Fazzruddin, Oil & Gas Is Way Above Your Head

 Fazzruddin, Oil & Gas Is Way Above Your Head

The commercial agreement signed on Dec 7 will enable Petroleum Sarawak Berhad (Petros) to play a bigger role in the oil and gas industry through collaboration with Petronas, said Tupong assemblyman Fazzrudin Abdul Rahman.

At the same time, it will provide wider employment opportunities in the state, he added.

https://www.theborneopost.com/2020/12/12/fazzrudin-rebuts-see-petros-role-a-boon-to-sarawak/

Fazzrudin Abdul Rahman could have done all of us a favor by providing a framework upon which Petros can play a bigger role in the O&G industry in Sarawak and how it will provide wider employment opportunities in the state so that we can better assess his statement. That would have stopped a lot of Sarawakians from sneering at his comments and rebutting him on the issue.

Lest we forget why there are a lot more talks on the O&G industry in Sarawak now, let us first be reminded of the original trigger. Fazzruddin Abdul Rahman may have no prior interest in this and may not know this as he became Tupong assemblyman only in 2016. 

So as give some credit to BN Sarawak, now re-branded as GPS, we will use the late Adenan Satem as starting point.

On the 6th June 2014, on the occasion of the 100th day of Adenan Satem’s as chief minister of Sarawak he was reported as saying he will continue to push for an increase in oil revenue for the state. He said the increase, if approved, will be over and above the usual development expenditure meaning off budget.

That is the primary reason: To increase revenue from an existing revenue stream and not just increasing the streams because a lot of money was needed to fund development projects in Sarawak so that she can be on par with states in Malaya which are far ahead in terms of GDP and infrastructural development.

https://www.theedgemarkets.com/article/100th-day-office-adenan-pushing-more-oil-revenue-sarawak

Earlier, the Sarawak state assembly sitting in May 2014 had approved a special motion to seek royalties from the state’s oil and gas revenue to be increased from 5% to 20%. Adenan had brought it up personally with Najib. The opposition in the DUN, comprising lawmakers from PKR and DAP, had been harping on the issue far earlier than Adenan Satem.

https://www.thestar.com.my/news/nation/2014/05/06/sarawak-assembly-calls-for-twenty-percent/

The most pertinent question to ask is, are we now getting more money from Petronas than before, specifically, in an amount equivalent to the 20% that Adenan Satem and the DUN was gunning for? The answer is no and neither did Petronas conceded their stranglehold on Sarawak’s O&G with the signing of the commercial agreement. Not an iota of the terms and conditions in the PDA74 was changed. Did Sarawak’s 5% sales and service tax on O&G products fully compensated for the shortfall that Sarawak sought to rectify? As of now, the answer is again no. Not even remotely close.

The 5% SST that Petronas agreed to pay was made conditional to a progressive reduction in the rate of the SST, subject to a commercial agreement to be negotiated later (after May 2020). That commercial agreement is now operational.

https://www.malaymail.com/news/malaysia/2020/05/09/exact-amount-to-be-paid-by-petronas-to-sarawak-still-being-calculated-says/1864651

Did the GPS government reveal how much it will earned from taking over the distribution rights of a subsidised and prize controlled commodity from Petronas via Petros? It did not. There was not even a projected figure given. Did the government reveal how much it expect to earns by taking over the production rights of 2 onshore gas fields from Petronas? No, it did not and questions are now being asked about why Petronas and their j.v partner so easily agreed to surrender their rights to the 2 fields after they had spend so much money in exploration works on the fields. 

Do take note that the Sarawak GPS government also did not reveal how big (or small) is the reserve in the two fields, what is the potential daily production like and how long will the reserve last.

Finally, was Sarawak shortchanged through the commercial agreement? CM Abang Johari’s now famous reply ‘time will tell’ is telling. The GPS government of Sarawak does not have the faintest idea.

Do you want to continue to leave your future and that of your children to a bunch of clueless people?