SPG views Sarawak O&G issues with concern

9/6/2018

KUCHING: The Suarah Petroleum Group (SPG) views the current oil and gas (O&G) issues involving Sarawak, ‘with great concern’.

Being an active contributor to the journey of redressing O&G equity and revenue for Sarawak, the group calls for ‘clear heads to prevail’.

It also calls for ‘reduced political upmanship’ between the Sarawak and federal governments.

“We reiterate our mission of providing professional advice and services to maximise Sarawak’s socio-economic benefits and safeguard its rights in the O&G industry for present and future generations.

“In our initial engagement with Sarawak’s Ministry of Industrial Resources in 2015, we had put across that Petronas would be a formidable organisation in the event that Sarawak might decide to engage or put into a confrontational situation, as it finds itself now,” SPG said in a press statement issued yesterday.

It said it submitted the papers to the then-chief minister Pehin Sri Adenan Satem and had also shared it with the present Chief Minister Datuk Patinggi Abang Johari Tun Openg.

Adenan passed away on Jan 11 last year.

Adding on, SPG also stressed about the need for sustainability and ‘robust economic multiplier’ effects of national O&G exploitation policies and strategies in relation to Sarawak.

In this respect, the group believed that Sarawak would need a holistic approach to redress imbalance of inequitable sharing and distribution, as well as poor value creation for Sarawak. This, it added, would require adjustments to legal, policy and eco-system synergy – in other words, more equitable participation amongst federal and state level entities.

“Rather than focusing overwhelmingly on the legal perspective, Sarawak needs to develop its own ‘in-country value creation model’ and endeavour to apply it for a more generative formula to create healthier participation by Sarawak companies; not all business opportunities being channelled to peninsula-based companies by way of huge ‘umbrella contracts’ currently awarded by Petronas.

“Without doubt, there must also be a ‘felt factor’ at ground level in terms of employment opportunities for Sarawakians. Such a model already exists in the UK, i.e. Scotland approach, which is to develop it as a O&G hub, instead of the current Petronas model of ‘federalising’ the economic perspective towards maximising revenue collection for federal coffers.

“This approach has proven to impoverish the states with the resources and no coherent master plan in place to ensure growth of a healthy state O&G sector.”

According to SPG, in the Scotland approach, the employment opportunities are very much felt by ‘the common man’.

“This is not at all the case for Sarawak, with Sarawakian economic interests being sidelined and Petronas playing the role of an ‘exploiter’ rather than a sustaining ‘value-creator’. It’s sad to note that the recent move by Petronas hardly seems to indicate any different thinking or change to this stance.”

SPG said while the action by Petronas in seeking clarity of its role under the Petroleum Development Act 1974 could be seen as condescending towards the recent efforts by Sarawak, it respected that the oil corporation ‘had the guts’ to fire the first salvo.

“It is unfortunate that Sarawak might be seen as being caught flatfooted by the turn of events. One could say now rather simplistically that the matter rests with the (Federal) court to decide.

“Unfortunately in SPG’s prognosis, whichever way the decision goes, it could result in a ‘lose-lose’ scenario for all parties. Time will tell.”

In this regard, SPG urged all parties to seek for a ‘win-win’ solution that would address the ownership issues of Sarawak’s O&G resources and redress the economic parity in the distribution and sharing of revenues derived from these resources within the ambit of Malaysia, in the true spirit of MA63.

“It would not be far-fetched at all to consider breaking up Petronas into smaller commercial entities – that is via the creation of ‘Petros-Petronas Sarawak Bhd’ (and ‘Petronas Sabah Bhd’, for example) with Sarawak and Sabah taking majority participation.

“This will enable greater focus within the geographies concerned as opposed to the current perceived lopsided and centrist-model, and can only be initiated by the PH-led federal government as a new policy direction. “

SPG viewed this as ‘direly needed’, in that it regarded the current leadership in Petronas as neither having the imagination nor the gumption to ‘reinvent’ its business model, which had gone way past its shelf-life.

“Instead it is replete with festering issues and concerns which are simply ‘swept under the carpet’ or hammered down using the instrument of PDA 1974. Does this country deserve such a throwback to the past era as we seek a brighter future for all?

“While the ownership issues have now taken the route of being argued through constitutional and legal avenues, we believe that there should be still room for discussions and negotiations on redressing of the distribution and sharing of revenues derived from the O&G resources for a fresher solution moving ahead.

“It is in this context that we call upon all parties at Sarawak and federal levels to work harder in seeking a ‘win-win’ solution for the sake of our future generations,” stressed SPG.