Petronas Investment in Uzbekistan

Excerpts from http://thestar.com.my/news/story.asp?file=/2008/11/16/nation/2564337&sec=nation

"Prime Minister Datuk Seri Abdullah Ahmad Badawi, who begins a three-day official visit to Uzbekistan today, is expected to announce new investments of up to RM700mil by Petronas in the republic’s oil and gas sector"

"Malaysia made several investments in post-independent Uzbekis­tan, particularly in the banking, hotel, mobile services and the distribution of oil and fuel industries. However, almost all the investments failed, owing mainly to the Asian regional economic crisis in 1998."

...

They never learn, do they?

Make investements just before an economic crisis hits. Watch investments fail. Repeat every couple of years?

Anyhow, a mere RM700m is nothing to Petronas. After all, we're talking about lunatics who spent RM128 billion in 2008 alone!

hmm: extra food for thought: http://en.wikipedia.org/wiki/Economy_of_Uzbekistan

"According to EBRD transition indicators,[13] Uzbekistan's investment climate remains among the least favorable in the CIS, with only Belarus and Turkmenistan ranking lower. The unfavorable investment climate has caused foreign investment inflows to dwindle to a trickle. It is believed that Uzbekistan has the lowest level of FDI per capita in the CIS. Since Uzbekistan's independence, U.S. firms have invested roughly $500 million in the country, but due to declining investor confidence, harassment, and currency convertibility problems, numerous international investors have left the country or are considering leaving"

...

You know what? Don't blame the Asian Economic Crisis for investments in Uzbekistan... it's a lousy economy there.

Petronas might become a LOSS making company!!!

Let's look at the company which contributes 44% of Malaysian government's revenue in 2008:

http://www.petronas.com/internet/corp/centralrep2.nsf/Src/WebDoc*Investor+Relations+Default/?Open

In 2007, Petronas revenue was RM184billion, expenses 108b, profit before tax 76b.
In 2008, Revenue RM228b, expenses 118b, profit before tax 95b.

FY2008 FY2007 FY2006 FY2005 FY2004
Revenue 223.1 184.1 167.4 137.0 97.5
Profit Before Tax 95.5 76.3 69.4 58.0 37.4


Not included in annual report but easily calculated:
(Expenses) 127.6 107.8 98.0 79.0 60.1

You can see that expenses are going up 10billlion each year.
You also notice that Petronas is cunningly leaving out the expense section in their annual report, hoping to exploit the fact that many people have poor mental arithmetic.
This is not surprising, since our malaysian governments entire BUDGET 2008 was 177 billion. And these champions in Petronas expenses in 2008 was 128 billion.


If we assume that last year they were selling oil at USD120 (which is cheap considering that it was over USD 155 for a while)
If we assume that they will be selling oil at USD 55, their revenue for 2009 and will be HALVED to RM110b (their revenue in 2004 was only 97.5billion. So this is not unrealistic)

In other words... Assuming expenses for Petronas stay constant (no lay offs, no cancelling of projects, etc). (In fact the way they are trying to expand, expenses are projected to go up yet another year, to over 120b! )
Petronas is expected to go from a profit of 95B to a loss of RM10billion in 2009!

Edit: Btw, for those who have been saying that expenses might drop accordingly... wrong. Normally, for a company, when revenue drops in half, it means that SALES in UNITS have dropped in half. So it is expected that costs would drop accordingly, since production has halved. In this case, it is SELLING PRICE that has dropped by over 60%.
For an easier to understand example, imagine if you have an accounting firm, and the government announces: Effective immediately, ALL accounting fees charged will be cut by 60%. Losses to be borne by the firms themselves.
Having your final sale price for your product cut by half is far far far worse than having your sales figures cut in half. It's a DISASTER of epic proportions.

This is a complete disaster for our country, if there isn't some sort of huge mistake here. Checking with some other independant analysts, my projected figures appear sound, so it is looking more and more likely that this will materialize.
I'm really really surprised that Lim Kit Siang hasn't got his people investigating this.

Maybe the accountants and analysts see something that I don't. Maybe Petronas has a lot of long term oil contracts. Which actually brings out a whole other barrel of fish, but whatever...
I DEMAND that Petronas provide some transparency!

Remember, as I said, Petronas contributed 44% of government revenue in 2008.
http://thestar.com.my/news/story.asp?file=/2008/11/12/parliament/2518320&sec=parliament

Abdullah talking about our fundamentals still being strong. How strong will our fundamentals be if government income is reduced by 44%?
How will our economy handle the shock of around 100billion in income just disappearing?
If this is true, Malaysia will not only go into a recession next year... it will be SEVERE. Our GNP is less than RM800billion. So... 100billion lost revenue by petronas would be a recessionary drop of 12%. That's rather ridiculously large!

EDIT: Everyone has been asking why government has not reduced our Petrol Prices.
It's BLARDY OBVIOUS when looked at it from this angle.
We Rakyat are subsiding Petronas. If gov drops petrol too much, Petronas is gonna lose too much money. Therefore, it is up to us, the Rakyat, to bear the burden. By paying USD90 for our oil, from our own BLARDY GLC Petronas.
I am an ANGRY INVESTOR!!!!