had burst and would take a while to recover.
If the Malaysian government think they have consummated defences against catching the bug that most other more developed countries are caught in and are presently in the throes of recession than there must be something wrong with the yardstick we used to measure our economic activities.The sooner we wake up to the reality that the honeymoon and the good time will be taking a break soon the better it would be, at least to have a contingency plan in case the situation turned bad.
In the United States (US) the three big car makers in Detroit have recently declared they are in serious financial trouble.General Motors(GM) the leading car makers have cash reserve of US$30 billion and have declared they would be running out of cash in 2 to 3 months time.With the dramatic decline in sales of its cars the company have to use its cash reserve to pay for its recurring expenditure at the rate of US$5 billion a month which means the total reserve would be completely exhausted in 6 months.So, even if you have money when things go bad, that money will be gone in no time.As at September 2008 Malaysia's foreign reserve stood at US$32.3 billion, not much bigger than the GM's reserve.
The three big car makers GM,Ford and Chrysler were not on the original list of patients for bail-outs when the US Congress approved the bail-out package.They are now seeking government bail-out which they probably will not get.Their troubles are of their own making, incompetent management and products quality problem.The same problem faced by Proton here.
I believe the US Government will not bail them out but would ask them to file for Chapter 11, a bankruptcy protection from creditors that allow the company to reorganise without threat of foreclosure from creditors.Some creditors may end up as shareholders of the company under a reorganised scheme.
I have said in my earlier posts there is usually a time lapse before we feel the effect of the global recession.At the moment everything seems fine but it may not be so by the end of the 1st quarter of next year when the recession bites in,unless something dramatically good happened along the way that changed the whole global economic scenario.
Precaution is better than cure.
Hooray! The price of crude had fallen below $50 a barrel.The price slid to as low as $48.64 today.Who was right those mumble-jumble sycophantic economists or .........? Than you have those who made foreccasts and predictions but didn't have the balls to put their names on it.
Employing academicians who spent more time trying to please their bosses to listen to what is pleasant to their bosses' ears rather than doing some serious research to predict short and long term economic trends is as good as not having any of those blighters on board.They are not worth their salt.
It is even more disheartening to hear that almost every leader in our government are sold on the idea of the nation's immunity to the global economic meltdown purportedly due to our strong banking/financial system and strong fundamentals whatever that might mean.
Strong finances and healthy foreign reserves are just some of the many components that make up the whole economic pie.There is an array of other things that influence the workings of the economy which eventually boils down to one single objective, the making of money.The more money a nation has the more prosperous the people are .There are only two things money can't buy in this world, the air we breathe and immortality, everything else costs money.
In economics, one must not forget the law of supply and demand, the very essence of market forces.Dearth of supply will increase prices, abundance of supply will depress prices.Than there is a new element, not found in the old economic theory, that have been added to the new scheme of things to influence market and market prices, it is called speculation.Speculation can be a powerful tool in setting market prices.These are the wonderful inventions of the economic gangsters.These are bands of white collar criminals loaded with other people's money to raid the world markets in search of anything they can get their hands on and steal your whole life saving away from you. Would you in your wildest dream ever imagined that the price of palm oil can touch RM4,500 per ton ? Do you honestly think that's the real value of the commodity? Do you think price of crude oil at US$147 a barrel is a reasonable level for optimum economic consumption? Just like a balloon if over inflated it would burst and burst it had.
Over the past two decades the world has been teetering on the verge of an economic disaster never seen before due to over-speculative indulgences in every aspect of its commercial activities.The bubble had burst and would take a while to recover.
If the Malaysian government think they have consummated defences against catching the bug that most other more developed countries are caught in and are presently in the throes of recession than there must be something wrong with the yardstick we used to measure our economic activities.The sooner we wake up to the reality that the honeymoon and the good time will be taking a break soon the better it would be, at least to have a contingency plan in case the situation turned bad.
In the United States (US) the three big car makers in Detroit have recently declared they are in serious financial trouble.General Motors(GM) the leading car makers have cash reserve of US$30 billion and have declared they would be running out of cash in 2 to 3 months time.With the dramatic decline in sales of its cars the company have to use its cash reserve to pay for its recurring expenditure at the rate of US$5 billion a month which means the total reserve would be completely exhausted in 6 months.So, even if you have money when things go bad, that money will be gone in no time.As at September 2008 Malaysia's foreign reserve stood at US$32.3 billion, not much bigger than the GM's reserve.
The three big car makers GM,Ford and Chrysler were not on the original list of patients for bail-outs when the US Congress approved the bail-out package.They are now seeking government bail-out which they probably will not get.Their troubles are of their own making, incompetent management and products quality problem.The same problem faced by Proton here.
I believe the US Government will not bail them out but would ask them to file for Chapter 11, a bankruptcy protection from creditors that allow the company to reorganise without threat of foreclosure from creditors.Some creditors may end up as shareholders of the company under a reorganised scheme.
I have said in my earlier posts there is usually a time lapse before we feel the effect of the global recession.At the moment everything seems fine but it may not be so by the end of the 1st quarter of next year when the recession bites in,unless something dramatically good happened along the way that changed the whole global economic scenario.
Precaution is better than cure.
Thursday, November 20, 2008
Petrol And Diesel Below MR1.50 A Litre ?
Hantu Laut
In my post 'Where Crude Oil Heading For' I predicted the price of crude would fall below US$50 per barrel.The likelihood of it going below that level look more and more realistic now.The huge stockpile in the US helped to drive price down.OPEC's production cut have not helped to stabilise price.The cut of 2 million barrel a day since September had no effect on keeping price sliding further down. The group are calling for further cuts.
India and China would require less need for energy as their economies begin to slow down in the next few months.Japan, one of the largest economy in the world is in a recession.The US,Europe ( the largest in the world) and most other countries are already in a recession.Only Malaysia and most third world countries are not ?
The current US crude price stand at US$53.90.The London Brent closed nearer the $50 mark at US$51.84 a barrel.Unusually cheaper than WTI ( West Texas Intermediate) which used to get around $1.00 to $2.00 higher than Brent.WTI is sweeter than Brent with lower sulphur content hence the higher price.
In 1998 the average price for crude was about US$12.00 a barrel and 4 years ago the average price was about US$38.00 a barrel.The price peaked at $147 few months back not so much due to supply and demand but more due to speculations by nasty speculators.
Middle East producers which have lower production costs may be able to sustain such low prices but new oilfields and those in deep waters may lose money due to higher production costs.
Those in Petronas may not be the happiest people now if they don't have huge forward contracts. If they didn't have any than production cut should be an option to cut down losses.
Malaysian motorists should be happy soon if the government continued to pass on the cheaper price.If price falls below US$50 a barrel than the price of petrol and diesel can posssibly be adjusted to as low as RM1.50 a litre.
