Petronas urged to dump U.S. dollar

Petronas urged to dump U.S. dollar

Agence France-Presse, Bintulu, Malaysia

Malaysian Prime Minister Mahathir Mohamad on Thursday urged national oil firm Petronas to drop the U.S. dollar for the euro in its oil and gas trades as he launched a multi-billion dollar gas complex here.

Mahathir noted that the dollar had fallen by 25 percent against the euro since the European unit was launched in 2000.

"I think it is something that Petronas should consider because the U.S. dollar has depreciated 25 percent. In other words, we are earning 25 percent less," he told reporters.

"If we were to sell in euro but at the same price when converted to the U.S. dollar, if the euro appreciates, then we gain."

Mahathir said such a move may upset the U.S. but "it is not a question of the U.S. being happy or not, it is a question of whether we get value for our goods."

If the greenback appreciates, trades can once again revert back to the dollar, he added.

The proposal to dump the world's reserve currency is already being considered by Indonesia's state oil company, Pertamina, which recently said it may adopt the euro in its trades because the dollar has become too volatile.

Mahathir earlier launched Petronas' 16.6 billion ringgit (US$4.4 billion) liquefied natural gas (LNG) complex in Bintulu in eastern Sarawak state, which is set to help Malaysia overtake Algeria as the world's second largest LNG producer.

But the veteran premier urged industry players to be more cost efficient to cope with stiffer competition and falling prices.

"We cannot afford to be complacent. We know that great companies do not remain great forever... our reserves are not inexhaustible, indeed it is quite limited," he warned.

"We must no longer be confined to the home ground but instead develop the capability as well as capacity to be a global LNG producer."

Malaysia is presently the third largest LNG exporter in the world, accounting for 13 percent or 15 million tons global exports annually, after Indonesia and Algeria.

Petroliam Nasional Bhd (Petronas) said its LNG complex in Bintulu, comprising of three plants with total production capacity of about 23 million tons a year, was the world's largest LNG production facility on a single location.

A total 37.5 billion ringgit has been invested in the upstream and downstream activities in the area, it said.

Most of the LNG is exported to Japan, Taiwan and South Korea, where Malaysia's share of their LNG markets stands at 25 percent, 49 percent and 21 percent respectively.

Last year, LNG accounted for 5.6 percent of Malaysia's gross national product and 3.6 percent of Malaysia's gross exports.