Malaysia: Sarawak still negotiating with Petronas on increase in oil royalty, CM says

Malaysia: Sarawak still negotiating with Petronas on increase in oil
royalty, CM says

Sarawak has not abandoned its negotiation with Petronas for a 20 per cent
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 per cent 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.

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

Link to Original Article:
http://www.themalaymailonline.com/malaysia/article/sarawak-still-negotiating
-with-petronas-on-increase-in-oil-royalty-cm-says

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com