Sarawak govt ‘disappointed’ with decision by Federal Court to postpone hearing on Petronas case

KUCHING: The Sarawak government has expressed its “deep disappointment” with the decision by Federal Court to postpone to June 21 a hearing over the state rights on its oil and gas resources.

In a statement yesterday, the state government said it will consider all other options to protect and enforce its constitutional rights in this matter, 

On June 4, Petroliam Nasional Bhd (Petronas) filed a suit seeking a declaration from the Federal Court that it is the exclusive owner of petroleum resources in the country, as well as the only regulator of upstream activities nationwide, including in Sarawak.

The case was supposed to be heard on Monday, June 11.

“It is surprising that Petronas who made the application and sought an urgent hearing has no objection to the postponement of hearing of the case,” it said.

The postponement, according to the statement, was granted without according the Sarawak Attorney General legal team the courtesy of being heard on the state government’s objection.   

“The state government would not allow Petronas to disrespect and disregard our rights to regulate the upstream activities under our laws such as the Oil Mining Ordinance and the Land Code,” it said.

Over the past year, Sarawak has embarked on several initiatives that would see Petroleum Sarawak Bhd (Petros) come into force from July.

An official letter from Sarawak Attorney General (AG) Datuk Talat Mahmood Abdul Rashid to Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin on April 13 stated that from July 1, the state government would regulate the downstream and upstream O&G industry in accordance to state laws.

Source: https://www.thestar.com.my/business/business-news/2018/06/11/sarawak-govt-disappointed-with-decision/

The Petronas-Sarawak oil intrigue

Change in political landscape paves way for a decision on who has control over oil and gas resources once and for all

SIX DAYS after former prime minister Datuk Seri Najib Tun Razak announced the dissolution of Parliament, Petroliam Nasional Bhd (Petronas) received a letter from the Attorney General (AG) of Sarawak, which it knew it had to act on.

The letter effectively aimed to relieve Petronas as the undisputed guardian of oil and gas (O&G) resources in Malaysia and its powers to be shared with the state government-owned Petroleum Sarawak Bhd (Petros).

Officials familiar with the matter say the biggest fear for Petronas was that its role as the authority for any O&G exploration works would be compromised not because of inadequate laws, but the weak political strength of the federal government.

“But the change in the political landscape after May 9, where the shift in power moved to Pakatan Harapan, gave fresh hope that Petronas has an even chance to allow the courts to determine who is the guardian of all O&G resources in the country.

“The state based its case around the Sarawak Oil Mining Ordinance (OMO), while Petronas is anchoring its case on the Petroleum Development Act 1974 (PDA). Under Pakatan, the mantra is to follow the rule of law, which is good for all parties,” says the official.

On April 13, the letter from the Sarawak AG stated that Petronas would deal with Petros on all matters pertaining to the extraction of O&G resources effective July 1.

It officially positioned Petros as the sole authority to issue licences and permits on all upstream O&G activities carried out in the state.

Hence, Petronas, its sub-contractors and partners in the production-sharing contract ventures are to work with Petros in the extraction of O&G resources in the state with the most amount of reserves in Malaysia.

“When the letter came, Petronas was expecting the worst because over the past five years, it had lost many battles to the Sarawak state government. This was largely because the federal government was weak and did not provide Petronas with ‘air cover’ when it came to matters dealing with Sarawak,” says an official close to the matter.

To the international O&G world, the letter from Sarawak effectively was a blow to the standing of Petronas as the sole authority of O&G resources in the country.

The national oil company faces the daunting prospects of explaining to oil majors such as Shell, Murphy Oil, Mubadala Oil & Gas, Total and Nippon Oil that they have to go through one more layer – Petros – for any type of work they are going to undertake in O&G ventures in Sarawak.

In the past few years, Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin never hid the fact that the company was getting uncomfortable with the situation in Sarawak. He had the view that the practice in most countries was for a single body to be the sole authority for O&G resources.

In this respect, Petronas has always anchored on the PDA that came into effect in 1974, vesting it as the sole authority for all upstream O&G activities in the country. This involves exploration works and entering into contracts with international partners to mine O&G fields, whether onshore or offshore Malaysia.

In return, the states of Sarawak, Sabah and Terengganu, which have O&G resources, receive royalties amounting to 5% from Petronas.