In my post 'Where Crude Oil Heading For' I predicted the price of crude would fall below US$50 per barrel.The likelihood of it going below that level look more and more realistic now.The huge stockpile in the US helped to drive price down.OPEC's production cut have not helped to stabilise price.The cut of 2 million barrel a day since September had no effect on keeping price sliding further down. The group are calling for further cuts.
India and China would require less need for energy as their economies begin to slow down in the next few months.Japan, one of the largest economy in the world is in a recession.The US,Europe ( the largest in the world) and most other countries are already in a recession.Only Malaysia and most third world countries are not ?
The current US crude price stand at US$53.90.The London Brent closed nearer the $50 mark at US$51.84 a barrel.Unusually cheaper than WTI ( West Texas Intermediate) which used to get around $1.00 to $2.00 higher than Brent.WTI is sweeter than Brent with lower sulphur content hence the higher price.
In 1998 the average price for crude was about US$12.00 a barrel and 4 years ago the average price was about US$38.00 a barrel.The price peaked at $147 few months back not so much due to supply and demand but more due to speculations by nasty speculators.
Middle East producers which have lower production costs may be able to sustain such low prices but new oilfields and those in deep waters may lose money due to higher production costs.
Those in Petronas may not be the happiest people now if they don't have huge forward contracts. If they didn't have any than production cut should be an option to cut down losses.
Malaysian motorists should be happy soon if the government continued to pass on the cheaper price.If price falls below US$50 a barrel than the price of petrol and diesel can posssibly be adjusted to as low as RM1.50 a litre.
Before 1990 the price of petrol was RM0.89 a litre.The drastic increase was this year when crude price shot up to as high as US$ 147 a barrel.At least for the next few months Malaysians should be happy with cheaper fuel and falling prices of other consumer goods.
Farmers must be the dumbest people. At least in Sabah they are.The prices of green had gone up about two weeks ago when most other items are falling.
The price of crude may pick up again during the 1st or 2nd Quarter of next year if the global economy do not slide further down and those greedy hedge funds stopped screwing the world's financial markets again.
Thursday, November 13, 2008
Down,Down, Down !
Hantu Laut
We have one of the highest wastage of public funds through corruptions and incompetence.It wouldn't be an over-statement to say that at least 30% of taxpayers money are lost to these two evils in government.
We are also blessed by exploitable natural resources that gave us a sound economy that allow us to survive the pilferage,incompetency and inefficiency in the system.The biggest source of government funding comes from taxes and oil revenue.With falling global price of crude oil a big chunk of this revenue would be wiped out requiring the government to look for alternative source of financing for its budget.
If the world markets for crude oil and palm oil do not improve in the near future and with the decline in exports of manufactured goods the government would have a serious budget deficit.The liquidity problem is much more serious than those in government have anticipated.A near negative growth in the following year is not a far-fetched scenario.
China, now the second largest economy after the US, which have had double-digit growth the past few years will face a downturn in its economy soon.With two of the world largest economy slowing down there would be huge decline in demand of commodities including demand for crude oil.How long the recession would last is difficult to guess.Bail-outs in the US have not picked up momentum or showed any improvement to the economy.
Finance Minister and Prime Minister in waiting Najib Tun Razak would have to crack his head to find a solution to the problem.
A recent proposal to sell government assets to raise funds sounds impractical and would be easier said than done.Unless the government is prepared to sell these assets at very low prices there would be few takers.Those with money to buy would look for real bargain.Chances are it would go to cronies even at more depressed price.It would lose future income if income-generating assets are sold.Only loss-making corporations and non-income generating assets should be considered for sale.
Selling government controlled blue chips would be killing the goose that lay the golden eggs.The PM and Finance Minister should not agree to the sales of any of these golden assets in a depressed market.
Worst case scenario, the government may have to trim its development expenditure to reduce the budget deficit.
In October I predicted that the price of crude would fall to around US$50 per barrel before the end of the year in my post "Where Crude Oil Heading For" .The price had tumbled to US$55 in spite of OPEC cut in productions.This means that demand had gone down faster and bigger in volume than OPEC cut in production.
Prolonged period of depressed crude market would spell trouble for Petronas and the Malaysian government spending.
On a lighter note, I find Malaysian generally more interested in politics than the state of the economy.
The good news is prices of consumer goods would go down as well and consumers should be smart to avoid those businesses that are profiteering by not adjusting prices.
We have one of the highest wastage of public funds through corruptions and incompetence.It wouldn't be an over-statement to say that at least 30% of taxpayers money are lost to these two evils in government.
We are also blessed by exploitable natural resources that gave us a sound economy that allow us to survive the pilferage,incompetency and inefficiency in the system.The biggest source of government funding comes from taxes and oil revenue.With falling global price of crude oil a big chunk of this revenue would be wiped out requiring the government to look for alternative source of financing for its budget.
If the world markets for crude oil and palm oil do not improve in the near future and with the decline in exports of manufactured goods the government would have a serious budget deficit.The liquidity problem is much more serious than those in government have anticipated.A near negative growth in the following year is not a far-fetched scenario.
China, now the second largest economy after the US, which have had double-digit growth the past few years will face a downturn in its economy soon.With two of the world largest economy slowing down there would be huge decline in demand of commodities including demand for crude oil.How long the recession would last is difficult to guess.Bail-outs in the US have not picked up momentum or showed any improvement to the economy.
Finance Minister and Prime Minister in waiting Najib Tun Razak would have to crack his head to find a solution to the problem.
A recent proposal to sell government assets to raise funds sounds impractical and would be easier said than done.Unless the government is prepared to sell these assets at very low prices there would be few takers.Those with money to buy would look for real bargain.Chances are it would go to cronies even at more depressed price.It would lose future income if income-generating assets are sold.Only loss-making corporations and non-income generating assets should be considered for sale.
Selling government controlled blue chips would be killing the goose that lay the golden eggs.The PM and Finance Minister should not agree to the sales of any of these golden assets in a depressed market.
Worst case scenario, the government may have to trim its development expenditure to reduce the budget deficit.
In October I predicted that the price of crude would fall to around US$50 per barrel before the end of the year in my post "Where Crude Oil Heading For" .The price had tumbled to US$55 in spite of OPEC cut in productions.This means that demand had gone down faster and bigger in volume than OPEC cut in production.
Prolonged period of depressed crude market would spell trouble for Petronas and the Malaysian government spending.
On a lighter note, I find Malaysian generally more interested in politics than the state of the economy.
The good news is prices of consumer goods would go down as well and consumers should be smart to avoid those businesses that are profiteering by not adjusting prices.
