O&G players in limbo amid Sarawak licensing tussle
No clear instructions on how best to proceed with regulatory requirements, says Serba Dinamik MD
OIL and gas (O&G) contractors in Sarawak are in a licensing limbo following the tussle over petroleum rights in the state. Petroliam Nasional Bhd (Petronas) and Sarawak government are currently tussling over who is the rightful regulator for upstream activities in the state.
Serba Dinamik Holdings Bhd managing director Datuk Mohd Abdul Karim Abdullah said there had been no clear instructions on how best to proceed with the regulatory requirements.
“We have not received any clarity on the matter pertaining to the Petroleum Development Act 1974 or Oil and Mining Ordinance 1958 in Sarawak.
“For a company with PSC (production sharing contract) like us, we will act according to the law and regulations in effect at the location we are operating in, which is Sarawak in this instance.
“On the other hand, we are also aware how Petronas has invested billions in Sarawak for the state to be where it is today,” said Karim on the sidelines of the Smart Living & Innovation Caucus 2018 conference recently.
Sarawak’s O&G sector has received much limelight due to the prospect of it setting a precedent for the other three states on increasing the oil royalty from five per cent now to 20 per cent.
This has created uncertainty over the matter as players have not received any conclusive directions, in addition to the change in licensing, as well as land rights over the O&G regulatory framework in Sarawak,
On July 25, Economic Affairs Minister Datuk Seri Azmin Ali said the government’s 20 per cent royalty promise to Kelantan, Terengganu, Sabah and Sarawak would take time to be fulfilled.
He said the royalty payment mechanism needed to be ironed out between Federal and state governments and Petronas.
The royalty increase based on gross profit would result in “grave” implications to Petronas and Federal government, Azmin added.
Meanwhile, Karim said Serba Dinamik would try to balance between the two authorities in Sarawak and manage the regulatory requirements set forth by both parties.