Dr Sim asking 100 pct oil, gas royalty ‘insane’, says Chong

KUCHING: It is either he is totally ignorant or he is trying to fool the people with his argument about Barisan Nasional ( BN) Sarawak wanting 100 per cent oil and gas (O& G) royalty from the federal government.

This is what Democratic Action Party ( DAP) candidate for Stampin parliamentary constituency Chong Chieng Jen describes of his election opponent Datuk Dr Sim Kui Hian, who is Sarawak United People’s Party – a BN Sarawak component party.

Chong alleged that Dr Sim had told a local Chinese daily that the state Pakatan Harapan ( PH)’s request of 20 per cent oil royalty from the federal government, should the opposition captured Putrajaya, was ‘too little’ compared with state BN’s 100-per cent quest.

He viewed Dr Sim’s statement as just another ‘hot air’.

“It is a fact that in 2014, the State Legislative Assembly ( DUN) under the leadership the late Pehin Sri Adenan Satem had passed a resolution, unanimously asking for 20 per cent royalty.

“Four years have passed, and the federal government still refuses to grant that 20 per cent. Now, Dr Sim is talking about 100 per cent.

“If you can’t even deliver what was unanimously resolved in the DUN, what is there to talk about of you wanting 100 per cent?” he told reporters during a press conference at DAP headquarters here yesterday.

Chong pointed out that it would be impossible to get 100 per cent royalty from O& G in Malaysia.

Royalty is compensation in lieu of rights.

What is happening now is that the state government has sold its right by virtue of Petroleum Development Act – selling its rights to the federal government, to Petronas.

The compensation for selling the rights is five per cent royalty, based on the gross price.

“Looking at the oil industry in Malaysia at the moment, 60 per cent goes to the contractors who explore and extract oil, such as Shell.

“Five per cent goes to the state government and five per cent to the federal government, while 20-25 per cent goes to Petronas as cost of operations – research and development ( R& D), and future investment.

“The other remaining percentage is the profit. The federal government gets a few percentage from the profits of Petronas.

“They also get a few percentage from the contractors, which they call the ‘Petroleum Tax’.

“So adding (this) up, the federal government is getting 10-15 per cent,” said Chong.

He also said PH Sarawak was suggesting a 20 per cent O& G royalty because that was regarded as the maximum that the state could get from the extraction of crude oil and gas from Sarawak.

He said for anyone to suggest beyond 20 per cent, it showed that he was ignorant of what was happening in the O& G industry – let alone to suggest 100 per cent royalty.

“I’m really shock and disappointed that Dr Sim, who has been a state minister for two years, is so ignorant about the operations in the O& G industry.

“It’s either he is totally ignorant or he is trying to fool the people with that kind of argument,” he said.