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Kota Kinabalu: The Sabah Government is exploring broader avenues to strengthen the State’s oil and gas (O&G) resources, rather than focusing solely on increasing royalties, said State Finance Minister Datuk Seri Masidi Manjun.

He said the State is not abandoning the idea of getting higher royalties, but believes that royalties should not be seen as the only means of deriving greater value from Sabah’s oil wealth.

“Getting higher royalties is not the only way to get more (oil) revenue. What we should also look at is strengthening the O&G industry itself.

“Hence, we aim to build a vibrant oil and gas ecosystem that will create jobs and boost local participations in the industry which directly benefit the people of Sabah,” said Masidi, who is also Chairman of SMJ Energy (SMJE) Sdn Bhd, when attending a SMJE networking dinner here, recently.

He was elaborating on what he meant in his speech that getting higher royalties is not the approach that the State Government is going for to increase revenue in the O&G industry in Sabah.

“What I'm saying is that if it is just royalty, the money just goes straight to the government consolidated fund and do not create jobs.

“But if it is about the creation of a very vibrant O&G industry in Sabah, it would benefit a wider segment of the population where many local companies will benefit that lead to creation of jobs. That way the money goes into many people’s pockets, and not just government coffers,” he said.

Masidi emphasised that this approach should be seriously considered as an alternative strategy to ensure Sabah can derive maximum value from its oil resources, creating a ripple effect that boosts the overall economy.

While not disclosing figures, he said quite a number of Sabahans are working in the State’s O&G sector with nearly 500 companies registered. 

“Currently, there are about 471 O&G companies in Sabah, a sharp increase from previous years when only around 70 were inactive.  

“This growth is partly attributed to initiatives under the Sabah Maju Jaya Agenda (SMJA), which has facilitated greater local participation and encouraged more companies to pursue opportunities in the O&G market,” he said.

According to Masidi, active oil and gas exploration activities are underway off Sabah’s East Coast, which are expected to pave the way for increased economic growth in the region.

“One of the key exploration sites is located in the northeast of Sabah. It's being given to ConocoPhillips, which is currently carrying out the exploration work particularly in the northeast region near Sandakan,” he said.

He clarified that the activities are not within the Coral Triangle area, which is a sensitive environmental area.

Masidi also indicated that another exploration project may soon be announced, signalling growing investor interest in Sabah’s O&G potential.

On the recent discussion about Ambalat oil block, he said it is better to get the facts right before making comments or issuing statements, and to seek clarification from the Federal Government.

He said the Prime Minister Datuk Seri Anwar had recently made a statement over the issue on a joint development of the disputed Ambalat block with Indonesia.

“Don’t speculate (over the Ambalat issue). Better get the facts correct before we start making comments. 

“Otherwise, it ends up becoming just a speculation,” he said, while urging all not to make speculations over the issue.