Smooth transition for O&G players come July 1
KUCHING: Petroleum Sarawak Bhd (Petros) has assured oil and gas (O&G) industry players of a smooth transition once it takes full regulatory authority over the upstream and downstream aspects of Sarawak’s O&G industry from July 1.
With less than a month to go, O&G players have voiced their concerns on whether their operations would be affected.
Petros chief executive officer (CEO) Saau Kakok said most, if not all, entities undertaking activities in the local O&G industry will need to apply or reapply for their respective licences and leases through Petros.
Under the Oil Mining Ordinance 1958 (OMO), which will be amended next month to update provisions catering for present and future management of the O&G industry in Sarawak, industry players involved in upstream will be required to apply to the State Minerals and Management Authority (SMMA) through Petros for their licences and leases.
Under the Distribution of Gas Ordinance (DGO) 2016, which will be gazetted on July 1, downstream players will be required to reapply for their licences with the director of gas under the Ministry of Utilities as licences granted under the Gas Supply Act 1993 is not applicable in Sarawak.
“This includes any licences issued by the secretary-general of the Ministry of Domestic Trade, Co-operatives and Consumerism under the Petroleum Regulations 1974 or the Control of Supplies Act 1961,” Saau said during an industry engagement session on the implementation of the OMO and DGO in Sarawak last month.
The need to reapply for licences and leases has been an area of concern for many existing Production Sharing Contract (PSC) holders, but Saau explained that the process of reapplication will be streamlined in order to ensure there is a smooth transition of regulation to Petros and to protect the existing investments in Sarawak, while encouraging more investments to take place.
State Legal Counsel Datuk JC Fong emphasised that the process would not jeopardise entities currently undergoing any exploration, prospecting of petroleum, or mining as they would be provided with an interim approval or short-term licence, while their applications are under consideration with Petros.
It is understood that these short-term licences and leases will be valid until Dec 31, 2019.
For service providers, Saau added existing processes would be streamlined so that only one licence would be applicable for service providers to continue their work in the state.
“For existing Petronas qualified service providers, you will need to reapply for a licence with Petros but it will be a very straight forward process so as not to affect your business processes,” he said.
Regarding fees involved in submission of applications, annual licences, lease fees and annual land rent, Saau said they would be advised in due course.
Chief Minister Datuk Patinggi Abang Johari Tun Openg has also previously emphasised that O&G players operating in Sarawak need not worry about their investments.
“The state will exercise its regulatory powers in a manner that would not jeopardise the interests and investment of those who have already been operating in Sarawak. But the oil and gas industry should work with the government in the implementation and enforcement of our laws,” he said.