WITH the recent discovery of a large reserve of oil and gas in Miri, leaders from both sides of the political divide have aired their opinions on how this discovery should benefit the state.
While Pekatan Rakyat leaders promised to give 20 per cent of royalty to Sarawak if they took over Putrajaya, Barisan Nasional (BN) leaders on the other hand suggested that a new formula be forwarded to the federal government for a better deal for the state.
Under the Petroleum Act 1974, Petronas is entrusted with the responsibility to develop and add value to the country’s hydrocarbon resources and pay the state five per cent oil and gas royalty in return for extracting the natural resources from within its borders.
This five percent royalty has been a bone of contention between oil and gas producing states and Petronas and the proposals mooted by both the ruling coalition and opposition front are promises to address this long standing grouse.
While the opposition calls for a straight forward increase in royalty, BN is more cautious, taking into account the bigger picture.
State Minister of Land Development Tan Sri Dr James Jemut Masing pointed out if Sarawak were to get more than five percent oil royalty, the federal government could offset the drop of revenue in its coffers from Petronas by reducing its allocation to the state and the situation would revert to ‘square one’.
Instead, Masing proposed that the state should be given the chance to have joint production equity with Petronas through a profit sharing agreement.
He said if we insist on royalty, it was just a lazy way of doing things but since Sarawak has the capability and financial resources to venture into the oil and gas industry, we should demand for joint ventures instead.
Masing’s suggestion was echoed by Minister of Housing and Tourism Datuk Amar Abang Johari Tun Openg who recently called for Sarawak to forward a new formula to get better returns from the ‘black gold’ industry in the state.
Although he did not disclose his formula it is likely to be similar to Masing’s idea of joint venture.
State BN Backbencher Club (BNBC) chairman and Semop assemblyman Abdullah Saidol during his recent visit to The Borneo Post office here recently also opined that Sarawak should seek better options rather than the five per cent annual royalty from Petronas.
During the last DUN Sitting, Abdullah revealed that many BN backbenchers requested for better deals from Petronas. The reasons are very obvious because at the current amount of allocation from the federal government, we will never be able to catch up with the rest of the states in Peninsular Malaysia especially in terms of infrastructure and amenities such as roads, schools, water, electricity and clinics.
The success of the state BN’s proposals hinges on its performance in the coming 13th general election as the more seats it could deliver for the national front the stronger will be its bargaining power be with the federal government.
Abdullah believed that if Sarawak could help Prime Minister Datuk Seri Najib Razak secure a two-third majority in parliament, then the bargain could be achieved.
As reported by Petronas in its 2011 financial year, its total revenue was a staggering RM241.2 billion through its various ventures and productions in more than 30 countries worldwide. That year the oil and gas company reportedly paid the federal and state governments some RM65.7 billion.
But back to Sarawak, if we could have the equity share in production, we would have a much better returns from the reported reserve in Miri which could produce up to 440 barrels of oil and more than 11 million cubic feet of gas per day.
Direct increase in revenue would not be the only benefit for the state through having a share in their production as small players would also benefit from the spin-offs.
Dato Kristoffer Nyuak Bajok the executive director of CGG Veritas (Malaysia) Sdn Bhd, an oil and gas exploration company, said that Sarawak would not be short of workers in the industry as there are many Sarawakians involved in oil and gas production overseas.
The state’s participation in oil and gas production within its borders is also in line with the vision of Sarawak Corridor of Renewable Energy (Score) where the oil and gas industry is one of the top ten industries to be developed to create opportunities for people with the right skills.