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7 . Petronas & Sabah (P&S) KK/rpt/27530/04 21 Dec 2004 **
Petronas & Sabah (P&S) KK/rpt/27530/04 21 Dec 2004 **
Petronas and its performance and impact on the welfare of Sabah Why has this become an issue after 28 years since 1976?
It is really patriotism that we raise this issue now, as a natural development in a nation deemed to enjoy equal benefits from the resources of the nation. We are not asking for wealth from another part of Malaysia but within our own shores. The case of Terengganu yet to be resolved in the Courts is not applicable to Sabah for historical and geographical reasons.
While the current rate of the royalty at 5% has been openly queried by so many quarters in recent years asking for more increase of that percentage, I am more concerned about the whole operations and the management of the fuel oil around Sabah by Petronas which had been assigned outright by agreements to deal with the production of the fossil fuels. I believe the profit sharing of successful wells found in Sabah had been determined with outsiders for very long periods hence there is no provision for any mechanism of changes mid way.
In the absence of transparency and accountability when Sabah is not entitled to verify the performance of the Petronas and Sabah is not likely a shareholder of that company, it is now timely that the Government looks into the following areas.
1) Do we know why the recent brief reports up to 31st March 2003 and even up to same year ended 31st March 2004, Petronas had been lacking in financial performance since commenced operation for almost 28 years? How efficient and effective are the regulations of the Federal Government over the Petronas company? The Government seems to be satisfied despite poor performance for the massive funds.
2) What is the rationale of Petronas investing heavily in foreign exploration (deemed risky) activities in 35 countries when our own sectors are allocated to foreign companies? Petronas should present detailed accounts for such operations and the returns expected of such adventures over the years for public consumption as part of the good governance and accountability when the national interests and national resources are involved.
3) As far as the Sabah sector is concerned, can we know who actually own the resources found in the shores of Sabah. It would appear Petronas only owns a small percentage of the oil finds and bulk of the shareholding is held by outsiders. Who are the real shareholders of these substantial shareholding held by foreigners? Why is it that Petronas would not invest more in our own shores?
4) The Finance Minister II made a statement in the Parliament about Sabah getting more percentage of the oil royalty but it was withdrawn soon after. Would the Government review the whole operation of Petronas in the context of globalisation and the volatile prices cum strategic resources?
5) With so many massive new oil wells in Sabah, yet our oil will be exhausted in 18/19 years from now, and would the Government explain this scenario in greater details? Oil is sold in barrels but Sabah's data as available is expressed in tonne. The data of crude oil exports and value as per schedule P&S 1 and graph P&S 1 would indicate that only 11 out of 27 years the oil fetched the price level above the Sabah's average of RM441,000 per 1,000 tonne. It would appear that more oil were sold when the prices were low. The graphs show great volatility. Who make such business decisions- Petronas or the Concessionaires?
I have written a couple published letters on Petronas (ref pages P&S 2), and it is rightly that I raise relevant pressing issues to the appropriate authorities through this Police Report to deal with some major anomalies unfolding before us. I trust this effort would bring the grudges held by many over the way Petronas had been conducting itself to a level where the public can be positively informed. One of the questions so often asked is that despite our resources in timber and fossil fuel, Sabah is now so poor with hardcore poverty at about 16% and more. Every one in Sabah can be a millionaire, and yet many are surviving from hands to mouths with the level of costs of living here, and how can we really explain to the people of Malaysia? Despite our timber image gone, the cost of living has not gone down, instead the trend is still upwards. Joshua Kong Yun Chee, P. O. Box 11923, 88821 Kota Kinabalu.
25. Petroleum Development Act and (Petronas), PM & NPA Council L/002072/08 11/7/ 08
25. Police Report on Petroleum Development Act and Petroleum Nasional Bhd (Petronas), PM & National Petroleum Advisory Council 11th July 2008
In the public interest and concern, I urge the Police, the relevant authority and the Royal Commission of Inquiry conduct a detailed investigation on the performance, accountability and transparency of Petronas, the control and directions of the Prime Ministers since 1974 as well as the responsibility of the NP Advisory Council as far as the likely violations of the Petroleum Development Act 1974 [Act 144] as per attached in PDA 1-5.
According to the PDA 1974 Act 144, Petronas under section 2 was given the exclusive rights over petroleum in Malaysia, but what have been practised is that other corporations apart from Petronas had been 'allocated' substantial portions of such resources as seen in various Production Sharing Contracts, Joint Venture Agreements and other commercial undertaking as per items in schedules PDA9-14 as attached.