Friday, October 24, 2008
The Ugly Extortionists
Hantu Laut
Got back my Streamyx yesterday after one week of screaming obscenities at TmNet's talking machines.They have gone completely futuristic, you talk to a machine that talk endlessly about the company but can't understand your plea for help.This company is helmed by a bunch of jackasses.A typical trademark of government-linked companies.
On 11 October I wrote on the expected price decline of crude oil due to declining demand in global consumption brought about by the global recession.
In my article "Where Crude Oil Heading For" I predicted that price would fall below the US$50 per barrel before the end of the year.OPEC is now taking steps to cut down production to stabilise prices.
Many OPEC members were over-spending their windfall for the past 18 months on the assumption that oil price would stay at high level.The spending spree in some OPEC countries have been unashamedly financed by other consuming countries forced to pay ridiculously high price for one of the most essential commodities in the modern world without which it can bring untold human miseries and paralyse the world's industry.The high price have to certain degree played an important part in the global economic chaos.
OPEC accounts for 40% of global oil supply and can influence or control prices in a stable economic situation by cutting or increasing production output.In a severe economic downturn the law of supply and demand would decide the idle price the global market should pay.The picture is increasingly moving in that direction and OPEC are now trying to stop the price free fall with cut in production, which they will find increasingly difficult to control as the recession moves into high gear in other industrialised countries.There would be major decline in industrial output in India and China starting in the 1st quarter of 2009.
OPEC countries have benefited and compensated by the strengthening of the US Dollars the past few weeks.Price is now steadying at US$67 a barrel and would dip further as more bad news come out of the global economy.
Below is what I wrote in my earlier article:
Got back my Streamyx yesterday after one week of screaming obscenities at TmNet's talking machines.They have gone completely futuristic, you talk to a machine that talk endlessly about the company but can't understand your plea for help.This company is helmed by a bunch of jackasses.A typical trademark of government-linked companies.
On 11 October I wrote on the expected price decline of crude oil due to declining demand in global consumption brought about by the global recession.
In my article "Where Crude Oil Heading For" I predicted that price would fall below the US$50 per barrel before the end of the year.OPEC is now taking steps to cut down production to stabilise prices.
Many OPEC members were over-spending their windfall for the past 18 months on the assumption that oil price would stay at high level.The spending spree in some OPEC countries have been unashamedly financed by other consuming countries forced to pay ridiculously high price for one of the most essential commodities in the modern world without which it can bring untold human miseries and paralyse the world's industry.The high price have to certain degree played an important part in the global economic chaos.
OPEC accounts for 40% of global oil supply and can influence or control prices in a stable economic situation by cutting or increasing production output.In a severe economic downturn the law of supply and demand would decide the idle price the global market should pay.The picture is increasingly moving in that direction and OPEC are now trying to stop the price free fall with cut in production, which they will find increasingly difficult to control as the recession moves into high gear in other industrialised countries.There would be major decline in industrial output in India and China starting in the 1st quarter of 2009.
OPEC countries have benefited and compensated by the strengthening of the US Dollars the past few weeks.Price is now steadying at US$67 a barrel and would dip further as more bad news come out of the global economy.
Below is what I wrote in my earlier article:
"With increasingly high unemployment in the developed economies, industrial outputs are going to plummet to a low level and consumption of energy would likewise follow.
As more people lose their jobs, businesses going into bankruptcies and reduction in global industrial outputs the demand for oil would show a sharp decline.Consumption would continue to decline as long as the global economy continue to shrink which is expected to continue well into 2009.With reduced global demand prices are expected to fall below US$50 a barrel before the year ended.
If the global recession become hard-headed and carry on without any sign of recovery than prices may even drop below US$30 per barrel by the first-half of 2009."
The oil-producing countries have had it too good and have been totally inconsiderate to poorer countries by demanding ridiculous price for their oil.
I believe crude price should stay around the US$50 per barrel, a reasonable threshold for both oil-producers and the rest of the world.
Anything more is extortion.
Saturday, October 11, 2008
Where Crude Oil Heading For?
Hantu Laut
Have we reached 'peak oil'? Would the world's industrial output come to a grinding halt when we ran out of fossil fuel.
Peak oil is not about absolute depletion of crude oil and the world running out of it.It is a theory of whether oil extraction have reached its peak and in terminal decline as featured in the 'Hubbart Curve'.
Below is Hubbart's theoretical chart
Click to read:
Have we reached 'peak oil'? Would the world's industrial output come to a grinding halt when we ran out of fossil fuel.
Peak oil is not about absolute depletion of crude oil and the world running out of it.It is a theory of whether oil extraction have reached its peak and in terminal decline as featured in the 'Hubbart Curve'.
Below is Hubbart's theoretical chart
Click to read:
From the said chart he theorised that oil extraction would decline to zero by the year 2200.
Will it happen? I would think so, maybe, not on the exact Hubbart's time frame, but the day would come when mother earth would run out of fossil fuel. I am also optimistic that by then humans would have found abundance of alternative sources of energy through technological advancement and new inventions capable of mass production of energy producing substances.
The recent high oil prices we saw this year was not the consequence of the law of supply and demand but has an added element of human greed in the form of speculation of oil futures.Again greedy speculators took advantage of this forward and futures contracts and took it to the casinos.
In 1972 the price of crude oil was around US$3.00 a barrel.During the Yom Kippur War or the Arab Oil Embargo in 1973/74 the price of oil quadrupled to US$12.00, not because of shortages but because of Arab's anger at America and the West for having sided with Israel.The Arabs put a brake on productions that increased the price.This year we saw the highest price of over US$150 per barrel fuelled by rising demands and needless to say price highly aggravated by speculations.
Prices have begun to fall over recent weeks as speculators moved out of the market in anticipation of the financial market collapse.The crude oil market is now finding its own price level.
Below is a chart showing the prices of crude between 1947 to May 2008:
Click to enlarge
With increasingly high unemployment in the developed economies, industrial outputs are going to plummet to a low level and consumption of energy would likewise follow.
As more people lose their jobs, businesses going into bankruptcies and reduction in global industrial outputs the demand for oil would show a sharp decline.Consumption would continue to decline as long as the global economy continue to shrink which is expected to continue well into 2009.With reduced global demand prices are expected to fall below US$50 a barrel before the year end.
If the global recession become hard-headed and carry on without any sign of recovery than prices may even drop below US$30 per barrel by the first-half of 2009.
It may sound like good news but it is not.In fact it is a scary scenario, it means the global economy is in the doldrums and there would be widespread hardship among the populace of the world.
Those who have cash are kings and can go bargain hunting.
QUIZ
Test Your Knowledge of the Economic Crisis
Sunday, June 22, 2008
The Petronas Mythbuster
Hantu Laut
The letter was authored by an employee of Petronas who took it on himself to clarify the actual position and the inner workings of the organisation to counter the myth about the company.
