Set up sovereign O&G wealth fund – SPG

Yusuf delivering his points on the rationale of setting up an oil and gas sovereign wealth fund during the forum.

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KUCHING, Feb 1: Suarah Petroleum Group Bhd (SPG), a non governmental organisation (NGO) consisting of experienced oil and gas (O&G) professionals, is proposing the state to set up an O&G sovereign wealth fund for the benefit of future generations.

SPG board member and Suarah Petroleum Ventures Bhd chairman, Yusuf Abdul Rahman, believed the state should set up a fund to grow its income from O&G business, as well as generating income from non O&G investment.

The fund will provide the state government a way to broaden its revenue base and diversify its income risk from the O&G business to ensure continuous income stream for Sarawak to develop its economy.

“Pursuant to resolution three of the first Sarawak O&G Seminar and Exhibition (SOGSE) 2019 held in Miri, it was agreed that to ensure sustainable development of Sarawak O&G resources, a comprehensive masterplan should be drawn up, including the establishing of a Sovereign O&G Wealth Fund for the benefit of future generations of Sarawakians.

“The rationale for the establishment of the fund is because Sarawak’s O&G have at most, 20 to 30 years window of opportunity, due to depletion of resources.

“It is predicted that by 2040, more than half of all passenger and light commercial vehicle will be electric. To ensure future sustainable income from O&G, it will actually be necessary to move a portion of that income into non- O&G investments,” he said at the “Seeking Economic Parity for Future Generations, Fight for Rights, Fight it Right” forum organised by SPG here today.

Yusuf added that such investments wound need proper management and that it is imperative that the Sarawak O&G fund be set up from at least 30 per cent of the state’s present and future oil and gas income.

He added the Sarawak O&G Fund Corporation should be set up by law and managed independently with complete transparency. The management of the corporation should report to the Sarawak Legislative Assembly and the state Cabinet upon written guidelines provided by the state’s Finance Ministry.

He also suggested that the fund be allocated an initial capital of RM1 billion or more.

Drawing the example of how successful Norway, a country which has established its own sovereign O&G fund in the past and has grown it to over RM4.3 trillion after 22 years, Yusuf believed that Sarawak can emulate the operation and the management of the Norwegian Oil Fund for the benefit of future generations of Sarawak.

He believed SPG and the state government can work together to safeguard and build financial wealth for future generations.

At the same time, he noted the Norwegian Oil Fund did not invest the majority of the money in the country. He observed that the Norwegian Oil Fund has over the years accumulated 1.5 per cent of global stocks and owned shares in 9,000 listed companies in 70 countries worldwide.

Quoting a comment from the Norwegian Oil Fund’s chief executive officer, Yngve Slyngstad, Yusuf noted that the return on the investments in global financial markets were so high that it can be compared to discovering oil once more.

Hatta showing an example of the world’s first fully automated oil and gas platform in Norway without the need for manpower to operate it.

Meanwhile, SPG’ board member Dr Abang Hatta believed that with more financial resources from the wealth fund, Sarawak oil and gas players can implement digital initiatives for the industry and their businesses.

Those include operational applications of artificial intelligence (AI) primary machine learning and data science for instance covering pipeline construction, maintenance and transportation for the midstream O&G segment, as well as refining processes, storage maintenance, security and environmental management for downstream segment.

Furthermore, he noted other initiatives include digital information sharing and operational transparency where the applicable technology include block chains or smart contracts.

Hatta also revealed some examples of the initiatives which include robotic drilling systems, augmented reality and automated oil and gas platform. — DayakDaily