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Now Petronas subsidiary is leaving Labuan
Published on: Sunday, January 08, 2017

Labuan: A long-time big player in the oil and gas industry here – Petronas Carigali Sdn Bhd (PCSD) – has moved its operations to its own supply base at Bintulu Port, Sarawak, effective January 1.A notice issued by the company advised its service providers and vendors that the delivery point for its materials would now be the East Logistics Command Centre (ELCC) at the Bintulu Port.

Industry sources reacting immediately to the latest development said it was certainly bad news for Labuan but good news for Sarawak which, not long ago, had acted firmly on Petronas to increase Sarawak's opportunities in its employment.

PCSD had a strong presence here and had helped to raise the profile of the island as a significant oil and gas hub.

The company had been serving as an anchor tenant at the Asian Supply Base (ASB) which has often been described as a fully integrated logistics hub for oil and gas. ASB is a fully Sabah-owned entity and was established in 1985 when Tan Sri Harris Salleh was the Chief Minister of Sabah.

The understanding was only Labuan and Terengganu would be approved by the Federal Government for this purpose, and it has remained this way over the years.

Industry sources added that a reason for the PCSD relocation of its operations could be due to continuing depressed oil prices and having a supply base nearer to its oil and gas fields was a cost-cutting measure.

Labuan PKR Chairman Simsuddin Sidek said:

"The pullout of PCSD from here would see Labuan slipping from gloom to doom as oil and gas players are no longer attracted by the island's duty-free status."

He said it was likely that the PCSD move would be also followed soon by the company's service providers and vendors, as they would also want to be nearer to their client to provide better and competitive-priced services.

In an interviewed in 2012, ASB CEO Datuk Harris Tan said the ASB yard which started off on mere 100 over acres had expanded to 325 acres and the company was considering further expansions and investments.

But under the present circumstances, many of such plans would likely be put on hold.

The motivations of ASB have been viewed as a pillar of the local economy providing employment to about 5,000 locals.

"The effect on Labuan will be gradually felt, there is no escaping from it," said one analyst.



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