MALAYSIA IS AN OIL PRODUCER AND EXPORTER, YET WE'RE STILL NOT IMMUNE TO GLOBAL CRISIS - WHY?

It is the same situation as Brunei and most oil-exporting countries Those who are in the oil and gas industry will understand this. (Note : In Malaysia, fuel subsidies and aid programmes like SARA and MyKasih help cushion global oil price shocks and protect households. While they do not reduce reliance on imported fuel components or exposure to global disruptions, they at least soften the immediate impact, buying time for more practical, long-term solutions without compromising essential aid and subsidies, even as the cost shifts to the government) 1. We EXPORT crude, but IMPORT refined components Malaysia IS indeed an oil and gas producer. However: We export crude oil and LNG, but we still import refined petroleum products and blending components This includes: Fuel additives, Specialty chemicals, High-spec blending stocks (for Euro 5 fuel, aviation fuel, etc.) So when war disrupts supply chains, shipping routes, or refining hubs globally, we feel it immediately. 2. Additives are highly specialized (not just “mix and make”) Fuel additives are not basic chemicals. They involve: - Proprietary formulations (detergents, anti-knock agents, stabilizers) - Advanced R&D - Strict engine and emissions compliance (e.g., Euro standards) Major producers are global companies like: BASF, Chevron Oronite, Lubrizol Malaysia does not yet have strong domestic players at that scale in additives. 3. Why not produce additives locally? (ask the same question to Brunei and you'll get the same answer) It’s not that we can’t, it’s about economics, scale, and ecosystem: a. Market size Additives demand in Malaysia alone is relatively small and hard to justify large R & D investment b. Technology barriers - Requires years of testing with engine manufacturers - Certification is costly and time-consuming c. Supply chain integration - Additives rely on upstream petrochemicals and downstream testing facilities - Needs a full ecosystem (labs, OEM partnerships, global distribution) d. Cost competitiveness Imported additives (in bulk) are often cheaper due to global scale 4. War impact goes beyond oil Even if Malaysia produces oil, wars affect: 4.1 Global oil pricing (Brent benchmark) 4.2 Shipping insurance & freight costs 4.3 Currency fluctuations (USD vs MYR) 4.4 Availability of refining capacity A conflict in, say, the Middle East or Eastern Europe can: - Reduce supply - Increase prices globally - Disrupt chemical and additive supply chains So Malaysia like any other oil exporter nation pays the global price, not a “local producer price.” 5. We do have refining but still not fully independent Malaysia has refineries (e.g. RAPID in Johor), but: - Not all crude types match our refinery configuration - Some refined products are still imported for efficiency - Blending components often come from multiple countries Bottom line is : Being an oil producer doesn’t make a country self-sufficient because: a) Oil does not mean finished fuel b) Fuel does not mean complete product (needs additives & blending) c) Supply chains are global and interconnected