TEXT OF SPEECH:

THE RIGHT HONOURABLE CHIEF MINISTER

At: PETROS Special Event (Industry Dinner)
Friday, 30 October 2020

1. Good evening to all our guests from the Oil and Gas Industry in Sarawak to this Dinner which forms part of the Special Event of Petroleum Sarawak Berhad. 
2. This Special Event is a manifestation of the State Government’s efforts towards growing the Oil and Gas industry in Sarawak and to demonstrate the State’s commitments to create a stable and attractive environment for all companies, both local and from overseas, to invest in this industry in the State. It is also a reaffirmation of the State Government’s commitment to fully realize the remaining hydro carbon potentials in the onshore areas. 
3. Since the 1970s, the focus of oil mining has been in the offshore areas of the State where there are significant reserves of oil and natural gas have been found and currently being produced. Although there have been significant exploration efforts since 1980s by various international oil and gas companies in the onshore the results have been very modest. Through a focused approach including application of new technologies we remain hopeful that we would be able to prove commercial reserves in the onshore which will augur well for the State.  
4. Oil mining in Sarawak started in 1911, and for over a century since the Rajah’s Order XXIX, 1921, Sarawak have laws and regulations governing oil mining. These laws, which included the Oil Mining Ordinance, regulate oil mining activities and the usage and occupation of land for such purposes. At the same time, our laws protect the interests and investments of companies undertaking oil exploration and mining in the State. 
5. When Malaysia was formed, the Federal Constitution entrenches the right of the State to issue licenses for the prospecting and mining of oil under Item 2(c) List II (State List) in the Ninth Schedule of the Federal Constitution and the laws passed by the State’s Legislature have legal effect within the boundaries of, and throughout the State. 
6. Thus, the Oil Mining Ordinance, 1958 regulates oil mining in Sarawak and its continental shelf. The Continental Shelf is part of the territory of Sarawak before Malaysia Day by reason of the Sarawak (Alteration of Boundaries) Order in Council, 1954. The Federal Constitution protects the boundaries and territories of the Sarawak as they existed on Malaysia Day. The natural resources, including petroleum within Sarawak’s territory belong rightfully to the State.
7. The Oil Mining Ordinance has never been repealed even during the period of the 1969 Proclamation of Emergency. The State Government is firmly committed to regulate oil mining in the State to protect the interests and aspirations of Sarawakians.
8. Tonight, that commitment is exemplified by the issuance of Mining Leases to PETROS in respect of two blocks, one in the Adong Kecil West in Miri area, and the other in the Engkabang area South of Marudi. This signals the beginning of the State Government’s efforts to exercise Sarawak’s constitutional rights to regulate oil mining under the State laws to take complete control over the exploration and production of petroleum in the onshore areas. 
9. The State Government, through PETROS, will have the control of, and legal title to, all the oil and natural gas produced from the onshore areas, and to select and appoint contractors or enter into ventures with investors to explore and produce the oil and gas from onshore Sarawak. The State Government will have in place a fair and business friendly regulatory framework and environment to attract investors to participate in the development of oil and gas industry. 
10. We will continue to collaborate with the existing industry players already operating in Sarawak including PETRONAS and SHELL which I have been informed will be relocating the headquarters of its Malaysian operations to Miri. As a result of this effort, nearly 2,000 Shell employees will be resident in Miri. Because of this, and the commencement of renewed exploration activities for oil and gas production in the Miri and Marudi areas, the economy of Miri should experience robust growth in the coming years. 
11. 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 strengthen the role of PETROS in spearheading the State’s enhanced involvement in the oil and gas industry especially in the downstream sectors. These efforts are geared towards securing for the State adequate natural gas supplies needed to drive the State’s industrial development agenda, including the establishment of a petrochemical hub, and gas processing plant to enhance security of supply for Liquefied Petroleum Gas (LPG) to meet the increasing demands for LPG in the State.  
12. All these initiatives by the State Government would ensure greater opportunities for Sarawakians and Sarawak companies to participate and invest in the oil and gas industry and to acquire expertise, knowledge and technology that would contribute to the continued growth and development of the oil and gas industry which will contribute to the economic success of the State and of Nation.
13. I am confident that PETROS is ready and equipped to play its important role in advancing successfully the policies and objectives of the State Government which I have mentioned. I ask all of you involved with the oil and gas industry to fully co-operate with PETROS towards making the industry grow sustainably in a well-regulated and business friendly environment provided by the State Government.

TAN SRI DATUK AMAR (DR) HAMID BUGO,
Chairman of the Board of Directors, Petroleum Sarawak Berhad

(All protocols observed)
Good Evening and Salam Sejahtera.

