SABAH, PETRONAS TO COLLABORATE ON OIL AND GAS DEVELOPMENT IN SABAH

KOTA KINABALU, Dec 7 -- The Sabah government and Petroliam Nasional Bhd (Petronas) today signed a Commercial Collaboration Agreement (CCA) in an effort to develop the oil and gas (O&G) industry in the state.

The agreement, which marks a new chapter of closer cooperation between the state government and Petronas in developing the industry, was signed by Sabah state secretary Datuk Safar Untong and Petronas president and chief executive officer Datuk Tengku Muhammad Taufik Tengku Aziz.

Speaking at the event at Menara Kinabalu here today, Chief Minister Datuk Hajiji Noor said the CCA was the most important document between Sabah and Petronas since June 16, 1976 when the royalty cash payment agreement was agreed and signed between Sabah and Petronas.

In this regard, he announced the establishment of a wholly state-owned O&G company, SMJ Petroleum Sdn Bhd, as a result of the CCA signed between the Sabah government and the national oil company.

“The CCA signing ceremony today indeed marks a new era in the O&G industry in Sabah. In line with the terms and conditions of the CCA, the state government intends to establish its wholly-owned company to be actively involved in the O&G industry.

"SMJ Petroleum will lead the state's commercial participation in the O&G industry as well as coordinate all existing state government-linked companies to ensure the terms and conditions of the CCA are successfully implemented for the benefit of Sabah and its people," he said.

Hajiji, who is also Sabah Finance Minister, said a joint committee had been set up by the 1963 Malaysia Agreement Special Council to discuss Sabah's commercial involvement in the O&G industry between the federal and state governments and Petronas.

He said the Sabah government and Petronas also took the initiative to hold discussions starting on Oct 8, apart from several meetings before the CCA was finalised which showed the cooperation of both entities in developing the O&G industry in Sabah.

A joint committee was set up on Dec 1 with the federal government agreeing to ratify and facilitate the enforcement of the CCA.

He said the CCA would create a more inclusive environment for the O&G industry in Sabah, including offshore and onshore, and the state government through its company SMJ Petroleum would receive guidance from Petronas to ensure the state was able to become a strong industry player.

The chief minister also announced the establishment of a committee under the collaboration, namely the Annual Strategic Dialogue (ASD); and the Joint Coordinating Committee (JCC); besides sub-committees in the areas of Upstream, Domestic Gas Supply, Equity Investments in LNG & Downstream businesses, Oil & Gas Services & Equipment Industry and Human Captial Development & Other State matters.

Through the committee, Sabah will ensure greater participation and control in the O&G industry through development plans and participation in state O&G activities including the Sabah Gas Master Plan, LNG projects and involvement in Product Sharing Contracts.

Commenting further, Hajiji said Petronas also agreed to hand over the right to access data in the Sabah O&G industry which will facilitate discussions in ASD, JCC and the technical committees under it.

In addition, the CCA will allow the participation of companies or contractors from Sabah in the Vendor Development Programme and Petronas will work to award more contracts to Sabahans in the tender process, he said.

He said Petronas was also committed to paying cash on oil royalties and state sales tax as part of a larger revenue-sharing agreement.

"It is important to state here that the CCA will preserve the legal rights of the state by providing comprehensive protection in the interest of the state," he said.

In this context, Hajiji said, the Sabah government thanked the federal government and Petronas for their commitment to always listen to Sabah's demands in terms of its O&G rights.

-- BERNAMA