OIL & GAS SECTOR TO PLAY MAJOR ROLE IN SABAH'S FUTURE DEVELOPMENT

Oil & gas sector to play major role in Sabah's future development

KOTA KINABALU 19th August, 2011: A prominent Sabahan familiar with the oil and gas industry says the oil and gas sector is poised to play a major role in the future development of Sabah.

Datuk Dr Johan Arriffin A. Samad, Yayasan Sabah Group deputy director said the sector would not only attract significant investments but also provide excellent career development for Sabahans and generate enormous wealth for the State.

“The oil and gas sector has a major role to play as the state economy develops over the next several years and well into the future,” said Johan, who worked with Exxon Mobile for 18 years before joining Yayasan Sabah.

“It is poised to grow at a rapid pace given the RM16 billion ($5.1 billion) investment in several major projects, including the Sabah Sarawak Oil and Gas pipeline project, Sabah Oil Gas Terminal (SOGT), Ammonia and Urea Plant Project (SAMUR) and the Kimanis Gas Fired Power Plant,” he said.

Johan, who is also executive chairman of Petrosab Logistik, a Yayasan Sabah investment arm for oil and gas business, said there are also substantial opportunities for oil and gas to further downstream activities.

Petronas recently announced major plans to develop long-term key projects to monetise and add value to Sabah’s petroleum resources, which will result in greater revenue to the state.

Following discoveries of oil and gas resources in offshore Sabah, Petronas is forging ahead with its upstream and downstream oil and gas projects involving a combined capital investment of RM45billion.

Integral to Petronas’ plan is the Sabah-Sarawak Integrated Oil and Gas Project (SSIOGP), which comprises the upstream development of oil and gas fields offshore Sabah and downstream development of the Sabah Oil and Gas Terminal (SOGT) and the Sabah-Sarawak Gas Pipeline ((SSGP).

Petronas said the SOGT, being developed at RM3.8 billion, is designed to receive a total of 260,000 barrels per day of crude oil and a total of 1,250 million standard cubic feet per day of gas from offshore.

Petronas said crude oil from the terminal will be exported while the gas will be supplied to domestic consumers in Sabah and, via the SSGP, to the Petronas LNG Complex in Bintulu, Sarawak.

Another Petronas project whose gas feedstock will be supplied by the SOGT is the RM1.5 billion 300MW gas-fired Kimanis Power Plant being jointly developed in Kimanis by Petronas Gas Berhad in partnership with Yayasan Sabah through NRG Consortium (Sabah) Sdn Bhd.

Petrosab Logistik, of which Johan is its executive chairman, represents Yayasan Sabah’s interest in the NRG Consortium.

Petrosab started its oil and gas business in 2005 by providing services to Shell Petroleum Sdn Bhd as its logistics centre in Usukan, Kota Belud.

To further enhance Sabah’s electricity supply security, Petronas also plans to set up a liquefied natural gas (LNG) re-gasification terminal in Lahad Datu, to feed natural gas to the proposed new 300MW Lahad Datu Power Plant.

According to PETRONAS, its total investment in Sabah since 1975 was RM61 billion, while the total amount of royalty paid to Sabah (until 2010) was RM6.8 billion.

Johan said the oil and gas industry in Sabah is relatively young compared to that of Sarawak, nevertheless it has to be developed along a planned approach, drawing the experiences of Kertih, Terengganu and Bintulu.

He said one of the main challenges in managing the development of the oil and gas industry in Sabah was the lack of infrastructure support for the orderly development of the sector.

“We need to invest further in the right infrastructure support to attract more oil and gas investors to Sabah.

“Petronas has already allocated gas for Sabah’s industrial development and it is now up to us to make sure that the gas is utilised for industries which will bring long-term economic benefits and jobs to Sabah,” he said.

Johan, who sits as a Board Member of the Kimanis Power Plant, acknowledged that Sabah needs to train more skilled manpower to meet the requirement of the new industries, including investing more in the right training schemes.

In this regard, PLSB, through its subsidiary, Kimanis Operation and Maintenance Sdn Bhd, is hoping to recruit 60 Sabahans to become technicians and naturally become the main operator for the Kimanis Power Plant.

“In fact, we have already sent the first batch of 13 students to undergo training at Kerteh, Terengganu, and we’re in the process of selecting the next group,” he said, adding that the programme was supported by Petronas.

Petronas is also planning to build a permanent petroleum training centre in Kimanis, expected to be ready by 2013, at a cost of RM50million.

The new campus will replace the present Kimanis Petroleum Training Centre (KTC), which is operating from a temporary premise in Membakut, where 25 trainees are currently undergoing training.

Johan said since the oil and gas business is not an ordinary job, especially in off-shore projects, local contractors must team up with established players with the right technology and experience.

“For a successful industry to develop, we need to establish closer ties with Petronas and the oil majors.

“Petronas must nurture local oil and gas contractors and service providers with the right experience and technological know-how,” he said.