(AFP) A British trade delegation led by a former minister arrived for a five-day visit with an eye to secure investment opportunities in the petroleum sector, officials said today.

"British Trade International has identified the oil and gas sector as of particular interest to UK firms," Sir Jeremy Hanley, leader of the group told reporters.

Hanley, a foreign minister specialising in overseas trade under the last Tory government, said British companies are keen to "play a big role" in the upstream and downstream oil and gas activities.

The Malaysian government has a stated policy of developing oil and gas reserves over the next five years and has allocated RM60.8 billion (US$16 billion) to this end.

Malaysia plans for 30 percent of this to be provided by direct foreign investment.

Hanley said the delegation would seek clarification regarding Malaysia's plan to block the opening of foreign petrol stations.

"It is that sort of restriction ... one has to decide it does not spread into other areas of businesses.

"Obviously one does not want creeping nationalisation. If it is that then it is disincentive to foreign direct investment. It is one of the matters we are seeking clarification," he added.

No more licences

Muhyiddin Yassin, domestic trade and consumer affairs minister was quoted as saying that Malaysia will not issue any more licences to foreign petrol companies seeking to open new petrol stations.

"No petrol companies except Petronas will now be allowed to expand its business in the country," he was quoted as saying by The Star newspaper last Thursday.

Petronas or Petroliam Nasional Bhd. is the state-owned oil company.

The trade delegation in a statement said the competitive pricing of the Malaysian currency - the ringgit - pegged at 3.80 to the US dollar in 1998 - means Malaysia offers an attractive investment environment for British companies.

The trade delegation comprises some 14 business leaders from leading companies such as engineering giant Rolls Royce, helicopter manufacturer AgustaWestland and Balfour Beatty Rail.

They are to hold talks with Prime Minister Mahathir Mohamad, Finance Minister Daim Zainuddin and International Trade and Industry Minister Rafidah Aziz during their trade tour.

Second largest trading partner

Britain is Malaysia's second largest trading partner in the European Union, accounting for 3.1 percent of Malaysia's global trade in 1999.

Bilateral trade between Malaysia and Britain in 1999 was RM17.7 billion (US$4.65 billion), an increase of 14.9 percent over 1998. During the first nine months of 2000, total trade stood at RM13.1 billion (US$3.46 billion).

Duncan Slater, former British High Commissioner here who is co-heading the delegation described ties between Britain and Malaysia as "extremely good".

"You have to keep it going. You cannot neglect it," he added.