Kota Kinabalu: The State Government’s landmark partnership with Petronas under the Commercial Collaboration Agreement (CCA) has triggered a massive economic shift in Sabah’s oil and gas sector.
Local vendors now command a record 36 per cent of the contract market share, a surge of over 26 percentage points since 2021, proving the success of the local empowerment strategy for companies and talent.
SMJ Energy Chairman Datuk Masidi Manjun pointed out the success of the comprehensive governance framework under a Sabah State and Petronas sub-committee (SC4) for oil and gas services and equipment (OGSE) industry as the key factor in this economic transformation.
“The numbers speak for themselves. In 2018, Sabah companies held only three per cent of the contract market share in Sabah. Today, that figure stands at an amazing 36 per cent,” he said.
“This is not a coincidence. It is the direct result of having clear policies, such as Tender Thresholds, Reserved Work Categories and Mandatory Partnership requirements, which ensure our local companies are given priority in the competitive bidding process,” he added.
The exponential growth is seen across the vendor ecosystem, namely Contracts Secured, whereby the total number of contracts held by Sabahan vendors has soared by 263 per cent, rising from 133 contracts in 2021 to 483 contracts as of the latest projection (September 2025).
As for Long-Term Security, the focus on sustainable growth means the number of Sabah vendors holding long-term contracts has jumped by 260 per cent since 2021, ensuring stability for local businesses to invest in staff and assets.
The policy success is most clearly reflected in the absolute monetary value flowing directly to Sabahan enterprises.
While the overall contract value secured by local vendors in 2021 was significantly lower, aligning with their 15.3 per cent market share at the time, the current figures show a dramatic turnaround.
By the latest actual performance for September 2025, the total anticipated contract value awarded to Sabahan companies hit RM1.7 billion.
This unprecedented injection of capital into the State’s economy is a direct result of the CCA’s prioritisation framework.
Masidi pointed out that these gains directly translate into tangible benefits for the people of Sabah.
“When we see this kind of growth, it means more money staying in Sabah, more business opportunities for our local entrepreneurs and crucially, more quality jobs for our Sabah youths. We are not just giving out contracts; we are building generational capability,” he said.
“Our collaboration with Petronas is proof that a State-driven agenda, backed by disciplined governance, can successfully transform an industry,” said Masidi, reiterating the State’s commitment to sustainable empowerment.
“We will continue to protect and reserve work for Sabahan companies to ensure that the wealth generated from our resources benefits the people of Sabah first and foremost,” he said.
State Industrial Development and Entrepreneurship Ministry’s Permanent Secretary cum Co-Chairmen of Sub-Committee 4 (SC4) Datuk Thomas Logijin affirmed the commitment to implementation.
“The success we are seeing is a testament to the strong working relationship between the State Government and Petronas through SC4.
“We are working shoulder-to-shoulder to ensure that every policy benefit agreed upon in the CCA is delivered efficiently to our local companies, driving real, on-the-ground change and creating economic multipliers for Sabah,” he said.
Building on this unprecedented momentum, the State has set a new, ambitious target for the next phase of its localisation strategy.
“Having proven our capability, we are now setting a new, ambitious target to have Sabahan companies secure 60 per cent of the contract market share by the end of 2026,” said Thomas, in his capacity as SC4 Co-Chairman, while announcing the next major milestone.
“This is our commitment to full-scale local participation. The combined efforts of our governance platforms, namely, SC4, Joint Task Forces and the Sabah Local Content Council, are fully aligned to make this a reality.
“This strategic push will be complemented by a massive growth in Sabahan employment and targeted training, ensuring our people are the primary beneficiaries of this industry,” he said.
Beyond contracts, the State is actively pushing local companies to take on more complex, higher-value work, previously dominated by large external players.
SMJ Energy Executive Director for OGSE and Corporate, Terry Biusing, noted the rapid maturation of local firms.
“In 2022, only 10 local companies were recognised for successfully upgrading their technical capabilities to secure major high-value contracts. Early this year, that number skyrocketed to 88,” he said.
“Sabahan companies have evolved from doing minor maintenance to major, complex maintenance.
“For key jobs like Hook-up and Commissioning (HUC) and Offshore Maintenance, Construction and Modification (MCM), all the contracts in Sabah last year were dominated by our local companies, often through strategic partnerships that bring in global technology while retaining local ownership,” Terry said.
SMJ Energy Chief Executive Officer Datuk Dr Dionysia Kibat confirmed that the focus is now shifting to ensure the talent pipeline keeps pace with the economic opportunities.
The Sabah Local Content Council recently established a new joint task force to secure funding and formulate a comprehensive action plan for human capital development.
“We must have a handle on what kind of skilled labour is needed to support the whole ecosystem of oil and gas in Sabah.
“The opportunities for our youths are vast. We need all skill sets from accountants and technicians to engineers,” she said.
