Friday 30 July 2010



PETRONAS is now willing, albeit reluctantly it seems, to let Sabah keep some of its considerable gas reserves for its own use. This is the unofficial feedback the state government has received from the normally reticent national oil corporation.

This was disclosed by State Industrial Development Minister Raymond Tan Shu Kiah "Petronas is spurring oil and gas related industries even in non-oil states like Malacca, Johor and Kedah, besides Sarawak and Terengganu."

So, the question that Petronas was asked by the Sabah government was why the state was being left out of the picture. Instead, Sabah gas reserves are now earmarked for Sarawak, Japan and Peninsular Malaysia.

Tan was explaining the background to the latest development in an update on last week's Asean Oil and Gas Expo 2010 in Kota Kinabalu.

However, this apparent change of heart by Petronas has a catch. The state must first substantially build up its infrastructure and manpower to support an oil and gas industry.

"It is not only about just getting the gas but what we do with it," said Tan.

The Sabah government hopes to work with Universiti Malaysia Sabah and Petronas on developing the necessary infrastructure and human resources.

Tan reckons that the first locally trained personnel for the industry would graduate in two years to support Petronas in its Sabah activities.

The state government expects oil company to invest in the manpower needs for the oil and gas industry. It also hopes to source federal funding.

All must be in place

Petronas has also advised the state government to ensure that the water supplies and uninterrupted power supply are in place as investors expect everything to be in place for them.
It's a chicken-and-egg situation for the state when it comes to utilising its gas reserves, a point not lost on Tan.

Left unsaid is what Petronas itself has been doing in Sabah since 1976 when then Chief Minister Harris Salleh signed away the state's oil and gas reserves in perpetuity.

Petronas has a methanol plant in Labuan. It is also building the Sabah Oil and Gas Terminal (SOGT) in Kimanis, along the west coast. But this is for shipping the gas to Bintulu in Sarawak to feed its LNG plant there.

Even so, Tan is hoping to persuade Petronas to keep the gas for local use although they have started building the pipelines to Bintulu.

"I am telling them that if I can use the gas in Sabah, maybe it's not necessary to send it Bintulu because they can still make money from local use," said Tan. "But if we do nothing then it's gone."

Tan sees it as a race against time now to work closely with Petronas to plan what the local industries would be and to get them started "so that I can keep the gas here". He declined to dwell on the fate of the gas pipeline going to Bintulu, in that event.

Not in agreement

However Luyang state assemblyperson, Melanie Chia, thinks that the state government should not agree to local gas being shipped to Bintulu if it was serious about developing industries to utilise it.

"Petronas should not have pushed so strongly for our gas knowing that people in the state are opposed to it being shipped out to Sarawak," said Chia. "We don't even have enough power and the state is toying with using a dirty source like imported coal."

She noted that Federal Plantation Industries and Commodity Minister Bernard Giluk Dompok, from Sabah, had warned two months ago that there's no guarantee that Petronas would not ship the gas to Bintulu even if it was needed locally.

Chia pointed out that Petronas had been taking oil and gas from Sabah since 1976 without giving anything back to the state in return.

"The infrastructure and human resource development should have started more than three decades ago, added Chia.

"Now, this is the excuse being used to prevent our gas reserves being utilized locally even for power generation."

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