Sarawak still negotiating with Petronas on increase in oil royalty

22 May 2017 / 18:46 H.

KUCHING: Sarawak has not abandoned its negotiation with Petronas for a 20% increase in oil royalty, Chief Minister Datuk Amar Abang Johari Tun Openg said today.
In his winding up speech at the 18th Sarawak legislative Assembly sitting here, he said now the time is unfavourable for the negotiation as the price of oil is low and production cost very competitive.
"Under such a situation, we have to manage this with care," he said.
Meantime, he said in lieu of the loyalty increase, he had decided that the state would continue to pursue interests in the development of the oil and gas industry in the state.
It would further negotiate with Petronas the ways and means by which it could participate in the national oil corporation's upstream and downstream activities in Sarawak, he added.
"The state government will form a state-owned commercial entity alongside Petronas to explore and produce oil and gas in marginal or brown fields in Sarawak that have feasible potential to produce oil and gas.
"Sarawak will also participate in downstream activities. It has embarked on a pilot project in Bintulu in the manufacture of methanol and its derivatives," he said.
Abang Johari said the government was also actively negotiating with Petronas on the details of the shareholders agreement for a 10% equity in the Malaysia Liquefied Natural Gas (MLNG) Plant Train 9, besides working for a larger equity in MLNG 2 plant.
Petronas, he said, had been directed by the state government that it must be consulted on the usage of gas from any new fields.
''This is to ensure that Sarawak has the first right of refusal in using the new source of gas for the development of its oil and gas industries, as well as the development of other industries in the state.
"As a result of several agreements signed recently, Petronas has committed to supply 450 million standard cubic feet per day of natural gas for the power and non-power sectors development in the state.
"Furthermore, it has committed to a baseline value of RM2.1 billion worth of contracts to be awarded to Sarawak companies. Since 2013, Petronas has given RM15.8 billion worth of contracts to Sarawak companies,"he said.
Abang Johari said the number of Sarawak companies that were licensed or registered with Petronas had increased from 314 in 2013 to 420 last year.
"We will continue to develop ways and means to enhance the participation of local companies in the oil and gas industry," he said.
On another development, he said state-owned Brooke Dockyard and Engineering Works Corporation had been awarded the Bokor and Anjung projects offshore Sarawak worth RM490 million.
"The scope includes design, construction, offshore installation, hook up and commissioning the entire value chain of an offshore development project. This award paves the way for further involvement in marginal fields offshore Sarawak which we can capitalise on." he said. — Bernama

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