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Sarawak won’t be getting the 20% oil royalty

Sarawak Chief Minister Adenan Satem admitted, during a meeting with Orang Ulu community leaders here Tuesday night, that an impasse has been reached in negotiations with Petronas on hiking the present measly 5 per cent oil royalty to a respectable 20 per cent.“To break the deadlock, the Sarawak Government will work on alternatives,” said Adenan in virtually conceding that the 20 per cent demand is a non-starter with the national oil corporation.

“Had the negotiations succeeded, the Sarawak Government could have reduced water and electricity tariffs.”

Adenan did not say why Petronas refuses to consider the 20 per cent oil royalty demand.

Among the alternatives, according to Adenan, are Sarawak companies being given priority over peninsula-based ones for Petronas contracts in the state; more Sarawakians to be hired by the national oil corporation; and the inclusion of the state in its corporate social responsibility (CSR) programmes.

At present, it is said, even cleaning contracts awarded by Petronas in Sarawak, are given to peninsula-based companies.

It’s believed that Petronas explained, during two rounds of negotiations with the Sarawak Government, why it cannot entertain the 20 per cent oil royalty demand put forward by it via a Resolution in the Sarawak Assembly.
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If the Sarawak Government persisted with its 20 per cent oil royalty demand, according to sources familiar with the negotiations, the national oil corporation threatened to halt new explorations and investments in the oil and gas industry in Sarawak.

The threat, if carried out by Petronas, would be a blessing in disguise for Sarawak, according to industry sources.

The 20 per cent oil royalty pledge was first made in Sabah and Sarawak by the Pakatan Rakyat alliance in its election manifesto in 2013.