The absolute amount received by these states depends on the quantum of O&G resources extracted from the state. For instance, between 1978 and March 2000, Terengganu received RM7.13bil in royalties. Global oil prices averaged US$20 per barrel then.

In a legal suit between Terengganu and the federal government, it was disclosed that the latter had offered to pay the state RM1.67bil for the period from March 2000 to 2009, while the state wanted RM2.79bil. The matter was settled out of court.

GE14 a turning point?

Petronas vice-president and group general counsel Maliki Kamal Mohd Yasin wrote back to the Sarawak AG stating that it disagreed with the assertion of the state requiring it to get licences and permission from Petros to embark on any work starting from July 1.

It is learnt that Maliki’s argument was anchored on the PDA that vested all rights to upstream O&G resource activities to Petronas.

Maliki’s letter was sent on May 22, just two weeks after Malaysia saw a turning point in its political landscape.

Sarawak, which was the king maker in the previous administration under the Barisan Nasional with 25 seats in Parliament led by Najib, no longer held that precious position. Sarawak’s Barisan won only 19 seats in the 14th general election (GE14) and is facing a different federal government in the form of Pakatan.

The new federal government does not need to depend on Sabah and Sarawak to control Parliament.

The Pakatan coalition, led by Prime Minister Tun Dr Mahathir Mohamad, has more than 112 Parliamentary seats in Peninsular Malaysia and does not have to depend on allies from Sabah and Sarawak to form the government.

The political shift is viewed as something that works in favour of Petronas.

Whether by sheer coincidence or design, in the first week of June, Petronas filed a suit seeking a declaration that it is the sole governing authority for upstream O&G activities in Malaysia for onshore and offshore fields.

Petronas also wants the courts to declare that the PDA supercedes the Sarawak OMO, the law that the state has used as its basis for setting up Petros as the sole authority for O&G activities in Sarawak.

It is not hard to fathom why Petronas wants a decision in determining who controls the O&G resources in Sarawak as soon as possible.

Starting from July 1, the function of Petros as the sole issuing authority for all licences and approvals for O&G activities in the state is to kick off. Petronas would be deemed illegal if it operates in Sarawak without getting the approval from Petros.

The suit, which is to be heard on July 12, will consequentially determine if the Sarawak state assembly has any standing to preside on matters regarding the upstream activities of the O&G industry.

However, when it comes to matters pertaining to Petros, the state Pakatan and Barisan parties seem to have a similar stance.

Towards this end, Sarawak Parti Keadilan Rakyat vice-chairman See Chee How has already stated that the state cannot afford to lose the case against Petronas.

However, the federal government has already stated that it would manage the country based on the rule of law. On this score, Dr Mahathir has already said that the Petronas case is something that the company has taken up and that it would abide by the decision of the court.

Landmark case

The case between Petronas and Sarawak will be an interesting landmark because it sets the stage for other states such as Sabah and Terengganu to set up their own version of “Petros”. In fact, Sabah already has a similar set-up but it is not active.

As for Terengganu, the state government will directly get oil royalties from Petronas after 18 years. And ironically, it is coming from the same Prime Minister who had stopped payments to the state after it fell into the hands of PAS in 1999.

After Barisan lost Terengganu to PAS in the November 1999 GE, Dr Mahathir channelled the payments to a federal government-owned entity. The payments stopped in March 2000.

Payments were made through a federal government entity and was known as Wang Ehsan. It continued until 2009 when Barisan regained the state.

The utilisation of funds between 2004 and 2008 was said to be one of the reasons that led to the ouster of Datuk Seri Idris Jusoh as Mentri Besar of Terengganu. He was replaced with Datuk Seri Ahmad Said after the 2008 GE.

During Ahmad Said’s tenure, one of the proposals for the utilisation of the funds in a supposedly transparent manner led to the birth of 1Malaysia Development Bhd or 1MDB – the fund that is subject to a massive investigation at domestic and international levels.

Since 1974, when the PDA came into effect, Petronas has been managing the resources. It has a monopoly and is the sole authority to go to for any investor wanting to get a piece of the action. Unlike some other state-owned petroleum companies such as Pertamina of Indonesia, Petronas has been handling the contracts well.

However, after 44 years, the states, especially Sarawak and Terengganu, have established many companies and employed people with vast experience in managing O&G resources. It is only natural that they would want a bigger role to play.

