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Sabah CM says the state is targeting RM1b in oil and gas contract awards this year

Publish date: Thu, 08 Jun 2023, 11:41 AM

KOTA KINABALU, June 8 — Sabah Chief Minister Datuk Seri Hajiji Noor today said that the state is targeting to get RM1 billion in local contract awards or 20 per cent of the total oil and gas contracts awarded this year.

“To date, local contract awards have reached RM564 million, equivalent to 11 per cent of total spend in 2022,” he said.

Oil and gas revenue has been among the key highlights in the state’s pursuit of its rights within the state and federal relations.

“We are equally serious in the recruitment and development of local talents in this sector and it is a key priority for Sabah,” he said at the 10th Sabah Oil, Gas and Energy Conference and Exhibition (SOGCE) held at the Sabah International Convention Centre (SICC) here today.

Next year, the state will increase its target to 30 per cent.

Hajiji said that under the state’s investor-friendly Sabah Maju Jaya (SMJ) initiatives, Sabah is targeting to acquire additional Upstream and liquefied natural gas (LNG) producing assets and will consider suitable green energy opportunities simultaneously.

“While oil and gas will provide an important revenue stream for the state, we also welcome investors to explore renewables such as solar and storage technologies, hydro, geothermal, and also carbon market opportunities in Sabah,” he said.

Hajiji said he was proud of the state’s economic achievement since the Gabungan Rakyat Sabah took over the administration of the state less than three years ago.

“Today, I am proud to say we have done well and are on the right track seeing the progress we have achieved. In spite of the economic challenges faced not only by the state but globally, Sabah has, as of the end of December 2022 achieved RM6.960 billion in revenue, the highest recorded so far.

“This represented a 28 per cent increase from the previous year’s achievement of RM5.449 billion. We will not rest on our laurels but will continue to implement a robust policy to bring in more investments to the state, create more economic spin-offs and double our efforts to generate more revenue through new and innovative means and resources,” he said.

Since the signing of the Commercial Collaboration Agreement with Petronas in December 2021 and the launch of the Sabah Gas Master Plan in January last year, Sabah is expected to collect additional revenue of RM2.45 billion annually in Sales and Services Tax (SST) from the oil and gas sector.

As of May 31 this year, RM715 million has already been collected and since 2022, Sabah’s 10 per cent equity in LNG9 has earned the state RM337 million to date.

Hajiji said Sabah has vast potential with good oil and gas resources in place, producing about 40 per cent oil and just under 20 per cent gas in Malaysia.

“The state works in partnerships with Petronas, international oil and gas companies and local companies to create a favorable FDI environment from Upstream to LNG to domestic downstream developments and oil and gas services.

“This includes the US$2 billion Esteel investment to produce HBI (Hot Briquette Iron) and flat steel at the Sabah Oil and Gas Industrial Park (SOGIP) for Phase 1 to be followed by multi-billion dollar investments to produce green steel products in subsequent phases,” he said.

Phase 1 is expected to be in commercial production by 2026-2027, providing some 2,800 direct employment opportunities during the peak construction period.

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