Why No Ag Report On 5% Royalty?

The total number of existing oil wells in Malaysia until 31st of March, 2011 is 117 oil wells, and all are in operation and producing crude oil. There are altogether 15 oil wells in the Sabah and the produce from these oil wells all belonging to Sabah. The total extraction of oil from the 15 Sabah oil wells is as much as 192,000 barrels per day.

This was a question recently raised by the Kota Kinabalu Member of Parliament Hiew King Cheu in Parliament. The answer given by the Prime Minister Dato’ Seri Najib Tun Razak is very important to the Sabahan who like to know how much crude oil is being produced in Sabah, and by how many barrels per day.


If we use a simple calculation based on the current market price of crude oil at USD92 per barrels, Sabah is actually producing a staggering amount of RM 52,992,000 per day. This works up roughly to RM 1.589 billion per month and it is RM 19.077 billion for a year. If the petroleum royalty payable to Sabah is 5%, then it would come up to an amount of RM 953.856 million per year.

MP Hiew said the total oil production in Sabah was the reply by the Prime Minister who directly oversees the Petronas. The 192,000 barrels per day from the 15 oil wells actually gives Sabah an income based on the 5% is RM 953.856 million per year. Why the figure given in the annual Sabah state financial report 2011 stated that Sabah is receiving a sum of RM 721.70 million, and where is the rest of the money gone to?

Hiew said this is highly questionable? If the official amount on the 5% petroleum royalty given to the Sabah government from Petronas is correct, then it will be interesting for the government or the Chief Minister Datuk Musa Aman and the Prime Minister Datuk Seri Najib to explain to the people in Sabah on what happened to the rest of our money RM232 million?

Is this something to do with the terms and condition within the Petronas Agreement signed with Sabah because there is a ‘Capping Price’ (may be USD 60 per barrel) set on the crude oil extracted to calculate the petroleum royalty from Sabah?

In another Parliament reply to Hiew’s question in 2010, it stated that since the start of the Petronas oil production in Sabah until to date, Sabah had been paid a sum of RM 5.3 billion. This was the total sum receipt by Sabah over the past 37 years. It is a very small sum when compared to the estimated 5% sharing figure of RM 953.856 million in a single year.

MP Hiew also queries on the Audit General Report that why there is no audit carried out over the 5% petroleum royalty payable to the Sabah government. Is it true that the account and operation of the Petronas cannot be audited or touched?

If so, how would the Sabahan know whether their oil money is not being swindled, manipulated or cut away? Sabahan needs some answers, and may be the Prime Minister Datuk Seri Najib Tun Razak can explain to us to show his accountability and responsibility.