SABAH now has a five per cent equity in the LNG plant in Bintulu, which is worth about RM1billion, Chief Minister Datuk Seri Musa Aman told the state assembly sitting, yesterday.
Musa said since Sabah was piping its natural gas to Bintulu for processing, he had, with the support of Prime Minister Datuk Seri Najib Tun Razak, asked for Sabah to be given equity in the LNG plant.
“I told Petronas that since natural gas from Sabah is being piped to Bintulu, it is logical that Sabah gets equity in the Bintulu Energy Plant and I asked for 10 per cent. Petronas has agreed to give us five per cent and I have spoken to the Prime Minister about the possibility of getting 10 per cent equity which is what we had initially asked for.
“But if it is not possible then five per cent is okay,” he said adding that the equity would be from the profit the LNG plant in Bintulu would be making as it is a strong and solid business.
Musa also explained the reason why there was no plan to set up an LNG plant in Sabah even though the state produces natural gas.
According to him LNG, which is natural gas processed into liquid form and exported, does not give high value-added returns.
There is also not enough natural gas in Sabah, therefore it is not practical to build a plant here, he said adding that there would not be much in terms of employment opportunities because of the insufficient supply of natural gas.
“We however are banking on the downstream industries involving natural gas as it brings higher impact to the development of the oil and gas industry in Sabah. So for this we have SOGIP or the Sipitang Oil & Gas Industrial Park, and if we compare the downstream activities with the building of an LNG plant, the benefits of the former is better as we will be able to attract foreign investors as well as create a new industry which SMEs can participate in,” he pointed out.
Through SOGIP Sabah will be able to produce more skilled local labour in the oil and gas industry, create more employment opportunities and reduce the impact of importing fertilizer to the state, he said.
Musa added that according to SOGIP’s master plan, the SAMUR or Sabah Ammonia and Urea project in Sipitang would see the setting up of three urea operated plants there.
“We are also planning to build a RM2.6 billion ammonia plant which is expected to be completed in 2018 and also in the works are five ammonia/urea operated plants that will be built with the help of Petronas’ expertise,” he said adding that this would create more than RM10 billion worth of investments and about 5,000 employment opportunities.
Musa disclosed that in 2012, Sabah used 30 per cent of the fertilizer imported to Malaysia and this amount is expected to reach 600,000 metric tonnes by 2020. With SOGIP up and running, it can reduce the country’s expenses on importing fertilizer by about RM4billion, he added.
This is important for Sabah to produce fertilizer as the state is with the most oil palm plantations in the country, he said.
“Currently, the Sipitang Oil and Gas Development Corporation Sdn Bhd (SOGDC) is in discussion with investors from Europe about producing melamine in SOGIP and three of their engineers have visited SOGIP,” he said adding that Petronas has approved the setting up of a melamine plant in SOGIP.
“We are not saying that LNG is not profitable (it is just) that we have discussed and planned to have downstream industries which will be more profitable and open up more employment opportunities in Sabah and for the rakyat in the state,” he said.
Musa also said Petronas has, in principle, to give Sabah 25 per cent equity in SAMUR.
He added that the state government, together with Petronas or mega foreign companies, would be developing many downstream activities which would bring huge returns to the state because at the end of the day it would want to increase its revenue.
According to Musa, the state government has also other strategies to increase its revenue, and added, “if not through the increase in oil royalty then we do it through oil and gas based downstream activities.
“Sarawak has a company that is expert in the oil and gas industry, and was given the opportunity to participate in the industry; so I have asked Prime Minister Datuk Seri Najib Tun Razak to also give Sabah the opportunity to look for a company with expertise in oil and gas.
“With the help of Sabah Development Bank, we found M3enery Sdn Bhd which has the necessary expertise and the company has discussed with other companies on the possibility of working together on onshore explorations in Sabah,” he said.
Initially, Petronas had given Sapurakencana the priority to carry out onshore exploration with Petronas Carigali having 20 per cent equity and the former, 80 per cent equity.
“I met with the Prime Minister on the issue because onshore exploration provides the state government the opportunity of joint ventures through M3energy. I have also discussed with Sapurankencana which initially wanted to give us only 10 per cent equity while I asked for 30 per cent.
“In the end they agreed to give us 25 per cent which is a huge amount in the oil industry. So now Sabah has 25 per cent equity, Petronas Carigali 20 per cent for onshore exploration and Sapurakencana 55 per cent,” Musa disclosed.
The state government has, through M3energy requested from Petronas for an offshore block in Sandakan which has been approved.