Petronas can produce oil for 20 years
KUALA LUMPUR: Petronas will continue to produce crude oil when Malaysia becomes a net oil importer.
"Being a net importer means that the country is in a situation where it has to import more than it produces.
"Malaysia will become a net importer when its domestic consumption, growing at six per cent per annum, is expected to overtake national production in 2011. But we will continue to produce oil for another 20 years or so."
He said the country now produces an average of 600,000 barrels of oil per day and this production level would be maintained for as long as possible.
On the contrary, he said, Petronas' refineries could make less money or even incur losses as a result of higher feedstock costs, if crude oil price hikes continued unabated.
Although the upstream sector made more money when the price of crude oil rose, Hassan said the downstream sector incurred increased costs as they needed to buy the oil at global prices, which were at record levels.
Oil prices traded at US$136.50 (RM447.36) per barrel in London on Thursday.
"And don't forget that if we make money, we pay 38 per cent in petroleum tax to the government, in addition to the corporate tax," added Hassan.
Petronas was importing crude oil, Hassan said different types of crude oil produced different amounts of petroleum products, such as diesel and petrol.
Malaysia's benchmark crude oil, Tapis Blend, does not produce as much petrol but it produces higher distillates.
Tapis is the most expensive crude oil in the world.
Described by the industry as sweet and light, it has low sulphur content.
That is why Petronas built a second refinery in Malacca to process imported crude, primarily from the Middle East which contains high amounts of sulphur.
It is described by the industry as sour and heavy.
Hassan said Malaysia already had the capacity to refine 100,000 barrels per day of foreign crude oil.
He said Petronas decided to build a refinery in Terengganu when there was a shortage of diesel in 1979 for security reasons but the refinery had never been viable because input costs were very high.
He also said that the cost of exploration and production activities had gone up.
For instance, the cost of drilling an exploration well in the continental shelf had more than doubled to US$7 million, from US$3 million previously. - Bernama
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