Sabah wants PDA re-evaluated
Joe FernandezPublished: May 31, 2011 2:55 PM | Updated: May 31, 2011 3:01 PM
Local contractors are leading Sabahans in renewed demands that the Petroleum Development Act 1974 (PDA), long deemed outdated, be reviewed towards a fairer policy that includes their interests.
Local contractors are leading Sabahans in renewed demands that the Petroleum Development Act 1974 (PDA), long deemed outdated, be reviewed towards a fairer policy that includes their interests.
It is alleged that national oil corporation Petronas now leaves ‘the crumbs from the crumbs’ to Sabahans when it comes to oil and gas contracts.
Another beef is that government-linked companies (GLCs) are edging out local contractors even when it comes to minor jobs involving fencing and drainage.
“This is th
e time for the people of Sabah to look to Parliament to review the PDA. We are also urging the federal government to review it,” said Sabah Oil and Gas Contractors Association (Sogca) representative Iskandar Malik.
For starters, the contractors want to engage in a dialogue with MPs, especially those from Sabah, to find a way forward. It is not enough, they have discovered, for the handful of federal ministers from the state being vocal about the issue of Petronas not doing enough for the local oil and gas industry companies.
The contractors also want the Sabah government to set up a special committee that includes Sogca representatives “to ensure a more credible set-up to oversee all matters with regard to the development of the oil and gas industry in the state”.
“The question is how much is enough and how much Petronas should give to Sabah. This will depend on how well organised the state government and elected representatives are, especially those at federal level, in handling the problems that crop up involving the oil and gas industry,” said Iskandar.
His remarks come in the wake of polemics in the local media that Sabah gets little or no benefits at all from its considerable oil and gas reserves. The issue arose after Foreign Affairs Minister Anifah Aman openly expressed the state’s displeasure with Petronas.
Anifah is the MP for Kimanis, the site of Petronas’ Sabah Oil and Gas Terminal project to channel local gas to Bintulu in Sarawak. He is against Sabah gas being piped to Sarawak instead of being utilised locally where it was most needed.
Iskandar, delving into the issue of contracts, reiterated that Petronas’ contribution to the state has never been enough and this has been made worse by GLCs muscling in on the action.
“The GLCs are supposed to be investors and not our competitors. They should let the opportunities go to the local oil and gas contractors who are in fact struggling to get by although they have been in the field for quite some time.”
Iskandar also sketched a scenario where local contractors have to make do with cheap sub-contracts from the sub-contractors to the main contractors.
The main contractors in Sabah, and their sub-contractors, are said to be mostly from Peninsular Malaysia with a few from neighbouring Sarawak.
Inadequate compensation
Federal Deputy Minister in the Prime Minister’s Department, VK Liew, agrees that “37 years is a very long time and it’s high time the PDA is reviewed”.
“The cash payments given to the state are not commensurate with the proportion of petroleum and gas produced in our state,” said Liew, the de facto deputy law minister.
A review, he said, should cover the wisdom of vesting in Petronas the entire ownership, rights, powers and control of downstream activities and development relating to petroleum and its products.
“Through the years, we have also raised concerns about vesting (all this) in Petronas in return for cash payments to the state for exploration and exploitation of petroleum in Sabah,” said Liew.
The PDA, implemented since 1976, gives 95 percent of the oil and gas revenue from the inner waters, and all from the outer waters, to the federal government.
The overwhelming majority of Sabah’s wells are in its outer waters from which the state government, again, gets nothing.
In contrast, Sabahans point out that the central government in Jakarta for example, takes only 30 percent of the oil and gas revenue from the provinces where the commodity is produced. No distinction is made between wells in inner and outer waters.
It is alleged that national oil corporation Petronas now leaves ‘the crumbs from the crumbs’ to Sabahans when it comes to oil and gas contracts.
Another beef is that government-linked companies (GLCs) are edging out local contractors even when it comes to minor jobs involving fencing and drainage.
“This is th
e time for the people of Sabah to look to Parliament to review the PDA. We are also urging the federal government to review it,” said Sabah Oil and Gas Contractors Association (Sogca) representative Iskandar Malik.For starters, the contractors want to engage in a dialogue with MPs, especially those from Sabah, to find a way forward. It is not enough, they have discovered, for the handful of federal ministers from the state being vocal about the issue of Petronas not doing enough for the local oil and gas industry companies.
The contractors also want the Sabah government to set up a special committee that includes Sogca representatives “to ensure a more credible set-up to oversee all matters with regard to the development of the oil and gas industry in the state”.
“The question is how much is enough and how much Petronas should give to Sabah. This will depend on how well organised the state government and elected representatives are, especially those at federal level, in handling the problems that crop up involving the oil and gas industry,” said Iskandar.
His remarks come in the wake of polemics in the local media that Sabah gets little or no benefits at all from its considerable oil and gas reserves. The issue arose after Foreign Affairs Minister Anifah Aman openly expressed the state’s displeasure with Petronas.
Anifah is the MP for Kimanis, the site of Petronas’ Sabah Oil and Gas Terminal project to channel local gas to Bintulu in Sarawak. He is against Sabah gas being piped to Sarawak instead of being utilised locally where it was most needed.
Iskandar, delving into the issue of contracts, reiterated that Petronas’ contribution to the state has never been enough and this has been made worse by GLCs muscling in on the action.“The GLCs are supposed to be investors and not our competitors. They should let the opportunities go to the local oil and gas contractors who are in fact struggling to get by although they have been in the field for quite some time.”
Iskandar also sketched a scenario where local contractors have to make do with cheap sub-contracts from the sub-contractors to the main contractors.
The main contractors in Sabah, and their sub-contractors, are said to be mostly from Peninsular Malaysia with a few from neighbouring Sarawak.
Inadequate compensation
Federal Deputy Minister in the Prime Minister’s Department, VK Liew, agrees that “37 years is a very long time and it’s high time the PDA is reviewed”.
“The cash payments given to the state are not commensurate with the proportion of petroleum and gas produced in our state,” said Liew, the de facto deputy law minister.A review, he said, should cover the wisdom of vesting in Petronas the entire ownership, rights, powers and control of downstream activities and development relating to petroleum and its products.
“Through the years, we have also raised concerns about vesting (all this) in Petronas in return for cash payments to the state for exploration and exploitation of petroleum in Sabah,” said Liew.
The PDA, implemented since 1976, gives 95 percent of the oil and gas revenue from the inner waters, and all from the outer waters, to the federal government.
The overwhelming majority of Sabah’s wells are in its outer waters from which the state government, again, gets nothing.
In contrast, Sabahans point out that the central government in Jakarta for example, takes only 30 percent of the oil and gas revenue from the provinces where the commodity is produced. No distinction is made between wells in inner and outer waters.
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