Global oil industry in figures

The importance of oil to global economies has been brought into focus as prices reach $100 a barrel. Follow the links for a snapshot of the industry and how reserves, consumption and trade differ around the world. Reserves Consumption Trade RESERVES The Middle East remains the biggest player in oil. The region dwarfs the rest of the world, when it comes to reserves, ensuring its prominence on the global political stage. Saudi Arabia alone possesses 21.9% of the world's proved reserves. The North Sea and Canada still have substantial reserves. No-one knows how long the world's oil reserves will last, but even the oil industry suspects the world "peak" is now approaching. It says it has 40 years of proven reserves at the moment - but it also said that 30 years ago. In fact, the estimate has actually increased in recent years as production has fallen. Cutting consumption would prolong oil's life. Return to top CONSUMPTION Demand is at an all-time high, fuelled by the continued economic expansion of the economies of China and India. China overtook Japan as the world's second-largest consumer of oil in 2003 and is closing in on the US, with demand for oil growing at about 15% a year. Western Europe and Japan are heavily dependent on oil imports as production cannot meet massive domestic demand. The gas-guzzling US is the world's largest per-capita oil consumer but produces much of its requirements itself. Producers in the Middle East, where oil costs so little, are also heavy users. Poorer countries consume much less per head. Return to top TRADE The Middle East is the biggest oil producer, currently providing nearly one-third of the world's total. Europe and Eurasia (mainly Russia and the UK) and North America are also big producers. The difference is, nearly all the Middle East oil is for export while Europe and the US do not produce enough to meet their own needs. The weaker dollar has been driving up oil prices as investors have been using the commodity as an alternative to holding dollars. Oil prices nearly doubled in value during 2007, but prices have still not reached a record high if inflation is taken into account. Adjusting for inflation, US light crude's record peak of $101.70 came in 1980 against a backdrop of war between Iraq and Iran. Return to top

‘This is truly a mess, a very big one’

KUALA LUMPUR, Aug 28 — A grand alliance between two of Southeast Asia's wealthiest tycoons, Malaysian T. Ananda Krishnan and Indonesian James Riady, has collapsed into an acrimonious face-off that could lock their businesses in a bitter legal battle.

In Indonesia, a joint venture into a pay-TV business has turned hostile. Allegations of embezzlement and fraud, including charges that unauthorised payments were made to an unnamed family member of former Malaysian premier Tun Dr Mahathir Mohamad, have been levelled.

Relations worsened to the point that at least three employees of Ananda's business units in Jakarta had to flee Indonesia for fear of arrest by the police.

In Singapore, the months-long feuding over how to manage property and hotel company Overseas Union Enterprise (OUE), which Ananda and Riady control jointly, has forced the two parties to the arbitration table to resolve differences.

A senior executive of Ananda's business empire, which includes the satellite TV network Astro and cellular phone company Maxis, admitted that the businessman's corporate alliance with the Riadys was in trouble. “The issues are being worked out, but we are also pursuing legal remedies,” said the executive who asked not to be named.

Riady, who owns the conglomerate Lippo Group, did not respond to queries.

A spokesman for Lippo in Singapore said the company could not comment as the dispute is in arbitration.

“This is truly a mess, a very big one,” said a chief executive of a Malaysian bank which has dealings with the two groups and is closely tracking the situation. “Both sides made wrong moves and the whole issue boils down to the loss of face. There are not going to be any winners here,” he added.

Loss of face aside, the collapse of the four-year business partnership shows how inter-regional corporate alliances are hard to forge in Southeast Asia because companies and governments are reluctant to yield their markets to outside competition.

When partnerships unravel or domestic political problems crop up, nationalistic sentiments are whipped up. In the process, foreign investors can often find themselves on the wrong side of the law, as Singapore groups like Temasek have discovered in their investments in the telecommunications sector in Indonesia and Thailand in recent years.

The following account of the crumbling business ties between Ananda and Riady is based on interviews with bankers, government officials and corporate executives in Singapore, Malaysia and Indonesia, who requested anonymity.

The partnership began in early 2005 when both groups agreed to set up a joint venture to operate a pay-TV business in Indonesia through a Lippo subsidiary, PT Direct Vision (PTDV). The subsidiary owned a multimedia licence awarded by the Indonesian government.

The pay-TV tie-up quickly led to other corporate pacts.

In April 2005, Ananda-controlled Maxis paid US$100 million (RM330 million) to acquire a controlling 51 per cent interest in Lippo's wholly owned cellular telephone company Natrindo.

But rolling out the pay-TV and cellular businesses was not easy in Indonesia's heavily regulated business environment.

