Sabah, Sarawak may lose oil, gas forever

Luke Rintod

The two states have already experienced '100%' loss of their natural resources under the Umno-controlled Petronas, according to UBF.

KOTA KINABALU: Sabah and Sarawak will lose their oil and gas resources “forever” if the Petroleum Act 1974 is not amended, United Borneo Front (UBF) leader, Jeffrey Kitingan, said.

He said that the two states have already experienced “100% losses” of their oil and gas resources under the Petroleum Act.

He added that unless MPs and party leaders in the two states compel the federal government to amend the Act now, the states will “lose forever” their reserves.

He said both the Sabah and Sarawak governments have absolute rights to seek a review or even a repeal of the Petroleum Act.

“But whether the Petroleum Act itself is constitutional, given the position of Sabah arising from the Malaysia Agreement 1963 and the safeguards given to the state by the founding fathers of Malaysia, is debatable.

“If the Act is to be continued, Sabah and Sarawak should be entitled to nothing less than 50% of the profits derived from the oil and gas assets.

“The Sabah government should be entitled to a share in Petronas, given that the state is a stakeholder in the profits derived by Petronas compared to non-oil producing states.

“The monies invested by Petronas in Sudan, Iran, Iraq and other overseas ventures are derived partly from profits obtained from Sabah and Sarawak’s oil and gas assets.

“Similarly, profits from Sabah’s assets have helped Petronas establish its subsidiaries, some of which are now listed on Bursa Malaysia and generate more profits for Petronas ,” he said.

Urgent steps

Jeffrey said that so far the two states had not been benefiting from the oil-related industry and must take urgent steps to address the issue with the Barisan Nasional (BN) government.

If they failed to so, he said, both states will continue to lose rights to profits from oil and gas derived from their territories.

“In reality, Sabah and Sarawak have suffered a 100% loss of their oil and gas because under the Petroleum Act, all the oil and gas reserves in the states are lost forever… they are vested in Umno-controlled Petronas.

“In return, Petronas pays the state governments a measly and miserable 5% of the revenue reaped by Petronas.

“The 5% so-called oil royalties cannot adequately compensate the total loss of the oil and gas assets which, by right, should benefit all Sabahans and Sarawakians first and not Petronas,” Jeffrey said in a statement to FMT.

He said that the revenue of Petronas is based on operational profits and as such, it is a gross injustice to Sabahans and Sarawakians that they only get 5% of the profit while 95% of it goes to Petronas.

Jeffrey also said that in January 2011, Sabah Chief Minister Musa Aman had announced that the state contributed 26.9% of the 637,000 barrels of crude oil produced per day in Malaysia.

“In the 2011 Sabah state budget, the chief minister projected the oil royalties (5%) to be RM721.7 million, of which all will be used for the annual expenditure of the state.

“Not a single sen is saved or invested for the future of Sabah and Sabahans.

“In Norway, the bulk of the oil revenue from its North Sea oilfields is saved and invested, making Norway one of the largest investors in the whole of Europe.”

“This means that every Norwegian owns the asset (oil) extracted long before he or she is born,” he said.

Mind-boggling

Jeffrey said that the oil and gas problem in Sabah and Sarawak was compounded by the lack of transparency in the dealings.

He added that there was also a lack of political will to establish an oil and gas industry, especially in Sabah.
“The latest arrangement to divert Sabah’s natural gas from Kimanis, Papar, to Bintulu, Sarawak, for processing is mind-boggling.

“The RM4 billion Kimanis-Bintulu gas pipeline and the billions spent on expanding the Bintulu LNG plant could very well have been invested in a new processing plant in Sabah where Sabahans could reap the benefits of the future spin-offs from such an investment,” Jeffrey said.

Petronas profit rises while...

Petronas profits while people suffers from fuel hikes and price hikes around the country!!!

It was reported that oil prices and larger volume of sales lifted Petroliam Nasional Bhd's (Petronas) full-year profit more than a third to RM63bil from RM45.5bil a year earlier. The national oil company said dividend payments to the Government would likely be 30% of the company's future net profit instead of a flat RM30bil annual payment.

Petronas will be increasing its capital expenditure and plans to invest RM300bil over the next five years in growing oil and gas production and reserves. Petronas' capital investments last year amounted to RM34.9bil.



Money spent to purchase oil and gas reserves internationally to improve the quality of such assets abroad will be in addition to its planned capex schedule.....

Petronas urea plant should be in Kimanis

There are two issues that the State Government and the people of Sabah must confront Petronas.

One, the issue of ron-participation of Sabah contiactors at Kimanis SOGT.

Two, the proposed establishment of an urea plant at Sipitang.