However, under the Pakatan government, Sabah and Sarawak are to get 20% of the royalties instead of 5%. That itself is a lot of money to handle – running into billions. As we have seen in Terengganu, the handling of the royalty money from Petronas itself is a full-time job.

Although the current case only involves Petronas and Sarawak, the implications are wide-ranging.

The courts will decide once and for all who controls the O&G resources. This decision will come in an environment where nobody has any room to cast doubts if there were hidden hands behind any court judgements.

A decision either way will have a major impact on the O&G industry in the country.

 

 

 

Related story:

Petronas warned of July 1 being the cut-off date

Source: https://www.thestar.com.my/business/business-news/2018/06/09/the-petronassarawak-oil-intrigue/

Petronas warned of July 1 being the cut-off date

EVERYBODY knows that national oil company Petroliam Nasional Bhd (Petronas) has been losing its clout in Sarawak in the last few years. It came to light in 2016 when Sarawak issued a moratorium on all new applications for work permits for staff outside the state, including Petronas.

It was reported that the state government’s decision was prompted by complaints from Petronas officers from Sarawak whose services were terminated or retrenched because of the downturn in the oil price.

In April last year, Sarawak announced the setting up of Petroleum Sarawak Bhd (Petros), a company that would enable Sarawak to actively participate in oil and gas (O&G) extraction activities in the state.

Petronas since then has said that it has had a series of discussions with the state, but there is not much progress.

In the last one year, Sarawak has embarked on several initiatives that would see Petros come into force from July this year.

The grim reminder came in an official letter from Sarawak Attorney General (AG) Datuk Talat Mahmood Abdul Rashid to Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin on June 13.

The letter stated that starting from July 1, the state government would regulate the downstream and upstream O&G industry in accordance to state laws, including the Oil Mining Ordinance 1958 (OMO), the Land Code of Sarawak and the Gas Distribution Ordinance 2016.

The letter stated that Petronas has to comply with the state laws for the exploration, prospecting and mining of petroleum including natural gas, and the distribution of gas within the state.

“Any such activities and the use or occupation of state land, both onshore and offshore, carried out without the required licences or leases issued under the state laws after July 1 would be deemed illegal and appropriate action would be taken,” the letter stated.

Petronas was told to liaise “immediately” with the Sarawak state-owned oil exploration company Petros to discuss arrangements on the exploration and prospect of mining petroleum and natural gas in the state.

The letter also stated that the state government would be holding a dialogue session with all persons or companies involved in upstream and downstream O&G activities in Sarawak.

Petronas responded on May 22, more than a month after the issuance of the letter from the Sarawak AG and two weeks into the formation of a new government at the federal level under Pakatan Harapan.

Petronas issued a lengthy letter stating that the company disagreed with the state on its authority over the exploration and mining activities of O&G resources.

“Petronas is not required to apply for any such licences or leases from the state under the OMO … there is no requirement for Petronas to liase with Petros. In all instances, Petronas fully reserves its rights in respect of the foregoing,” the three-page letter ended.

Petronas, in essence, disagreed with Sarawak’s contention that the state was not covered by the Petroleum Development Act 1974 (PDA).

In outlining details, Petronas said that the PDA had vested in it exclusive powers to regulate upstream O&G activities throughout Malaysia and that no other body had such powers.

“The OMO was superceded by the PDA, which by necessary implication repealed the OMO,” the letter said.

It also said that the Sarawak government had entered into an arrangement, in March 1975, vesting in Petronas the ownership of petroleum resources both offshore and onshore in return for agreed cash to the state government.

Petronas also wrote that the OMO was a pre-Malaysia Day law and that under the Malaysia Act 1963, the OMO is to be treated as a federal law since the ordinance pre-dates the formation of Malaysia.

This means that from then on, the Sarawak government could no longer consider itself the authority under the ordinance, Petronas stated.

Since the letter was issued, there were no major developments until June 4, when Petronas filed a case seeking a declaration from the Federal Court that it is the exclusive owner of petroleum resources in the country, as well as the only regulator of upstream activities nationwide, including in Sarawak.

It is worth noting that Sarawak has also issued a handbook on “The Regulatory and Basic Procedures of the Oil & Gas Industry in Sarawak”.

The handbook says that the O&G industry in Sarawak will be experiencing regulatory adjustment in consequence of the state reclaiming its constitutional authority to regulate the mining and production of petrochemicals, as well as the distribution of gas in Sarawak.