The joint venture also came under resistance from other Indonesian telcos and pay-TV players that did not want competition from the new Riady-Ananda start-ups.

At the time, bankers say that Astro and Maxis executives would privately gripe that the Riadys, who wielded immense clout during the Suharto years, had lost their political muscle to get things done under the new regime.

“The view among the Malaysians was that the Riadys had not been able to ensure the status of the licences that they had obtained from the Indonesian authorities,” said a senior Malaysian banker familiar with the situation.

But that did not deter Ananda and Riady from forging new business tie-ups.

In May 2006, Ananda's privately-held holding company Usaha Tegas and Lippo paid S$1.8 billion (RM4.4 billion) to take control of Singapore's premier property and hotel company, OUE, from United Overseas Bank.

It was Ananda's first major investment in Singapore and at the time both parties trumpeted the acquisition of the highly prized OUE as a major corporate coup in the island's robust property sector.

In the meantime, Astro pushed ahead with building its pay-TV business through the Lippo-controlled PT Direct Vision despite numerous unresolved issues over the planned joint-venture agreement. Astro employees were seconded to head PTDV, which is currently ranked as Indonesia's second-largest pay-TV operator with 150,000 customers.

In April 2007, Ananda's Maxis bought out Lippo's remaining 44 per cent interest in Natrindo for US$124 million.

It would be a deal that would cause irreparable damage to the alliance.

Two months after concluding the buyout of Natrindo, Ananda entered into one of the region's biggest corporate transactions with Saudi Telecom, Saudi Arabia's largest telecommunications firm.

He sold a 25 per cent interest in Maxis and another 51 per cent in Natrindo for a whopping US$3.05 billion.

The deal stoked anger in the Riady camp. The Indonesians felt that Ananda had already lined up Saudi Telecom as a potential business partner before he concluded the deal to acquire Lippo's remaining interest in Natrindo and in the process deprived the Indonesian group the chance to profit from the Saudi deal.

“The Riadys felt it represented a huge loss of face,” said a Jakarta business consultant who knows the Lippo group well.

But Maxis executives say that negotiations with Saudi Telecom began only after the deal with Lippo was concluded.

Relations between the two partners deteriorated rapidly.

Lippo then informed Astro that it wanted a non-negotiable sum of US$250 million to sell its interest in PTDV, a demand which the Malaysian group rejected.

The OUE joint venture also began to unravel.

While both parties held roughly equal stakes in the company, close associates of Ananda claim that the Malaysians were deprived of any real sway in the company's management.

Within months, Astro and Maxis executives say that Ananda's operations came under intense pressure.

In August last year, a police report was lodged at the Jakarta police headquarters against one Astro employee seconded to PTDV for alleged embezzlement by a director of a Lippo-affiliated company called PT Ayunda Prima Mitra. The director allegedly made payments to a family member of Dr Mahathir.

The allegations contained in the police report, which Astro insists are frivolous, prompted the Malaysian company to immediately fly Sean Dent, who was seconded as chief financial officer in PTDV, out of Jakarta. Dent continues to perform his duties for the pay-TV company from outside Indonesia.

Malaysian police say that the Indonesian police then requested the Interpol division in Malaysia to arrange for them to interview Ralph Marshall, Ananda's chief corporate lieutenant, over the allegations of embezzlement at PT Direct Vision.

Astro executives say that the company had informed the police that its employees, including Marshall, were not aware of any alleged criminal acts in the Indonesian pay-TV company.

So far, no further action has been taken by the police in Malaysia or Indonesia.

In late May this year, another police report was lodged against Astro executives seconded to PTDV, including the Indonesian company's president director Nelia Molato, alleging embezzlement and money laundering.

Sources in Astro say that shortly after the police report was filed, the company was informed that several of its several of its executives had been listed on a travel ban to Indonesia, including Marshall, Dent and senior technical advisor Michael Chan.

The three now perform their duties from outside Indonesia, including Molato, who left Jakarta in mid-June.

With little chance of both parties reaching an amicable situation, senior bankers familiar with the situation say that Ananda is seriously considering legal remedies to resolve his troubles with the Riadys.

Astro has also decided that it will cease its licensing pact with PT Direct Vision when its agreement lapses later this month.

That will mean 150,000 unhappy pay-TV subscribers in Indonesia because Astro will cease to deliver programming to PTDV. The Malaysian company also plans to initiate legal proceedings to demand for roughly US$250 million as compensation from the Lippo Group for funds and technical services to PTDV in rolling out its pay-TV business. — Straits Times Singapore

Anwar’s popularity adds to ruling party’s fear and loathing

KUALA LUMPUR, Aug 28 — Former Deputy Prime Minister Datuk Seri Anwar Ibrahim won a crucial by-election for the parliamentary seat of Pemantang Pauh on Tuesday.

