Malaysia: Borneo hinge to Anwar’s ambition

If Malaysian opposition leader Anwar Ibrahim is successful in his historic bid to form a reformist government in Kuala Lumpur, he will likely owe much to the country’s Borneo states of Sabah and Sarawak.

Sarawak has long been an important petroleum-producing province and now Sabah is joining it as a result of new and large deep water oil discoveries
Sarawak currently produces about 200,000 barrels of day of oil, or about 28% of national production. But it is natural gas that is most important in Sarawak with very large volumes – about three billion cubic feet per day, or 50% of national production – of offshore gas for the Bintulu liquefied natural gas (LNG) terminal on the mid-coast run by Malaysia’s state company, Petronas. At 23 million tons annual output capacity, it is one of the world’s largest LNG facilities.

The Sarawak government, apart from its existing 5% upstream royalty on production also benefits from a minority stake in the downstream facility. An additional 15% royalty though would be a very substantial boost to state treasuries. But it is in Sabah where a 20% royalty would be a real and unprecedented bonanza and could go a long way to help Sabah overcome the development gap with the peninsula.

A huge increase in oil and gas production is forecast to come on line by the end of the next decade from deep water fields offshore. Until now, Sabah has produced only a modest volume of oil and gas, so petroleum has not featured greatly in the state and Kuala Lumpur’s political equations. But all this is changing. New deep water exploration in depths of more than 200 meters, by the US’s Murphy Oil and Shell has revealed major deposits.

By the middle to end of the next decade, this deep water frontier is anticipated by Petronas, to be adding of the order of 300,000 barrels per day and one billion cubic feet per day of gas to national output. The significance of these volumes is underlined by the fact that oil production at this scale would be about 45% of the country’s present total output while the natural gas output would be about 16% of present production.

Asia Times