Malaysia must build long-term energy resilience, says economist

 Samirul Ariff Othman says resilience must be built on medium- and long-term strategies rooted in diversification, technological adaptation and integrated planning.

Founded in 1974, national oil and gas company Petronas has grown into an entity capable of exercising control over all petroleum resources nationwide.

PETALING JAYA:

Malaysia must move beyond short-term fixes in response to oil shocks and adopt longer-term strategies that strengthen resilience, diversify energy sources and safeguard national security, says an economist.

Universiti Teknologi Petronas adjunct professor Samirul Ariff Othman said Malaysia learnt a lasting lesson from the 1973 oil crisis.

Arab oil-producing nations imposed an embargo amid a war with Israel, causing global oil prices to quadruple and sparking widespread economic disruption.

“Having petroleum resources is not enough. What matters is control, governance and security of supply,” Samirul told FMT.

“Today’s crisis may be different in form, but the core lesson is the same: energy security is inseparable from national resilience.”

Samirul’s comments come as tensions in West Asia remain high, with Iran blocking traffic in the Strait of Hormuz, a chokepoint for one-fifth of global oil and liquefied natural gas.

Nearly 40% of Malaysia’s crude oil supply passes through the strait, leaving the country exposed to price spikes and supply disruptions.

With the crisis dragging on, national oil and gas corporation Petronas has assured the country of secure fuel supply across its stations nationwide until end-June, easing worries about a potential immediate shortage.

However, while higher global oil prices are boosting the company’s international revenues, government officials have warned that those gains are being eroded by ballooning petrol subsidy costs borne by Putrajaya.

That has prompted suggestions that the government may reduce the monthly subsidised RON95 quota for eligible citizens under the BUDI95 programme, cutting it from 200 litres to 150 litres.

While such a move may address immediate fears, Samirul said the government must also look for longer term solutions.

“For middle powers such as Malaysia, the imperative is clear. Energy security must be approached as a core element of economic resilience and national strategy, not as a narrow sectoral concern,” he said,

For inspiration, the government need only look at how Petronas came to be.

Founded in 1974 in response to the Arab oil embargo a year earlier, the national oil company was immediately able to acquire all petroleum resources nationwide.

Describing the move as an “institutional pivot,” Samirul said it mirrored the action taken by major economies such as the US, Europe and Japan to strengthen their institutions in the wake of their own energy crises.

These included diversifying supply and investing in alternative energy sources.

Today, Malaysia produces up to 570,000 barrels of oil per day but remains a net importer of refined petroleum products, leaving the country exposed to potential oil shocks.

Samirul said resilience must be built on medium- and long-term strategies rooted in diversification, technological adaptation and integrated planning.

“The challenge is to update our institutional memory for a world where the threat is no longer only embargo, but also chokepoints, sanctions, conflict spillovers and maritime disruption,” he said. - FMT