The Sabah & Petronas Agreement: Changes & Opportunities


Has anyone of you really knew what was in the Petronas agreement with Sabah about oil & gas royalty? Why do we have such a minuscule percentage of revenue while the federal government has the most of it?

That is the topic that I want to talk about in this post, since Petronas is once again tapping out our newly found resources. Under the Petroleum Development Act (PDA) 1974 , the government of Sabah signed an agreement granting Petronas the right to extract and earn revenue from petroleum found in the territorial waters of Sabah in exchange for 5% in annual revenue as royalties.

Because the nature of the agreement, it is possible for the state government to review back the agreement and give more revenue and opportunities to Sabah. Petronas has already spread it wings out of Malaysia for a more valuable and high revenue joint venture.

For example, in December 2009, Petronas and Royal Dutch Shell signed a deal to develop Iraq’s oilfield of Majnoon, with 60% going to Royal Dutch Shell and 40% to Petronas. And just recently, they have also acquired 30% stake in GMR Energy Singapore Pte Ltd in Singapore. Among the demands that was proposed for the agreement is increment of the oil royalty sharing of 20%, jobs for Sabahan Oil and Gas contractors, and setting up of Oil and Gas industries in Sabah itself.

As I mentioned on my previous post, the development of Sabah-Sarawak Gas Pipeline (SSGP) is a great step towards the changing the lifestyle of our people, especially from the rural side. We deserve more than just 5% of the revenue given on resources siphoned from our shores every year.

In fact, we should demand more in terms of job opportunity and also being able to play a greater role in the industry. We are not in short of talented young people who are eager to work in this industry, I urge those who are left out to capture this opportunity, do not sit and wait for this opportunity to fall on your lap.

We Sabahan cannot simply repeat the mistake in terms of being loser in this deal, thus losing out the opportunity to be in control of the industry.

Remember while we still have the vast resources and the small window of opportunity reopened again, we will never know when will be there another opportunity like this in the future.






They should give more room to Sabahans to excel and benefit more in the industry.

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4 Responses

  1. cutebun says:

    Forever Petronas will earn and never for us in East Malaysia =(

  2. Rungitom says:

    As long as we are adamant in changing the agreement terms, we can benefit more than we do now. Our local leaders have already voiced out their concern and the need to change, we should support them.

  3. Anonymous says:

    well, actually, petronas has built 68bil worth of infrastructure in the state and will be building another 45bil worth (if i'm not mistaken). this is like, about almost 30 kali ganda instead of 'cash in hand'. this is much better that giving the govt the money straight. yang the 6.8bil in royalty tu memang sikit saja, tapi what was the money used for? kalau they raise the royalty tapi teda juga perkembangan macam mana?

    i'm not on petronas side, but i can see they are trying really hard juga. heran juga la the govt indak mau review tu royalty.

  4. Rungitom says:

    You got a point there, I hope the recent development will increase great opportunity for the locals.

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