Let Petronas do its job

drops out of favour with Petronas, it means that it has performed deplorably.)

A dynamic list of registered Petronas contractors exists. The problem is, there’s a large number of them who just aren’t competitive. And that’s excluding the so-called “agents” who merely hope to secure a Petronas contract typically by claiming that they are part of the elite connected personnel of the country.

Those guys have got no business being on this list. By the way, there are around 3,700 such registered contractors today. The number should be close to the 700-odd that Norway has, a country with similar-sized hydrocarbon resources as Malaysia.

The other problem is the non-competitive ones. Petronas has long called for these players to do something about that. When oil prices were high, things weren’t so obvious. But in this period of prolonged lower oil prices, it becomes very clear if contractors can’t perform up to mark, as prices of O&G services have come down to realistic levels. It’s kind of like how Warren Buffet put it: “Only when the tide goes out do you discover who’s been swimming naked”.

Of course, it’s not only local players who are trying to strike a sweet deal with Petronas.

I’m sure in the early days, when exploration expertise came mainly from the US or European firms, they negotiated better deals for themselves when they struck the production sharing contracts with Petronas. Today, the story is different, as Petronas has over the years become very adept at inking joint ventures that are not lopsided.

Just ask all the global O&G companies doing or trying to do business with Petronas today and they will tell you that the latter strikes a hard bargain.

This brings to mind recent reports speculating a deal between Petronas and Saudi Aramco, the world’s largest oil company.

There has been a fair bit of speculation surrounding Aramco inking a deal with Petronas in relation to the latter’s Refinery and Petrochemical Integrated Development or Rapid project in Pengerang, Johor. The latest is that both parties will sign an agreement on Monday during King Salman’s visit to Malaysia.

Petronas has not said anything about any potential deal with Aramco, except that it is always in talks with potential partners, but that any deal inked would have to be on Petronas’ terms. In other words, beneficial to Petronas and not lopsided, as it should be.

Petronas’ president and CEO Datuk Wan Zulkiflee Wan Ariffin recently told editors in Kuala Lumpur that Petronas never takes on projects with the view that it has to depend on investors for funding to complete the project.

That said, partnering Aramco should have its benefits, considering it is not only the company with the vastest oil reserves, but also the most valuable company in the world today. The deal just has to be struck on equally beneficial terms.

It is also clear that Petronas is still in a decent financial state, with Fitch recently affirming its A- rating on the oil giant.

Petronas also has around RM130bil in cash. Hence, it should not be nudged into any deal that is not on its terms. Some other countries have seen the well-connected get their hands on the kitty of their rich Government-owned companies. Let this not happen to Petronas.

Remember the spirit of the formation of Petronas? It was created by virtue of the Petroliam Development Act of 1974, which wrested control of all the country’s O&G resources into Petronas for the benefit of all Malaysians.

In other words, the O&G resources of the country belong to all Malaysians, and they have to be handled with care.