It says that the aim of the handbook is to give industry players clear and comprehensive guidance to help them understand and apply all relevant state legislations when operating in Sarawak.

“The state government will exercise its regulatory powers in a manner that would not jeopardise the interest and investment of those who have already been operating in Sarawak,” the handbook states.

The role of Petros is also laid out in the handbook, including to assist the state government to issue exploration, prospecting and mining licences.

It points out that Petros is to be a major revenue contributor to the Sarawak state through active participation as a major player in the exploitation and utilisation of petrochemicals in Sarawak.

There has been growing dissatisfaction in the Sabah and Sarawak governments over the years on oil royalties, despite the fact that the bulk of Petronas’ hydrocarbons are derived from the two states.

Things between Sarawak and Petronas started to heat up last year when Sarawak chief minister Datuk Patinggi Abang Johari Tun Openg announced the formation of Petros.

Wan Zulkiflee then responded that he welcomed any involvement by state government entities in the O&G business, but it has to be within the PDA.

He said that under the PDA, Petronas is the custodian and manager of the O&G resources in Malaysia.

Related story:

The Petronas-Sarawak oil intrigue

Source: https://www.thestar.com.my/business/business-news/2018/06/09/petronas-warned-of-july-1-being-the-cutoff-date/

Tussle for O&G resources

Petronas and Sarawak at loggerheads over control of petroleum rights

PETALING JAYA: In a move seen as a challenge to Sarawak’s claim over petroleum ownership, Petroliam Nasional Bhd (Petronas) has gone to court to declare that, under the Petroleum Development Act 1974 (PDA), it is the exclusive owner of oil and gas resources in Malaysia.

The national oil corporation on Monday announced that it had filed an application before the Federal Court seeking for a declaration on the PDA being the law applicable for the petroleum industry in the country.

Meanwhile, in a related development, the Sarawak state Government said it will defend its rights in court. (see story in Page 2)

The application by Petronas stated that the national oil company was the exclusive owner of the petroleum resources as well as the regulator for the upstream industry throughout Malaysia, including in Sarawak.

“Petronas believes that the determination by the Federal Court would help provide clarity on its rights and position under the PDA,” the group said in a statement.

“Petronas remains committed to support Sarawak’s aspiration to participate in the oil and gas (O&G) industry in the state, for as long as it is within the framework of the PDA,” it added.

The move by Petronas came just a month before the Sarawak government is expected to assume full regulatory authority over the upstream and downstream operations and activities of the O&G industry in the state by July this year.

Sarawak established its own O&G company, Petroleum Sarawak Bhd (Petros), last year. At the launch of the company in March this year, Sarawak Chief Minister Datuk Patinggi Abang Johari Tun Openg said Petros would spearhead the state’s participation in the strategic O&G industry to boost state development, adding that Petros would be granted the rights to mine O&G in the state.

Abang Johari recently also said all companies or persons involved in the O&G industry must henceforth have the necessary licences, leases and approvals required either under the Sarawak Oil Mining Ordinance 1958 or Sarawak Gas Distribution Ordinance 2016.

Sarawak, as well as Sabah, had long been seeking for their O&G royalties be increased to 20%.

Both states currently receive royalties of around 5% from Petronas for O&G revenues.

However, Abang Johari recently lamented that the state government’s request to Petronas for an increase in oil royalty to 20% had proved to be difficult to secure.

“That is why the state government started petroleum company Petros to develop our oil resources using our own means,” Abang Johari said.

“By having our own petroleum company, we will chart our own development agenda,” he added.

Prior to winning the 14th general election last month, Pakatan Harapan had pledged to give O&G-producing states a “reasonable sum” for royalties if it took over the federal government. Under this election manifesto, O&G royalties to Sabah and Sarawak would be raised to 20%.

Meanwhile, in September last year, Petronas president and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said while he welcomed any involvement by state government entities in the O&G business, all activities must comply with the PDA.

“We have a strong relationship with the Sarawak government, as such, we welcome its participation in the O&G industry. But we also have regulations in place, of which under the PDA, Petronas is the custodian and manager of the O&G resources in Malaysia,” he said.

Wan Zulkiflee noted that the partnership with Petros could be similar to other Petronas partnerships, either as service providers or as a partner under the production sharing contract.

When asked about the potential partnership between Petronas and Petros, Wan Zulkiflee said: “Discussions are ongoing with the Sarawak government.”