The issue of Sabah contractors, particularly Bumiputeras not given any works by Petronas speaks for itself. Everything is from West Malaysia.


Even then, if contractors are given, they will be given through “negotiated contract". This will surely only benefit those with high and strong influence. "Habis Cerita".

The issue establishment of urea plant at Sipitang will raise doubt on matters such as:

1. Sipitang has a shallow sea frontage. It requires dredging work to be carried out off the coast at least 3 to 5 km to accommodate berthing of 50,000 to 100,000 tonnes of ships;

2. During contract work, the work force definitely will come from outside Sabah; and II) after completion (when the plant is in operation) again mostly non Sabahans will be employed;

3. Is the urea meant for Sabah only or for export?

The State Government should relocate the urea plant to Kimanis instead of Sipitang. At the same time, ask Petronas to allocate RM500 million for the agricultural development of Sipitang under its community responsibility. With RM500 million and with properly planned agricultural develop ment, 50pc of Sipitang would be fully and permanently developed. This will turn Sipitang's idle lands into productive lands and create at least 5,000 jobs compared with number of employment provided by the urea plant.

After all, Sipitang was designated as an Agricultural Corridor some years ago. So far there is no corridor development at all.

It is not too late for both the State Government and Petronas to consider moving the urea plant to Kimanis and contribute RM500 million for the agricultural development to Sipitang district.

By A. Pengiran, Sipitang (Forum Daily Express)

Contractors call for Petroleum Act Review

KOTA KINABALU: The Sabah Oil and Gas Contractors Association (SOGCA) has called on the Government to review the Petroleum Act I974.

SOGCA president, Datuk Iskandar Malik, suggested that the members of parliament, especially those from Sabah, hold a dialogue with us and to let us know what is happening on the ground as this is the time for the people ofSabah to look to Parliament for a review of the Petroleum Act 1974.


"We are urging the Government to review the Petroleum Act 1974 for us Sabahans, we are actually grateful that PETRONAS had given us a contract, but we want PETRONAS to give it directly to the people of Sabah not through the main contractors from Sarawak or Semenanjung", he explained during a press conference at Novotel Hotel yesterday.

In spite of that, Iskandar added that what needed to be done first is to review the Petroleum Act 1974 in Parliament before the State can demand or more or 'enough' from Petronas. He said that in line with the Government's policy of a high-income concept, SOGCA hoped to help the people, for example, university graduates.

These graduates who may only be paid RM500 per month if they work, are the ones SOGCA is hoping to provide with jobs. SOGCA can actually employ these graduates but the problem is if Sabah contractors are only given sub-contracts how are they going to pay salaries for the graduates.

"If we get the main contract, we can deliver, but when we only get a sub contract our income would not be much," said Iskandar, who also urged PETRONAS to consider giving them a direct contract.

"At the moment we still get our contract but only from sub contractors," he said.

He also suggested for the sake of transparency and credibility, that PETRONAS should only award contracts to its licence holders and priority should be given to
SOGCA members who have the experience and capability to implement projects hands-on.

The association has set the record straight by saying that PETRONAS which is the national oil company, has in fact been playing its part for the State as evidenced by the total amount of contracts awarded-about RM500 million so far.

SOGCA indeed paid tribute to PETRONAS for according due recognition to SOGCA.

However, Iskandar pointed out that no matter how much PETRONAS has contributed to the State the amount would never be 'enough' to satisfy certain quarters unless the issue is resolved which includes competition for oil and gas jobs from Sabah Government Linked Companies( GLCs).

He regretted such competition from the GLCs competing for almost everything including small "fencing and drainage jobs".

"The GLCs should instead let the opportunities go to genuine oil and gas contractors who are already in the field but struggling to obtain work and participate in the oil and gas business.The GLCsa re supposed to be investors and not our competitors," he asked.

Meanwhile, Iskandar also hopes that with the 300MW IPP project, the GLCs will give SOGCA the oppoftunity to implement Sabah jobs, as far as the Vendor Development Programme (VDP) is concerned.

"PETRONAS is now considering to award one such licence to a Sabah company."

"The question on how much is 'enough' that PETRONAS should give to Sabah would depend Qn how well and organised the State Government and its elected representatives especially those at the Federal level handling the problems that have been cropping up as far as the industry here is concerned.

Iskandar proposed that the setting up of a special committee by the State Committee should include SOGCA to ensure a more credible set-up to oversee all matters with regard to development of the oil and gas industry in the state.

Also present were SOGCA secretary general cum Captain Walter J. Nair and SOGCA treasurer Mohamed hilfekar Ahmad.

By Suraini Andokong (Borneo Post)