KOTA KINABALU: If Petronas finds that it is not profitable to operate in Sabah, the national petroleum company should stop expanding in the state, Matunggong assemblyman Datuk Jelani Hamdan said.
Jelani was of the opinion that Petronas would not go bankrupt if it increased the oil royalty or cash payment to Sabah to 20 per cent.
“I do not agree with Petronas’ statement because the impact of increasing the oil royalty would mean that its profit margin will be lower and not that it would not be making any profit at all,” Jelani said at a luncheon with members of the media yesterday.
He was commenting on the statement by Petronas that an increase in cash payments which some people prefer to call royalty by Petronas to the state and federal governments would have an adverse impact to project viability and the industry at large.
According to vice-president of Malaysia Petroleum Management, Adif Zulkifli, if the cash payments were to be increased to 20 per cent for Sabah and five per cent to the federal government, some projects undertaken by Petronas might be in jeopardy.
The immediate impact would be projects being dropped by foreign investors, investors’ confidence would be eroded and the country’s energy security would be at risk, he said.
Adif said the mid-term impact would be contract and opportunity losses for supporting industries, no further exploration activities and retrenchment
“In the long run we would experience shrinkage in Malaysia’s oil and gas industry, lower government revenue and reduction in the GDP as well as GNI,” he stressed, adding: “We may have problems sustaining the cash payments to Sabah if we cannot sustain production,” he said at a briefing with the local media last week.
Jelani said if Petronas felt that it was not profitable to operate in Sabah, then it should make way for the state government or Sabahan company(s) to do their own exploration here.
He added that he supported all requests for the increase in the oil royalty as it is beneficial for the state and its people.
Jelani also supported Chief Minister Datuk Seri Musa Aman’s consultative approach as a good one, and added: “If Petronas cannot agree to give Sabah 20 per cent then why not have the state as a business partner?”
Meawhile, UPKO Youth chief Arthur Sen proposed that the Petroleum Development Act 1974 be amended so that the state government had full control over the oil and gas produced in Sabah.
Let Petronas be responsible only for the oil and gas produced in Peninsular Malaysia, he said, adding: “I am confident that the state government can manage its own natural resources.
“The corporate tax the federal government gets should be enough for it. I think this federation of Malaysia is all about the formation of the country. Why do we allow others to dictate what happens to our natural resources?
“This does not make sense; we are the masters of our natural resources and it looks like Petronas is a ‘licensed pirate’ who is taking our treasures,” he claimed.