Oligopolies threat to Asian oil players

Oligopolies threat to Asian oil players

KUALA LUMPUR (AFP): Mega-mergers in the world's oil industry will leave "midget" Asian players helpless against giant competitors, Malaysian Prime Minister Mahathir Mohamad warned Monday.

The premier also renewed his attack on uncontrolled globalization, saying rich foreign capitalists were making "frenzied preparation to invade" developing nations when they opened up.

Opening a two-day Asia Oil and Gas Conference, Mahathir said a wave of mega-mergers had led to the creation of "giant entities dominating and dictating to the industry."

"Over the last three years, we have seen a few of such mega- mergers: BP and Amoco, Exxon and Mobil, Total Fina and Elf, and then BP Amoco and Arco," he said.

"We see a return of oligopoly, only the oil companies are many, many times bigger and richer than before."

The premier said U.S. industrialist John D. Rockefeller had "almost complete monopoly" of the oil business until the US government halted it through an anti-trust act and broke up his company into several smaller entities.

"The offsprings of the Rockefeller monopoly are coming together again. They are in fact, teaming up with the other oil majors to form an even tighter oligopoly," he said.

"Together they can control the production, refining, marketing and also the relatively new petro-chemical industries."

Mahathir said the new alliances led to an uneven playing field for Asian players, mostly made up of national oil companies which he described as "midgets of the world."

"None are big enough to take on the merged giants or to qualify to be one of the new sisters. And so they need to hide behind their national boundaries," he said.

But he said globalization would render these national oil companies helpless against the world's giant entities. The premier warned that unfettered globalization and market liberalization could lead to "loss of independence and a world ruled by enormously rich capitalists and their countries."

He said Asia's economic downturn in 1997/98 had proved that the free flow of capital was a "minus-sum game" for the region.

"What we are seeing is a frenzied preparation to invade us when we open up. Giant corporations are merging to form even bigger giants. Rich and powerful banks are merging to form even more powerful and financially invincible banks.

"And behind them stand rich governments ready to bail them out if they should fail," he said.

"Against all the giants, our own corporations and banks will be easy meat. When they lose out in the free competition, they will be swallowed up. Once that happens, politics too will be manipulated by them."

At a press conference later, Mahathir said the world oil price was likely to increase over time because of increasing production costs and inflation.