Daily Express Subscriber
Sign in to your account.

Kota Kinabalu: The Sabah Government is open to revisiting a long-standing proposal to build an oil refinery in the State, amid renewed calls and fresh developments in the sector, including more discoveries in Sabah waters.

Deputy Chief Minister II Datuk Seri Masidi Manjun said Kimanis had been identified as a potential location previously and remains relevant as Sabah seeks to strengthen its position in the industry’s downstream segment.

“Yes, perhaps it is high time for us to revisit the proposal, especially with more oil discoveries taking place, particularly on the East Coast of Sabah.

“With such promising development, I think some form of refinery must be built in the State,” he said, responding to a proposal in Daily Express by former Chief Minister Tan Sri Harris Mohd Salleh.

Harris, known for putting Sabah on the fast track after Usno’s dark nine years upon taking over the reins of government in 1976 through Berjaya, said the current the global crisis due to the ongoing Iran war in a tension-filled Middle East may finally justify such a proposal. 

The war has led to the blockade of the strategic Strait of Hormuz where most of the world’s oil supply must pass through. Crude oil prices have since hit over US100 per barrel, besides high shipping and insurance charges, before dropping to below US100 following the announcement of a two-week ceasefire.

Harris said the Federal Government had long overlooked the logic of building refining capacity closer to where more than 60 per cent of Malaysia’s oil and gas are produced, which is Sabah and Sarawak.

The veteran statesman was responding to a question on why Sabah, despite being a major oil and gas producer, lacked a refinery of its own, while refineries were built in Johor and Melaka across the South China Sea which totally had no oil or gas. 

Harris suggested that Labuan be the centre for a refinery and for storage for the East and North Asian markets, especially China, which is heavily dependant on Iranian oil. 

Masidi was speaking after officiating Hibiscus Petroleum Malaysia’s Hari Raya Aidilfitri Open House, Thursday. Present were Hibiscus Petroleum Berhad Chairman Zainum Rahim bin Mohd Zain, Hibiscus Petroleum Malaysia and Vietnam Country head Dr Pascal Hos and other senior officials.

Masidi, who is also State Finance Minister, said various considerations — including industry changes and commercial viability — had influenced past decisions to locate such facilities elsewhere.

He said it had long been a contentious issue for Sabah as crude oil extracted from the state is shipped to be refined elsewhere far away.

“Sometimes it is difficult for people to understand why the oil is from Sabah, but the refinery is built somewhere else. 

“I was a member of the State Government during the then Barisan Nasional (BN) time. 

“It was something we have been trying to impress upon the Federal Government, particularly Petronas, for many years…to have a refinery in Sabah. I think there are many considerations why investments are made elsewhere, and we understand that. But that does not mean we do not want a refinery in Sabah. We maintain that position,” he said.