Sarawak allowed up to 50pc stake
Published on: Sunday, September 03, 2023
By: James Sarda
Tan Sri Tengku Muhd Taufik Tengku Aziz
Kuala Lumpur: The Commercial Settlement Agreement (CSA) accords Sarawak the right to take up to 50pc equity, if it so desires, where monetisation of its hydrocarbon resources is concerned.
“This is set out in the agreement and should not be construed as a shock,” said Tan Sri Tengku Muhd Taufik Tengku Aziz, acknowledging the aspiration of the state to be fully assertive and part of the oil and gas industry.
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The Petronas group CEO said while it can rely on the PDA (Petroleum Development Act, 1974) to preserve the national oil corporation’s position contractually and in accordance to the existing PSCs (production Sharing Contracts), it also needs to respect Sarawak’s intent to want a bigger share of the pie.
“That’s exactly what I would do, to manage the CCS properly. However, it would not be free but according to the terms after we have done our exploration,” Tengku Taufik told Daily Express.
“If they want 50pc, we have already accorded them this right under the CSA. They will answer the capex (capital expenditure) call and we can do it together.
“We have already done this…like the harmonisation of 25pc in Bintulu.
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“This is something we have prepared for, the economics of deploying a real account for the possible sharing of capex.”
Petronas is known to spend billions on exploration. Despite suggestions that Malaysia’s petroleum resources are depleting, Sarawak bucked the trend recently with the discovery of six new fields.
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Sarawak Premier Datuk PatinggiTan Sri Abang Johari Tun Openg said recently that it may seek 50pc profit sharing in future oil and gas engagements in the State with Petronas. He also talked about the possibility of collaborating with Shell as well on some endeavours.
On whether Petronas should be worried over this development, Tengku Muhd Taufik said: “At the end of the day, both of us (Shell) are competitors and collaborators. We collaborate with Shell here and compete for bids (elsewhere).
“If you think the announcement is a death knell for Petronas, I don’t take that view. There is an avenue for partnership, be more proactive and consciously grow in the oil and gas chain, to do it together.
“The reality is the sheer size of what we do, no one can do it anyway.
“While we participated as early as 1978, the PSC is not in the hands of other contractors. But we also know that that there are other higher risk players we have to share.”
He said where upcoming fields are concerned, the joint expertise of both Petronas and Shell should work.
“We have also accorded them (state) the leeway under the CSA. They (Shell) will come in on those terms, will answer the capex.”
Tengku Muhd Taufik recalled Prime Minister Datuk Seri Anwar Ibrahim also saying that Sarawak has further thoughts on the CCS and its hydrogen industry, adding that “if they go that far along that curve, we will do likewise.”
He said for that matter, Shell is already entering a MoU with Petronas. “We have identified them as a CCS partner as well.”
Elaborating on the settlement agreement, he said within it are several categories. “What is up and running, until such time they (state) will respect that. Hence, no change to existing ones.
“Those where we explore and discover, it’s 100pc Carigali. If they want to participate up to 50pc, we have accorded them that right as well.
“Over and above what we already put in as supply, the state also has aspirations to add more volume to the system.
“They want to keep Bintulu alive. They also want to grow the industry. Even though they have hydropower, they also need gas for power supply. All this adds up and if you are going to do this alone there is a large capex involved.
“My question to the state was do you see yourself participating beyond energy and the answer was clearly ‘yes’.
“They have taken that position in Sarawak on how to govern the CCS properly. They want to move on methanol and asked if we can collaborate in fertilisers. All these are gas-based growth.”
He also said any confrontational approach on what is the best way to mutually benefit from the oil and gas would be an exercise in futility and would not happen under his watch.
“It is better to collaborate and move on rather than allow the hydrocarbons to stay in the ground much longer.”
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