Sarawak moves cautiously on oil and is no mere state

Update:

https://www.linkedin.com/feed/update/urn:li:activity:6404521017846390784

Ministers in Malaysia’s new government began their first day at work on Tuesday, having promised a slew of economic and financial reforms in the lead up to a stunning election win over an alliance that had led the country for the six decades since independence.

Prime Minister Mahathir Mohamad’s government has vowed to fulfill some of those promises in its first 100 days.

Here are the key points from the manifesto:
...

● Increase petroleum royalties to East Malaysian states Sabah and Sarawak, and other petroleum producing states, to 20 percent. Examine the rights of Sabah and Sarawak over their national resources and oil and gas reserves."

That would be a better arrangement for Sarawak than the current arrangement, which is far too lopsided to Petronas.

Malaysia is the world's 3rd largest exporter of LNG. And *ALL* of that LNG comes from the state of Sarawak.

Yet Sarawak only gets a pittance in return from Petronas and Putrajaya (Malaysia's federal administrative center). 5% royalty. Insufficient, in my opinion.

As mentioned earlier, I very strongly agree with the new government's proposal to increase oil & gas royalties to Malaysia's oil & gas producing states, from 5% to 20%. And to re-examine the lopsided contracts that too strongly favor Petronas over oil and gas producing states.

My opinion probably won't go over very well with Petronas management. But it's long overdue for Petronas to DO THE RIGHT THING with oil producing states in Malaysia.
5% royalty is *not* the "right thing".

Amir Hisham Albakri understood your wariness.

A question to consider... In Malaysia, why are the oil producing states among the poorest per capita in the country, and among the least developed states in the country? Think of Sabah, Sarawak, Kelantan and Terrengganu.

The most Oil & Gas rich states are also the worst economically.

The original Petroleum Development Act 1974 did not specify a 5% royalty to states, it only specified "as may be agreed between the parties concerned."

Shortly afterwards, all 13 states simultaneously agreed to 5% royalty in exchange for giving Petronas full oil & gas rights. Seems like railroading to me, but that was before my time here in Malaysia.

I agree that these old agreements should at least be *reviewed* and alternate agreements be proposed for consideration.

KLCC Twin Towers, KLIA and Putrajaya were all built with oil & gas money extracted from these 4 states. Where are the similar developments in the oil & gas producing states?

Time to rethink the 95% amount of oil & gas money that goes to Putrajaya.

Just my opinion; as always, you are free to disagree.

Yes, I worked in Miri from 2002 to 2005. Great place, Miri is not too big, not too small, South China Sea on one side, jungle on the opposite side. Sarawak is one of my favorite places on earth - and I've done pretty fair amount of traveling.

Amir Hisham Albakri no real arguments with any of your points. Sarawak and Sabah, for example, could never on their own develop their own O&G resources the way that Petronas has done.

Malaysia has pretty much spent its revenue for oil & gas. No proper sovereign wealth fund from O&G money.

The problem I see is 95% of the oil money was extracted from the poorest states, and dumped into the richest areas - KL area.

Similar to what Jakarta did with Aceh's oil revenues - Jakarta royally screwed Aceh.

This is not a gripe against Petronas, who has been an excellent custodian of Malaysia's O&G resources. This a peeve against KL / Putrajaya getting a 95% share, while the poor I&G producing states are left with 5% share.

Again, I agree with revisiting these old O&G agreements, which were hastily thrown together to primarily benefit KL.

Petronas is subject to the control and direction of the Prime Minister, per the Petroleum Development Act 1974 (see clause 3). The Prime Minister is accorded the right to review Petronas agreements, which is exactly what Dr. M plans to do.