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Kota Kinabalu: The decommissioning of the 500km Sabah-Sarawak Gas Pipeline (SSGP) after a decade of service will not have significant economic impact on the state, said Finance Minister Datuk Seri Masidi Manjun.

Masidi said that the move was likely made with practical considerations in mind, but also that it might have long term benefits, allowing Sabah to repurpose its gas resources and optimise it for the better.

“Would it affect our revenue in gas expense? No, not at all. In fact, I think we can actually benefit from this. In general, we tend to benefit more from the gas being able to stay in Sabah. So we will not be losing out, but we can look at other options on how to utilise the gas,” he said.

Masidi said he understood the reason for the decommissioning of the pipeline which connects Kimanis in Sabah to Bintulu in Sarawak at the cost of over RM4 billion when it was built.

“From my understanding, even from the beginning, there have been leakages, and that has resulted in very expensive repairs. It is not financially viable for them to spend hundreds of millions every time there is a problem with the pipeline.

“Secondly, Petronas will be building the largest onshore liquefied natural gas (LNG) facility in Sabah,” he said when speaking to the media after attending the state-level Chinese New Year celebration at the Sabah International Convention Centre (SICC) today.

Masidi, who is also the chairman of SMJ Energy Sdn Bhd (SMJE), said Sabah could benefit from locally produced gas without having to rely entirely on shipments to Bintulu.

He explained that Bintulu has long been the largest LNG distribution hub, and from the start, all gas was sent there as it was the main processing center.

“However, given that hundreds of millions have been spent on transportation, and each time there is an issue with the pipeline, Petronas saw the need to explore alternative solutions.”

Yesterday, Petronas announced its decision to deactivate the Sabah-Sarawak Gas Pipeline.

For the next three years, Petronas’ deactivation plan includes plugging and abandoning approximately 153 wells, as well as decommissioning about 37 offshore facilities.

In November last year, the company lifted the “force majeure” on gas supply to Malaysia LNG Dua Terminal after it was shut down in 2022 due to a leak in the Sabah-Sarawak pipeline.