18 August 2009

August Update

In the past few months, crude oil prices have gone down and climbed up again. Forbes reports that crude oil futures for September delivery traded at more than USD69 per barrel today, a rise of 3% from yesterday. (Ref: Reuters, 18th August 2009. Oil rises above $68 on Wall Street gains.)

In the local Malaysian scenario, the following interesting stories have appeared.

(1) The International Monetary Fund (IMF) advised that Malaysia should reduce its dependency on oil. (Ref: The Star Online, 16th August 2009. IMF: Take preventive steps and reduce dependence on oil.) The Forbes today also reported:
Malaysia shelved plans to implement GST in 2007 but has recently put it back on the drawing board due to declining oil revenues.

Malaysia's budget deficit excluding oil revenues will be 11 percent of GDP in 2008, according to the IMF, and with lower oil prices in 2009 than in 2008, the income from oil will shrink in 2010 as it is based on 2009 prices.

(Source: Forbes, 18th August 2009. UPDATE 2-Malaysia targets lower budget deficit in 2010)

The good news is that GST isn't implemented just yet in Malaysia. The bad news is that it may, if the expectations about the shrinking profits from oil in 2010 prove to be correct.

(2) Malaysia and Iran have agreed to set up a joint company called SKS_PARS. Gas condensate construction in both Iran and Malaysia are expected to lead to the daily production of 120,000 barrels (Iran) and 250,000 barrels (Malaysia) of crude oil. (Ref: United Press International, 17th August 2009. Iran, Malaysia team up on energy.) Interestingly enough it was noted in another UPI report that "Washington opposes any project that could give Tehran economic benefits, especially in the energy sector." (Ref: UPI, 18th August 2009. Washington links Pakistani aid to IPI.) It remains to be seen whether SKS_PARS will face hostility from Washington.

(3) Until 31st August 2009, Shell Malaysia is running a competition to award weekly cash prizes of RM30,000, RM3,000 and RM300. The competition runs for eleven (11) weeks all in. You can check out the winners for the first eight (8) weeks so far. There's another three (3) weeks left to go! Check out the link.

(4) Shell launched its RON 95 fuel late July 2009, in response to and in support of the Government's initiative of introducing RON 95 nationwide by 1st September 2009. (Ref: The Star Online, 28th July 2009. RON 95 petrol launched, Shell targets 1m users.)

(5) Cadbury New Zealand announced that it will stop using palm oil in its chocolate making recipes. Bernama made reference to an NZ report that linked palm oil supply with native land deforestation. (Ref: Bernama, 17th August 2009. Cadbury In New Zealand To Stop Using Palm Oil In Its Chocolate.) An excerpt from a report at Stuff magazine (NZ):
Palm oil is derived from the fruit and kernels of the oil palm and is used in cosmetics, cleaning products and many processed foods.

Much of the oil comes from land where existing rainforest has been slashed and burned to make way for Palm oil plantations.

Three quarters of all Palm oil comes from Malaysia and Indonesia where rainforests - housing the Bornean and Sumatran orangutans and other flora and fauna - are being destroyed.
(Source: Stuff.co.nz, 17th August 2009. Cadbury stops using palm oil in chocolate.)

Readers may also like to consider that the terrible haze in Kuala Lumpur recently has been pinned on plantation firms. Considering that it was the Indonesian State Minister for Environment who blamed the plantation companies for the forest fires, it certainly is a bold accusation / statement. (Ref: The Jakarta Post, 9th August 2009. Plantation firms behind forest fires in Riau: Minister.)

(6) Malaysia and Brunei are exploring the possibility of an oil joint venture. (Ref: The Star Online, 7th August 2009. Malaysia and Brunei closer to inking deal on oil and gas joint venture.)

(7) Malaysia and Morocco will considering increasing two way trade in a mutually beneficial way. Morocco will consider importing more palm oil from Malaysia while Malaysia will consider importing more phosphates from Morocco. (Ref: The Star Online, 15th August 2009. Eager for a fair exchange.)