SHOULD SABAH BE GETTING 50% OIL ROYALTIES & AT LEAST A 12.5% STAKE IN PETRONAS AS A CONTRIBUTING STAKEHOLDER IN THE WEALTH OF THE PETRONAS GROUP?

BHF: Re-examine and re-think strategies on oil and gas resources

KOTA KINABALU 9th August, 2011: The recent announcement by PETRONAS of two new gas finds off Sabah is a god-sent opportunity for the present government and its leaders to revisit the much-discussed loss of Sabah’s oil and gas resources and increment of petroleum royalties, said Borneo Heritage Foundation (BHF).

Its Chairman, Datuk Dr Jeffrey Kitingan said given this new development, the State Government needs to re-examine and re-think its strategies on the oil and gas resources located in Sabah and its territorial waters.

“With the loss of “Blocks L and M” to Brunei without so much of a whimper from the Government and its Barisan Nasional leaders, it should not lose this new opportunity to re-negotiate on the Petroleum Development Act 1974 and on a more equitable and fairer revenue sharing formula,” he stressed.

He lamented that the current miserable 5% oil royalties has directly contributed to Sabah being the poorest State in Malaysia with 40% of all hardcore poor in Malaysia from once the second richest State after Selangor (then including Kuala Lumpur) in 1970.

He continued that the disclosure by the Chief Minister in the 2011 State Budget in November 2010 that Sabah is projected to receive RM721.7 million as oil royalties for 2011 (which is expected to be much higher given the current global crude oil prices), pales in comparison to the RM13.7 billion that will be received by PETRONAS. RM721.7 million is small change for total revenue of RM14.42 billion.

The Chief Minister in January 2011 also disclosed that Sabah now produces 26.9% of Malaysia’s daily crude oil production.

“Together with the liquefied natural gas (LNG) in current production including the wells off the island of Labuan and the existing LNG fields that are to be tapped and then piped to Bintulu via the new Kimanis-Bintulu Pipeline, the new gas find of 550 billion standard cu ft with an estimated daily production rate of 21 million standard cu ft as well rumours of new oil-fields off Sandakan and Kudat and the much touted “find of the century” somewhere off the coasts of Sabah, oil and gas is here to stay and could play a very crucial and integral part of Sabah’s economy and future.

“Sabah BN leaders should stop paying lip service and for once seriously consider the interests of the State and the plight of the poor citizens. Some leaders have even gone on record to raise concerns on the oil royalties and PETRONAS projects in Sabah only to shut up once their “associates” are awarded lucrative PETRONAS contracts.

“The time is up for these leaders and for patriotic leaders to rise and demand for the rights of Sabah and its people to be the paramount criteria especially for the sake of the future generations of Sabahans,” stressed Dr Jeffrey in a statement yesterday.

He also expressed regret over the imminent siphoning of Sabah gas all the way to Bintulu, Sarawak via the Kimanis-Bintulu Pipeline.

He contended that the costs of the new production facility and the Pipeline costs could have been spent on a new facility in Sabah to process Sabah’s LNG rather than being sent 533 km. overland to Bintulu.

“With the Pipeline, Sabah has lost all the spin-offs that could be generated if the production facility was housed in Kimanis, Sabah,” he lamented.

Dr Jeffrey claimed that information from reliable sources close to PETRONAS revealed that PETRONAS is building another four platforms off Kimanis with a budget of RM8.0 billion.

He thus reiterated that together with the new gas find, there is no excuse for Sabah not to develop its own oil and gas industry locally.

He also claimed to have met international oil and gas corporations who are prepared to invest in Sabah if Sabah develops its oil and gas industry, and that if the State Government is unable to do it,BHF is prepared to spearhead the development of the oil and gas industry in Sabah.

“In fact, BHF has received calls from various sources to urge the State Government to step down for failing to look after the interests of Sabah vis-à-vis the oil and gas resources in Sabah and failing even to safeguard the interests of Sabah contractors in the construction of the Sabah Oil and Gas Terminal (SOGT) in Kimanis,” he further claimed.

He also lamented that while PETRONAS has previously indicated that the total expenditure in PETRONAS projects in Sabah is expected to be in the region of RM36 billion, so far Sabah contractors have only been awarded less than 3% and to top it all the SOGT contract is being awarded to a Sarawak company.

“If the State Government is to continue with its lackadaisical approach, Sabah’s economy and its people will remain the poorest in Malaysia,” he warned.

Dr. Jeffrey who is also Chairman of the United Borneo Front (UBF) thus contended that there is no point in the State government claiming to be in coalition with the Federal Government and having good relationship with the Federal Government when it cannot even secure a better and fairer revenue sharing with PETRONASand to look after the interests of Sabah.

He further contended that Sabah should be getting 50% oil royalties and at least a 12.5% stake in PETRONAS as a contributing stakeholder in the wealth of the PETRONAS Group and similarly Sarawak, Terengganu and Kelantan should each have a 12.5% stake in PETRONAS being the oil-producing States, with the balance 50% in PETRONAS to be divided between the Federal Government and the non-oil producing States.

He added that if this was the case, the people of Sabah will be as rich as their counterparts in Brunei.

“With a population of 407,045 (2010) Brunei has a 2009 GDP ofUSD10.732 billion and a per capita GNP of USD26,340 while Sabah has a per capita GNP of USD4,943 (RM14,830) for 2009.

“If Sabah gets a 50% oil royalties of RM7.213 billion for 2011 based on the figures as projected by the Chief Minister, Sabah will enjoy a quantum leap in its economy and per capita income since the 2011 State Budget had projected a revenue of RM2.748 billion with an expenditure of RM3.069 billion. If Sabah had kept its oil and gas resources, the State will get the full RM14.426 billion for 2011 and Sabahans will be in the same boat as rich Brunei,” he explained.

“May be Sabah will be better off like Brunei with replacement leaders who are prepared to fight for the rights of Sabah and obtain its fair share of the oil royalties,” he added.