KUALA LUMPUR: The Trans-Pacific Partnership Agreement (TPPA) will preserve Petroliam Nasional Bhd’s (Petronas) most critical roles under the Petroleum Development Act 1974 and its commitments in supporting the Government’s policy.
PricewaterhouseCoopers, in its study, Potential Economic Impact of the TPPA on the Oil and Gas (O&G) sector, said Petronas maintained its vested ownership and exclusive rights to hydrocarbon resources in Malaysia, as well as preserving its discretionary rights to determine how contractual arrangements were awarded to foreign participants.
The study is part of the TPP Cost-Benefit Analysis studies released by the International Trade and Industry Ministry.
Under the TPPA, Malaysia, however, has committed to liberalise 12 goods and services within the O&G sector.
“The goods and services made up approximately 10% of the total amount Petronas and petroleum arrangement contractors spent in 2014,” it said.
The study said upon entry into force, Malaysia would no longer be able to impose restrictions on entities that wished to participate in supplying these goods and services.
For the upstream sector, commitments under the TPPA provided for domestic preferences to be initially capped at 70% of annual budgeted spending in the first year upon signing, with gradual reduction to 40% by the sixth year, it said.
For downstream and non-O&G activities, domestic preferences were capped at 40% of annual budgeted spent upon entry of the TPPA into force, it said.
The study said tariffs imposed by TPPA countries were already low and did not affect the export decisions of industry players.
It also said Petronas would benefit very little from TPPA as 74% of its exports were to non-TPPA parties.
“Even without TPPA, Malaysia has attracted over RM330bil worth of upstream investments cumulatively as of 2013,” it said.
Prior to the TPPA requirements, it said, Malaysia already had agreements in place for investor protection.
“Malaysia has signed and ratified 64 investment guarantee agreements to promote greater investment flows between countries and protection when investing in another country,” it said.
It said TPPA would accord Malaysian entities more security when investing or providing services in TPPA countries with attractive oil reserves, such as Mexico and Vietnam.
Although the TPPA would accord Petronas increased investor protection, the study said, the focus of overseas activities was not within TPPA countries.
PricewaterhouseCoopers, in its study, Potential Economic Impact of the TPPA on the Oil and Gas (O&G) sector, said Petronas maintained its vested ownership and exclusive rights to hydrocarbon resources in Malaysia, as well as preserving its discretionary rights to determine how contractual arrangements were awarded to foreign participants.
The study is part of the TPP Cost-Benefit Analysis studies released by the International Trade and Industry Ministry.
Under the TPPA, Malaysia, however, has committed to liberalise 12 goods and services within the O&G sector.
“The goods and services made up approximately 10% of the total amount Petronas and petroleum arrangement contractors spent in 2014,” it said.
The study said upon entry into force, Malaysia would no longer be able to impose restrictions on entities that wished to participate in supplying these goods and services.
For the upstream sector, commitments under the TPPA provided for domestic preferences to be initially capped at 70% of annual budgeted spending in the first year upon signing, with gradual reduction to 40% by the sixth year, it said.
For downstream and non-O&G activities, domestic preferences were capped at 40% of annual budgeted spent upon entry of the TPPA into force, it said.
The study said tariffs imposed by TPPA countries were already low and did not affect the export decisions of industry players.
It also said Petronas would benefit very little from TPPA as 74% of its exports were to non-TPPA parties.
“Even without TPPA, Malaysia has attracted over RM330bil worth of upstream investments cumulatively as of 2013,” it said.
Prior to the TPPA requirements, it said, Malaysia already had agreements in place for investor protection.
“Malaysia has signed and ratified 64 investment guarantee agreements to promote greater investment flows between countries and protection when investing in another country,” it said.
It said TPPA would accord Malaysian entities more security when investing or providing services in TPPA countries with attractive oil reserves, such as Mexico and Vietnam.
Although the TPPA would accord Petronas increased investor protection, the study said, the focus of overseas activities was not within TPPA countries.
As at 2013, Petronas had exploration and production activities in 12 countries, of which only five are TPPA countries. - Bernama
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