PM:Cheaper oil & gas, 20% royalty will impact Petronas

He said the oil and gas sector required a huge amount of capital expenditure, and if the opposition Pakatan Rakyat increased royalties to 20 per cent, it would hamper Petronas' ability to invest and reinvest.

"Not only will the Treasury be affected, but Petronas' ability to invest and reinvest, in exploring for oil in deeper waters, to look for new (oil) reserves, while maintaining existing ones will be in very serious jeopardy. You should know this even better than me.

"This is the fact that Tan Sri Shamsul (President and Chief Executive Officer of Petronas Tan Sri Shamsul Azhar Abbas) has always emphasised to me. Please ensure that Petronas has enough resources to reinvest," he told Petronas staff at a Town hall Meeting here, today.

He added Petronas would not be the same successful organisation today if not for its strong reserves and ability to invest.

Najib also said if the proposed reduction in the price of petrol, diesel and gas as touted by the opposition were to be implemented, the annual subsidy for fuel may rise to RM30 billion from the current RM22 billion annually.

If this happens, Petronas' resources for productive investment will instead be channelled to private consumption.

"And that is a recipe for economic disaster," he added.

The Prime Minister said Petronas had grown from an initial seed capital of RM10 million in 1974, to a cumulative contribution totalling a staggering RM733 billion as of Dec 31, 2012.