Sabah’s oil curse strikes again

Poverty-riddled Sabah is the sixth biggest contributor to
the national economy, contributing more than a quarter of
the total oil and gas produced in the country.

KOTA KINABALU: Sabah lost control of its oil wealth more than 30 years ago but the fallout of the widely acknowledged cock-eyed contract is continuing to roil business dealings in the state.

The state Barisan Nasional government is now facing more questions over how it is managing the Petronas-sponsored Sabah Oil and Gas Terminal (SOGT) project that began more than a year ago.

The Sabah Progressive Party (SAPP) has accused Chief Minister Musa Aman’s Umno-led BN government of failing to safeguard the interest of the local companies in the ongoing multi-billion-ringgit project.

Melanie Chia, the party’s outspoken women’s wing chief, said there appeared to be no attempt by the state government to ensure locals get a bigger share of the spin-offs from the SOGT project.

She said they had since discovered that the main contract work had been handed over to a Sarawak company which had in turn subcontracted the job valued at RM2.4 billion to a South Korean company to the extent that even the canteen at the site was operated by Koreans.

She noted that while 35 companies with Sabah connections had obtained sub-contract works, the value of these contracts totalled a fraction of the value of the main contract.

“The total value of these sub-contract works is only RM470 million, or a mere 19.6% of the total contract value of RM2.4 billion. Even the Kimanis new township will be developed by Miri-based Homelite Development Sdn Bhd.

“I don’t believe that we do not have enough local companies which can do the jobs. We also have very established and esteemed developers who can develop the new township.

“Do we have to be subservient and remain playing second fiddle all the time even in our own state?” she asked.

Sabah’s oil reserve
Chia, who is also Luyang assemblywoman, posed the question during a public talk themed “Sabah’s Future” organised by the SAPP Luyang central liaison committee here over the weekend.

She said the issue of out-of-state companies not only taking the lion’s share of the SOGT work and then sub-contracting it out to foreign companies needed to be studied.

“The government owes the people a good explanation as to why Sabah remains the poorest state in Malaysia despite being blessed with abundance of natural resources,” she added.

The state is the sixth biggest contributor to the national economy, contributing more than a quarter of the total oil and gas produced in the country.

Sabah’s oil reserves were calculated at 1.5 billion barrels as of last year but new oilfields discovered since then have raised the estimate substantially. Gas reserves stand at 11 trillion cubic feet, with four new oilfields found in the Sabah waters in the last two years.

The projected production from one area, the Gumusat/Kakap Project, is 135,000 barrels per day will come on stream soon, but Sabah’s share is unknown as other oil-producing companies are in on the project with Petronas on a contract-sharing basis.

SAPP and the opposition have been hitting on the wealth extraction from the state and at the same time holding up its high poverty rate and unemployment figures.

Sabah has the highest number of unemployed in the country at 5.6% or 76,000 people without jobs.

The opposition says that the ruling coalition government has had almost 20 uninterrupted years of power in the state but has yet to come up with a coherent and comprehensive development policy to ensure the state’s well-being well into the future.

“Obviously, something is not right with the present government; otherwise Sabah would not end up the poorest despite having abundance of oil and gas,” Chia said.

Sabah-Sarawak O&G project

The SOGT is part of the Sabah-Sarawak Integrated Oil and Gas Project to harness the oil and gas resources in the offshore areas of the two states.

Besides the development of the new oil and gas fields off the coast of Sabah, namely Gumusut/Kakap, Kinabalu Deep and East, Kebabangan and Malikai, the project consists of SOGT and the Sabah-Sarawak Gas Pipeline (SSGP)

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 and complements the operations of the existing Sabah Gas Terminal, the Labuan Crude Oil Terminal and the Labuan Gas Terminal which handle the oil and gas produced from other fields offshore Sabah.

According to Petronas, the terminal covers an area of about 250 acres and will have the capacity to handle up to 300,000 barrels of crude oil per day and 1.0 billion standard cubic feet of gas per day.

The 500km 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.