Sabah govt and Petronas devise masterplan to pursue full potential of natural gas industry

Malaysian energy giant Petronas and the Sabah state government have launched the Sabah Gas Masterplan as a reference and a guide, which will enable them to embark on the journey towards further development of natural gas in this Malaysian state, located in the northern part of the island of Borneo.

Petronas reported on Tuesday that the Sabah Gas Masterplan was launched as a reference for both parties in guiding the way forward for the further development of natural gas in the country. The launch of the Sabah Gas Masterplan was officiated by the Sabah Chief Minister, Datuk Seri Panglima Haji Hajiji Haji Noor, at Menara Petronas 2 Kota Kinabalu, accompanied by the Sabah State Secretary, Datuk Seri Panglima Sr Haji Safar Untong, as well as Petronas Chairman, Tan Sri Mohd Bakke Salleh and Petronas President and Group Chief Executive Officer, Datuk Tengku Muhammad Taufik.

Datuk Seri Panglima Haji Hajiji Haji Noor, Sabah Chief Minister, remarked: “The State Government is continuing to develop the infrastructure related to the oil and gas requirements. We appreciate Petronas’ collaboration with us on the Sabah Gas Masterplan, including in efforts to spur an attractive and competitive investment ecosystem for investors.” 

The masterplan is the result of a joint study between the Sabah state government and Petronas, which is a testament to the collaborative effort between both parties to sustainably pursue the full potential of the domestic natural gas industry, according to Petronas.

This latest development comes on the heels of the signing of a commercial collaboration agreement between these two parties in early December 2021. The agreement was described as a way to further expand the mutually beneficial relationship by focusing on progressing and evolving the oil and gas industry.

At the time, Petronas explained that a consultative framework would be established whereby both parties would jointly engage on matters of importance to the industry to maintain a sustainable, conducive business and investment environment for the benefit of the state and the nation. 

“We will keep striving for equitable development to ensure that there will be ample opportunity for Sabahans to develop and that they will enjoy tangible benefits from the efforts undertaken,” added the Chief Minister.

The Sabah Gas Masterplan highlights three distinct investment opportunities for Sabah’s natural gas resources. The first is the construction of a liquefied natural gas (LNG) plant with a capacity of 2.0 million tonnes per annum (MTPA) at the Sipitang Oil and Gas Industrial Park.

To this end, the company late last year awarded two front end engineering design (FEED) contracts to a JGC-Samsung Heavy Industries consortium and to Saipem for a nearshore LNG project in Sabah.

In addition, the LNG facility will also provide opportunities for Sabah to expand its LNG distribution across the state through activities such as the virtual pipeline system, allowing more industrial and commercial businesses to access and utilise natural gas as a cleaner source of energy.

The second investment opportunity for natural gas resources is related to the Sabah state government taking up a more prominent role in gas marketing and distribution in Sabah, with 120 MMscfd volume of gas to be made available for the development of key industries in the state. Petronas added that the natural gas would be supplied from Sabah Oil and Gas Terminal in Kimanis, and Sabah Gas Terminal in Tuaran. 

Furthermore, the signing of a Heads of Agreement (HOA) between Sabah Energy Corporation and Petronas on 4 January 2022 for the supply of 70 MMscfd of natural gas signifies progress towards realizing this second investment opportunity, while the document exchange of a previously signed HOA for 50 MMscfd of natural gas supply – for utilisation in Sabah – further contributes to it.

The third investment opportunity highlighted in the Sabah Gas Masterplan refers to a suite of petrochemical derivative options for Sabah to attract investors, based on market needs and future outlook, leveraging on locally available feedstock.

Tan Sri Mohd Bakke Salleh, Petronas Chairman, commented: “We believe the Sabah Gas Masterplan which bears strong testimony to this shared vision will help shape the future landscape of Sabah for the mutual prosperity of the State and the nation.”