Who Benefits When The Oil Price Hikes?

The other shocking revelation that has come to my knowledge is that 80% of the oil produced by Petronas is not sold directly to the world market but is channelled through six ‘option holders’ who obtain the supply from Petronas below market prices. These option holder agents are the ones reaping the benefits in the oil price hikes.

Who are these people?

Why are there in the first place? Why had such a system been created for Petronas? Are these people in fact representing certain private interests?

It is also understood that this supply through the option holders is sold by contracts with a binding agreement for 20 or 30 years, causing huge losses for Petronas when oil price increases, as Petronas would then have to continue selling at the old agreed price.

Only 20% of Petronas’s supply is sold through direct open bidding.

Because of these arrangements, Petronas is sadly not maximising its revenue by dealing direct with the open world market. Instead it has been incurring incalculable losses for the nation and for the people.
How much this monstrous loss is, we will never know.

The Members of Parliament and the state government should boldly raise up this very important issue in Parliament or directly with the federal government for the benefit of the oil-producing states.

As soon as possible, leaders of the oil producing states should seek for a review of the oil royalty rate and push for a differentiation of prices and benefits for the oil-producing states and the non-oil-producing states.

This review is being offered by the alternative government which is committed to giving the oil-producing states at least 20% oil royalty.

This is a window of opportunity for all of us to demand for a review of the Petronas agreements, and to make Petronas more open and transparent.