Oil profits cannot be used to keep fuel prices low

Profits from state-owned oil firm Petronas cannot be used to keep fuel prices low as Malaysia's oil and gas reserves will run out in three years.

Opposition parties are campaigning to prevent the ruling Barisan Nasional from getting a two-thirds majority in parliament by offering voters fuel cuts and free medical treatment in the March 8 polls.

"We cannot simply stop Petronas from expanding just for the sake of a quick fix for global petrol price hikes," second finance minister Nor Mohamed Yakcop ( right ) told the New Straits Times daily.

Prime Minister Abdullah Ahmad Badawi has already hinted the price of petrol, one of the lowest in the region, would not be subsidised for much longer as global oil prices recently breached the psychological US$100 a barrel mark.

Abdullah has not given a timeframe for when fuel prices would be raised but Malaysians expect it to happen after the polls.

Oil prices at US$102 a barrel

Oil prices hovered near US$102 a barrel in Asian trading today after hitting record levels last week.

Nor Mohamed said Petronas needed funds to explore overseas markets and to provide the government with financing for other subsidies.

"Petronas has to look for new resources, as our natural oil and gas reserves are expected to run out by 2011," he said.

BN which has ruled Malaysia since independence in 1957, is expected to win with a two-third majority but analysts say issues like rising inflation could lead to the opposition winning more seats in Parliament.

In the 2004 polls the ruling party won 90 percent of the 219 seats contested.