I leave it to my readers to decide the veracity or mendacity of the story.
Dear all,
After reading all the chain mails and blogs, I feel called to reply, because of the relentless attacks and allegations -- most of which are inaccurate or baseless -- against PETRONAS.
PETRONAS' STAFF SALARY & BONUS
1) The salaries paid to PETRONAS' employees are not as high as people think. At best, they are just industry average. And these are not attractive enough for some who left PETRONAS to find work at other companies (mainly from the Middle East) which are willing to pay more. Why do they pay more? The oil and gas industry worldwide has been facing acute shortage of qualified or experienced personnel, so most companies are willing to pay lots of money to entice and pinch staff from their competitors.
Bonus? There has NEVER been a bonus amounting to 6 months or 12 months throughout the 33 years. On average, it is 2 months. But don't ever think we don't deserve it. We more than deserve it. A lot of us work really hard, some in the most extreme of conditions. Those who have been to and worked in northern Sudan, for example, would testify that it's like working in a huge blower oven. Southern Sudan, on the other hand, is almost all swamps and mud. Imagine having to go through that kind of heat, or waddling in muddy swamps, day in and day out.
QUALITY OF CRUDE & REFINED PRODUCTS
2) Malaysia produces about 600,000 barrels of crude oil per day (and about 100,000 barrels condensate). Of this crude volume, 339,000 barrels are refined locally for local consumption. The rest is exported (and yes, because it has lower sulphur content it fetches higher prices).
Malaysia also imports about 230,000 barrels of crude oil per day, mainly from the Middle East, to be refined here. This crude oil contains higher sulphur and is less expensive (so the country gains more by exporting our crudes). In Malaysia, this crude is processed by PETRONAS at its second refinery in Melaka, and also by Shell at its Port Dickson refinery.
Different refineries are built and configurated to refine different types of crude. And each crude type yields different percentage of products (diesel, gasoline, kerosene, cooking gas etc) per barrel.
But most importantly, products that come out at the end of the refining process have the same good quality regardless of the crude types. That's why PETRONAS, Shell and Exxon Mobil share the same pipeline to transport the finished products from their refineries to a distribution centre in the Klang Valley. The three companies collect the products at this centre accordingly to be distributed to their respective distribution networks. What makes PETRONAS' petrol different from Shell's, for example, is the additive that each company adds.
PETRONAS' ROLE, FUNCTION & CONTRIBUTION
3) A lot of people also do not understand the role and function of PETRONAS, which is essentially a company, a business entity, which operates on a commercial manner, to mainly generate income and value for its shareholder. In this case, PETRONAS' shareholder is the Government.
In 1974, when PETRONAS was set up, the Government gave PETRONAS RM10 million (peanuts, right?) as seed capital. From 1974 to 2007, PETRONAS made RM570 billion in accumulated profits, and returned to the Government a total of RM335.7 billion. That is about 65% of the profits. That means for every RM1 that PETRONAS makes, 65 sen goes back to the Government.
Last year, PETRONAS made a pre-tax profit of RM86.8 billion. The amount given back to the Government (in royalty, dividends, corporate income tax, petroleum products income tax and export duty) was RM52.3 billion. The rest of the profit was used to pay off minority interests and taxes in foreign countries (about RM7.8 billion - PETRONAS now operates in more than 30 countries), and the remaining RM26.7 billion was reinvested. The amount reinvested seems a lot, but the oil and gas industry is technology- and capital-intensive. Costs have gone up exponentially in the last couple of years. Previously, to drill a well, it cost about US$3 million; now it costs US$7 million. The use of rigs was US$200,000 a day a couple of years ago; now it costs US$600,000 a day.
A lot of people also do not realise that the amount returned by PETRONAS to the Government makes up 35% of the Government's total annual income, to be used by the Government for expenditures, development, operations, and yes, for the various subsidies. That means for every RM1 the Government makes, 35 sen is contributed by PETRONAS.
So, instead of asking what happens to PETRIONAS' money or profits, people should be questioning how the money paid by PETRONAS to the Government is allocated.
CRUDE EXPORTS & FUEL PRICES
4) A lot of people also ask, why Malaysia exports its crude oil. Shouldn't we just stop exporting and sell at cheaper prices to local refiners? If Malaysia is an oil exporting country, why can't we sell petrol or diesel at cheaper prices like other oil producing countries in the Middle East?
I guess I don't have to answer the first couple of questions. It's simple economics, and crude oil is a global commodity.
Why can't we sell petrol and diesel at lower prices like in the Middle East? Well, comparing Saudi Arabia and other big producers to Malaysia is like comparing kurma to durian, because these Middle Eastern countries have much, much, much bigger oil and gas reserves.
Malaysia has only 5.4 billion barrels of oil reserves, and about 89 trillion cubic feet of gas. Compare that to Saudi Arabia's 260 billion barrels of oil and 240 trillion cubic feet of gas.
Malaysia only produces 600,000 barrels per day of oil. Saudi Arabia produces 9 million barrels per day. At this rate, Saudi Arabia's crude oil sales revenue could amount to US$1.2 billion per day! At this rate, it can practically afford almost everything -- free education, healthcare, etc, and subsidies -- for its people.
But if we look at these countries closely, they have in the past few years started to come up with policies and strategies designed to prolong their reserves and diversify their income bases. In this sense, Malaysia (and PETRONAS) has had a good head start, as we have been doing this a long time.
Fuel prices in Malaysia is controlled by the Government based on a formula under the Automatic Pricing Mechanism introduced more than a couple of decades ago. It is under this mechanism that the complex calculation of prices is made, based on the actual cost of petrol or diesel, the operating costs, margin for dealers, margin for retail oil companies (including PETRONAS Dagangan Bhd) and the balancing number of duty or subsidy. No retail oil companies or dealers actually make money from the hike of the fuel prices. Oil companies pay for the products at market prices, but have to sell low, so the Government reimburses the difference -- thus subsidy.
Subsidy as a concept is OK as long as it benefits the really deserving segment of the population. But there has to be a limit to how much and how long the Government should bear and sustain subsidy. An environment where prices are kept artificially low indefinitely will not do anyone any good. That's why countries like Indonesia are more pro-active in removing subsidies. Even Vietnam (which is a socialist country, by the way) is selling fuel at market prices.
PETRONAS & TRANSPARENCY
5) I feel I also need to say something on the allegation that PETRONAS is not transparent in terms of its accounts, business transactions etc.
PETRONAS is first and foremost a company, operating under the rules and regulations of the authorities including the Registrar of Companies, and the Securities Commission and Bursa Malaysia for its listed four subsidiaries (PETRONAS Dagangan Bhd, PETRONAS Gas Bhd, MISC Bhd and KLCC Property Holdings Bhd.
