Petronas Board seats for reps from Sabah, Sarawak?

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SABAH and Sarawak are looking to have a bigger say in the decisions made by national oil company Petroliam Nasional Bhd (Petronas) when it comes to the latter’s activities in those states.

One of the suggestions being bandied about for a more effective representation is for a board seat for a representative from each of the states, say sources close to the state government.

Over the last few months, there has been growing dissatisfaction in the state governments of Sabah and Sarawak that they are not being accorded the respect they deserve, despite the fact that the bulk of Petronas’ hydrocarbons are derived from them.

Sabah and Sarawak currently receive royalties of some 5% from Petronas for oil and gas (O&G) revenues.

Sarawak has been especially vocal that it deserves a higher royalty rate. The state government has been continuously negotiating with the federal government on the increase of Sarawak’s O&G royalty.

Meanwhile, over the last few weeks, it is said that Sarawak state officials have made a representation to Putrajaya on having a bigger say in Petronas’ activities in the state.

“Following those talks, some of the key points that were highlighted include the possibility of having Sabah and Sarawak’s board representation in Petronas.

Significantly, Sarawak wants to be kept in the loop on all of Petronas’ activities in the state, and it also wants a say in the decisions Petronas makes in Sarawak,” says one source.

Sources from the state say that there has been an agreement in principle for the appointment of a representative from the state to the board of Petronas.

However, the Petronas board has not agreed to this yet because they will have to look into the Petroleum Development Act and whether it allows for representatives from state governments to be appointed to the board.

In recent months, The Sarawak Government’s growing displeasure at Petronas’ way of handling business in Sarawak has become apparent. It hogged the limelight when last month, the Sarawak Government made a sudden move of issuing a moratorium on Petronas hiring non-Sarawakians to work in Sarawak.

This followed a public outcry in the state as several reports highlighted that Petronas had been laying off Sarawakian employees (including 29 senior officers) and replacing some of them with non-Sarawakian employees.

Petronas again came under fire when it terminated the services of Sarawakian and Sabahan tour companies which had been handling the travelling needs of its personnel.

However, much of the exercises are related to Petronas cutting down on its operating cost in view of the low oil price enviroment.

Nonetheless, it has not gone down well with the state government.

In response, Deputy Chief Minister Datuk Amar Douglas Uggah Embas issued the hiring ban of personnel from outside Sarawak. This decision was prompted by complaints from Sarawakian Petronas officers whose services were terminated or who were retrenched.

It would appear that some consensus has been achieved when last month, Chief Minister Tan Sri Adenan Satem said Petronas had agreed to give priority to Sarawakians in filling its current vacancies and to increase the number of Sarawakian employees at management level to at least 60% by 2020.

Adenan told reporters that the state government had accepted Petronas’ working plan to increase the number of Sarawakians at management, manager and executive level from 33%, 41% and 48%, respectively, to 60% at management and manager levels and 75% at executive level.

Petronas currently has 5,190 employees in Sarawak, of whom 3,880 are Sarawakians. It also employs 1,000 Sarawakians working outside the state.

He also said that the state government’s sub-committee chaired by Sarawak’s State Secretary Tan Sri Mohamad Morshidi Abdul Ghani was reviewing the issuance of work permits for Petronas’ non-Sarawakian employees with a view to lifting the freeze on some.

Petronas is currently developing the Sabah-Sarawak Integrated O&G Project to harness the O&G resources in the offshore areas of Sabah and Sarawak.

Besides the development of the new O&G fields off the coast of Sabah, namely, Gumusut and Kakap, Kinabalu Deep and East, Kebabangan and Malikai, the project consists of two onshore developments – the Sabah O&G Terminal (SOGT) and the Sabah-Sarawak Gas Pipeline (SSGP).

The 500-km SSGP will transport gas from the SOGT in Kimanis to Bintulu for processing into liquefied natural gas (LNG) at the Petronas LNG Complex for export. The pipeline system also has provisions for future domestic consumption in Sabah and Sarawak.

The SOGT will receive, store and export crude oil as well as receive, process, compress and transport the gas produced from the fields offshore Sabah. Covering an area of about 250 acres, the SOGT will have the capacity to handle up to 300,000 barrels of crude oil per day and 1.0 billion std cu ft of gas per day.

The new terminal will complement the operations of the existing Sabah Gas Terminal, the Labuan Crude Oil Terminal and the Labuan Gas Terminal, which will continue to handle the O&G produced from other fields offshore Sabah.

  • This article was first published in The Star