No terms set for sale of Petronas stake, says Abang Johari

Sarawak Chief Minister Abang Johari Openg says he does not know what to expect at his meeting with Dr Mahathir Mohamad on Monday.

KUCHING: Chief Minister Abang Johari Openg today said Putrajaya has yet to set any terms over its proposal to sell stakes in Petronas to Sarawak and Sabah.

“They just made us that offer. They have not set any terms yet,” he said.

Abang Johari also said the statement by Petronas CEO Wan Zulkiflee Wan Ariffin over the national oil giant’s inability to give 20% royalty to oil and gas producing states was Wan Zulkiflee’s own opinion.

“It’s his view,” he said when met after the signing of a shareholders’ agreement and handing over of shares with Naim Holdings Berhad at his office here today.

On Dec 7, Wan Zulkiflee said paying 20% royalty to oil and gas producing states was not possible because of high production costs and low profit margins.

He said Petronas – Putrajaya’s biggest source of income – makes only 3.7% profit from local oil production, with 70% of oil revenue going towards production costs. These costs are higher when ultra-deep-water oil production is involved, he said.

Later, Prime Minister Dr Mahathir Mohamad said the government might consider selling stakes in Petronas to Sabah and Sarawak as the two states are demanding a bigger share of revenue from oil extracted in their territories.

Although the Pakatan Harapan (PH) government had promised in its election manifesto to increase oil royalty paid to Sabah and Sarawak from 5% to 20%, Putrajaya was not able to fulfill its promises as it would “kill” the oil company, Mahathir said.

The proposal to sell stakes in Petronas has different feedback from Sarawak leaders, with state tourism minister Abdul Karim Rahman Hamzah saying it could provide “backdoor” legitimacy to the Petroleum Development Act (PDA) 1974.

The PDA 1974 is not relevant in the state as it was never endorsed by the Sarawak legislative assembly.

It was reported that Abang Johari and his Sabah counterpart, Shafie Apdal, are scheduled to have a meeting with Mahathir on Monday to discuss issues such as the selling of the Petronas stakes as well as oil royalty.

Abang Johari said he did not know what to expect at the meeting.