Is it legal that other oil corporations have been likely 'assigned' such rights over the petroleum discoveries in Malaysia? Under what power, authority, provisions of Act 144 or any other statutes that the exclusive rights of Petronas be shared by others and who had made such an order? Sharing of such exclusive rights if true to the supplies of petroleum at predetermined prices (PDA13 item 11) subject to sight of such agreements can resulted in tremendous losses to the nation and Sabah in particular especially when the market price of crude oil is very high in recent years. Malaysia's portion for Sabah's petroleum ranks the lowest as per schedule PDA9-11 & PDA14 and marked *SB*.
Is there a National Petroleum Advisory Council according to clause 5 of Act 144?
To assist preliminary investigation, I also append a sample of likely questions in appendix A for attention on the performance and violations and this is my second Police Report on Petronas & Sabah (P&S) KK/rpt/27530/04 21 Dec 2004.
Laporan Polis atas Akta Pembangunan Petroleum dan Petronas, Perdana Menteri, Jawatankuasa Nasional Penasihat Petroleum 11hb Julai 2008
Untuk kepentingan dan khuatir umum, saya gesa pihak Polis, pihak kuasa yang relevan dan Suruhanjaya Siasat diRaja menjalan siasatan yang lengkap atas Petronas mengenai pretasinya, bertanggungjawabnya dan transparensinya, kawalan dan arahan-arahan oleh Perdana Menteri daripada 1974 serta tugas yang bertanggungjawabnya oleh Jawatankuasa Nasional Penasihat Petroleum berkait dengan kemungkinan kesalahan-kesalahan atas Akta Pembangunan Petroleum 1974 atau Akta 144 yang disertkan PDA1-5.
Mengikut Akta 144, Petronas dibawah seksi 2 telah diberi hak eksklusif atas petroleum di Malaysia tetapi nampaknya apa yang dibuat ialah syarikat-syarikat yang lain dibagi beberapa bahagian besar daripada sumber alam minyak yang dinyatakan di beberapa Production Sharing Contracts, Joint Venture Agreements dan lain perjanjian kommersial seperti di beberapa butiran di jadual PDA9-14 yang disertakan.
Adakah sah bahawa syarikat syarikat minyak lain mungkin telah di-untukkan hak bagi jumpaan petroleum di Malaysia? Dengan apa kuasa, badan berkuasa, apa seksi di bawah undangan Akta 144 atau sesuatu undang-undang Parliamen bahawa hak eksklusif Petronas dibahagikan dengan syarikat lain dan siapa yang berbuat arahan itu? Hak eksklusif yang dibahagikan dengan pihak lain jika betul (PDA 13 item 11) atas bekalan petroleum secara harga yang tertentu tertakluk nampak perjanjian-perjanjian yang berkenaan boleh mengakibatkan kerugian yang besar bagi Malaysia khasnya Sabah kerana harga pasaran minyak mentah waktu tempoh beberapa tahun adalah sangat tinggi. Bahagian Malaysia untuk petroleum Sabah adalah terendah seperti jadual PDA9-11 & PDA14 dengan tanda *SB*
Adakah wujud Jawatankuasa Penasihat Petroleum Nasional mengikut seksi 5, Akta 144? Untuk pertolongan siasatan pendahuluan, saya sertai contoh beberapa soalan mungkin timbul dalam lampiran A untuk perhatian atas pretasi dan kelanggaran dan ini adalah Laporan Polis kedua atas Petronas & Sabah KK/rpt/27530/04 21hb Dis 2004.
Kong Yun Chee@Joshua 480823125003, 26 Lrg 5, Tmn Iramanis, Kolombong, 88450 K. Kinabalu.
NB: The English version is the proper report for clarity.
attached: document pages PDA1-14..
Police Report on Petroleum Development Act- QUESTIONS (sample only) App A
1. PERFORMANCE of Petronas
1.1 In the absence of detailed accounts since 1974, how would the Prime Minister control and give valuable directions over the performance of Petronas according to clause 3 (2) of Act 144?
1.2 In the absence of proper accountability and transparency, how would the National Petroleum Advisory Council (NPAC) if any, function accordingly?
1.3 Is anyone from Sabah -one of the oil states being appointed to the NPAC?
1.4 Is there any independent verification process for the payments of oil royalties to the respective oil states?
1.5 Who would be entitled to the oil royalties of oil sourced from Labuan?
1.6 Has the Prime Minister and his delegates actually review those annual reports with proper detailed accounts professionally, if any?
1.7 Why is Petronas not encouraged to invest in the exploration and production in the oil blocks in Sabah and Sarawak as evident in many Production Sharing Contracts signed with other oil corporations?
