Petroleum Royalty Increase Negotiation Still On-Progress

The progress of negotiation with PETRONAS and the Federal Government to increase the Petroleum Royalty to 20.0% is still going on.

Chief Minister Datuk Patinggi Tan Sri Haji Adenan Satem said that, in the last DUN Sitting in November 2014, he had announced that the State Government and PETRONAS have agreed to work on five key areas of cooperation to achieve the objective of the resolution.

"I wish to reiterate here that the negotiation on the percentage of the royalty, as the State Government take will be decided between Federal Government and the State Government as it is within the authority of the Federal Government."

He said that, they had made progress on the 5 key areas of negotiation despite the drop in oil prices that has affected their revenue, PETRONAS continue to accede to the State requests.

"PETRONAS has agreed to supply to Sarawak Energy Berhad 250 million standard cubic feet per day (mmscfd) of firm supply natural gas for power generation for 20 years at the price of RM15 per million British Thermal Unit (mmBtu) with 1.5% escalation per annum based on the principle of firm supply contract and it is also very much lower than the market price if it is sold internationally."

Adenan said that, in addition, PETRONAS is also working out a mechanism to supply 200 million standard cubic feet per day (mmscfd) natural gas for the non-power sector.

"This is important to the State especially in realising our SCORE development agenda as well as our industrialisation strategy. The supply of natural gas to the non-power sector will enable Sarawak to develop Bintulu as our petrochemical hub by attracting more petrochemical industries to invest in Bintulu and at the same time attracting more industries to invest in the Samalaju Industrial Park."

"PETRONAS has also increased the actual spending value for jobs awarded to Sarawak companies from RM2.1 billion in 2013 to RM2.4 billion in 2014. This is an increase of RM0.3 billion from the baseline value of RM2.1 billion worth of contracts to Sarawak companies."

"In the first quarter of 2015, PETRONAS has already spent RM350 million for the same purpose. PETRONAS will continue to improve and increase the value of contracts awarded to Sarawak companies," he added.

"I would also like to inform that the number of licensed/registered companies with PETRONAS has increased from 314 in 2013 to 369 in 2014. To further improve the Sarawakian companies’ participation in the oil and gas industry, PETRONAS has rolled out strategies with PETRONAS Supply Chain Management Units and PETRONAS Product Sharing Contracts in February 2015."

He disclosed that, a working committee with members comprise of both PETRONAS and State representatives have been formed to monitor and track the progress of the oil and gas industry in the State.

"In the area of human resource, education and technical trainings, PETRONAS in 2015 will spend about RM180 million on capital expenditure and educational sponsors and capacity building."

"We have witnessed earlier on 7 March 2015, during the SCAT Fair, PETRONAS had awarded scholarship to 150 students from MRSM Kuching, Betong and Mukah to encourage them to excel in their academic performance and another 150 VISTA scholarships to enable rural youth to undergo technical skill development to enhance their employability.

On Corporate Social Responsibility, Adenan said that, PETRONAS has allocated RM50 million over five years (2015-2019) on Community Outreach Programme, Disaster Relief Supports, Infrastructure Contribution and Environmental Conservation.

"PETRONAS is also in active final discussion with the State Government on the details of Shareholders Agreements onthe 10% equity in the MLNG Plant Train 9. We are also working with PETRONAS for more equity in MLNG 2," he added. - Sarawakiana