How Sabah secured 25pc equity on inland oil and gas
Published on: Wednesday, March 29, 2017
Kota Kinabalu: Chief Minister Datuk Seri Musa Aman (pic) said he had to bargain hard to secure for Sabah at least 25 percent equity in inland oil and gas exploration and extraction.He shared with a distinguished audience of 400 government colleagues, Rotarians and the media for the first time that while many may be familiar with the 5pc oil royalty that was worked out in 1976, that of inland royalty was missed by all State administrations until he decided to pursue it with the Federal Government."I went to see the Prime Minister and told him that while the 5pc royalty applied to resources at sea, the inland resources (involving Blocks SB330, SB331 and SB332) was another matter.
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"The Prime Minister was convinced and issued me a letter to pursue the matter with the other two Production Sharing Contract partners, Sapurakencana and Petronas Carigali Sdn Bhd."Musa said initially they (Sapurakencana and Petronas Carigali) were reluctant and offered only a 10pc stake to the state. "But I stood my ground. I told them what you get from the sea is your business (since already agreed upon). But when you are extracting resources from the land remember that forests and lands come under State jurisdiction. I will ask my Forestry Director, Land Director and Environment Director to be ready.
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Eventually they softened and agreed to give 25pc equity. The lesson to be learned from this is, we must never be quick to accept any deal that involves the State blindly," he said, to thunderous applause.Musa said the growth in oil and gas is vital to the social and economic development of the State and that the issue has long been a sore point even for those within the Barisan Nasional.
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"The call to increase oil royalty from its present five per cent to 20 per cent has been used by the opposition time and time again and those who know little of the workings of the industry."While it would be ideal for this quantum to be granted, we also know it is a tall order. Time and tide waits for no man and I decided it was time for a strategic approach. By doing this, we succeeded in getting Petronas to agree for Sabah to own a 10 per cent equity in LNG 9 in Bintulu, Sarawak," he said.He said in 2014, M3nergy Berhad (now Sabah Petroleum Berhad), a wholly-owned subsidiary of Sabah State Government, commissioned a Floating, Production, Storage and Offloading (FPSO) vessel, 'Ratu Nusantara', which is today operating at the Bukit Tua oil and gas field in Indonesia.He said the success stories of the oil and gas sector will not come overnight, but surely and steadily, this sector will reap its benefits, especially in downstream processing when the Sabah Oil and Gas Terminal (SOGT) and Sabah Ammonia and Urea (SAMUR) in Sipitang Oil and Gas Industrial Park (SOGIP), comes to full operation and become the catalyst in the economic development of the state."By the way, the State Government managed to secure 25 per cent equity in SAMUR," he said.In terms of the development of Sabah ports, Musa said the government must leverage on Sabah's geographical location, being at the heart of the BIMP-EAGA and strategically located for far-east shipping routes."I look forward to the outcome of the comprehensive Sabah Ports 30 years' master plan that will turn our ports into a vibrant transshipment hub for the BIMP-EAGA region as well as the Far East. "This will also spur other multimodal logistics development and activities that include the Pan Borneo highway, railway connectivity linking the hinterland and aviation hub.Stay up-to-date by following Daily Express’s Telegram channel.
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