US$20b (RM60b) Petronas Refinery in Johore

JK’s digest 8 of May, 2011 – the massive US$20b (RM60b) Petronas Refinery in Johore

“The Refinery and Petrochemicals Integrated Development (RAPID) will be commissioned by the end of 2016 as Malaysia aims to become a world class integrated oil, gas and petrochemical trading hub.”
So this massive project is to start very soon to be ready in 2016 and it would be very impressive to complete such a massive project in 4/5 years. There have been many projects of much smaller size to have taken much longer time to complete. It is also likely in Malaysia boleh tradition that the cost would be double by the time it is completed especially so with prices of foods and materials going up much very fast.

Nevermind about that RAPID project which may bring the nation into quicker bankruptcy in rapid style. I am not so sure of the impact of this project in our economy but I am going into a long session of Q & A after the preliminary introduction.

I have not been into the Petroleum industry but I had lodged at least two Police Reports on Petroleum Act 1974 Act 144 and the Petronas in 2006 and 2008. Of course these reports fall on the deaf ears of the Police, the Malaysian Anti Corruption Commission and the illegal Government. Like Suhakam’s annual reports since 2000, I think Petronas annual reports are also not debated in Parliament.
This RAPID project would definitely go ahead as it is the illegal Prime Minister who has the final say under the Act 144 without consulting the Parliament and the people especially the oil producing states in Malaysia as it a Petronas project fully self financed in a dream.

It is public knowledge that the crude oil price is dependent on the market and now USA is also going into its own home ground production to bring down the global oil price while Middle East oil producers are mired in political turmoil. Malaysian taxation is also very much dependent on the revenue of Petronas to boost up the annual fiscal budget. How would this project affect its contribution to the annual fiscal budget when RAPID is started? Maybe the illegal Government is trying to balance out the likely deficit with substantial reduction of subsidies and the introduction of Goods and Service Tax GST.
The impact of this shift also needs to be assessed on the costs of living of the people.

While the information on RAPID is sketchy at the moment, here come my list of questions (not exhaustive):-

Project Site:-

1. Where exactly is the project site on 1,012 hectares of coastal land in the state.
2. Is this coastal land somewhere near to Singapore?
3. Johore’s crooked bridge at the causeway has been aborted with much financial loss and would similar fate occur with RAPID?
4. What about the Environmental Impact Assessment EIA be done?

Fund and shareholders
1. Where would Petronas gets its immediate fund for the RAPID project?
2. If it has other shareholders, who are the other local shareholders?
3. Would this project be debated at the Parliament as it is not in the Ten Malaysia
Plan and Government Transformation Programme?
4. If it is to be debated in Parliament, when would that be held before further costs are incurred?

Project’s economic feasibility
Market of the finished products
1. What is the annual value of the finished products to justify such investment?
2. Would Peninsular Malaysia be the major market for these few products?
3. What is the export market like and its competitiveness?

Raw materials and technology
1. Where would the raw materials such as the crude oil come from?
2. Is the crude oil coming from Peninsula states?
3. Is the crude oil coming from Borneo States of Sabah and Sarawak?
4. What is the status of crude oil in Borneo states in term of reserves?
5. In what proportion of the cost of the project is the technology part?
6. Where would the technology come from?

General questions:-
1. Why RAPID cannot be set up in Sabah in desperate need of such mega project?
2. If the crude oils come from Sabah and Sarawak, would there be saving in transit cost?
3. Would it not a win-win scenario that we can do away with the Cabotage policy with much more containers load for the finished products from Sabah as Sabah container port has much unutilized capacity?
4. Why is this proposed project still on the drawing board be a topic for press release prematurely?
5. Is it like another Bakun dam committed suddenly just in time for the Sabah General Election 1994 when massive fund was transferred to Sabah?
6. How would this project affect the livelihood of the people in the decade of development economically and environmentally?
7. How would this project impact the Sabah scenario as far as the accountability of the 5% royalty is concerned when some people is calling for 20%?
8. Would the feasibility study be made public?

If this sudden conceived RAPID project is going to snowballed into double figure like RM120 billions within the decades, it is difficulty for the nation to sustain it. Watch it.

It is public knowledge that Act 144 and Petronas had been treated by prime ministers as pet project since 1974 with untold hardship for the people and no interest/desire to amend the Petroleum Act, it is timely to appoint a new PM under the Interim Good Governance Government so that a Royal Commission of Inquiry on Petroleum Act and Petronas can be established.

Our people needs to rise up to the challenge.

Joshua Y. C. Kong
PM of IGGG Malaysia