That Anwar was going to win was never in doubt. He was first elected to the seat in the early 1980s and his wife became MP when he was jailed in 1998.

Last month, she resigned from the seat so Anwar could get back into Parliament. What was unexpected was the huge margin of victory. Anwar's wife won the seat in the March general election with slightly more than a 13,000-vote majority.

Many had expected Anwar to win by about 10,000 votes rather than the nearly 16,000 votes he took on Tuesday. The ruling Barisan Nasional coalition poured everything it had into the campaign.

Led by the Deputy Prime Minister, Datuk Seri Najib Razak, the BN promised nearly RM60 million worth of development. Almost every minister visited the constituency offering more goodies if Anwar was defeated.

The BN has spent millions in trying to discredit Anwar, using the mainstream media and giant video screens spread all over the constituency, to remind voters that Anwar is under criminal indictment for sodomy. Sodomy is a serious offence under Islam and more than 60 per cent of Pemantang Pauh's voters are Malay Muslims.

The BN showed a tape of Anwar's accuser swearing on the Quran that he was sodomised by Anwar. Malay voters were told also that Anwar was a race traitor.

Anwar champions the removal of the New Economic Policy, or NEP. Under the guise of affirmative action, this policy discriminates against the non-Malay population in all areas of political and economic life. Special scholarships, bank loans, contracts and even a university were established exclusively for the Malays.

While it was initially popular among the Malay population and deeply resented by non-Malays, in recent years, the younger, better educated, Malays have become critics of the NEP.

It is a known fact that the NEP has enriched only those with link to Umno, the ruling party, and that poorer Malays have benefited much less. Some Malays who supported opposition parties were even denied access to the NEP.

Younger Malays are starting to realise that the NEP, far from helping them, is actually a tool for Umno to manipulate and buy its political support from the Malay community.

The culture of corruption created by the NEP has reached the plateau that a large segment of the Malay community has decided that the only way to get rid of the corruption is to get rid of the NEP and Umno.

They also want an end to racial politics in Malaysia pioneered by the BN, and Umno in particular. Umno's ideology of ''Ketuanan Melayu'' or Malay supremacy has meant open and blatant racial discrimination against the non-Malay population.

One senior Chinese minister described Umno's relationship with its non-Malay parties in the BN parties as akin to a ''master-slave'' relationship. Race relations are now much worse after 50 years of independence.

Anwar has promised to replace the NEP with the Malaysian Economic Policy, or MEP, which does not have racial criteria. The overwhelmingly majority of the younger population sees this as the only real long-term solution to racial polarisation.

Anwar has promised that he will engineer the defection of about 30 MPs from the BN by the middle of September, and he will take over as prime minister then. There is every reason to believe that Anwar is capable of doing this, although the BN will still try to do its best to stop him.

The BN will do its best to make sure that Anwar is convicted of sodomy. It does not matter that more than 80 per cent of the population thinks that the sodomy allegations are politically motivated.

The only political game Malaysia now, at least among Umno, is to stop Anwar. The security apparatus will also be used against Anwar's allies.

Several leaders in Anwar's parties have been arrested for corruption, and bloggers who are sympathetic to Anwar are being sued for defamation and publishing false reports on the Internet.

The Government is also expected to pass laws that restrict political chatter on the Internet, and crack down harder on civil society groups.

The BN is still a powerful political machine and when it is threatened, it moves back to its authoritarian mode. There is every reason to believe that there will be mass arrests under the Internal Security Act to stop Anwar from becoming prime minister.

There are too many vested interests that will stop at nothing to make sure that their corruption and past misdeeds are not exposed by Anwar's new administration.

They have every reason to fear the consequences of an Anwar ascendancy. When Anwar's party took power in several states after the March general election, they exposed shady land deals and government contracts worth millions.

A Morgan Stanley report published a few years ago says that corruption has cost Malaysia the equivalent of more than US$110 billion (RM360 billion) in the past 30 years.

The NEP was promulgated about 30 years ago and it was only after the NEP came into being that ''money politics'' became synonymous with Umno.

If Anwar eventually becomes prime minister, it will be one of Asia's most remarkable political comeback tales.

The closest one to it is that of Kim Dae Jung. Sometimes called the Nelson Mandela of Asia, Kim was nearly killed by South Korea's intelligence service in the 1970s, imprisoned, put under house arrest, sentenced to death for sedition and banned from politics.

Kim managed to overcome all these obstacles before becoming South Korea's president from 1998 to 2003.

- Canberra Times