Friday, December 12, 2014

See: Be firm in dealing with petroleum resources

by Jonathan Chia, Posted on December 12, 2014, Friday

KUCHING: Batu Lintang assemblyman See Chee How has urged the state government to be more resolute and aggressive in the safeguarding of the state’s limited petroleum resources and securing the development of upstream petroleum projects for Sarawak.

See, who is state PKR vice-chairman, said it appeared that the state was now lagging behind Sabah in developing upstream petroleum projects, with the awarding of two production sharing contracts (PSCs) in Sabah to a consortium of SapuraKencana Energy Sabah Incorporated (SKESI), M3nergy Bhd and Petronas Carigali Sdn Bhd.

He noted that SKESI, which holds 70 per cent interest in the joint venture, is a wholly owned subsidiary of SapuraKencana Petroleum Bhd. M3nergy Bhd, a Sabah government-owned company, has 25 per cent participating interests, while Petronas Carigali Sdn Bhd owns the remaining five per cent shareholding.

“These two PSCs involving exploration, development and production of petroleum from the fields identified and known as SB331 and SB332 are described as the first in the country without foreign shareholding and without a foreign company operating the fields,” See told a press conference here yesterday.

He stated that the PSCs, which are for a period of 27 years commencing on Nov 20 this year, comprise three years for exploration, four years for development and 20 years for production.

See pointed out that most significantly, the Sabah government, through its wholly-owned oil and gas company M3nergy Bhd, had made headways with their direct interests in the upstream petroleum projects and increased its participation in the oil and gas industry.

“While we have taken a small step forward, after the historic State Legislative Assembly resolution to demand an increase in petroleum royalty to 20 per cent, the Sabah state government has achieved a giant stride to the fore.”

He recalled that Chief Minister Datuk Patinggi Tan Sri Adenan Satem had in his ministerial winding-up speech last month, revealed that the state government and Petronas had negotiated and agreed to work on five key areas of cooperation.

Most notably, he said, the chief minister had said that Sarawak would no longer be satisfied to be a spectator but wanted to be a participant in the oil and gas projects in the state and that Petronas was allocating baseline revenue of RM2.1 billion worth of contracts to Sarawakian owned companies.

“We should not be contented with securing contract and subcontract works if we are serious about being a participant and not a spectator.”

See said this year, SapuraKencana Energy (SKE) had completed their five wells drilling campaign in Sarawak and made significant gas discovery: Teja-1, Gorek-1, Legundi-1, Larak-1 and Bakong-1 wells had found more than three trillion standard cubic feet of gas. The company will carry out another five wells exploration campaign next year.

He said that this upstream petroleum and gas development project under the SK408 PSC involved a block with an area of approximately 4,480 sq kilometres located in shallow waters 120 kilometres offshore Sarawak.

Consortium of SapuraKencana Energy Sarawak Incorporated was awarded 40 per cent of the PSC works while Petronas Carigali Sdn Bhd and Sarawak Shell Bhd were each awarded with 30 per cent, See added.

“However, do not be deceived or misled by the word ‘Sarawak’ appearing in the names of those companies, Sarawakians own absolutely nothing in these business entities!” See revealed.

He also noted that SapuraKencana Petroleum Bhd also owns stakes in several other PSCs in Sarawak.

“In view of the participation of Sabah state-owned M3nergy Bhd in the two PSCs, our Sarawak state government must be resolute and more aggressive to ask for shares and equity and direct participation in the upstream petroleum PSCs involving the exploration and production of oil and gas and related products in Sarawak.”

See called on the state government to demand for such equity holdings, through a state owned sovereign wealth fund (SWF), in the PSCs that are to be awarded and those that are up for negotiation for extension of their terms.

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