Source: https://www.thestar.com.my/business/business-news/2018/06/05/tussle-for-og-resources/

CM wants Chinese to rally behind state government

KUCHING: Datuk Patinggi Abang Johari Tun Openg says he needs strong support from the people to implement the plans he has for Sarawak.

A united front from all Sarawakians will send a strong signal to Putrajaya that the state is serious in reclaiming its rights, said the Chief Minister.

Abang Johari added he needed the people, in particular the Chinese community, to rally behind the state government to ensure the ruling coalition could put up a strong representation in Parliament.

“Sarawak people must unite and work together. This is the time to show that the Chinese in Sarawak are united and part of the ruling government,” he said at the Sejiwa Senada programme at Batu Kawah here.

Abang Johari added that his administration had lined up numerous initiatives to transform the state economy. The ongoing Pan Borneo Highway would have a multiplier effect to spur economic growth across Sarawak.

“Our new development approach is to embrace technology in all sectors including agriculture. Modern farming, research and technology in production including efficient logistics will help us penetrate the global market.”

Abang Johari (left) greeting Barisan Nasional candidate for Bandar Kuching Kho Teck Wan (right) while Stampin candidate Dr Sim Kui Hian looks on.

He said the setting up of Petroleum Sarawak Bhd (Petros) will ensure the state has strong participation in the oil and gas sector, working alongside Petronas.

The recent acquisition of 25% equity in LNG3 will give the state an extra income of about RM2bil next year, Abang Johari added.

Stronger participation and investment in the oil and gas sector will help the state support the RM11bil LRT project in the Kuching-Samarahan-Serian divisions, as well as the water grid project throughout Sarawak.

“I promise to source more funds for Sarawak and we will assert our rights under MA63 (Malaysia Agreement 1963).

“Petros will ensure Sarawak fully exploits its oil and gas resources,” Abang Johari said.

Abang Johari presenting a mock cheque for RM10,000 to Jimmy Chiang from the Kuching Spinal Injuries Association

The Chief Minister added Sarawak plans to have its very own television station in the near future.

At the event, Abang Johari presented a RM500,000 grant to SJKC Sam Hap Hin, an agreement letter for the relocation of SJKC Chung Hua Bako to Samarahan, as well as land ownership deed for expansion of SJK Chung Hua Mile 4 at Jalan Penrissen.

The Chief Minister also presented native customary rights communal reserve land titles to Kampung Giit in Padawan, Kampung Semadang, Siburan, and Kampung Gita Baru in Sungai Maong.

Petronas, under its corporate social responsibility initiative, presented a total of RM120,000 to 10 non-governmental organisations in Kuching.

Source: https://www.thestar.com.my/metro/metro-news/2018/05/07/seeking-communitys-support-cm-wants-chinese-to-rally-behind-state-government/

Abang Johari welcomes another ‘Chinese tsunami’

KUCHING: A “Chinese tsunami” supporting the ruling Barisan Nasional government in Sarawak in GE14 will strengthen the state’s pursuit to reclaim its rights and will demand Putrajaya’s attention.

Chief Minister Datuk Patinggi Abang Johari Tun Openg (pic) said there are big plans to spur development and economic growth in the state, and strong support from all Sarawakians – especially the Chinese community – is needed.

Sarawak Barisan won 25 out of the 31 parliamentary seats in the state in GE13, but Abang Johari is targeting at least 28 constituencies in GE14.

This would involve wresting Chinese-majority seats it lost such as Stampin, Bandar Kuching, Sarikei, Sibu and Lanang and Miri.

“We must have stronger representation in Parliament to fight for Sarawak rights,” Abang Johari said at the Sejiwa Senada programme at Batu Kawah here on Saturday.

The programme in Kuching is the fifth leg of the event after Miri, Saratok, Meradong and Sibuti. Next week, the Sejiwa Senada programme will be held in Lubok Antu. 

Sejiwa Senada is a free programme will give the public the opportunity to get services, information, and advice from government agencies, government-linked companies, NGOs and the private sector.

 
Abang Johari’s administration has lined up an agenda to transform the state economy. The state has embarked on building high-speed Internet facilities across the state as well as the Pan Borneo Highway project.

“Our new development approach is to embrace technology in all sectors, including agriculture.

He said modern farming methods would strengthen the rural economy, and create a diversity of agricultural products aimed at the global market,” he said.

