Petronas oil claim: Seek ‘win-win’ solution for all

8/6/2018

Suarah Petroleum Group views the current developments in Sarawak oil and gas issues with great concern. Being an active contributor in this journey in redressing oil and gas equity and revenue for Sarawak, we call on all parties for clear heads to prevail and ask them to reduce the political “one-upmanship” between Sarawak and the newly elected federal government.

We also reiterate our mission to provide professional advice and services to maximise Sarawak’s socio-economic benefit and safeguard its rights in the oil and gas industry for its present and future generations.

In our initial engagement with the Sarawak industrial resources ministry in 2015, we put across that Petronas would be a formidable organisation in the event that the state decides to engage in a confrontational situation, as it now finds itself.

We submitted our views in our initiation paper presented to the late YAB Tok Nan and recently shared these with YAB chief minister of Sarawak. SPG highlighted that our concerns are on the need for sustainability and robust economic multiplier effects of national oil and gas exploitation policies and strategies in relation to Sarawak.

As such, Sarawak needs a holistic approach to redress imbalances of inequitable sharing and distribution and poor value creation for Sarawak. This requires adjustments to legal, policy and eco-system synergy, ie. more equitable participation among 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 in a more generative formula to create healthier participation by Sarawak companies, ie. not all business opportunities being channelled to peninsula-based companies by way of huge umbrella contracts currently awarded by Petronas.

Without a doubt, there must also be a “felt factor” at the ground level in terms of employment opportunities for Sarawakians. Such a model already exists in the UK, ie. Scotland’s approach which is to develop it as an oil and gas 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 in terms of resources (need we remind readers that Sarawak is among the poorest states in Malaysia), and no coherent master plan in place to ensure the growth of a healthy state oil and gas sector.

In the Scotland approach, 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 difference in thinking or change to this stance.

While the action by Petronas in seeking clarity on its role under the PDA may be seen as condescending towards the recent efforts of the state, we respect that they had the guts to fire the first salvo (which Sarawak should have taken). It is unfortunate that the state might be seen as being caught flatfooted by this turn of events. One could say now, rather simplistically, that the matter rests with the court. Unfortunately, in SPG’s prognosis, whichever way the decision goes, it may result in a “lose-lose” scenario for all parties. Time will tell.

We urge all parties to seek a “win-win” solution that will address (1) the ownership issues of Sarawak’s oil and gas resources, and (2) the economic parity in the distribution and sharing of revenue derived from those resources within the ambit of Malaysia, in the true spirit of MA63.

In fact, it would not be far-fetched at all to consider breaking Petronas into smaller commercial entities, ie. by the creation of “Petros-Petronas Sarawak Bhd” and “Petronas Sabah Bhd”, etc, with the state taking majority participation. This would enable greater focus within the geographies concerned as opposed to the current model which is perceived as lopsided.

This change can only be initiated by the federal government as a new policy direction with the state government. It seems direly needed as the current leadership of Petronas doesn’t seem to have the imagination or the gumption to “reinvent” its business model which is 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 PDA74. 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 still be room for discussions and negotiations on redressing the distribution and sharing of revenue derived from oil and gas resources for a fresher solution moving ahead. It is in this context that we call on all parties at state and federal levels to work harder in seeking a “win-win” solution for the sake of our future generations.