Introduction

Malaysia is blessed with abundant resources, revenue from which has contributed significantly to national development. Oil and gas revenue is especially prominent, contributing about 40 per cent of national wealth at its peak in 2009, although this fell to almost half of that (20 per cent) in 2015. It has been argued that Malaysia is one of the few countries to have escaped the ‘resource curse’ or ‘paradox of plenty’, where countries take their natural resources for granted, leading to wastage instead of translating wealth into better development. US$1 billion, for example, reportedly disappeared from Angola's oil and gas accounts annually due to corruption (McMillan, 2005). Per capita incomes in resource-poor countries grew two to three times faster than resource-export driven countries between 1960 and 1990 (Auty, 2001). Have Malaysia's resources been optimised for maximum returns?

The oil and gas sector has contributed significantly to national development. The proportion of national revenue contribution from oil and gas increased through the years, making up 19.8 per cent of total government revenue in 1980, rising to 39.5 per cent in 2009. However, it fell to a low of 19.94 per cent in 2015 (Economic Reports, 1980–2015), equivalent to its proportional contributions to national revenue 15 years earlier in 2000. National revenue is highly dependent upon the stability of the oil and gas sector and, as the recent national financial situation shows, the government's budget has suffered because of the rapid fall in oil prices.

Malaysia's petroleum industry began in the early 1970s, following the oil crisis of 1973 when crude oil world prices tripled. Arab members of the Organisation of Petroleum Exporting Countries (OPEC) imposed a six-month embargo on oil supplies, causing price increases. Countries began to be aware of the need to control their own national resources. The Petroleum Development Act (PDA) was passed in 1974 and Perbadanan Petroleum Nasional (Petroliam Nasional Berhad, National Oil Corporation, PETRONAS) was formed. PETRONAS is wholly owned by the Malaysian government, but is incorporated as a private company.

PETRONAS is now ranked as one of Fortune Global 500's largest companies in the world. Fortune also ranks PETRONAS as the 13th most profitable company in the world and most profitable in Asia with some publicly listed companies (see Fig, 1).