Abang Johari also said that with the setting-up of Petroleum Sarawak Bhd (Petros), oil and gas royalties would be safeguarded working alongside Petronas.

He said that the additional revenue could support development of other projects such as a RM11bil LRT system across Kuching-Samaahan-Serian divisions, as well as a water grid project throughout the state.

“I promise to source more funds for Sarawak and we will assert our rights under MA63 (Malaysia Agreement 1963).

“We have to look into the future if we want to become a developed state by 2030,” Abang Johari said.

Abang Johari also mentioned plans to set up Sarawak’s very own television station in the future.

Source: https://www.thestar.com.my/news/nation/2018/05/05/abang-johari-welcomes-another-chinese-tsunami/

Supply base to be built in Bintulu for O&G industry

KUCHING: Sarawak will have its own multi-million ringgit integrated supply base in Bintulu next year to serve the needs of oil and gas (O&G) industry.

Phase one of the supply base project, which is undertaken by Bintulu Supply Base Sdn Bhd (BSB), is expected to cost RM300mil. It will provide a 370m long wharf able to accommodate four offshore supply vessels at any one time.

The supply base is scheduled to be operational in the fourth quarter of 2019.

Bintulu Supply Base signed an agreement to lease land at the Second Inner Harbour, Bintulu Port for the project from Bintulu Port Holdings Bhd (BPHB) yesterday.

The signatories were Bintulu Supply Base chairman Ahmadi Yusoff and BPHB chairman Hadzari Abang. Chief Minister Datuk Patinggi Abang Johari Tun Openg witnessed the ceremony.

Bintulu Supply Base is a smart partnership between Yayasan Sarawak and state-owned private companies OBYU Holdings Sdn Bhd and Kris Sakti Petroleum Sdn Bhd. It is a strategic asset and infrastructure for the growth of the Sarawak O&G industry.

“The integrated supply base will provide a one-stop solution for the O&G industry, from exploration to development to production needs, including provision of facilities and services to support drilling operations.

“The integrated asset and facilities hold the key to ensure a cost effective and efficient solution to the O&G players,” according to Bintulu Supply Base.

The company said the development of the supply base would be carried out in phases, taking into consideration the specific requirement of the O&G industry.

“The phased development approach is based on market demand and the fit for purpose of the O&G players.

“The supply base will operate in compliance with the industry health, safety, security and environment standard,” it added.

Bintulu Supply Base said as the project is strategically located in relation to the offshore fields in the Sarawak Basin in close proximity to fields offshore Sarawak, this would enable cost efficiencies to be attained by the O&G players from cost savings due to the shorter travel time from offshore to onshore.

Ahmadi said the set-up of the supply base was in line with Petroliam Nasional Bhd’s (Petronas) initiatives to achieve cost efficiency and operational effectiveness especially for players in Sarawak.

Johari described the integrated supply base project as a significant development of Sarawak’s O&G inclusion strategy.

“It will provide a strong platform for a most effective and efficient logistical service to the upstream activities undertaken by O&G companies on the continental shell, off the coast of Sarawak where valuable petroleum and natural gas resources are located,” he said.

The chief minister said the Sarawak government had decided to issue mining leases to the newly set-up Petroleum Sarawak Bhd (Petros), thereby vesting the mining rights unto Petros.

He said Petros would work out fair and equitable arrangement with Petronas and other companies relating to the mining of O&G from the areas covered by the mining leases.

“In regulating the upstream O&G production, Petronas must only deal with Petros to produce and extract oil and gas from beneath land within the state’s boundaries.

“Petros, under direction from the state government, will then enter into mining and production sharing agreements with Petronas and other major industry players,” he added.

Johari said the state government would also regulate gas distribution in Sarawak by July 1, this year with the enforcement of the Gas Distribution Ordinance, 2016.

“In regulating the distribution of gas ,the state expects to secure more gas necessary to expand its electricity generation capacity and accelerate industrial growth in Sarawak.

“The government wants to put an end to the present scenario whereby Sarawak has abundant gas for export to countries like Japan and South Korea but not enough gas for its own domestic use or to propel its industrialisation agenda.”

The chief minister said that under the Gas Distribution (Licence) Regulations 2018, the distribution of gas to any customers (intermediate and end-users) from any gas processing plant in Sarawak (both onshore and offshore) by way of pipeline would require a licence.

