SIGNING OF THE MEMORANDUM OF UNDERSTANDING FOR THE REVISED TOTAL NATURAL GAS SUPPLY TO THE STATE OF SARAWAK FOR IMPLEMENTATION OF PROJECTS UNDER
SARAWAK GAS ROADMAP

The Right Honourable Datuk Patinggi Tan Sri (Dr.) Abang Haji Abdul Rahman Zohari
Bin Tun Datuk Abang Haji Openg

At the

Signing of the Memorandum of Understanding for the Revised Total Natural Gas Supply to the State of Sarawak for Implementation of Projects under Sarawak Gas Roadmap

11 December 2021

Pullman, Kuching

Vision 2030 - A Bold Aspiration

The Sarawak government has launched Vision 2030 with the aim to transform Sarawak into a High-Income Advanced State by the year 2030. A bold aspiration to double the State’s GDP and triple household income by the end of the decade, while integrating environmental sustainability across all development initiatives.

An enabler for this vision, is to drive a step-change progress in domestic gas utilisation. Gas offers game-changing socioeconomic opportunities in downstream sectors, such as power generation, petrochemicals and other industries, while limiting carbon emissions. Well recognised as a “transition fuel” in the global decarbonisation journey, this crown jewel of Sarawak’s resources has a key role to play in meeting power demand growth and diversifying the power generation mix.

Sarawak’s Resources for Sarawak’s Progress – the Sarawak Gas Roadmap

On 7 December 2020, the State Government and PETRONAS entered into a Commercial Settlement Agreement (“CSA”) which sets out the principles for Greater Sarawak Participation, enabling greater revenue share and affording opportunities to derive equitable economic benefits from our oil and gas. Within this agreement, we have defined an operational Consultative Framework by which PETROS, key State Agencies and PETRONAS meet to implement the CSA‘s intent. 

Among other equitable arrangements, the CSA envisages the formation and implementation of a comprehensive Gas Masterplan for the State of Sarawak.

Our 10-year Sarawak Gas Roadmap – or SGR, is designed to realise the full potential of our abundant gas resources aimed at achieving Sarawak Vision 2030, contributing towards:

• 10% growth in GDP and
• creating thousands of “high income” job opportunities.

The SGR envisages implementation of broad economic activities in the period to 2030 from the development of additional power generation, petrochemical industries to re-shaping the landscape of downstream businesses within Sarawak, centred upon four strategic demand hubs spanning the State.

Today, we realise firm progress towards our Sarawak Gas Roadmap, with this announcement for access to an increase in supply of domestic Natural Gas of up to 1200 mmscf/d from the current 450 mmscf/d by 2030 for the implementation of identified projects under the SGR. This is a step change achievement – a supply increase of over 250%. Securing Sarawak’s Resources for Sarawak’s Progress.

PETROS – Progressing the Commercial Settlement Agreement

To effectively exercise our rights and the CSA, the imperative is that our State Oil and gas company - Petroleum Sarawak Berhad, or PETROS - is the One Stop Centre for operationalising the oil and gas value chain of Sarawak; in collaboration with players in the marketplace including investors and PETRONAS alike.

Since incorporation in 2017, the State government has continued to strengthen PETROS. In the Upstream, PETROS’ achievements to date:

1. as Regulator and Resource Manager of Onshore Sarawak and implementor of the State’s OMO 1958, PETROS’ has awarded it’s first Onshore Exploration Block SK 433 to rejuvenate the exploration, development and mining of oil and gas in onshore areas.
2. It’s wholly owned operating subsidiary Petroleum Sarawak Exploration & Production Sdn Bhd (PETROS EP) has also entered into two Offshore Sarawak Production Sharing Contracts (PSCs) as a non-operating equity partner effective 1 January 2021.
3. As a result, today, PETROS EP is the third largest equity gas producer in (working interest share) in Sarawak, behind PETRONAS Carigali and Shell and the second largest equity condensate producer.
4. PETROS EP has also secured a minority carried interest position in one Offshore Sarawak Exploration Block and expects to gradually increase its presence going forward.

In the Downstream, PETROS is driving - closely with other State entities, to increase the domestic gas utilisation through various Sarawak Gas Roadmap initiatives – to capture greater value locally from upstream gas production and contributing to socio economic growth through job creation for Sarawakians:

1. Since 1 January 2020, PETROS is the Single Entity for the supply, sale and distribution of domestic gas to industrial and residential customers; with ownership and operatorship of Bintulu and Miri Gas Distribution Systems
2. On 4 August 2021, PETROS LPG entered the homes and businesses of Sarawak first serving our capital city of Kuching, Padawan and Bau and expanding across the State soon.

Through assuming regulatory control of onshore mining, enforcing our constitutional authority over the distribution of gas and increasing PETROS’ participation in offshore petroleum production areas, the State Government will continue to strengthen PETROS’ in spearheading the State’s enhanced involvement in the oil and gas industry. A key enabler is access by the State for adequate natural gas supplies needed to drive the State’s industrial development agenda.

Enhancing Sarawak Contractors’ Participation
Through the CSA, the State Government is emphasising the case for greater participation of Sarawak contractors in the Malaysian oil and gas industry with a focus on oil and gas activities in Sarawak. Through the consultation framework, we are working to three (3) key objectives with PETRONAS, to benefit Sarawakian contractor community:

1. Capture a bigger share of higher value contracts;
2. Verify and prioritise bonafide Sarawakian and Sarawak based companies
3. Accelerate Vendor Development Programme (VDP) for Sarawakian companies

All these initiatives by the State Government are aimed at achieving Sarawak Vision 2030 – for the benefit of all Sarawakians and in turn, to the Nation.

To PETRONAS, we appreciate your continued collaboration – with the State Government, and with your counterpart – PETROS, to support the realisation of the State’s strategic agendas. With the game changing understanding we announce today of access to increased supply of 1200 mmscf/d of gas by 2030 for domestic purposes, we are well placed to implement our Sarawak Gas Roadmap.

Thank You.

- END -