20% royalty won’t hurt investment

Iain (second right) speaking to Shafie (right) during Shell Malaysia’s courtesy call.

Updated.

KOTA KINABALU: Increasing the oil royalty given to Sabah and Sarawak to 20 per cent will not jeopardise the country’s oil and gas investment climate.

Shell Malaysia chairman Datuk Iain Lo said as far as Shell was concerned, they were positive that two State Governments and Petroliam Nasional Berhad (Petronas) would not resort to a decision that would undermine the oil and gas sector.

Iain, who was speaking to reporters after paying a courtesy call to Chief Minister Datuk Seri Shafie Apdal on Tuesday, was responding to the question of whether it would still be viable for Shell to conduct business with Petronas in the event the 20 per cent royalty was granted.

“As far as I can see, neither the (two) State Governments nor Petronas want to do anything that will undermine the investment climate in this country. So for us, we will just wait and see what the outcome is going to be. I do not expect it to impact our business or our investment in this country,” he said.

“We are always looking to see how we can do more business in the oil and gas sector. So for companies like ours to invest, we must be able to get a reasonable return for our investments.

“At the moment, the oil and gas regulations in Malaysia are very clear for companies like ours,” he added.

He stressed that Shell’s interest will remain the same; whereby as long as the fiscal regulatory regime in Malaysia is good, Shell will continue to invest.

On Monday, Prime Minister Tun Dr Mahathir Mohamad said that the need to review the oil royalty for oil-producing states should not be done at the expense of ‘killing’ Petronas.

“If you take 40 per cent of its operating cost and add that to the operation cost, Petronas would lose money,” Mahathir said.

Sabah and Sarawak have been pushing hard to get the Pakatan Harapan (PH) government to fulfil their 20 per cent oil royalty election promise.

Among the objectives of the courtesy call was to explain the business activities of Shell in Sabah to the Chief Minister.

It is understood that Shell has been in Sabah for quite some time and it operates both in the upstream (offshore and deep water) and downstream (retail sector) business.

“The most important for us is to make sure that the oil continues to be produced safely and efficiently from deep waters. As you know, we operate two fields; one in Gumusut-Kakap and the other in Malikai.

“At the moment, we are producing very well. So that is the main part of the activity; to do maintenance, to do additional drilling, to make sure that we keep the production level up,” Iain said.

When asked to disclose the production level for both of the fields, he said that the two fields could produce up 200 barrels per day.

During the press conference, Iain had also commented on some of Shell’s ongoing Corporate Social Responsibility (CSR) initiatives in Sabah.

Perhaps of the most interesting CSR initiatives that Shell is currently spearheading is its Access To Energy programme. This is where Shell opts to provide power supply to the some of the rural villages in the state.

“We found a village that has got no power at all. But it happened to be situated by a river, so we put in a micro-turbine that generates electricity for them 24 hours a day. So now this little village has got electricity for their lights,”

Shell has initiated the said programme in Kg Sabibingkol, Pensiangan and it has identified two other sites that are in need of power supply.

Shell has also come up with the LiveWire initiative, an entrepreneur development programme where they assist the young aspiring businessmen to make their ideas a reality. Those who manage to impress will be awarded with funding by Shell.

Shell Selamat Sampai, another Shell’s CSR initiative, is a programme that is focused on teaching road safety at schools.

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