He said Petros would be granted a licence by the state to distribute gas from Petronas processing separation plant at Tanjung Kidurong, Bintulu.

By July 1, Sarawak would assume full regulatory authority over the upstream and downstream aspects of the O&G industry, he said.

The O&G unit of the Chief Minister’s Office will organise an engagement with Petronas and other industry players by the middle of next month to ensure an orderly implementation of the new policies related to the O&G industry.

Source: https://www.thestar.com.my/business/business-news/2018/04/20/supply-base-to-be-built-in-bintulu-for-og-industry/

Abang Johari: Oil and gas companies must get relevant permits by July 1

KUCHING: Companies involved in the oil and gas industries in Sarawak must obtain the necessary licences and leases required under the Oil Mining Ordinance 1958 and Gas Distribution Ordinance 2016 starting July 1.

 

Chief Minister Datuk Patinggi Abang Johari Tun Openg said the licenses, including permits, leases and other approvals will cover all persons and companies involved in the oil and gas industries in Sarawak including their contractors, sub-contractors and vendors.

 

He added that licenses will be issued by the Sarawak government under the Oil Mining Ordinance (OMO) and Gas Distribution Ordinance (GDO), in accordance with legislative powers conferred on the state under the Federal Constitution.

 

The state government will carry out engagement with all oil and gas industry players beginning next month on laws and regulations compliance including the Land Code and Natural Resources and Environment Ordinance. The session will also touch on penalties and consequences of non-compliances.

 

“This is normal practice. When you do business in other countries, you have to adhere to their regulations as well. We are asserting our rights within the Federal Constitution to regularise oil and gas operations in the state,” he told reporters after a MoU signing ceremony between Bintulu Port Authority and Bintulu Supply Base Sdn Bhd here Thursday.

 

Abang Johari said the regulating of both upstream and downstream of the oil and gas production, as well as gas distribution in Sarawak is crucial to the state’s planning to expand its economy and enhance level of participation by locals in the oil and gas industry.

 

He added that the forthcoming amendments to OMO 1958, to be tabled in the next Sarawak Legislative Assembly sitting, will require all oil and gas industry players in Sarawak, including Petronas, to comply with the ordinance.

 

“Section 2, Section 6 and Section 8 of the Petroleum Development Act (PDA) 1974 undoubtedly confirm that all industry players must comply with OMO and other state laws including the Land Code of Sarawak in regards to land use and occupation in the state.

 

“Under Section 8 of the PDA, only the Petroleum Mining Act 1966 (except Section 14 thereof) is not applicable to Petronas. Section 14 of the Act, which no longer applies to Sarawak, requires Petronas to seek permission to use and occupy land needed for its activities,” Abang Johari said.

 

He added that Petronas, not being exempted by the PDA from compliance with the Sarawak Land Code, must have licenses or leases to use and occupy land including the continental shelf for the production of oil and gas in accordance to the land code.

 

Touching on the GDO, the chief minister said all persons and companies undertaking the distribution of gas, including the setting up of gas processing, separation or regasification plants and pipelines will be required to obtain a license.

 

The Gas Distribution (License) Regulations 2018 would set out the procedures for applying for license and fees payable by licensees, Abang Johari said.

 

Petroleum Sarawak Bhd (Petros), under direction of the state government, will enter into Mining and Production Sharing Agreements with Petronas and other major industry players. Petros would also be granted license by the state to distribute Gas from Petronas processing separation plant at Tanjung Kidurong in Bintulu.

 

Source: https://www.thestar.com.my/news/nation/2018/04/19/abang-johari-oil-and-gas-companies-must-get-relevant-permits-by-july-1/

Sarawak govt ups stake in Malaysia LNG Tiga to 25%

KUCHING: The Sarawak government has, via its investment arm Sarawak State Financial Secretary (SFS), bought another 15% stake in Malaysia LNG Tiga Sdn Bhd (MLNG Tiga), increasing its shareholding to 25%.

The stake was bought from Shell Gas Holdings (Malaysia) Ltd, a subsidiary of Royal Dutch Shell plc.

State Financial Secretary Datuk Seri Ahmad Tarmizi Sulaiman and Shell Malaysia chairman Datuk Iain Lo signed the sales and purchase agreement here on Friday. Chief Minister Datuk Patinggi Abang Johari Tun Openg witnessed the event.

 With the acquisition, this has increased SFS’s shareholding in MLNG Tiga to 25%, making it the second largest shareholder.

