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Kota Kinabalu: The oil and gas (O&G) industry must increase its contribution to Sabah’s economy in order to sustainably support its population and boost value-add activities, said Deputy Chief Minister Datuk Joachim Gunsalam.

The Sabah Minister of Industrial Development said despite being the country’s largest crude oil producing state which accounted for 42 per cent of total production, Sabah remained the state with the highest unemployment rate and slowest rate of economic growth.

“It is critical for the state to continue moving up the value chain in order to maximise the benefits derived from its hydrocarbon resources and create valuable spin-offs across the state especially for the people.

“To realise this vision, core infrastructures including roads, highways, pipelines, and power and water supply will require a significant investment, in order to facilitate increased downstream activities,” he said in a statement here Tuesday.

Joachim applauded national oil company Petronas for playing an important role in driving the growth of the state’s O&G industry, with significant economic spillover to the people.

He said efforts in recent years regarding deep water exploration and production in Sabah’s offshore fields and the improvement of the production sharing contract by Petronas to optimally regulate the upstream sector had enabled the country to prosper from the state’s hydrocarbon resources.

“Since 2011, when the Sabah-Sarawak Integrated Oil and Gas Project development started together with Petronas Chemical Fertilizer Sabah Sdn Bhd (PCFSSB), also known as Sabah Ammonia Urea project, there have been significant spillover effects for the local communities in Sipitang.

“I am pleased when informed that the PCFSSB workforce comprises 80 per cent of talented Sabahans and 77 per cent of Petronas Sabah staff are Sabahans. It is a positive thing for Sabah and it is in line with the aspiration of the state government in ensuring direct local community participation in the industry,” he said.

Joachim said through the state agency Sabah Oil and Gas Development Corporation, the state government would continue to spearhead efforts to develop Sabah’s O&G industry through the dedicated state O&G industrial park, namely Sipitang Oil and Gas Industrial Park (Sogip).

He said the state government would further develop Sogip’s potential as a world-class integrated petrochemical site in the region.