Speaking to reporters at the Asia Oil and Gas Conference in Kuala Lumpur Malaysia’s Deputy PM Najib Tun Razak said, “We have no massive strategic reserves. It requires a lot of money. I don’t think we have immediate plans to do that. We are not going to war, so it’s okay.”

Najib said Malaysian consumers had no need for such a stockpile because they are “partly shielded” from high crude oil prices by government subsidies of up to US$2.37 billion per annum. However, Najib hinted such subsidies would not be around forever.

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

Najib’s announcement is backed strongly by the President of state-owned oil company Petronas, Tan Sri Mohamad Hassan Marican.

According to Hassan, “Net oil exporters, like Malaysia, do not need to build strategic oil reserves or stockpiles unlike oil-consuming nations. Strategic reserves and stock piling is a very big issue in terms of the amount of investment, mechanism, input and output holding costs and infrastructure required.”

“These are major issues that require a lot of thinking and finding the balance between the need for such infrastructure and the costs involved,” said Hassan.

“For Malaysia, its reserves are effectively our natural reservoirs. As a net exporter and in time of need, there is a margin available for us to draw on the reserves from our production facilities. Rather than invest in infrastructure and holding cost of such reserves, I believe that the financial resources could be put to better use on other needs,” added Hassan.