PETRONAS the holding company produces annual reports which are made to whomever wants them, and are distributed to many parties and places; including to the library at the Parliament House for perusal and reading pleasure of all Yang Berhormat MPs (if they care to read). PETRONAS also makes the annual report available on its website, for those who bother to look. The accounts are duly audited.
The website also contains a lot of useful information, if people really care to find out. Although PETRONAS is not listed on Bursa Malaysia, for all intents and purposes, it could be considered a listed entity as its bonds and financial papers are traded overseas. This requires scrutiny from investors, and from rating agencies such as Standard & Poor and Moody's.
BOYCOTT PETRONAS?
6) The last time I checked, this is still a democratic country, where people are free to spend their money wherever they like.
For those who like to see more of the money that they spend go back to the local economy and benefiting their fellow Malaysians, perhaps they should consider sticking to local products or companies.
For those who like to see that the money they spend go back to foreign shareholders of the foreign companies overseas, they should continue buying foreign products.
FINAL WORD (FOR TODAY)
I'm sorry this is rather long, but I just have to convey it. I hope this would help some of you out there understand something. The oil and gas industry, apart from being very capital intensive, is also very complex and volatile. I'm learning new things almost every single day.
Appreciate if you could help to forward this response to as many contacts as possible to counter the subversive proposal out there.
Thank you.
Tan, Boon Hua
Geoscientist
Peninsular Malaysia Gas Fields Development Project
PETRONAS Carigali Sdn Bhd
Level 17, Tower 2
PETRONAS Twin Towers,
KLCC 50088 Kuala Lumpur
__________________________________________
Tel : +603 - 2331 9307
Fax : +603 - 2331 5633
E-mail : tan_boonhua@petronas.com.my
The letter was authored by an employee of Petronas who took it on himself to clarify the actual position and the inner workings of the organisation to counter the myth about the company.
I leave it to my readers to decide the veracity or mendacity of the story.
Dear all,
After reading all the chain mails and blogs, I feel called to reply, because of the relentless attacks and allegations -- most of which are inaccurate or baseless -- against PETRONAS.
PETRONAS' STAFF SALARY & BONUS
1) The salaries paid to PETRONAS' employees are not as high as people think. At best, they are just industry average. And these are not attractive enough for some who left PETRONAS to find work at other companies (mainly from the Middle East) which are willing to pay more. Why do they pay more? The oil and gas industry worldwide has been facing acute shortage of qualified or experienced personnel, so most companies are willing to pay lots of money to entice and pinch staff from their competitors.
Bonus? There has NEVER been a bonus amounting to 6 months or 12 months throughout the 33 years. On average, it is 2 months. But don't ever think we don't deserve it. We more than deserve it. A lot of us work really hard, some in the most extreme of conditions. Those who have been to and worked in northern Sudan, for example, would testify that it's like working in a huge blower oven. Southern Sudan, on the other hand, is almost all swamps and mud. Imagine having to go through that kind of heat, or waddling in muddy swamps, day in and day out.
QUALITY OF CRUDE & REFINED PRODUCTS
2) Malaysia produces about 600,000 barrels of crude oil per day (and about 100,000 barrels condensate). Of this crude volume, 339,000 barrels are refined locally for local consumption. The rest is exported (and yes, because it has lower sulphur content it fetches higher prices).
Malaysia also imports about 230,000 barrels of crude oil per day, mainly from the Middle East, to be refined here. This crude oil contains higher sulphur and is less expensive (so the country gains more by exporting our crudes). In Malaysia, this crude is processed by PETRONAS at its second refinery in Melaka, and also by Shell at its Port Dickson refinery.
Different refineries are built and configurated to refine different types of crude. And each crude type yields different percentage of products (diesel, gasoline, kerosene, cooking gas etc) per barrel.
But most importantly, products that come out at the end of the refining process have the same good quality regardless of the crude types. That's why PETRONAS, Shell and Exxon Mobil share the same pipeline to transport the finished products from their refineries to a distribution centre in the Klang Valley. The three companies collect the products at this centre accordingly to be distributed to their respective distribution networks. What makes PETRONAS' petrol different from Shell's, for example, is the additive that each company adds.
PETRONAS' ROLE, FUNCTION & CONTRIBUTION
3) A lot of people also do not understand the role and function of PETRONAS, which is essentially a company, a business entity, which operates on a commercial manner, to mainly generate income and value for its shareholder. In this case, PETRONAS' shareholder is the Government.
In 1974, when PETRONAS was set up, the Government gave PETRONAS RM10 million (peanuts, right?) as seed capital. From 1974 to 2007, PETRONAS made RM570 billion in accumulated profits, and returned to the Government a total of RM335.7 billion. That is about 65% of the profits. That means for every RM1 that PETRONAS makes, 65 sen goes back to the Government.
Last year, PETRONAS made a pre-tax profit of RM86.8 billion. The amount given back to the Government (in royalty, dividends, corporate income tax, petroleum products income tax and export duty) was RM52.3 billion. The rest of the profit was used to pay off minority interests and taxes in foreign countries (about RM7.8 billion - PETRONAS now operates in more than 30 countries), and the remaining RM26.7 billion was reinvested. The amount reinvested seems a lot, but the oil and gas industry is technology- and capital-intensive. Costs have gone up exponentially in the last couple of years. Previously, to drill a well, it cost about US$3 million; now it costs US$7 million. The use of rigs was US$200,000 a day a couple of years ago; now it costs US$600,000 a day.
A lot of people also do not realise that the amount returned by PETRONAS to the Government makes up 35% of the Government's total annual income, to be used by the Government for expenditures, development, operations, and yes, for the various subsidies. That means for every RM1 the Government makes, 35 sen is contributed by PETRONAS.
So, instead of asking what happens to PETRIONAS' money or profits, people should be questioning how the money paid by PETRONAS to the Government is allocated.
CRUDE EXPORTS & FUEL PRICES
4) A lot of people also ask, why Malaysia exports its crude oil. Shouldn't we just stop exporting and sell at cheaper prices to local refiners? If Malaysia is an oil exporting country, why can't we sell petrol or diesel at cheaper prices like other oil producing countries in the Middle East?
I guess I don't have to answer the first couple of questions. It's simple economics, and crude oil is a global commodity.
Why can't we sell petrol and diesel at lower prices like in the Middle East? Well, comparing Saudi Arabia and other big producers to Malaysia is like comparing kurma to durian, because these Middle Eastern countries have much, much, much bigger oil and gas reserves.
Malaysia has only 5.4 billion barrels of oil reserves, and about 89 trillion cubic feet of gas. Compare that to Saudi Arabia's 260 billion barrels of oil and 240 trillion cubic feet of gas.
