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Sabah, Sarawak will lose oil, gas forever

The two states have already experienced '100%' loss of
their natural resources under the Umno-controlled
Petronas, according to UBF.
By Luke Rintod of FMT
KOTA KINABALU: Sabah and Sarawak will lose their oil and gas resources “forever” if the Petroleum Act 1974 is not amended, United Borneo Front (UBF) leader, Jeffrey Kitingan, said.

He said that the two states have already experienced “100% losses” of their oil and gas resources under the Petroleum Act.

He added that unless MPs and party leaders in the two states compel the federal government to amend the Act now, the states will “lose forever” their reserves.

He said both the Sabah and Sarawak governments have absolute rights to seek a review or even a repeal of the Petroleum Act.

“But whether the Petroleum Act itself is constitutional, given the position of Sabah arising from the Malaysia Agreement 1963 and the safeguards given to the state by the founding fathers of Malaysia, is debatable.

“If the Act is to be continued, Sabah and Sarawak should be entitled to nothing less than 50% of the profits derived from the oil and gas assets.

“The Sabah government should be entitled to a share in Petronas, given that the state is a stakeholder in the profits derived by Petronas compared to non-oil producing states.

“The monies invested by Petronas in Sudan, Iran, Iraq and other overseas ventures are derived partly from profits obtained from Sabah and Sarawak’s oil and gas assets.

“Similarly, profits from Sabah’s assets have helped Petronas establish its subsidiaries, some of which are now listed on Bursa Malaysia and generate more profits for Petronas ,” he said.

Urgent steps

Jeffrey said that so far the two states had not been benefiting from the oil-related industry and must take urgent steps to address the issue with the Barisan Nasional (BN) government.

If they failed to so, he said, both states will continue to lose rights to profits from oil and gas derived from their territories.

“In reality, Sabah and Sarawak have suffered a 100% loss of their oil and gas because under the Petroleum Act, all the oil and gas reserves in the states are lost forever… they are vested in Umno-controlled Petronas.

“In return, Petronas pays the state governments a measly and miserable 5% of the revenue reaped by Petronas.

“The 5% so-called oil royalties cannot adequately compensate the total loss of the oil and gas assets which, by right, should benefit all Sabahans and Sarawakians first and not Petronas,” Jeffrey said in a statement to FMT.

He said that the revenue of Petronas is based on operational profits and as such, it is a gross injustice to Sabahans and Sarawakians that they only get 5% of the profit while 95% of it goes to Petronas.

Jeffrey also said that in January 2011, Sabah Chief Minister Musa Aman had announced that the state contributed 26.9% of the 637,000 barrels of crude oil produced per day in Malaysia.

“In the 2011 Sabah state budget, the chief minister projected the oil royalties (5%) to be RM721.7 million, of which all will be used for the annual expenditure of the state.

“Not a single sen is saved or invested for the future of Sabah and Sabahans.

“In Norway, the bulk of the oil revenue from its North Sea oilfields is saved and invested, making Norway one of the largest investors in the whole of Europe.”

“This means that every Norwegian owns the asset (oil) extracted long before he or she is born,” he said.


Jeffrey said that the oil and gas problem in Sabah and Sarawak was compounded by the lack of transparency in the dealings.

He added that there was also a lack of political will to establish an oil and gas industry, especially in Sabah.

“The latest arrangement to divert Sabah’s natural gas from Kimanis, Papar, to Bintulu, Sarawak, for processing is mind-boggling.

“The RM4 billion Kimanis-Bintulu gas pipeline and the billions spent on expanding the Bintulu LNG plant could very well have been invested in a new processing plant in Sabah where Sabahans could reap the benefits of the future spin-offs from such an investment,” Jeffrey said.

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