By For many years, Sarawak’s oil and gas resources was exploited with little returns given to the state itself.
The Petroliam Nasional Berhad (PETRONAS) was making billions upon billions of ringgits from Sarawak’s oil and gas since 1974 and paying the federal government not less than RM70 billion a year.
It was reported that PETRONAS owed the state government about RM1.29 billion in sales tax on petroleum products for the first half of 2019.
In 2020, the Gabungan Parti Sarawak (GPS) state government under the leadership of Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg took a momentous and historic stand in suing Petroliam Nasional Berhad (PETRONAS) for non-payment of the State Sales Tax (SST) on petroleum products.
On 21 November 2020, the state government had filed a Writ of Summons and Statement of Claims against PETRONAS at the High Court of Registry in Kuching to recover the sums due.
Many political analysts have dubbed the action as a watershed moment as Sarawak had finally asserted itself in defending its legal rights against a gain corporation.
Following the battle in court, the state government and PETRONAS signed the commercial settlement agreement (CSA) after resolving their differences on the imposition of SST for petroleum products as well as oil and gas matters on 7 December 2020.
The agreement provides Sarawak with a greater share of revenues from oil and gas found and produced in the state, a more active involvement by the state in the oil and gas industry through the management of onshore oil and gas resources by Petroleum Sarawak Berhad (PETROS) and investment by PETROS in the upstream ventures in offshore areas among others.
THE ESTABLISHMENT OF PETROLEUM SARAWAK BERHAD (PETROS)
Petroleum Sarawak Berhad (PETROS) was incorporated in 2017 and it was the first entity that Abang Johari established when he took over the role of chief minister from the late Pehin Sri Adenan Satem.
It is a shared aspiration of all Sarawakians to see and enjoy the natural resources of Sarawak in terms of improving their standard of living, the quality of infrastructure and basic facilities in line with the vision of making the state a high-income and developed by the year 2030.
PETROS was established with the purpose of fulfilling this aspiration so that the people of Sarawak could enjoy the wealth of the state’s natural resources.
It was also incorporated to become a flagship of Sarawak’s meaningful participation in the orderly exploitation of the oil and gas resources that the state is endowed with while at the same time safeguarding the interests of Sarawak and its resources.
PETROS has been entrusted with the task of furthering Sarawak’s cause including negotiating the details of Sarawak’s commercial position with PETRONAS which culminated in the signing of the CSA between PETRONAS and PETROS in December 2020.
The agreement had included Sarawak’s equity participation in offshore operations and the assurance that 25 percent of the state’s gas is prioritised for Sarawak’s domestic needs as well as PETROS is empowered to develop potentials of oil and gas onshore.
PETROS IS AMONG THE BILLION-RINGGIT COMPANIES
PETROS is on a journey of rapid growth which they have funded with their own prudent equity and securing their own financing.
In 2021, PETROS achieved a revenue of RM1.2 billion which is a significant feat by a company that is only five years old.
Not only PETROS is among the ranks of billion-ringgit companies with a robust financial performance, but it also has a Triple-A RAM rating.
PETROS UPSTREAM AND DOWNSTREAM ACTIVITIES
Over the years, PETROS has also grown its equity in hydrocarbon resource base where in the offshore exploration and production space it has three offshore production sharing contracts (PSCs) and three offshore exploration PSCs.
In the onshore explore and production space, PETROS remains as regulator but also with participating interest through its subsidiary Petroleum Sarawak Exploration and Production (PSEP) in the existing Block SK433 located in Miri-Baram area.
Following this, after 20 years of inactivity in onshore Sarawak, the state will be drilling again in Miri next year.
For the downstream oil and gas sector, PETROS is now a major player in the domestic market where PETROS Niaga is the number one liquefied petroleum gas (LPG) operation with 65 percent market share in Sarawak.
As a domestic gas aggregator under Sarawak Domestic Gas Ordinance, PETROS has been delivering gas to households and industries in Miri and Bintulu since 2020.
Sarawak’s downstream business is all about scale as margins are small thus with bigger market share, the state is expecting better and reliable service for customers.
THE PETROS SARAWAK GAS ROADMAP – A GAME CHANGER
The Sarawak Gas Roadmap is expected to be a game changer for Sarawakians as it is a key supporting pillar in Sarawak’s aspiration of being a high income and advanced state.
PETROS is targeting to create four gas hubs namely in Miri, Bintulu, Samalaju and Kuching.
Through these hubs, PETROS will serve the whole of Sarawak through the ‘Hub and Spoke’ model – delivering a state-wide access to sufficient gas supply and clean energy which will spur economic activities in the state to realise Vision 2030.
In the immediate term, PETROS will deliver the following projects as part of the Sarawak Gas Roadmap:
i) For the Miri Hub, the first project is 400MV Power Plant to ensure northern Sarawak Energy Security
ii) For the Samalaju Hub, PETROS will lay gas pipeline together with Sarawak Energy Berhad (SEB) and build a power plant – this is critical to complete Samalaju as a heavy industry zone.
These projects will require an investment of around RM6 billion and over 10 years across the four hubs, the total projected investment is RM65 billion inclusive of downstream value-added industries.
PETROS THREE-IN-ONE PETROL STATION
Sarawak introduced a whole new refueling concept to Malaysia with a three-in-one petrol station where the state-of-the art multi-fuel station caters to cars powered by conventional fuels (petrol and diesel), electricity, and hydrogen.
The new fueling station concept is run by PETROS with the first station located at Jalan Tun Datuk Patinggi Abang Muhammad Salahuddin completed in 2021.
The second multi-fuel station is in construction in Batu Kawah New Township while four more stations namely Sri Aman, Sibu, Bintulu, and Miri are also in the works.
Abang Johari had lauded the multi-fuel station and dubbed it as an achievement that shows Sarawak is one step ahead in terms of fueling technology.
PETROS AS RESOURCE MANAGER FOR SARAWAK’S CARBON CAPTURE UTILISATION AND STORAGE (CCUS) POTENTIAL IN NET ZERO
With Sarawak being blessed with geological structures that are suitable to store carbon dioxide, the state’s potential for Carbon Capture Utilisation and Storage (CCUS) can be at a world-scale.
CCUS is a key enable to achieve Net Zero by the year 2050 as the world transition away gradually from carbon-based fossil fuels.
The GPS state government recently updated the Sarawak Land Code to include legislation regulating this new business opportunity as such these CCUS sites are part of the state’s land hence belonging to Sarawak.
PETROS with its technical skills has been entrusted to be the resource manager for CCUS with the support of relevant ministries.
The CCUS industry will promote the development of Sarawak’s massive sour gas reserves which contain carbon dioxide to secure long-term energy-security for the state, create more domestic jobs through green energy and provide another revenue source.
At this juncture, PETRONAS and PETROS inked a CCUS Joint Collaboration Agreement which is the first step to enable the green economy.
As part of the energy transition, the state government is positioning Sarawak to become a hydrogen producing hub in the region and this will complement the later phase of this plan.
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