1.8 Has the Prime Minister scrutinise those massive contracts for the oil infrastructure of Petronas in Malaysia and elsewhere?
1.9 Has the Prime Minister any control over those many overseas investments and purchases/takeovers of oil companies?
1.10 How much financial commitments had been carried out in activities not relevant to the petroleum industries tentamount to abuses of fund?
2. Violations as alleged of the PDA 1974 - Act 144.
2.1 Is the Act 144 being amended to permit Petronas to share its exclusive rights over the oil discoveries as per schedules PDA9-11 as marked *SB* (examples only)?
2.2 Can the public have access to the agreements of Petronas including the Production Sharing Contracts and Joint ventures to establish the value of such alleged violations?
2.3 Are the 6 option holders as the per item 11 of PDA13 the same parties in those Production Sharing Contracts also known as working interests in PDA9?
2.4 Petronas has been accused of involvement of internal conflicts in some nations and how widespread is this in departure of the PDA?
3. Social obligations to Sabah in corporate social responsibilities
3.1 Please quantify the amount of financial contributions direct to Sabah in such areas since 1976 such as scholarships, sponsorship of public activities and other charities such as disaster reliefs.
4. General questions and comments
4.1 What the CEO said in the recent media exposures especially item 10 of PDA12 must be reconciled with the annual reports and substantial historic records hence a Royal Commission of Inquiry is needed with the effort of Consumers Association of Sabah & Labuan FT as per PDA7.
4.2 For the aforesaid alleged shortcomings, Sabah deserves to be allocated a special substantial amount much higher than 5% from Petronas directly or otherwise for the reconstruction of the backward State in a special trust fund managed by NGOs. Would this expectation materialise now as per PDA12-14?
4.3 The urgency of this case cannot be over-emphasized as we need to consolidate the performance with greater public awareness and scrutiny. The exclusive rights as granted is not a licence to ignore good governance, good public accountability for the Malaysians as it was only in the last 18 years that limited exposure of accounts were published (PDA 14). The recent annual reports & accounts are very limited in content.
Joshua Kong 11th July 2008
'20pc oil royalty excessive'
Published on: Thursday, August 07, 2014
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Petronas Senior Vice President (Upstream Malaysia) Datuk Mohd Anuar Taib said investors might think twice to come to Malaysia and invest in the oil and gas sector, which is already becoming a highly competitive industry among the oil producing countries.
In a special briefing for the Sabah media, Mohd Anuar together with Vice President of Malaysia Petroleum Management, Adif Zulkifli, said many of the major oil companies from US were also returning to their country.
They said that if the cash payments of five per cent to the Sabah State Government were to be increased it would result in Petronas and its Production Sharing Contractors (PSC) being left with a smaller portion to be divided between them.
The breakdown of the revenue from oil fields is 10 per cent (five per cent each for the State and Federal governments), 70 per cent for cost recovery and only 20 per cent profit.
Out of the 20 per cent, Petronas has to pay 38 per cent to the Federal Government in oil income tax.
"Therefore, Petronas and its PSC would only divide the remaining 52 per cent out of the 20 per cent, normally 50:50," they said.
Therefore, if the cash payment is increased to 20 per cent like what Sarawak is asking, it means Petronas and its PSC only share 10 per cent of the profit after deduction of income tax.
"This is surely not attractive to investors and they may just shy away from Malaysia," they said.
Adif said Sabah was actually producing about 180,000 barrels or oil equivalent per day (boe/d) which is only 10 per cent of the total national oil production.
Most of the oil produced was in the peninsula side, he said, adding Sarawak mostly produces gas.
However, Sabah's production is expected to grow to 16 per cent over the next few years.
According to Adif, out of the 333 oil platforms in Malaysia, 53 were in Sabah.
Sabah currently has 14 oil fields and three gas fields in production while 41 oil and 47 gas fields had been discovered.
Petronas has 27 active PSCs in Sabah involving 12 companies or players. Petronas' cumulative upstream investments up to 2013 plus commitments amounted to approximately RM179 billion while for downstream the figure was RM6 billion.
Adif said Petronas was not paying oil royalty to Sabah but as stated in the Petroleum Development Agreement, it was paying cash payment.
"This is our top priority and according to the agreement, Petronas must pay the five per cent whenever there is production regardless if there is a profit or not," he said.
Oil and gas industry have become more costlier, he said, adding that Petronas had to attain expertise from other companies and this was done through the PSC.
The cost of exploration alone starts at RM4 billion, he said.
Nonetheless, he said compared with other oil producing countries, Petronas' cash payments of five per cent to Sabah were relatively higher.
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