Petroliam Nasional Bhd (Petronas) holds 60% in MLNG Tiga. Nippon Oil Finance (Netherlands) BV has a 10% and Diamond Gas (Nethelands) BV, a subsidiary of Mitsubishi Corp, 5%.

 Petronas subsidiary Malaysia LNG Sdn Bhd operates MLNG 3 as part of the larger Petronas LNG complex in Bintulu.

 At the request of Shell, Johari told reporters later that he could not reveal how much SFS had paid for the 15% stake in MLNG Tiga, only saying that the pice tag was “reasonable.”

 He said SFS was ready to increase its shareholdings in MLNG Tiga if Petronas considers to divest some of its sharesholdings.

 He said the SFS had recently acquired a 10% stake in MLNG 9 Train,which started operations in 2016 with an annual production capacity of 3.6 million tonnes.
 
Johari said the acquisition of equity interest in MLNG 3 and MLNG 9 Train was in line with Sarawak’s efforts to diversify its economy and increase its revenue stream.

Up to 2017, he said SFS has received close to RM20bil in dividends from its investments in MLNG 1 to 3 projects. 

“ I will announce in October another initiative that will help Sarawak to generate a new revenue stream,” he added.

 He described the latest equity acquisition in MLNG Tiga as another milestone for Sarawak to participate actively in both the upstream and downstream industries of the oil and gas  (O&G) industry.

 He said Sarawak was embarking on a methanol plant project in Bintulu,which is estimated to cost RM8.4bil, as part of the state to venture into more downstream value-adding petro-chemical industry.  

 On the newly formed Petroleum Sarawak Bhd (Petros),Johari expects the state-owned company to be “up and running” in two years, and to start contributing revenue to the state coffers in the next few years.  

 Petros was set up to enable Sarawak to participate in the upstream O&G development, particularly in the exploration  and extraction of oil and gas resources.

Johari said Sarawak required massive funds to finance its various development projects,particularly road and bridge projects.

He said the newly operational Sarawak Development Bank would finance some of the strategic projects,such as the proposed methanol plant.
 

Source: https://www.thestar.com.my/business/business-news/2018/04/13/sarawak-govt-ups-stake-in–malaysia-lng-tiga-to-25pct/

Orang Ulu want greater say in petroleum company

MIRI: The Orang Ulu want to be given a major role in projects undertaken by the newly-formed Sarawak oil company, Petroleum Sarawak Bhd (Petros).

They are seeking contracts in upstream exploration operations and downstream spin-off sectors.

These were among the views expressed during the closed-door biennial conference of the Federation of Orang Ulu Association of Sarawak, Malaysia (Forum) held here yesterday.

Forum president Antonio Kahti Galis, who chaired the conference, said all the resolutions adopted by the delegates would be forwarded to the state government.

“We in Forum will liaise closely with the Chief Minister to link the Orang Ulu in urban and rural Sarawak with the state government on issues concerning our people.

“Forum wants to be the platform for that,” he said.

Orang Ulu from the Kiput minority ethnic group seen here in Kampung Kuala Tutoh in Ulu Baram. – filepic

The Orang Ulu, made up of Kayan, Kenyah, Kelabit, Lun Bawang, Kiput, Saban, Lahanan and others, also want to be represented at the management level of Petros so that they will have a direct say in polices and decison-making.

A delegate pointed out that at present, the management of Petros did not have any significant representation from the Orang Ulu.

“Orang Ulu have people with capabilities in the petroleum upstream and downstream sectors but until today, we only get small sub-contracts.

“This situation must be looked into so that Orang Ulu can play a significant role in our own petroleum sector.

“This would hasten the socioeconomic development of Orang Ulu people who are way behind other races,” he said.

Forum secretary-general Dick Bala said they will compile a report on the matters raised to be forwarded to Chief Minister Datuk Patinggi Abang Johari Tun Openg.

“The Chief Minister will be briefed on the matters raised by delegates including Petros.

“Other current issues affecting the Orang Ulu in terms of land and rural development will also be included in the report,” he said.

Forum was set up 10 years ago to function as the umbrella body for the Orang Ulu in the state and country.

Source: https://www.thestar.com.my/metro/metro-news/2018/04/04/orang-ulu-want-greater-say-in-petroleum-company-delegates-at-closeddoor-meeting-say-involvement-shou/

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