CORRUPT BARISAN NASIONAL - KUALA LUMPUR: Malaysians firms were overly keen to invest in oil and gas in Iran, to the extent of carrying “suitcases of money” to the Islamic republic to buy concessions, revealed a confidential US cable.
Quoting a Malaysia Foreign Ministry official, the US cable stated that “Malaysian firms go to Iran with suitcases of money to purchase oil and gas concessions from the Iranians”.
The Malaysian official, Muhammad Radzi Jamaludin, was quoted in the cable as telling US diplomats that the Malaysian firms bring “too much cash to count the money, so they weigh it to determine if the amount is correct”.
“Radzi did not offer why Malaysian firms would purchase an O&G concession from the Iranians for a project they are unable to finance,” added the cable. Radzi is the principal assistant secretary and America desk officer at the Foreign Ministry.
The cable stated that he had a meeting with the US diplomats on Jan 12 and revealed the information on Malaysian firms investing in Iran. The leaked cable did not state in which year the meeting took place but a series of cables on the same issue indicated that it must be after Najib Tun Razak took over as prime minister in 2009.
Details of the cable were leaked by WikiLeaks to popular blogger Raja Petra Kamarudin who had reproduced the cable in his Malaysia Today website today.
Earlier cables stated that national oil company Petronas and two local Bumiputera companies, Amona and SKS Ventures, had interests in Iranian oil and gas fields. Their interest in Iran was due to Malaysia’s support for trade cooperation with Iran.
A previous cable also noted that SKS Ventures, backed by billionaire businessman Syed Mokhtar Al-Buhkary, was eager to pull out from the deal after discovering that the prospect of developing two gas fields in Iran has “no commercial value at this time”.
SKS Ventures CEO Abang Iskandar Muas had informed US diplomats during a meeting on Jan 19 that the company had “no money in the ground” in Iran, because the firm did not pay an initial “signing bonus” as the buyback service contract did not carry any vested rights to the gas.
Radzi also confirmed this in this latest cable, stating that both SKS Ventures and Amona had claimed to the Malaysian Trade Ministry (MITI) that they had no financing sources for their projects in Iran.
Petronas, meanwhile, had informed MITI that it did not have any investments in Iran. The same message was also conveyed by the national oil company to the US diplomats.
“Petronas told us Jan 11 that it has no active investments in Iran, no commitment has been made to invest in South Pars Phase 11 and its contractual obligations in the Munir block are complete, with no further investment under consideration.
“Petronas officials noted that Petronas is concerned about investing in Iran due to current political uncertainties there.
“Amona told us via telephone they sold their oil and gas (O&G) business, including any interest in the redevelopment of the Resalat Oilfield,” stated the US diplomats in the cable.
The Petronas position
The US diplomats stated that their meeting with Petronas was at “a surprisingly high level and the information offered was unusually frank and forthcoming for such a sensitive topic”.
The US diplomats had met with a member of the Petronas board of directors and corporate secretary Mohd Azhar Osman Khairuddin. Also present at the meeting was Azhar’s assistant, the head of Legal Research, Planning and Issues Management, Abdul Rahim Mydin.
“Azhar explained that Petronas aspires to be a global company and desires a positive relationship with the US government.
“However, he related that Petronas was a relatively late entrant to the O&G business and was not competitive with international oil companies (IOCs) in most development areas.
“Petronas made the conscious decision in the mid-1990,s, with the blessing of the Malaysian government, to compete in countries where Western sanctions precluded the largest IOCs from competing such as Iran, Sudan, Myanmar, and Mauritania,” according to Azhar.
“He claimed that in 1996 the Petronas president met with Clinton Administration officials informing the US government of Petronas’ plans to invest in Iran and that Secretary Albright gave Total, Gazprom, and Petronas ISA exemptions on South Pars Phases 2 and 3,” added the US cable.
The US diplomats also stated that according to Azhar, the Malaysian O&G reserves were not large and were running out soon.
They said this was confirmed by Conoco Philips Malaysia that without new discoveries, Malaysian oil production will decline at approximately 10% per year, from 550,000 bpd in 2008 to roughly 490,000 bpd in 2009 and 450,000 bpd in 2010.
“Azhar noted that revenues from Petronas accounted for 45% of Malaysia’s budget last year and stated that the government is over-reliant on Petronas to fund its operations.
“He said Petronas feels tremendous pressure to grow its business in order to maintain Malaysia’s political status quo and added that Petronas wants to stay insulated from politics, but must comply with government policy,” added the cable.
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