Sabah to play a bigger role in Oil and Gas

According to one estimate, as of January 2008 Sabah's natural gas reserves were estimated at 12.7 trillion cubic feet or about 14 per cent of the national gas reserves. Sabah's offshore oil fields are a major contributor to the national oil and gas revenue, which contributed RM68.3 billion (13.1 per cent of the GDP) and this is expected to increase to RM81.9 billion in 2015. Datuk Musa shares the opinion of many in Sabah thatthe state should have a bigger share in the oil and gas sector. To begin with, Sabah companies like the Petrosab Logistic and Yayasan Sabah Group and their joint-venture partners ought to play a more active role in pursuing contracts in oil and gas, something that the Chief Minister would like a major player like Petronas to bear in mind. When the Minister of Industrial Development Datuk Raymond Tan disclosed in August 2010 the development of the Sipitang Oil and Gas Industrial Park project on a 4,000-acre site in Mengalong, Sipitang by a Chief Minister's Incorporated company, it was clear the Chief Minister had taken a more assertive step toward clinching a more substantive share of the industry for Sabah. When work begins on this project Sabah's involvement in the oil and gas industry will have come a considerable way from the launching of the Sabah Oil and Gas Terminal (SOGT) project at Kimanis by the former Prime Minister Datuk Seri Abdullah Ahmad Badawi in February 2007. In the beginning the oil and gas terminal was intended primarily as a local complex for Petronas' oil and gasrelated activities. With a storage capacity of 2.5 million barrels of crude oil, the complex was designed to handle 300,000 barrels per day and one billion cubic feet of gas daily. Crude oil received by SOGT was to go directly to tankers harboured 10 km from the port. But later the project was reorientated to involve the construction of the Sabah-Sarawak Gas Pipeline (SSGP) from Kimanis to the Petronas LNG Complex in Bintulu through an overland pipeline spanning 500 kilometres (90km in Sabah and 410km in Sarawak). Designed to pipe Sabah's natural gas to Bintulu to be processed into Liquefied Natural Gas for export, the pipeline was estimated to cost RM3 billion. Datuk Musa took a long-term perspective. He saw the planned developments in the oil and gas industry as a way of increasing oil royalties for Sabah, creating more job opportunities and therefore economic spin-offs. Besides, according to Datuk Musa, there was the added attraction of having an oil related training school built in the Sabah Oil Gas and Terminal (SOGT), thus opening up a whole new horizon for the people of Sabah, especially Bumiputra, to engage in the oil and gas and related fields. As Sabah's end of the gas pipe link with Bintulu, Kimanis is set to see much development. As a centre for the gas and oil industry Datuk Musa sees it as ideally suited to be developed into a "Common Facilities" township with a helicopter hanger and airstrip, industrial and occupational health clinics, supply base and warehouses, workshops and service centres and offices apart from training schools with up-to-date equipment. Likewise, he wants Sipitang to benefit as well. In fact he sees Kimanis and Sipitang as sister oil towns, similar to Miri and Bintulu in Sarawak and Kerteh in Terengganu. When the gas from offshore Sabah is landed at the Sabah Oil and Gas Terminal in Kimanis, expected in 2013, the gas will be available for the domestic market, including for the proposed 300-megawatt power plant in Kimanis as well as for the Bintulu LNG plant through the Sabah-Sarawak Gas Pipeline. As a key component of Sabah's economy, in 2009 oil and gas sector accounts for 8.2 per cent of the Gross Domestic Product and crude petroleum accounted for 37.4 per cent of Sabah's total export with an approximate value of RM13.9 billion. With off-shore Sabah holding 14% of Malaysia's natural gas reserves, part of Datuk Musa's longer-term vision is the establishment of downstream petrochemical industry, like refineries, methanol plant and petrochemical processing complex.