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No plan to build LNG plant, says Musa

Published on: Thursday, July 17, 2014

Kota Kinabalu: The State Government has no plan to build a LNG plant in Sabah as it is impractical and involves a huge amount of money.

Chief Minister Datuk Seri Musa Aman said since the volume of natural gas in Sabah is low coupled with the low price of the produce and the lack of impact in terms of job opportunities, it is more viable to simply channel natural gas produced in Sabah to the Bintulu LNG in Sarawak.

"However, we have other options which is through Sipitang Oil and Gas Industrial Park (Sogip). We found out that downstream activities will give more impact than LNG.

"Through downstream activities, we will be able to generate more investments, get involved in new industries, create job opportunities, generate more skilled workers in the field of oil and gas and finally, reduce fertiliser imports into Sabah.

"Furthermore, Samur which is currently under development, can create three more plants using urea as raw materials. These plants can produce LPK, melamine and urea formaldehyde," he said during the question and answer time at the State Assembly sitting here, Wednesday.

Petronas is also planning to construct another ammonia plant worth RM2.6 billion and will be completed in 2018. It is also expected that two new plants will also be built.

According to Petronas estimation, the whole urea and ammonia-based plants will generate about RM10 billion in investment value and directly or indirectly, create 5,300 job opportunities.

Fertilisers produced in the plants will meet the demands in Sabah which translates to reducing imported fertilisers.

In 2012, Sabah used 30 per cent of the total fertilisers imported into Malaysia and consumption is expected to reach 60,000 metric tonne a year by 2020.

"Therefore, fertiliser production will help the agriculture industry in terms of reducing the cost of fertilisers. With the existence of these plants in Sogip, we expect to save RM4 billion in imported fertilisers.

"Therefore, it is essential for us to develop this industry especially because Sabah also has many oil palm plantations and this will directly benefit them," he said.

In terms of melamine, Musa said Sipitang Oil and Gas Development Corporation (SOGDC) is in negotiation with European investors to produce melamine and the foreign company had already sent three engineers to Sogip.

"What I am trying to explain here is that, we are saying that LNG is not profitable. But we feel that we will benefit more in other fields in terms of monetary and job opportunities," he said.

For Samur, Musa added, Sabah had already requested for 25 per cent equity and the matter will be brought to the discussion table soon.

Various downstream activities planned by the Government will be developed either with Petronas or other giant companies.

"I appreciate that the opposition and the Government are on the same page in this. We all want increased funds, more monetary value and more financial muscle," he said.