Malaysia only produces 600,000 barrels per day of oil. Saudi Arabia produces 9 million barrels per day. At this rate, Saudi Arabia's crude oil sales revenue could amount to US$1.2 billion per day! At this rate, it can practically afford almost everything -- free education, healthcare, etc, and subsidies -- for its people.
But if we look at these countries closely, they have in the past few years started to come up with policies and strategies designed to prolong their reserves and diversify their income bases. In this sense, Malaysia (and PETRONAS) has had a good head start, as we have been doing this a long time.
Fuel prices in Malaysia is controlled by the Government based on a formula under the Automatic Pricing Mechanism introduced more than a couple of decades ago. It is under this mechanism that the complex calculation of prices is made, based on the actual cost of petrol or diesel, the operating costs, margin for dealers, margin for retail oil companies (including PETRONAS Dagangan Bhd) and the balancing number of duty or subsidy. No retail oil companies or dealers actually make money from the hike of the fuel prices. Oil companies pay for the products at market prices, but have to sell low, so the Government reimburses the difference -- thus subsidy.
Subsidy as a concept is OK as long as it benefits the really deserving segment of the population. But there has to be a limit to how much and how long the Government should bear and sustain subsidy. An environment where prices are kept artificially low indefinitely will not do anyone any good. That's why countries like Indonesia are more pro-active in removing subsidies. Even Vietnam (which is a socialist country, by the way) is selling fuel at market prices.
PETRONAS & TRANSPARENCY
5) I feel I also need to say something on the allegation that PETRONAS is not transparent in terms of its accounts, business transactions etc.
PETRONAS is first and foremost a company, operating under the rules and regulations of the authorities including the Registrar of Companies, and the Securities Commission and Bursa Malaysia for its listed four subsidiaries (PETRONAS Dagangan Bhd, PETRONAS Gas Bhd, MISC Bhd and KLCC Property Holdings Bhd.
PETRONAS the holding company produces annual reports which are made to whomever wants them, and are distributed to many parties and places; including to the library at the Parliament House for perusal and reading pleasure of all Yang Berhormat MPs (if they care to read). PETRONAS also makes the annual report available on its website, for those who bother to look. The accounts are duly audited.
The website also contains a lot of useful information, if people really care to find out. Although PETRONAS is not listed on Bursa Malaysia, for all intents and purposes, it could be considered a listed entity as its bonds and financial papers are traded overseas. This requires scrutiny from investors, and from rating agencies such as Standard & Poor and Moody's.
BOYCOTT PETRONAS?
6) The last time I checked, this is still a democratic country, where people are free to spend their money wherever they like.
For those who like to see more of the money that they spend go back to the local economy and benefiting their fellow Malaysians, perhaps they should consider sticking to local products or companies.
For those who like to see that the money they spend go back to foreign shareholders of the foreign companies overseas, they should continue buying foreign products.
FINAL WORD (FOR TODAY)
I'm sorry this is rather long, but I just have to convey it. I hope this would help some of you out there understand something. The oil and gas industry, apart from being very capital intensive, is also very complex and volatile. I'm learning new things almost every single day.
Appreciate if you could help to forward this response to as many contacts as possible to counter the subversive proposal out there.
Thank you.
Tan, Boon Hua
Geoscientist
Peninsular Malaysia Gas Fields Development Project
PETRONAS Carigali Sdn Bhd
Level 17, Tower 2
PETRONAS Twin Towers,
KLCC 50088 Kuala Lumpur
__________________________________________
Tel : +603 - 2331 9307
Fax : +603 - 2331 5633
E-mail : tan_boonhua@petronas.com.my
Tuesday, June 10, 2008
Anwar Ibrahim:Talking Cock
Hantu LautMany governments have to face the unpleasant fallout of the fuel crisis with prices of goods spiralling out of control festering discontent and labour unrest in the country.
In Spain and France thousands of truckers blocked roads over the rising prices of petrol and diesel.In Portugal and Spain long queues formed at supermarkets for fear of shops running out of fresh food due to truckers strike.The story were the same at petrol stations where long lines of motorists were waiting to fill up.In Madrid around 15% of petrol stations were dry a few days ago.
French truck drivers joined the protest and sealed off their side of the border and gridlocked with a go slow that caused 20 miles of tailbacks.In Britain 300 lorries are expected to converge on central London on 2nd July to protest the high price of fuel.There were protests and demonstrations in other parts the world over the high prices of petrol and diesel. Most governments have no choice but to increase prices.
Experts warned that the escalation in price has not ended and may climb to US$200 per barrel if there were no drastic reduction in consumptions.With the exception of OPEC members who can provide cheap fuel to the people, other countries including those highly developed economies, are worried that keeping the price low through subsidies would encourage consumers not to conserve and would lead to wastage and further price escalation and more money flowing to oil-producing countries with serious negative impact on the global economy.Increased consumption and some speculations had been the reasons behind the sharp rise in price.
Was speculation the cause of the unstoppable rise in the price of crude oil? Not so according to Adrians Binks of Argus Media Group, the largest independent energy news and price reporting agency.Binks may be right to certain extent but may not be exactly on the dot.Any commodity with futures market will attract some form of speculation and crude oil has futures for hedging just like many other commodities and would definitely attract some speculators with big appetite for big bucks.
One lucky investor who had, after a lot of research and a lot of thinking, eleven years ago decided that the long decline of oil price in the 1980s was about to end and acted on his conviction.Richard Rainwater of Texas plunked down $300 million of his own money on energy-company stocks and oil and gas futures.At the end of 1998 , the price of oil fell below US$10. per barrel and petrol sold for 90 c per gallon. Rainwater was getting poorer by the day while the Internet and dotcom were making billionaires.Then the dotcom bubble bursted and the price of oil climbed,climbed and climbed.A few weeks ago when the price of oil was at $129. Rainwater liquidated all his energy stocks and netted US$2 billion.He rises from No. 200 on Forbes 400 richest to No.91 with net worth of US$3.5 billion.
In the United States where people are more adapt to changing oil prices and are quick to change their lifestyle, the price of petrol hit the $4.00 per gallon or $0.95 per litre two days ago.Many Americans have abandoned their gas-guzzling SUVs in favour of smaller fuel-saving vehicles.The sales of SUVs and big capacity engine are expected to fall drastically in favour of hybrid and smaller cars.
In UK the price of petrol is around 117.9 p per litre, one of the highest in Europe. To top up a full tank,depending on size of cars, one would require between 100 to 130 pounds.For many Malaysians that's two-month petrol bill.
