Sabah sets up SMJ Petroleum Sdn Bhd and committees to have better control over oil and gas

 By Olivia Miwil - December 7, 2021 @ 7:48pm

Sabah marked a historic milestone with the incorporation of the state's wholly-owned oil and gas company, SMJ Petroleum Sdn Bhd. - Pic courtesy of Sabah Chief Minister Office

KOTA KINABALU: Sabah marked a historic milestone with the incorporation of the state's wholly-owned oil and gas company, SMJ Petroleum Sdn Bhd.

The establishment of the company is the result of the Commercial Collaboration Agreement (CCA) signed between the Sabah government and national oil company, Petroliam Nasional Bhd (Petronas) today.

Chief Minister Datuk Seri Hajiji Noor said the company would spearhead Sabah's commercial venture in the oil and gas industry and coordinate existing state government-linked companies in ensuring the compliance of the CCA.

During the tabling of the state's 2022 Budget last Friday, he had said that the CCA would allow Sabah to get greater revenue sharing, participation and opinion in oil and gas-related matters through a commercial consultative framework with Petronas while at the same time ensuring Sabah holds on to its legal rights.

He had also given his assurances that the CCA would create a more inclusive environment for the oil and gas industry in Sabah including offshore and onshore.

The agreement will also allow participation of companies or contractors from Sabah in the Vendor Development Programme and ensure that Petronas would see to it that more contracts be given to Sabahans in the tender process.

"The CCA is perhaps the most important document after June 16, 1976, when the oil cash payment (royalty) was agreed upon, signed between Sabah and Petronas.

"The signing of the CCA today indeed marked a new era in Sabah's oil and gas industry," he said in a statement, adding the CCA was finalised two months after Sabah and Petronas took the initiative to hold talks about the issue since Oct 8 last year.

Earlier, he had witnessed the signing of the CCA at Menara Kinabalu where State Secretary Datuk Seri Safar Untong represented the Sabah government and Petronas by its president and chief executive officer Datuk Tengku Muhammad Taufik Tengku Aziz.

Hajiji added that the commitment of both the Sabah Government and Petronas had made it easier for the federal government because it took only one Joint Committee Meeting for both sides to reach common ground that was stipulated in the CCA.

The Joint Committee Meeting was held on Dec 1, 2021, during which the Federal Government agreed to endorse and facilitate the enforcement of the CCA.

"Together with Petronas, Sabah will develop the oil and gas industry by ensuring a win-win situation for the state as well as creating a new image for the industry," he said.

Hajiji also announced the setting up of several committees under the collaboration namely the Annual Strategic Dialogue (ASD), Joint Coordination Committee (JCC) and sub-committees in the Upstream, Domestic Gas Supply, Equity Investments in LNG & Downstream businesses, Oil & Gas Services & Equipment Industry and Human Capital Development and other state matters, made up of members from the state government and Petronas.

Through the committees, Sabah will ensure greater participation and control in the oil and gas industry through the development plan and participation in the oil and gas activities in the state including in the Sabah Gas Master Plan, LNG projects as well as involvement in the Product Sharing Contract.

"As chief minister, I will be jointly-heading the ASD with Petronas chairman Tan Sri Mohd Bakke Salleh. ASD is the highest discussion platform that will ensure Sabah fully benefits from the CCA in the future," he said.