The aim of this thesis is to study the evolution, structure, administration, effects and future prospects of the petroleum industry in Malaysia in the context of the changing ideas and concepts that are influencing the petroleum industry at present. The discovery of petroleum deposits in the offshore areas of Malaysia in the early 1970's promises to act as a catalyst to future development. The production of crude petroleum has increased significantly and has emerged as one of the leading activities in Malaysia today. We are proposing to examine several areas in the development of the petroleum industry - petroleum reserves and production, refinery capacity, crude oil pricing, product supplies and prices, government legislation and petroleum revenue contributions to the economy. It has been predicted that petroleum reserves are limited at present and would be depleted sometime in the beginning of I990's. With the increasing demand for local crude in refineries, the problem might become worse. By the end of 1970's, it is predicted that there is a necessity to expand local refinery capacity to cope with the growth in demand for petroleum products. Ever since the 1973 'Oil Crisis' and subsequent developments, the structure of the product prices in this country has changed with the increase in crude prices. This has led to 'under-recoveries' to oil companies, pi'oduct shortages and hoarding. This has also led the Government to involve more and more intervention in the industry especially with the establishment of Petroliam Nasional Berhad (PETRONAS), the National Oil Company, We conclude the thesis by emphasising the necessity of instituting a prograimed development (conservation) of our petroleum resources and local participation in investments in the upstream phase of the industry. The conservation measure would ensure sufficient supplies of crude petroleum for our future needs, A reasonable time-production function would enable PETRONAS to involve in exploration, refining and distribution functions and ensure reasonable price and adequate supply of petroleum products in the future. This is also reasonable in view of the problems involved in the recycling of "surplus" oil money accrued to the Government as a result of a rapid depletion of our oil resources.