The most amazing country is Norway, the third largest exporter of crude oil in the world also has one of the highest price of petrol and diesel in the world.Its exports around 3 million barrel of crude oil per day.Since the discovery of oil and gas in the 1960s the country has been saving it oil and gas budget surpluses in a Government Petroleum Fund invested overseas now valued at over US$300 billion which is a whopping RM990 billion at current exchange and is still growing.Conservative estimates predicted the funds may reach US$800-900 billion by 2017.It is a net external creditor and has the second highest per capita in the world at US$53,037. (IMF).A nation once dependent only on its fishing industry and shipping fleet is now the richest nation on earth due to its prudent financial management and a government that stays clear of corruption.
Malaysians who used to be pampered by subsidised petrol and diesel were shocked and angry when the government announced a hefty increase in the prices of petrol and diesel last week. Long queues at petrol stations were seen throughout the nation as motorists rushed to top up their tanks before the midnight dateline.There were huge public outcry accusing the government of Abdullah Badawi as being uncaring and irresponsible.The oppositions political parties and former Prime Minister Mahathir Mohammad were quick to jump on the bandwagon and sent a flurry of attacks on Abdullah. Small and peaceful street protests were seen in the capital city, Kuala Lumpur.
The much touted prime minister in waiting Anwar Ibrahim said the price hike has made the prospect of Pakatan Rakyat taking over the federal government looking much brighter than before and oil price will be reduced as soon as Pakatan took over the government.He also said they will reduce the pump price for petrol even if the price of crude went above US$200 per barrel.
A very brave promise indeed, how is he going to do it and for how long is one big question mark.Is he a man of many words and would have little to offer when the time comes.I dreaded the day Anwar become prime minister and failed in his promises to the Malaysian people in general and Sabahans in particular.Say I am a pessimist but I can't foresee Anwar being able to deliver what he promised the Sabahans. You can't just give Sabah the 20% and ignore the other two states,Sarawak and Trengganu.
With the current price of oil Sabah would become a very rich state if it gets 20% royalty.Let's assume the production from Sabah is around 300,000 barrels per day.At current price of US$130 bbl the total sale a day would be US$39 million and annual gross sale of US$14.23 billion and at 20% on gross sale Sabah would be getting US$2.84 billion in royalties and at current exchange rate it worked out to be RM9.37 billion annually.
Malaysia consumes about 530,000 bbl/day of crude oil.Assuming the volume of petrol and diesel obtained after refining is 60%, its daily consumption is 50.5 million litre a day (see conversion table below).
If Anwar brings the price of petrol and diesel down to its former level of RM 1.92 and RM1.58 per litre respectively and at consumption of 50.5 million litre a day, the Malaysian government would have to fork out subsidy at various level as shown below:
Unit---- Per-------- Per
Sub---- Day --------Annum
sidy---- RM --------RM
--------------------------------
1.00---- 50.5 million 18.4 billion
1.50---- 75.7-------- 27.6
2.00---101.0--------36.8
2.50--- 126.2------- 46.0
3.00----151.5------- 55.3
After the recent price increase the government would still be subsidising about RM1.50 per litre which is around RM27 billion a year.
The consolidated profit of Petronas for the year ended 31 March 2007 was RM46.4 billion and shareholder's fund stood at RM170.9.Where is Anwar going to get his money to subsidise fuel to make fuel thirsty Malaysians happy.
The total Malaysia budget for 2008 was RM176.9 billion.Abdullah expects the budget deficit to narrow down to 3.1 % for the year.With higher energy price there would be some contraction in GDP growth in 2008 where manufacturers have to struggle with higher costs of production due to higher energy costs.
He boldly says he would continue the subsidy even if the price is above US$200 a barrel.A smart man that many Malaysians are very much in love with but who cares not about the nation as long as he stays popular. If the price of oil were to be at US$200 per barrel, it would roughly costs US$1.26 or RM4.10 to buy a litre of crude before adding cost of freight and refining costs.Has Anwar any idea what would be the eventual cost of the refined products.A table below shows the main products and other derivatives that a barrel of oil produces. Anwar promise could just be a pie in the sky.His act of mendacity to the Malaysian people is just abominable.
The lightning increase in the price of crude had taken many governments by surprise where the fundamentals of economic forecasts have gone out of the window leaving government planners flustered and in disarry.
The increases in price of petrol and diesel(2004-2008) in Malaysia is shown in the table below:
There were gradual increase between May 2004 and February 2006. The drastic increase between Feb 2006 and June 2008 was probably due to the sharp increase in the price of crude during the same period.
Between Feb 2006 to Oct 2006 the price of crude was fluctuating between US$54-68, breached the US$100 in April 2008 and climbed to over US$130 in May/June 2008.The government should have done one adjustment between Feb and Oct 2006 and a second adjustment in June this year.
Anwar wanted his Pakatan Rakyat to take over the federal government, if possible, through the back door.
Take a look at his Pakatan Rakyat in Selangor and Penang.They seemed more interested in witch hunting than getting down to serious work to administer the states.They delighted in digging into the sins of the previous administration rather than leaving it to discover in the course of doing their duty.
Facts and figures about crude oil:
1 barrel of crude = 42 U.S.gallon = 34.9 Imperial gallon = 158.9 litre
The table below shows what a typical barrel
of crude produces:
| Product | Percent of Total |
|---|---|
| Finished Motor Gasoline | 51.4% |
| Distillate Fuel Oil | 15.3% |
| Jet Fuel | 12.3% |
| Still Gas | 5.4% |
| Marketable Coke | 5.0% |
| Residual Fuel Oil | 3.3% |
| Liquefied Refinery Gas | 2.8% |
| Asphalt and Road Oil | 1.7% |
| Other Refined Products | 1.5% |
| Lubricants | 0.9% |
Bringing the price of petrol and diesel down would certainly endear the people to him but what price the nation would have to pay to make the people happy, Anwar popular and the nation broke.
Saturday, June 7, 2008
Mahathir's Crude Calculation Of Crude Oil
Filling up, a painful
experience
Are we to believe all those hardball politics ? Many don't and it makes life difficult for Prime Minister Abdullah Ahmad Badawi.
People like Anwar Ibrahim, estranged former Prime Minister Mahathir Mohammad and Pakatan Rakyat have vested interests to demonise Prime Minister Abdullah Ahmad Badawi.They should not be looked upon as guardian angels.They are the demolition squads.
Anwar wanted Pakatan Rakyat to take over the government and he takes the post of prime minister.Mahathir has an axe to grind with Abdullah for the shelving of his vision of grandeur.Mukhriz Mahathir has lost his sense of balance and had become a chip of the old bloke.
Put any of them to run the government under the present situation you would see the same scenario.Their incessant barkings are now becoming a source of annoyance and an insult to the intelligentsia.
