CM: Sabah Targets RM1b O&G Local Contract Awards

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KOTA KINABALU: Sabah targets to get RM1 billion worth of local contract awards or 20 per cent of the total oil and gas contracts awarded this year.

And, the target would be increased to 30 per cent for next year, Chief Minister Datuk Seri Panglima Haji Hajiji Haji Noor said at the 10th Sabah Oil, Gas and Energy Conference and Exhibition (SOGCE) held at the Sabah International Convention Centre (SICC) here today.

“To date, local contract awards have reached RM564 million, equivalent to 11 per cent total spend in 2022,” Hajiji said.

The text of his speech was read by Assistant Minister to the Chief Minister Datuk Nizam Abu Bakar Titingan.

He added that the state government was equally serious in the recruitment and development of local talents in this sector and that this was a key priority for Sabah.

“The requirements for local content are aimed at creating jobs, promoting local enterprise development and accelerating the transfer of skills and technologies, particularly for the oil and gas sector,” he said.

Hajiji also said that under the state’s investor-friendly Sabah Maju Jaya (SMJ) initiatives, Sabah was targeting to acquire additional upstream and LNG-producing assets and would consider suitable green energy opportunities at the same time.

“While oil and gas will provide an important revenue stream for the state, we also welcome investors to explore renewables such as solar and storage technologies, hydro, geothermal as well as carbon market opportunities in Sabah.

“When we took over the reins of government more than two years ago, we set a clear direction and made it known what our defining actions would be.

“We set out key priorities in our five-year development roadmap, the Hala Tuju Sabah Maju Jaya (SMJ), that outlined a new strategic direction for Sabah’s economic development.

“And, today, I am proud to say we have done well and are on the right track seeing the progress we have achieved,” he said matter-of-factly.

The Chief Minister said in spite of the economic challenges faced not only by the state but globally, Sabah has, as at end of December 2022 earned RM6.960 billion in revenue, the highest recorded thus far.

“This represents a 28 per cent increase from the previous year’s achievement of RM5.449 billion. We will not rest on our laurels but will continue to implement a robust policy to bring in more investments to the state, create more economic spin-offs and double our efforts to generate more revenue through new and innovative means and resources,” he said.

And, since the signing of the Commercial Collaboration Agreement with Petronas in Dec 2021 and the launch of the Sabah Gas Masterplan in January last year, coupled with other petroleum operations, Hajiji said Sabah was expected to collect additional revenue of RM2.45 billion annually in Sales and Services Tax (SST) from the oil and gas sector.

“In fact, as of May 31, 2023, RM715 million had already been collected and since 2022, Sabah’s 10 per cent equity in LNG9 had earned the state RM337 million to date.

“Sabah’s 25 per cent equity acquisition in SAMUR and its 50 per cent stake in Samarang are also expected to generate good returns,” he asdded.

Meanwhile, Hajiji said Sabah has vast potential with good oil and gas resources in place, producing about 40 per cent oil and just under 20 per cent gas in Malaysia.

“The state works in partnerships with Petronas, international oil and gas companies and local companies to create a favourable FDI environment from Upstream to LNG to domestic downstream developments and oil and gas services.

“This includes the US$2 billion Esteel investment to produce HBI (Hot Briquette Iron) and flat steel at the Sabah Oil and Gas Industrial Park (SOGIP) for Phase 1 to be followed by multi-billion dollar investments to produce green steel products in subsequent phases,” he said.

Phase 1 is expected to be in commercial production by 2026-2027, providing some 2,800 direct employment opportunities during peak construction period.

Another Petronas-Sabah collaboration that will create multiple spin-offs for the state is the multi-billion ringgit ZLNG floating LNG facility – also to be built at nearshore SOGIP.

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