KERTIH - Prime Minister Dr Mahathir Mohamad on Thursday officially opened a RM70 billion oil and gas complex in an opposition ruled state.

Nearly 57 percent of the investment in the Petronas Petroleum Industry Complex at Kertih in Terengganu was from foreign investors, national oil firm Petroliam Nasional Bhd (Petronas) said in a statement.

Mahathir said the Kertih complex has become the "nerve centre" of peninsular Malaysia's petroleum industry and last year accounted for petroleum and petrochemical exports of RM7.9 billion.

"Off the coast of Kertih, 66 platforms are pumping oil and gas in round-the-clock operations everyday for the last 20 years or so," the premier said.

He said petrochemical plants around Kertih last year generated foreign exchange of around RM500 million and provided products worth close to a billion ringgit, which would otherwise have to be imported.

More than 70 percent of the nation's electricity is derived from gas from Kertih, he added.

Nucleus and catalyst

The complex, spread over 4,000 hectares, houses 41 oil and gas plants, including an oil refinery, six gas processing plants and 11 petrochemical plants, Petronas said.

Petronas and its foreign partners comprising mainly Exxon Mobil, Dow, BASF, BP-Amoco, DSM, Mitsui, Mitsubishi, Idemitsu and Sasol, have developed the complex in stages since 1980.

Petronas said Kertih as an industrial location has the biggest concentration of foreign direct investment in the country.

"The Petronas-led development of the complex has enhanced Malaysia's competitive edge and attracted major petroleum-based industry players to set up their operations in Kertih, once a sleeping fishing village."

It said Kertih's petroleum industry made it a nucleus and catalyst for Malaysia's industrialisation and generated spin-off benefits including transfer of skills and technology.

Oil rich Terengganu is among two of 13 states ruled by the opposition PAS.

Oil suit

PAS earlier this year took the federal government and Petronas to court in a legal tussle to reclaim oil revenues worth hundreds of millions of dollars a year.

Terengganu had since 1978 received direct annual payment from Petronas equal to five percent of the value of offshore oil and gas production as offshore oil royalties.

But 10 months after PAS captured the state in 1999 general election in a bitter blow to Mahathir's ruling party, the federal government seized control of Petronas' payments to the state.

The government said it could not trust PAS to spend the money wisely and would disburse the funds directly to the state's needy but opposition leaders said it was designed to undermine the PAS-led administration.