SARAWAK’s state oil corporation, Petroleum Sarawak Bhd (Petros), was officially launched earlier in the week by Chief Minister Datuk Patinggi Abang Johari Abang Openg in Kuching.
With a symbolic digital signature, the state chief executive finally made concrete a collective state aspiration to be an active player in the oil and gas sector, which Abang Johari described as strategically important to the socio-economic development objectives of Sarawak.
He marked the symbolic launch with a significant gesture in handing over to Petros chairman Tan Sri Hamid Bugo a state government licence, granting the new oil corporation the rights to mine oil and gas in Sarawak.
Abang Johari said: “Petros must build on its strategic presence in Sarawak to grow and deliver sustainable economic benefits via its business model, while, at the same time, safeguarding the interests of our state and its resources.”
He said henceforth, all those involved in the oil and gas industry in the state must have the necessary licences, permits, leases and approvals required under either the state’s Oil Mining Ordinance or the Gas Distribution Ordinance.
He also emphasised that the relevant state laws and their enforcement would not jeopardise the interests and investments of national oil corporation Petronas and others in the state.
Given that the Sarawak government has delegated its oil and gas regulatory and supervisory authority to Petros, how the state corporation interacts and collaborates with national oil corporation Petronas, as the national custodian of the nation’s oil and gas resources, is of critical importance.
In particular, it has to be better clarified in clear terms how Sarawak’s assertion of its rights over its own oil and gas resources does not contradict in any
way the Petroleum Development Act 1974, through which regulatory control over the nation’s oil and gas resources is vested in Petronas.
It is of utmost importance if only for the sake of regulatory certainty that this be clarified and soon. Businesses hate uncertainty of any kind.
This is perhaps particularly critical for investors in the oil and gas sector with its hugely capital-intensive nature and long gestation periods before returns are realised.
The last thing anybody in either Sarawak or the country wants is any scintilla of doubt about the consistency and certainty of the regulatory framework governing the oil and gas sector in the country as a whole or in any state, lest investments are jeopardised or even delayed.
The main reason the nation has attracted investors all this while is the clarity in our rule of law pertaining to businesses and investments. This needs to be zealously safeguarded in the interests of all.
It, therefore, goes without saying that the national and Sarawak governments on the one hand, and Petronas and Petros on the other, must work hand-in-glove in furtherance of everyone’s best interests.
Fortunately, there is growing recognition in Putrajaya that Sarawak seeking greater control over its own overall destiny is a legitimate goal and Prime Minister Datuk Seri Najib Razak has consistently reiterated that his administration would work to return whatever rights might be due the state.
That said, however, it also needs to be re-emphasised that Sarawak asserting state rights must not be viewed through the lens of a zero-sum game.
The overall business climate in the oil and gas sector is only now picking up with a small uptick in global oil prices. Any hoped-for recovery is certainly still fragile and will be a long and winding road.
There has to be a recognition as well that Petronas is today a tested and highly-credible player, not just locally but also internationally. It has proven itself to be remarkably agile in facing the business downturn of recent years and impressively adept in reaping quick returns with any whiff of a recovery in oil prices.
As a start-up entering a still challenging sector, Petros will have its work cut out for it. It will need to be a quick-study if the collective aspirations of Sarawakians for the fullest benefits derived from their natural resources are to be in any way realised and realised soon enough.
The world is replete with petro-states bungling in their management of their hydrocarbon resources. Malaysia has escaped such a “curse”.
With luck, Petros and Petronas will seek ways to collaborate and arrive at win-win propositions for all concerned.
The writer views developments in the nation, the region and the wider world from his vantage point in Kuching, Sarawak