Double blow for ‘dirt-poor’ Sabahans

Queville To

The discovery of oil and gas in Sabah has not brought home the wealth the state deserved, says an assemblywoman.

KOTA KINABALU: It is unfair that Sabah is getting pinched both ways – first by the cabotage policy which has forced the people to pay more goods that are cheaper in the peninsula and then receiving pittance from its own mineral wealth, the State Legislative Assembly was told today .


Citing reliable sources, Luyang assemblywoman Melanie Chia said that much of Malaysia’s 83 trillion cubic feet (Tcf) of proven natural gas reserves, as of January 2009, came from offshore Sabah and Sarawak.


Debating on the state budget 2012, she said that by virtue of Sabah’s significant contribution to the nation’s coffers, the state government should be getting more to help develop what is one of the more backward states in the country.

She took the Sabah government to task for backing away from demanding higher royalty from the federal government for oil and gas extracted from the state.

She said the discovery of many more new oil and gas fields off Sabah this year, including the discovery of an oilfield near Kota Kinabalu, had been large enough to be significant for Malaysia and national oil company, Petronas.

“Sabah, especially with the new-found (oil and gas) fields, should therefore enjoy the benefits of this natural endowment,” she said.

The state currently receives a fixed oil royalty of five percent from the federal government.

“As a reminder, the federal allocation for 2012 is only RM1,520.76 million for development, which is less than 3% of the total development budget of RM51 billion for the whole country.

“In a federal budget amounting to RM232 billion, what Sabah gets is so insignificant,” she said.

She also said that oil and gas in the state’s territorial waters would not last forever.

“The day the oil wells run dry we will get nothing. Therefore, the Sabah government should pursue the task of getting higher petroleum royalty. We should ask for a revision of at least 20%,” she said.

O&G hub in Johor

Reports indicate that based on the projected capacity of known oilfields in the country, Malaysia could turn into a net energy importer by 2015 based on its current trend of consumption if oil and gas (O&G) production did not improve.

The national Economic Report (2011-2012) revealed that the country’s oil production could fall further to 600,000 barrels per day this year.

Total oil production for the financial year ended March 31, 2011, had fallen to 2.14 million barrels of oil equivalent (BOE) per day, from 2.27 million BOE per day in 2010.

Chia also criticised the BN government for not capitalising on the state’s position as an oil and gas producer to develop the sector unlike non-oil producing states like Pahang, Malacca, Kedah and Johor.

In Johor, a RM60 billion refinery and petrochemical integrated development petrochemical complex is being built in Pengerang.

The federal government made the announcement last year when it said Petronas would play a major role in the development of Johor’s southeast areas of Teluk Ramunia and Pengerang by turning it into an O&G hub in the region.

The petrochemical complex is expected to create at least 20,000 jobs during the construction phase and 4,000 potential jobs for highly-skilled workers.

In addition, a RM5 billion independent deepwater petroleum terminal is being built in Pengerang, which will be the first deepwater terminal in Southeast Asia.

Oil and gas hub in Johor

But Chia asked why is Johor being turned into an oil and gas hub when Sabah, together with Sarawak, contributes 40% of the country’s revenue.

“We only want a fair deal from what is produced in our state.

“We are not even talking about what we lost in oilfields Block L and Block M and that Petronas recently entered into a joint production sharing contract with Petroleum Brunei.

“Petronas will start drilling for oil in Brunei waters and also in Block M. This joint production sharing will give Petronas billions of ringgit in contracts and income and what do we get?”

Chia said that it was even sadder to note that Sabah youths have even had to leave the state to find work in Johor.

She warned that another opportunity to develop the state could be lost the same way it wasted its timber resources if the state government did not get its act together quickly on the oil palm industry.

Currently, there is little value-added to palm oil produced in the state.

Despite the vast potential for palm oil downstream industries, estimated to be about RM100 billion, the only sign the state government is trying to tap this resource is the much ballyhooed Palm Oil Industrial Cluster (POIC) in Lahad Datu, which critics say is merely a glorified real-estate sell-off.