Petronas can no longer treat Sabah like before
Published on: Sunday, February 23, 2020
By: Datuk John Lo
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Attention grabbing headlines on 12 February were “Petros takes over control of Sarawak gas from Petronas” and “Petronas-Petros partnership can help increase S’wak participation in oil and gas value chain”.

Below is a very important point from the article from Sarawak’s perspective. 

Sarawak now has full control and authority over the supply, sales and distribution of natural gas within the state following an agreement signed between state-owned Petroleum Sarawak Berhad (Petros) and Petronas.

Here are some specific remarks of Petronas president and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin in this agreement signing ceremony.

“Petroliam Nasional Berhad (Petronas) has partnered with the Sarawak Economic Planning Unit on the development of the Sarawak Petrochemicals Masterplan Study,”

“In addition, we will explore the viability of a petrochemical hub and its related utilities infrastructure as well as human capital development.

He pointed out that the commercial arrangement witnessed at the signing ceremony together with the development of the Sarawak Petrochemicals Masterplan Study aligned with Petronas’ Statement of Purpose in nurturing local capabilities and participation for the long-term sustainability of the domestic oil and gas industry. “As a progressive energy and solutions partner enriching lives for a sustainable future, Petronas is committed to support the aspiration of the Sarawak government in developing the industry for the benefit of the people of Sarawak and the nation,” he said.

“Driven by this trust, Petronas is indeed proud to be a long-standing partner to Sarawak.

“Under the commercial arrangement, the sale and purchase of the gas distribution businesses and assets in Miri and Bintulu will see the role of gas transporter and aggregator assumed by Petros under its subsidiary Petros Gas.

“Additionally, Petronas will provide long-term supply of natural gas for Petros’ onwards sale to their customers in Miri and Bintulu,” he remarked.

[Capital fonts by me for emphasis]

I understand that Sabah government is in negotiation with Petronas on something that is similar to this agreement. I hope we can succeed in securing similar or [being on the same side] better terms and conditions as Sabah has been unfairly treated for a long time.

Like Sarawak, Sabah has had many problems attracting substantial investment in oil/gas in the past as the authority to sell/distribute gas rested solely with Petronas. Investors were not keen having to deal with too many parties and uncertainties. Sabah must get same or better agreement as without it, Sarawak which has a clear distinct advantage over Sabah now, will leave Sabah very far behind. More importantly, Sabah will suffer grave economic disadvantages.

As the sole authority on distribution of gas, Sarawak can now deliver domestic gas to homes also. This should be the case. Its policy of Sarawakians first is the right policy. So is true for Sabah for we cannot be gas rich [for Petronas to sell] and be deprived use of gas for our own economic advancement.

Why Sabah must get same or better deal? Please see the capital fonts in above quotations. The issues are:

[a] 3.1: The master plan for Sarawak Petro-chemical master plan study must not infringe on Sabah’s oil/gas resources. We must preserve our reserves for our own industrialisation. Sabah gas for Sabahans. Pumping our gas to Bintulu or similar action must not be repeated. Sabah cannot be made the sacrificial lamb for Sarawak’s Petro-chemical master plan or national interest. If the federal government wants Sabah gas to serve national interest, it can do so within Sabah— not to siphon it off. 

[b] 3.2: Establishment of a Petro-chemical hub in Sarawak should not be done at the expense of Sabah. In fact, Sabah should also be accorded same treatment. 

[c] 3.3: Development of long-term local capabilities for Sarawak. This is good for Sarawak. Sabah’s local capability is light years behind Sarawak. Petronas should develop same for Sabah. 

[d] 3.4: Petronas is committed to develop the industry to meet the aspiration of Sarawak and for the benefit of Sarawak people. That is how it should be. Sabah must be given same treatment. If not, where is the fairness? 

[e] 3.5. Petronas will take Sarawak as a long-term partner. Petronas has not treated Sabah as such. Bearing in mind that the GE14 promise of 20pc royalty is fast receding into oblivion, it is important for Sabah to extract similar and better terms in the gas agreement. The reasons are simply this:

[a] there won’t be 20% royalty as Tun M has again said recently that Petronas cannot afford it as he wants it to maintain its status as a 500 Fortune company. Petronas’ 500 Fortune company status is being paid for by Sabah and Sarawak. 

What is the point of this status if our people remain poor? 

[b] Present political landscape is conducive for such a negotiation. Such an opportunity may never come again. 

[c] Global demand for oil will subside. Demand for gas as a cleaner energy will sustain longer. Sabah must use this opportunity to strengthen and forge ahead our industrialisation using gas as a lead advantage.

Sabahans cannot accept any gas agreement that is inferior to that Petronas has already signed with Sarawak. It can no longer treat Sabah shabbily like it has done with the Bintulu gas pipe-line. Sabah cannot no longer accept this sort of 4th class treatment in the name of commercial viability. Sabah economic interest must come first.

Finally, I pray that Petronas will not short-change Sabah again and again. Sabah should be given a chance to catch up in the petro-chemical industry. To all our political leaders, please unite for Sabah’s economic advancement. Can’t you see that Sabahans are being taken advantage of while you play your political games? 


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