It is amusing to note that an article on comments made by Mahathir in his blog on the recent price hike of petrol and diesel appeared in Malaysiakini penned by one Syed Jaymal Zahiid. Malaysiakini appended a table on the price of petrol in other oil producing countries without doing an analysis and rendering of the different economic and social structures of those countries in comparison with Malaysia. The table from the said article is reproduced below:
Looking at the prices in the table any laymen would
immediately conclude that the Malaysiangovernment was wrong and could well afford to
give the people cheaper price for petrol and diesel because we are oil producing nation.The purpose of the table is to mislead those who has no grasp of economics.
The writer and Malaysiakini should have shown some semblance of responsibility to explain the purpose of the table.
Malaysia is not in the same league as those OPEC countries mentioned in the table. Crude oil is not the staple food(product) of Malaysia. Our domestic consumption of oil is almost 78% of our production capacity.We are a minuscule net exporter of crude oil.
Let's take Venezuela, which has the same population as Malaysia.It produces 2.8 million barrels per day and exports 2.2 million bbl per day and consumes only 599,000, bbl per day. Its economy depended solely on export of crude oil.Almost 90% of its export earnings came from export of crude. It has the lowest price for fuel oil among OPEC members, an unimaginable amount of RM0.16 per litre.
President Hugo Chavez is doing what Mahathir has been doing for the 22 years he was in power.Instead of making strong effort to raise to optimum level the income and living standards of the people, he pampered them with all kind of subsidies just to keep himself in power. The Malaysians' mindsets are now finely-tuned to the subsidy mentality.
Let us now take the other end of the spectrum, UAE (United Arab Emirates) with a small population of 4.6 millions.It produces 2.54 bbl/day and exports almost all of its premium crude.It imports around 137,000 bbl/day for part of its domestic consumptions. Although it could offer its people the cheapest price for petrol or even give it away free, it didn't.Its domestic price for petrol is MR1.19 per litre which is about the same price during Mahathir's time.
UAE is a forward looking nation and has diversified its economy to be not solely dependent on its crude oil export.Unlike Chavez of Venezuela, the rulers of UAE are fully secured in their seats and have successfully modernised and elevated the income level and living standards of the people.
Prime Minister wannabe Anwar Ibrahim said the price hike “wanton in size and callous in effect” and described the steepness in the price increase as unconscionable.
Anwar together with his former boss played equally damaging role to propagate a carrot and stick administration during his time in UMNO.He did nothing to stop the abuses when he was in the comfort zone.If you opposed the government you are seen as a security threat and are likely to be charged under the ISA. If you are a strong party supporter or a clever sycophant you would be rewarded with lucrative government contracts or given well-established public listed company on the platter that can make you an instant millionaire.
More shameful is Mahathir veiled attempt to mislead the people by saying that the government has the money to keep the fuel subsidy. He is either bad in mathematics or intentionally misrepresented Petronas profits.
For an ex prime minister who had 22 years experience in running the nation he should know the nitty-gritty of economics and interpretation of financial statements.As an adviser to Petronas such blatant disregard for facts and figures is inexcusable.
Writing in his blog he said“Roughly Malaysia produces 650,000 barrels of crude per day. We consume 400,000 barrels leaving 250,000 barrels to be exported. Our 250,000 barrels of export should earn us RM27 billion.
“But Petronas made a profit of well over RM70 billion, all of which belong to the government. I feel sure that maintaining the subsidy and gradually decreasing it would not hurt government finances,”
"Three years ago the selling price of crude was about USD30 per barrel. Today it is USD130 – an increase of USD100. There is hardly any increase in the production cost so that the extra USD100 can be considered as pure profit.
Our 250,000 barrels of export should earn us 250,000 x 100 x 365 x 3 = RM27,375,000,000 (twenty seven billion Ringgit).
But Petronas made a profit of well over RM70 billion, all of which belong to the Government.
By all accounts the Government is flushed with money"
Mahathir's above calculation is grossly misleading and most unexpected coming from someone like him, who is adviser to Petronas and one who knew the inner workings of government.The RM27 billion he calculated is gross sale not profit.
Below are details of the world prices of crude and the spot price of Malaysian Tapis for the period shown there in.Prices are not average but year end price.The annual average price would be much lower.
Year World Price US$ Malaysian Tapis US$ (in red)
-------------------------------------------------------------------------
Dec 2003 28.13 32.03
Dec 2004 33.05 38.41
Dec 2005 51.73 61.97
Dec 2006 55.95 65.57
Dec 2007 89.76 98.44
-----------------------
Jan 2008 85.53 93.69
Feb 2008 95.15 104.21
Mar 2008 99.32 107.88
Apr 2008 111.03 120.88
May 2008 126.06 138.43
---------------------------------------------------------------------------
The price reached US130. bbl only in May 2008.
Assuming we take the year end price between 2003 and 2007, the price for the period would be an untrue average of US$59.28 per barrel for Malaysian Tapis Spot.Let us assume the true average was US$50.00.
Assuming Petronas produced a daily average production of 600,000 bbl/day for the period, the annual gross sale of crude would be US$50 x 365 x 600,000. = US$10.5 billion before deducting operational costs, royalty to states and taxes.
Let us work out how much Petronas make between the period Mahathir left office and Abdullah took over the helm to the end of 2007.
Annual sale of crude US$10.5
Less:5% royalty to states .525
-----------
9.975
Assuming all other costs were
50% of net sales 4.987
------------
Net Profit to Petronas 4.987 x 3.20 = RM15.96
Petronas annual profit attributed to export of crude oil between 2003 to 2007 was only RM15.96 billion not RM27 billion as made out by Mahathir.Petronas also generates profits from it other operations especially its LNG and refined petroleum operations.Its other profit centres are from its overseas operations in other countries. In 2005 its revenue was US$44.3 billions and made a net profit of US$11.6 billions.
Petronas current crude production is in the region of 700,000 to 730,000 barrels per day.With the current high price of crude it probably can make RM60-70 billions from all its operations.
Malaysia's domestic consumption is in the region of 550,000 barrels a day and about 300,000 barrels of crude are imported to supplement the domestic needs .It is obvious from the amount of domestic consumption which is almost 78 % of the total crude production it would be unwise to fleece Petronas to continue with the subsidy. It would be likened to " kill the goose that lays the golden egg" if the government were irresponsible and continue the subsidy just to be popular with the people.
During Mahathir's time when the price of crude was much cheaper, averaging less than US$20. per barrel , Petronas profits had been even smaller. He kept Petronas accounts a closely guarded secret.
Why did Mahathir keeps the accounts of Petronas a secret? It is obvious he didn't want Malaysians to know how the money was spent and what are the reserves left after the many bail outs of failed projects and insolvent financial institutions and financing of his grandiose projects. Petronas is also wasting money on prestigious and non-revenue generating projects such as the Petronas Philharmonic Orchestra and bankrolling the F1 races. Now he claims the government is flushed with money.
The price of crude reached its peak at the end of May but have eased slightly since then.Will the price breached the US$200 mark this year?
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