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‘Misleading to say Petronas cannot afford higher royalty now’

 | April 20, 2017

Sarawak PKR leader says Malaysians should not be misled into thinking that the global oil price slump has caused Petronas to suffer.

See-Chee-How-petronasPETALING JAYA: Sarawak PKR vice-chairman See Chee How has taken the chief minister to task for claiming that Petronas cannot afford to give increased royalty, pointing out that the national oil and gas company’s post-tax profit grew significantly by 12%.

The Batu Lintang assemblyman said Abang Johari Openg was mistaken in asserting that Petronas cannot afford 20% in royalty payment compared with the current 5% as oil prices are currently hovering at between US$50 (RM220) and US$55 (RM242) per barrel.

In a statement today, he said the additional amount of RM4 billion would have been paid with such an increase in profit by the national oil company and the current world oil price scenario should not be used as an excuse not to do so.

“We should not be misled that the global oil price slump has caused Petronas to suffer and that they cannot afford to pay Sarawak and the other petroleum-producing states equitable royalties and entitlements that we deserve.”

He said the company’s records show that its profit after tax grew by 12% from RM20.9 billion in 2015 to RM23.5 billion in 2016.

This contrasted with its profit before tax which fell by RM3 billion, from RM36.7 billion in 2015 to RM33.7 billion in 2016.

Abang Johari yesterday said Petronas would be burdened to grant a request for increased royalty, citing oil prices hovering between US$50 (RM220) and US$55 (RM242) per barrel.

“If Sarawak was to raise the state’s oil royalty to 20%, Petronas would have to provide the same amount to the federal government,” he said.

“And when the cost of production is quite high, Petronas will likely close shop.”

Abang Johari said the state government was rational and not emotionally-driven in wanting higher royalty for the state.

See said increasing the royalty rate to 20% for the petroleum-producing states of Sarawak, Sabah, Terengganu and Kelantan does not mean there should be an equal increase in royalty to the federal government.

“The increment in royalties is for the four states only,” he said.

“The federal government owns Petronas wholly and is paid enormous and handsome dividends each year which oil-producing states like Sarawak are not entitled to,” he said, adding that the federal government also gets related taxes and duties.

He also said it is doubtful that the lower average realised product prices were to blame for Petronas’ revenue being reduced by 17%, from RM247.7 billion in 2015 to RM204.9 billion in 2016.

In 2014, the Barisan Nasional (BN) state government supported a motion in the Sarawak Assembly by DAP’s Kota Sentosa assemblyman Chong Chieng Jen for the oil royalty to be increased from 5% to 20%.

The late chief minister, Adenan Satem, had then publicly acknowledged the need to give Sarawak a higher share of oil revenue.

He eased up on his demand last year in light of the world oil price slump but said the state government would pursue the matter later.

However, Adenan died on Jan 11 from heart failure, and there has been no visible attempt since then by the state government to pursue the matter.

DAP: Oil royalty decision is with cabinet, not Petronas


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