Sterling results after GPS stood firm to safeguard rights over state’s O&G resource

2020 marks remarkable milestones for Sarawak in O&G industry

By Ling Hui

KUCHING, Dec 3: A tenacious fight by the Sarawak government under Gabungan Parti Sarawak (GPS) in wrestling to safeguard the state’s sovereign rights over its oil and gas (O&G) resources has yielded remarkable results this year.

This morning, Sarawak Legislative Assembly’s Consultative Committee (DUN Consultative Committee) chairman Datuk Amar Mohd Asfia Awang Nassar revealed that Chief Minister Datuk Patinggi Abang Johari Tun Openg and Prime Minister Tan Sri Muhyiddin Yassin will witness the Commercial Settlement Agreement between the Sarawak government and Petroliam Nasional Bhd (Petronas) on Dec 7.

Although the details of the Commercial Settlement Agreement will only be released after it is formally signed in four days’ time, this signifies a great milestone for the Sarawak government as well as all Sarawakians because there is now an official and written agreement with the federal government and Petronas on the state’s position and level of participation in the O&G industry.

Two committees have been set up, one appointed by the DUN and another by the state government, to handle the negotiations with Petronas on O&G issues. And both committees did not fail the state.


The DUN Consultative Committee with its chief negotiator who is also Minister of Tourism, Arts and Culture Datuk Abdul Karim Rahman Hamzah was appointed to tackle the SST improvement on Sarawak’s O&G resources. In about two months’ time, the committee won the legal battle with Petronas and earned Sarawak an extra revenue of RM2.957 billion.

The amount that equals the settlement of outstanding SST on the exports of petroleum products in the state for the year 2019, was paid in full via a cheque on Sept 17. And only yesterday (Dec 2), the Sarawak government received a second payment which is for the first six months of the year 2020. Other oil companies in the state including Shell, Murphy and Petromina have also paid their dues.

The second committee in relation to O&G in Sarawak is the working committee led by Deputy Chief Minister Datuk Amar Awang Tengah Ali Hassan as the chief negotiator representing the state government. He was appointed by Abang Johari on June 12, 2020 to carry the executive power in negotiating with Petronas on the commercial settlement, which was met with its first success today.

Unlike Abdul Karim’s legal team, Awang Tengah’s committee did not concern SST and was assigned to focus on negotiating the commercial standing of Sarawak in the O&G industry.

Subjects and objectives of the negotiation revolve around a commercial agreement on O&G matters, such as for the state to reclaim its regulatory role in oil mining in Sarawak, to increase its share of revenues from O&G produced in Sarawak, and to obtain greater investment opportunities in the downstream business.

The committee also set its sight to ensure more opportunities for Sarawakian companies in O&G industry and to guarantee a greater allocation and more secured supply of gas to meet the gas requirement of the state.

As a facilitator of the negotiation, a federal-level Joint Committee co-chaired by Senior Minister for Works Datuk Seri Fadillah Yusof and the Minister of Finance Tengku Datuk Seri Zafrul Abdul Aziz was established in May 2020.

A series of extensive discussions over the months since the committee’s first meeting on June 17 has helped Sarawak to finally gain its end.

Salient features and terms of the Commercial Settlement Agreement, including significant benefits and advantages which the state would derive from the agreement, are much to be anticipated.-DayakDaily