Premier asserts 50/50 oil profit split in Petronas-Petros fields via carry interest arrangement

Abang Johari addressing the Panggau Dayak twin towers launching ceremony at Jalan Ong Tiang Swee here on Aug 19, 2023.

By Karen Bong

KUCHING, Aug 28: Under Sarawak’s commercial agreement with Petroliam Nasional Berhad (Petronas), net profits derived from any oil fields within the State’s waters must be divided equally between Petronas and Petroleum Sarawak Berhad (Petros) in accordance with the carry interest arrangement.

Premier of Sarawak Datuk Patinggi Tan Sri Abang Johari Tun Openg stressed that this formed a promising revenue stream through the primary extraction of Sarawak’s oil for the State.

“Sarawak has a commercial agreement with Petronas. In that agreement, the oil wells within Sarawak waters through PSC arrangement (is) 70:30. After minus the cost of oil, the net will be distributed between 30:70 (ratio).

“Petronas has Carigali. So any (oil) wells (or fields) in Sarawak waters under the agreement, the Carigali has to be split into two (with) one for Petros and the other one for Carigali,” he said recently when officiating the Panggau Dayak twin towers which houses the Dayak Culture Foundation (DCF) and Dayak Chamber of Commerce and Industry (DCCI) new headquarters at Jalan Ong Tiang Swee here.

Referred to as the ‘carry interest’, this stipulates Carigali’s 15 per cent entitlement of the profit, which is further evenly distributed as a 50-50 split, resulting in 7.5 per cent for both Petros and Petronas, as stipulated within the framework of the Commercial Settlement Agreement (CSA).

With Petronas’ discovery of six new oil fields, all on the Balingian coast within Sarawak’s waters, so far this year, Abang Johari emphasised this presents an opportunity to increase Sarawak’s revenue from oil and gas.

Abang Johari asserted that this aligns entirely with the Sarawak Oil Mining Ordinance 1958 (OMO58) provisions and the Petroleum Development Act 1974 (PDA74).

“Our argument is that PDA 1974 cannot stand alone; it must work together with OMO 1958.

“They must co-exist, meaning divide (of revenue) into two. If this happens, our revenue will increase,” he added.

Additionally, Abang Johari mentioned that Sarawak also has policies to safeguard its marine and shoreline and airspace.

Furthermore, nine regional development agencies in Sarawak have been allocated RM1.5 billion each, to be spent within three years, for the implementation of various development projects to propel the region’s progress.

“Thereafter, consideration will be given to increase the allocation if the State’s revenue continues to increase.

“But so far so good. In 2022, we recorded nearly RM12 billion (in revenue), which is the highest in Sarawak’s history, doubling the figure recorded at about RM6 billion previously. The figure this year seemed to be the same and could possibly be higher depending on the oil price,” Abang Johari added.

Commending the fact that Petros is led by an Iban as its chief executive officer (CEO), Abang Johari expressed his pride that every community in Sarawak is actively managing and participating in the region’s economic and transformative journey.

“Hopefully, the buildings (Panggau Dayak twin towers) will become the new symbol of the Dayak community advancing alongside other communities and becoming part and parcel of Sarawak’s transformation towards the new economy,” he said. — DayakDaily