Sabah wants rights to 16 new oilfields

Sabah government would demand that it gets the right to participate in tapping the 16 new oilfields found within its waters.

KOTA KINABALU: The figures governing the oil industry in Sabah are not as simplistic as made out to be i.e. 5 per cent oil royalty for Sabah, the remainder 95 per cent for Putrajaya.

This was the thrust of what Minister with Special Functions Teo Chee Kang told the Sabah State Assembly yesterday.

The 5 per cent oil royalty for Sabah, or cash payment, disclosed Teo, was similar to the 5 per cent the Federal government received.

The 2nd component, said the Minister, would be the cost of the oil which may vary between 50 to 70 per cent for every barrel extracted.

Oil cost includes cost of exploration, exploitation, extraction and purification, among others.

The final component of 20 per cent is taxable by Petronas at 30 per cent of the net, added Teo.

Teo did not explain a situation where the cost of oil does not exceed 50 per cent.

In that case, there’s another 20 per cent unaccounted for unless included in the component taxed by Petronas.

In response to Bingkor state assemblyman Jeffrey Kitingan, Teo said the Sabah government would demand that it gets the right to participate in tapping the 16 new oilfields found within its waters.

He also clarified that Section 24 of the Land Ordinance does not apply by virtue of the Petroleum Development Act 1974 which resulted in the Oil Agreement dated June 1976 signed between the Federal and State governments.

These rights are vested in Petronas incorporated under the same Act, added Teo.