Petronas Senior Vice President (Upstream Malaysia) Datuk Mohd Anuar Taib said investors might think twice to come to Malaysia and invest in the oil and gas sector, which is already becoming a highly competitive industry among the oil producing countries.
In a special briefing for the Sabah media, Mohd Anuar together with Vice President of Malaysia Petroleum Management, Adif Zulkifli, said many of the major oil companies from US were also returning to their country.
They said that if the cash payments of five per cent to the Sabah State Government were to be increased it would result in Petronas and its Production Sharing Contractors (PSC) being left with a smaller portion to be divided between them.
The breakdown of the revenue from oil fields is 10 per cent (five per cent each for the State and Federal governments), 70 per cent for cost recovery and only 20 per cent profit.
Out of the 20 per cent, Petronas has to pay 38 per cent to the Federal Government in oil income tax.
"Therefore, Petronas and its PSC would only divide the remaining 52 per cent out of the 20 per cent, normally 50:50," they said.
Therefore, if the cash payment is increased to 20 per cent like what Sarawak is asking, it means Petronas and its PSC only share 10 per cent of the profit after deduction of income tax.
"This is surely not attractive to investors and they may just shy away from Malaysia," they said.
Adif said Sabah was actually producing about 180,000 barrels or oil equivalent per day (boe/d) which is only 10 per cent of the total national oil production.
Most of the oil produced was in the peninsula side, he said, adding Sarawak mostly produces gas.
However, Sabah's production is expected to grow to 16 per cent over the next few years.
According to Adif, out of the 333 oil platforms in Malaysia, 53 were in Sabah.
Sabah currently has 14 oil fields and three gas fields in production while 41 oil and 47 gas fields had been discovered.
Petronas has 27 active PSCs in Sabah involving 12 companies or players. Petronas' cumulative upstream investments up to 2013 plus commitments amounted to approximately RM179 billion while for downstream the figure was RM6 billion.
Adif said Petronas was not paying oil royalty to Sabah but as stated in the Petroleum Development Agreement, it was paying cash payment.
"This is our top priority and according to the agreement, Petronas must pay the five per cent whenever there is production regardless if there is a profit or not," he said.
Oil and gas industry have become more costlier, he said, adding that Petronas had to attain expertise from other companies and this was done through the PSC.
The cost of exploration alone starts at RM4 billion, he said.
Nonetheless, he said compared with other oil producing countries, Petronas' cash payments of five per cent to Sabah were relatively higher.
DE
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