The government today ruled out creating a large national oil stockpile to boost energy security amid volatility in the global market, saying it would be too costly.

"We have no massive strategic reserves. It requires a lot of money. I don't think we have immdiate plans to do that. We are not going to war, so it's okay," Deputy Prime Minister Najib Abdul Razak told reporters after opening a two-day Asia Oil and Gas Conference here.

China is already planning its own national stockpile while the Philippines and Thailand are pushing for a regional facility to cope with volatile oil prices and any supply disruption, officials said.

Najib said Malaysian consumers were partly shielded from current high crude oil prices because of government subsidies of some RM9 billion a year.

Reducing subsidy

The government aims to "reduce the subsidies gradually in the long-run" but it must ensure that prices of petroleum products would not fuel inflation, he added.

Referring to a prolonged territorial dispute with Brunei that has halted oil exploration work in two huge deepwater blocks since early last year, Najib said negotiations were still ongoing.

"These are delicate matters that require very intensive discussions between the two parties but we hope it will be resolved soon," he added.

The contested area represents about half of Brunei's entire offshore territory and is vital to its plans to diversify its oil-dependent economy.

Brunei, a tiny enclave surrounded by Malaysia's Sarawak state on Borneo island, is the fourth largest producer of natural gas in the world and third largest oil producer in Southeast Asia after Indonesia and Malaysia. - AFP