the oil price per barrel was US$1.50, which later rose to US$2.28 per barrel. War in the middle east and oil embargo by Organisation of Petroleum Exporting Countries (OPEC) had caused the price per barrel to rise until US$12.00, thus giving more incentives for Malaysia to set up her own oil company. Several countries such as United Arab Emirates, Egypt, and Indonesia have adopted the production sharing agreement instead of a concession system for oil revenue distribution. The Malaysian government also believed that foreign oil companies did not properly inform the government regarding the oil exploration activities in their own concessions (such as the new discovery of oil fields), thus resulted in a loss of revenue to the government. The formulation of Malaysian New Economic Policy in the early 1970s encourages Malaysians to take control of various modern industries and to open more economic opportunities for bumiputera (Malaysian natives). The former chief minister of Sarawak, Abdul Rahman Ya'kub was the first one who proposed the idea of Malaysia setting up an oil company in 1965, when he was the federal lands and mines minister. It was due to the pressure of the Sarawak people who sought to clarify the exact boundaries of Sarawak territorial waters. In fact, since the formation of Malaysia in 1963, the issue of territorial waters of Sabah and Sarawak has not been fully addressed, thus leaving its interpretation wide open. The Sarawak government has declared that the territorial waters extend well beyond the three-mile limit defined by the Malaysian federal government. However, Abdul Rahman Ya'kub was reminded of Tun Abdul Razak's act of installing him as the chief minister of Sarawak. Therefore, Rahman decided to keep the conflict as low profile as possible. Rahman's nephew, Abdul Taib Mahmud assumed the role of federal land and mines minister after Rahman became the chief minister of Sarawak. Taib believed in the sharing of oil royalties between the state and the federal government. During the time, the oil mining activities in Sarawak were still under the exclusive control of Shell. Taib Mahmud initially suggested allowing independent contractors to market government oil. Taib found a Lebanese trader to purchase the Malaysian oil, however, the contractor defaulted on payments, resulting in US$4 million loss. A government hydrocarbon committee was later set up. Taib Mahmud visited Indonesia and had a discussion with Pertamina (Indonesian state-owned oil and gas company). Taib suggested that