By any measure Petronas is an impressive entity, an integrated international oil and gas company with business interests in 31 nations and 37,430 employees worldwide. Earlier this year Fortune magazine ranked Petronas as the world's 95th largest company, the eighth most profitable company in the world as well as Asia's most profitable. For the fiscal year that ended March 31, Petronas reported income of $66.2 billion, an impressive increase of 29.2 percent over the previous year.

Despite such a rosy picture, there is trouble in paradise beyond slumping global energy prices. According to the U.S. government's Energy Information Administration, Malaysia's oil and natural gas production has declined, as in 2006 it produced 729,000 barrels per day of oil, which declined the following year to 720,000 bpd, while gas declined from 2.243 billion cubic feet in 2005 to 2.218 bcf the following year. Overall, Malaysia is the world's 25th-largest producer of oil and the world's 11th-largest producer of natural gas and a net exporter of both. While Malaysia is currently one of the world's leading exporters of liquefied natural gas, despite new offshore developments, the EIA forecasts that Malaysia's oil production will decline over the next two years, estimating that in 2008 Malaysia's production will decline to 693,000 bpd, a 13 percent decrease from its 2006 level.

Ever on the lookout for new opportunities, the Petronas Web site describes the company as "A Leading Oil and Gas Multinational of Choice." Hence the Central Asian road trip.

Badawi and his entourage arrived in Tashkent on Nov. 16 and were met at the airport by Uzbek Prime Minister Shavkat Mirziyayev and Foreign Minister Vladimir Norov. Badawi's delegation included Prime Minister Department officials Datuk Seri Nazri Aziz and Tan Sri Amirsham Abdul Aziz, Higher Education Minister Datuk Seri Mohamed Khaled Nordin, National Unity, Culture, Arts and Heritage Minister Datuk Ser Shafie Apdal and, last but hardly least, Petronas President and Chief Executive Officer Tan Sri Hassan Marican. In a signal sign of the importance Tashkent ascribed to the visit, Badawi and his wife as guests of President Islom Karimov stayed at the presidential Durmen residence.

Petronas and its Uzbek joint venture partner NHC Uzbekneftegaz began discussing cooperation in 2004, and two years later Petronas overseas investment arm Petronas Carigali Overseas Sdn Berhad opened an office in Tashkent. Petronas is now involved in oil and natural gas exploration and production in Uzbekistan's Baisun, Aral Sea, Surkhanski and Urga regions. Malaysian-Uzbek relations predate the 1991 collapse of the Soviet Union, as in 1987 former Prime Minister Tun Dr. Mahathir Mohamad led a delegation for an official visit. Karimov in 1992 then reciprocated with a visit to Malaysia, and Mahathir in March 1993 returned to Tashkent.

For Petronas, the prize followed Badawi's discussions with Karimov, when the Uzbek president told journalists that Petronas in the near future would invest an additional $750 million in exploration and development.

Karimov saved the best for last, however, stating that in addition to the investments mentioned above, Petronas declared its intention to implement a large petrochemical project worth nearly $2 billion, commenting, "The feasibility study of a project on producing synthetic liquid fuel (in Uzbekistan) is being drawn up (by Petronas) together with other companies."

While geography would seem to make Uzbekistan and Malaysia a somewhat unlikely match, Petronas in fact represents a new force in global energy output, the rise of state-owned energy companies. Last year the Financial Times identified the "new seven sisters," the most influential energy companies from countries outside the Organization for Economic Cooperation and Development.

The original "seven sisters" were Standard Oil of New Jersey and Standard Oil Co. of New York (now merged to form ExxonMobil), Royal Dutch Shell, Anglo-Persian Oil company (now BP), Standard Oil of California (now Chevron), Gulf Oil (now subsumed into BP) and Texaco. The new "seven sisters" are Petronas, Saudi Aramco, Russia's Gazprom, China National Petroleum Corp., the National Iranian Oil Co., Petroleos de Venezuela S.A. and Petrobras (Brazil). The new energy giants control between them almost one-third of the world's oil and gas production and more than one-third of its total oil and gas reserves.

Simply put, Uzbekistan's strongly nationalist government, which has long chafed under Gazprom's monopolist practices and the buccaneering capitalist policies of the descendants of the original Western "seven sisters," has concluded that its interests are served by partnering not only with Russian companies such as LUKoil but with rising stars such as Petronas. Uzbekistan, which currently produces 60 billion cubic meters of natural gas annually, an amount nearly equal to Turkmenistan's production, now sends more than half of its natural gas exports to Russia and the remainder to neighboring Central Asian states.

Unlike Turkmenistan, Uzbekistan consumes a high percentage of its gas production for domestic use at heavily subsidized rates, with indigenous annual consumption over the past decade averaging 48.4 bcm, nearly 80 percent of the country's production, leaving only 12 billion bcm for export, and the Petronas deal offers a heaven-sent opportunity to increase production for increasing export volumes and hard currency earnings.

For Petronas, access to Uzbekistan's natural gas riches, estimated in 2006 at 1.798 trillion cubic meters, represents a new source for supplying one of its major customers, China, being able to assist in overcoming one of Uzbekistan's earlier development barriers, its geographical isolation.

After Uzbekistan, Badawi flew to neighboring Turkmenistan on a two-day working trip, but it is hard to see how he can top his triumph in Tashkent. As for the Muscovite and Washington dinosaurs, busy fighting over the Caspian, their unwillingness to "go the distance" eastward has let others take their place.

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