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Malaysians have the right to know more about the two major deals made by Petronas with China


Media Statement

by Ronnie Liu Tian Khiew

(Petaling Jaya, Wednesday): The news of " Petronas clinches RM91 bil gas deal with China" and "Petronas, China's Nanjing to make car engines" have understandably made the front pages of all local newspapers rather "timely" at a time when Prime Minister Datuk Seri Abdullah Ahmad Badawi was accused of unable to bring foreign investment, new businesses and economic development to the country.

Those who take a closer look would know that these were actually no big deals. In addition, we want the Government to tell us more about the deals instead of hiding many facts from Malaysians.

Petronas will supply 3.03 million metric tonnes of natural gas annually to China's Shanghai LNG Company Ltd . The deal was unveiled by Abdullah and China's Premier Wen Jiabao on the sidelines of the China-Asean summit in south China's Nanning city.

The sales of LNG to China over a period of 25 years was similar to the deal we have made with Japan some years ago. The Japan long-term deal has proven to be in favour of Japan as the selling price fixed at that time was much lower than the current selling price. Since Abdullah has admitted that the deal was based on current selling prices, what has happened to the Petronas-Japan deal may also happen to the Petronas- China deal. There must be some mechanics for adjustment of energy prices within the contract period, knowing that the prices of energy are always on the upward trend. It therefore appears to us that the Malaysian Government has not learned a lesson. And Malaysians in general would again have to pay for the price of ill decisions in future.

On the case of building car engines in Nanjing China, many Malaysians may be wondering why Proton was not in the picture. Will Proton able to survive when even the government itself was not keen to promote its business?


And some may be wondering why Petronas has such a capacity or know-how in this field as a oil and gas company.


Petronas said it has sealed a deal with Chinese automaker Nanjing Automobile Corporation and Brilliant Culture Group Ltd to jointly manufacture car engines.

The project is scheduled to take off in December 2006 with production expected to commence in 2009 with an annual production capacity of 100,000 units according to Petronas in a statement.

Petronas said it will be the technology provider to the project and will provide support through its research and development centre in Malaysia. It did not state the value of the contract.

do know that Petronas in the past has spent several hundred millions of ringgit (some estimated the cost at more than a billion ringgit) to develop a 2,000 cc (2 liter) car engine. Market sources have told us that the engine was tested and found to be good but somehow it was not used by Proton. We were not informed of the real reasons why Petronas and Proton, both belong to the Malaysian people, cannot cooperate with each other. The 2,000 cc engine has been put on shelves for many years. We are not sure whether the same engine would be used now for the Nanjing deal. We do not know anything more than that unless the Abdullah administration wants to tell us more about it. We think he should.


*Ronnie Liu Tian Khiew, DAP CEC member and NGO Bureau Chief

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