Thursday 28 Mar 2024
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KUCHING: The chances of Sarawak getting an increase in oil and gas royalty payment are unlikely after two rounds of talks with Petroliam Nasional Bhd (Petronas) are said to have reached a stalemate.

Sources close to the state administration said the oil and gas company had reportedly balked at the state’s request to raise the royalty, from 5% to 20%, after both parties failed to agree on the quantum.

The Malaysian Insider has learnt that negotiations with Petronas were “heavy going” and the company had given a “myriad of reasons” why it was refusing to meet the request for 20%. The source said a dispute on how the payment quantum should be calculated was also a hurdle too difficult to surmount at the talks.

The source said there was a discussion that the payment should be calculated on Petronas’ overall net profit and not only on the net profit from its oil and gas operations in Sarawak.

According to the source, Petronas also threatened to freeze all explorations for new oil and gas fields in waters off the state and new investments to develop the industry if the state insisted on the 20% quantum.

On Sunday, Chief Minister Tan Sri Adenan Satem disclosed in a meeting with residents of Kota Samarahan that the national petroleum company had agreed to raise the royalty payment. However, he did not disclose the quantum Petronas is willing to pay.

He only said “negotiations are still ongoing” — hinting that nothing has been signed and sealed just yet.

Adenan, in the meeting, said he would give a report on the talks to lawmakers when the state legislative assembly sits next month for its budget session. “I hope we will be successful.”

In the meeting, Adenan said the reason for the request is that the state needs money to develop the state, particularly its rural areas. He said, after all, the oil and gas Petronas obtains are “from here, Sarawak”.

“We don’t want to be spectators. We want to be participants in the industry,” he said.

State lawmakers, in a historic first, unanimously stood up for the state’s interests at last May’s sitting of the assembly by agreeing to a resolution requesting Petronas and Putrajaya to increase the royalty.

Sarawak DAP chief Chong Chieng Jen said he had an inkling that Petronas and Putrajaya were stalling.

In Parliament on Oct 7, Chong charged that Putrajaya has no intention of increasing the oil and gas royalty payment after a question he submitted on the matter was disallowed.

The Bandar Kuching MP said Speaker Pandikar Amin Mulia disallowed the question because it was sub judice, since a related matter had been brought to court. — The Malaysian Insider

This article first appeared in The Edge Financial Daily, on October 21, 2014.

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