The State Of The Nation: Shrinking oil revenues, spending still high
This article first appeared in The Edge Malaysia Weekly, on October 19 - 25, 2015.
In 4 years, oil from US$200 to US$20
M'sia 25% of income from oil
crude tumbled precipitously from US$100 to just under US$50
Malaysia net oil importer
plagued by 1MDB needs to pump-prime economy
ensure bottom 40% of income earners (Malays mostly) move up
Why is oil below US$50 bad news for M'sia?
technology made shale oil & gas cheaper to produce
M'sian govt depend on oil revenue - 29.7% in 2014
govt & people used to bumper income with high oil prices
difficult to adjust expenditure downwards with low oil prices
govt debt risen from 30% in 1997 to 53.7% this year
Including g'tees by fed govt, debt is RM175.81b well above 55% ceiling
In Aug Petronas forced to draw on reserves, make cost cuts
cash from operations cannot cover capex & RM26b dividend for 2015
Petronas paid RM27b to RM30b / yr in dividends to govt btwn '09 and '14
Petronas’ contribution to fed, state govt RM80b in 2012, RM75.3b in 2014.
Petronas’ cumulative contribution since 1974 RM881.3b
more than double BNMs foreign currency reserves
govt’s opex projected 95% of revenue in 2015
problem is M'sia spending RM100 when earning RM90, debt adding up
cannot be sustained; don’t need a PhD to know that
As Prime Moron has said, next year Petronas can only give RM9b dividends. So where is the money going to come from to pay for all the free stuffs?
Especially the overpriced multi billion Ringgit contracts for the crony Datos and Tan Sris?
Ok now here is the more scary news. Petronas is the national piggy bank - the source of all the free stuffs. Petronas itself is in some bit of danger.
Here is something about Petronas NOT from The Edge. This is from someone else:
Petronas Floating LNG 1 (FLNG1) Kanowit to start ops early next year
Breakeven Price for FLNG 1 near US$10 per MMBTU Current price for Asian LNG is US$7 per MMBTU range.
Reuters forecasting 2016 average price US$7.80 per MMBTU
CME Group forecasting 2016 Asian LNG US$6 per MMBTU, low US$4.80
So Petronas will most likely LOSE MONEY on FLNG1
Meanwhile, Petronas still proceed with $36 billion LNG project in Canada.
Unofficial breakeven price for Canadian LNG project is US$10.30 to $11.60 MMBTU Petronas may run out of cash reserves by the end of 2017
Folks this is a new tune I have taken up - the Petronas fiasco in the making.
That Canada LNG project is anything between US36b - US50b. That is RM150b to RM200b.
I am sure the Kanowit FLNG1 project costs billions as well.
But all oil and gas projects depend on the selling prices of oil and gas.
In this case the Breakeven price is critical.
For the red shirts, the Mat Maslan types and the other UMNO boys, breakeven means BELUM UNTUNG. NO PROFITS. Breakeven means just cover costs.
The BE price for FLNG1 is near US$10 per MMBTU (million British Thermal Units).
The (unofficial) BE price for the Canada LNG project is US10.30 per MMBTU.
LNG prices are now at US$7 per MMBTU with forecasts saying it will go lower.
How low? Down to US$6 or maybe even US$4.80 per MMBTU.
And these LNG prices are going to stay down. New gas fields are coming on stream - one analyst says an additional 20% more LNG every year, for the next few years.
This is 30% to over 40% BELOW break even. Petronas is in deep stuff.
So where is that RM9 billion or that RM20++ billion going to come from?
Sos :
http://syedsoutsidethebox.blogspot.my/2015/11/petronas-our-piggy-bank-is-at-risk-now.html?m=1
This article first appeared in The Edge Malaysia Weekly, on October 19 - 25, 2015.
In 4 years, oil from US$200 to US$20
M'sia 25% of income from oil
crude tumbled precipitously from US$100 to just under US$50
Malaysia net oil importer
plagued by 1MDB needs to pump-prime economy
ensure bottom 40% of income earners (Malays mostly) move up
Why is oil below US$50 bad news for M'sia?
technology made shale oil & gas cheaper to produce
M'sian govt depend on oil revenue - 29.7% in 2014
govt & people used to bumper income with high oil prices
difficult to adjust expenditure downwards with low oil prices
govt debt risen from 30% in 1997 to 53.7% this year
Including g'tees by fed govt, debt is RM175.81b well above 55% ceiling
In Aug Petronas forced to draw on reserves, make cost cuts
cash from operations cannot cover capex & RM26b dividend for 2015
Petronas paid RM27b to RM30b / yr in dividends to govt btwn '09 and '14
Petronas’ contribution to fed, state govt RM80b in 2012, RM75.3b in 2014.
Petronas’ cumulative contribution since 1974 RM881.3b
more than double BNMs foreign currency reserves
govt’s opex projected 95% of revenue in 2015
problem is M'sia spending RM100 when earning RM90, debt adding up
cannot be sustained; don’t need a PhD to know that
As Prime Moron has said, next year Petronas can only give RM9b dividends. So where is the money going to come from to pay for all the free stuffs?
Especially the overpriced multi billion Ringgit contracts for the crony Datos and Tan Sris?
Ok now here is the more scary news. Petronas is the national piggy bank - the source of all the free stuffs. Petronas itself is in some bit of danger.
Here is something about Petronas NOT from The Edge. This is from someone else:
Petronas Floating LNG 1 (FLNG1) Kanowit to start ops early next year
Breakeven Price for FLNG 1 near US$10 per MMBTU Current price for Asian LNG is US$7 per MMBTU range.
Reuters forecasting 2016 average price US$7.80 per MMBTU
CME Group forecasting 2016 Asian LNG US$6 per MMBTU, low US$4.80
So Petronas will most likely LOSE MONEY on FLNG1
Meanwhile, Petronas still proceed with $36 billion LNG project in Canada.
Unofficial breakeven price for Canadian LNG project is US$10.30 to $11.60 MMBTU Petronas may run out of cash reserves by the end of 2017
Folks this is a new tune I have taken up - the Petronas fiasco in the making.
That Canada LNG project is anything between US36b - US50b. That is RM150b to RM200b.
I am sure the Kanowit FLNG1 project costs billions as well.
But all oil and gas projects depend on the selling prices of oil and gas.
In this case the Breakeven price is critical.
For the red shirts, the Mat Maslan types and the other UMNO boys, breakeven means BELUM UNTUNG. NO PROFITS. Breakeven means just cover costs.
The BE price for FLNG1 is near US$10 per MMBTU (million British Thermal Units).
The (unofficial) BE price for the Canada LNG project is US10.30 per MMBTU.
LNG prices are now at US$7 per MMBTU with forecasts saying it will go lower.
How low? Down to US$6 or maybe even US$4.80 per MMBTU.
And these LNG prices are going to stay down. New gas fields are coming on stream - one analyst says an additional 20% more LNG every year, for the next few years.
This is 30% to over 40% BELOW break even. Petronas is in deep stuff.
So where is that RM9 billion or that RM20++ billion going to come from?
Sos :
http://syedsoutsidethebox.blogspot.my/2015/11/petronas-our-piggy-bank-is-at-risk-now.html?m=1