(INTRODUCTION)

1. Let me begin by expressing, on behalf of Petros my sincere appreciation for your presence here tonight amidst a difficult environment.
   A very special thanks to our Chief Minister, Abang Jo for his guidance and support and the energy and commitment he has shown since taking over the office.
   
   Ladies and gentlemen,
   
   As players in this strategic value chain, that is Sarawak Oil & Gas, you have rallied together throughout this extraordinary time to ensure – in your respective roles – that Energy continues to Move for all Sarawakians. We are here together, to take care of bumi kenyalang.
2. The last time I shared a room with you we had just begun our journey in 2018 and mine as the newly minted Chairman of Petroleum Sarawak Berhad.  That was our genesis as PETROS – as we are commonly known. I shared with you our role as the implementation vehicle for the state for greater participation in Sarawak oil and gas value chain. Since then, we have moved on, although at times – I must admit, the journey has been challenging.
3. We have revisited our purpose – that is To Harness our Resources for the Sustainable Progress of Sarawak and deliver on our growth strategy both in the Upstream and for Downstream Sarawak. I am happy to announce that PETROS will be taking over the stewardship role of Sarawak onshore oil and gas activities.

(We have a Deeply Shared Vision towards 2030; towards a vibrant High-income, Advanced economy.)

4. Together with the State (under the stewardship of our Honorable Chief Minister Abang Jo here with us today), we have a shared 2030 vision for Sarawak. This includes:

• to achieve Economic growth rate of 8% (from 5% in 2016)
• to double Gross Domestic Production (GDP) from RM133 billion (2018) to RM282 billion by 2030
• to increase Foreign Direct Investment to RM100 billion by 2030
• to contribute as Economic Growth Engine, Mining and its exploration towards high value downstream.

To these ends PETROS will have to play a very active role for a sustained active Sarawak Oil & Gas sector.

(The ambition has been laid, the challenge must be accepted.)

PETROS – together with the State – and the participation of and support from you, the Industry, will redefine the landscape of Sarawak Oil & Gas.
 

(Harnessing Our Resources “Mining & Exploration…”)

5. The world’s need for more energy has NOT gone away. However, mature oil and gas basin (like Sarawak) need to think critically about what it will take to continue to attract investments.
6. To meet the demand future of Sarawak’s industrialisation and domestic non-power consumption, we will need to fill a projected deficit of 44 Trillions of standard cubic feet (Tscf) of gas over the next three (3) decades to 2050. This supply challenge drives our Upstream strategy.
   Three strategic priorities may be needed:
   1. building a foundational portfolio of profitable producing assets
   2. activating petroleum contracting for Onshore Sarawak and rejuvenating Exploration, to focus on early monetisation of discovered resources
   3. positioning PETROS role in strategic infrastructure assets in the Sarawak Oil and Gas value chain; i.e. connecting Upstream with Downstream

All these collectively should deliver on Secure Sustainable Supply – for decades to come.

(Sustainable Progress for Sarawak …Towards high value Downstream)

7. PETROS’ active play in integrated hydrocarbon planning must be designed to meet as well as to drive demand seamlessly so as to secure sustainable supply and to spur the local economy through implementation of Sarawak Gas Masterplan. Our implementation [of the Sarawak Gas Masterplan] is expected to contribute about 10% of the Sarawak GDP (Gross Domestic Production) by 2030.
8. This in turn, can transform the landscape of Sarawak Oil & Gas for deeper, more competitive oil and gas ecosystem.
   
   Through proactive advocacy and collaborative stewardship, PETROS aims to be a respected partner of choice. The challenges are many.
   
   Lower and Longer cyclical prices, a mature basin like Sarawak Onshore and the particular complexities of onshore exploration are key challenges for us. For these challenges we need to:
   1. Deliberately and effectively deploy technology and
   2. safety becomes a culture and
   3. cost discipline becomes a must to deliver value for our shareholder - the State, for Sarawak, the community in which we operate.

(Steadfast in Collaborating.)

9. We continue to collaborate. As industry catalyst, we grow the market for PETROS and equally for Sarawak players and partners.
10. As I said earlier, we have a shared vision of high value economic prosperity that needs real transformation of our industry to realise. The extractive (mining) industry including oil and gas has been identified as an economic growth engine for Sarawak High Income, Developed State by 2030. PETROS aims to contribute by proactively looking for ways to “do things differently”.
11. This is a long and complex journey which all of us in this room must execute diligently for the progress of Sarawak and Sarawakians.
12. I once again, thank you all for spending the better half of your day with PETROS. Our journey to purpose will need the support of every one of us in this room and beyond. Of Sarawakians and Malaysians alike.
13. I end this speech with a popular African adage; about taking challenge and opportunities head-on: “To hunt and eat an elephant; bring a lot of friends!”.

This is the time for change.

Thank you.

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