Petronas Gets 10 15 Not 95 In O G Revenues Says Rafizi

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The ex-economy minister says claims that the national oil company takes the bulk of earnings are misleading, ignoring the billions spent to develop East Malaysia’s oil and gas industry.
Rafizi Ramli (left) said Petronas may only record a profit margin of around 10% to 15% for the development of an oil and gas block under exploration.PETALING JAYA: Petronas’s profit margins from oil and gas (O&G) projects are only around 10% to 15% after accounting for heavy development costs and dividend payouts, said former economy minister Rafizi Ramli
Rafizi was responding in the latest episode of his Yang Berhenti Menteri podcast to Sarawak government legal adviser JC Fong, who reportedly said Petronas had taken 95% of the state’s O&G revenues for the past five decades.
The Pandan MP contended that the assertion was inaccurate and based on “half-baked figures”, ignoring the hundreds of billions that Petronas had invested to build the O&G sector in East Malaysia.
Under the production sharing contract (PSC) framework, he said, an explored block provides 5% royalty each to Sarawak and Putrajaya, with the balance covering costs and shared with partners.

“If you take one PSC, after paying a 10% dividend, you’re left with 90%. From that, likely 70% is costs, and that doesn’t even go into Petronas’s pocket. Some of those contracts are awarded to Sarawak companies.
“So the remaining 20% has to be shared with partners and used to cover other financial commitments. That’s why the profit margin is only about 10% to 15%.”
He said rising costs had squeezed profits further.
Rafizi said Petronas also has to return much of its earnings to the federal government through dividends, while some funds are channelled to Sarawak via specific allocations.
He said the 10% to 15% Petronas retains is justified, as the company shoulders the investment, risk, operations, and long-term capital spending on infrastructure.
With the state now regaining control of gas distribution through Petros, he said, the government would be better placed to direct funds to people-centric programmes.
“I’m not saying it’s wrong for Sarawak to want more rights in deciding how its resources are developed, but we should be educating the people.
“It’s not fair, it’s not true to say 95% of revenues go to Petronas,” he said. - FMT

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