Kota Kinabalu: The state government urged to promptly study the need to establish a Strategic Petroleum Reserve to ensure sufficient supply for domestic purposes.
Silam Assemblyman, Datuk Dr Mohd Yusof Apdal, in his speech during the State Legislative Assembly sitting, said Sabah and Sarawak are major contributors to the nation’s oil revenue, yet storage capacity for emergency use remains limited.
He said that, at present, most terminals function primarily for operational and export purposes.
“Establishing a strategic storage zone on Sabah’s East Coast would reduce the impact on this region from market price fluctuations or global supply disruptions.
“In the event of maritime conflict or disruption in the Selat Melaka, Sabah would have its own reserves and could continue operating without interruption to the supply of petrol, diesel and industrial fuels,” he explained.
According to Mohd Yusof, he does not fully agree with proposals to increase the capacity of the Labuan Crude Oil Terminal (LCOT) or other existing terminals for reserve storage purposes, as Labuan itself is a Federal Territory and not part of Sabah.
He said the proposal to build an oil refinery in Sabah has also been welcomed by many parties, noting that Sabah can no longer remain merely a pump station that extracts raw resources to be sent elsewhere.
He stressed that the time has come for Sabah to become a key player in processing value-added products within its own territory.
“According to industry data, a large portion of our sweet crude oil is exported due to its high quality, while we re-import finished petroleum products at market prices.
“In Sabah, we cannot allow this economic leakage to continue. Therefore, with the establishment of our own refinery, we would shorten the supply chain while ensuring energy security for Sabah, which would lead to a shift from an extraction-based economy to a high-value economy,” he said.
Mohd Yusof added that in line with the current focus of oil discoveries shifting to the East Coast, including areas in the Sulu Sea and maritime borders near Lahad Datu and Tawau, he believes that from the perspective of logistics costs and OPEX, it would be more suitable for an oil refinery to be built on Sabah’s East Coast.
He said that if realised, the move would help narrow the economic gap between Sabah’s West Coast and East Coast.
It would also position Lahad Datu or Tawau as a new petroleum industry hub capable of attracting foreign direct investment (FDI) and creating employment opportunities for Sabahans.
“I urge the government to give special attention to this matter. Start immediately with a feasibility study together with PETRONAS and private investors for the construction of a Strategic Petroleum Reserve and an Oil Refinery on Sabah’s East Coast, particularly in Lahad Datu,” he added.
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