(Apr 24): Despite admitting Sarawak has not made any headway in its negotiation with national oil firm Petroliam Nasional Berhad (Petronas) for an increase in oil and gas royalty payment, chief minister Tan Sri Adenan Satem has set a target to conclude the wrangling “by the end of this year”.

Sarawak is demanding an increase of 15% royalty, from the paltry 5% it currently receives, to 20%, on oil and gas extracted from the state.

Speaking at the national oil company's outstanding vendor awards event in Kuching today, Adenan said candidly: “It is not easy to negotiate with Petronas.”

The awards were to give due recognition to 13 of Petronas' and its subsidiary companies' Sarawak contractors for their exemplary performance in health, safety and environment, reliability, responsiveness and respectability.

Adenan said he would have to speak to Prime Minister Datuk Seri Najib Razak to break the impasse.

Last May, the state legislative assembly in a historic first, unanimously agreed on a resolution calling for the government to start negotiating with Putrajaya and Petronas for an increase to 20%.

“We know that the petroleum royalty issue and the negotiations with the federal government is a matter close to the heart of every Sarawakian.

“As I have mentioned on many occasions after the passing of the May 2014 resolution by the Dewan Undangan Negeri (state legislative assembly), the state government is negotiating with Petronas to find a resolution.”

He said despite winning some concessions in the talks, the state was nowhere near its objective of getting the 20% royalty.

Some concessions, however, have been wrung from Petronas.

The concessions disclosed by Adenan were the giving of contracts to Sarawak-owned companies worth RM2.1 billion annually; the agreement to work on five areas of cooperation to enable larger Sarawak participation in the state's oil and gas industry; and the opening of three licensing offices in Kuching, Miri and Bintulu to better facilitate Sarawak companies in the application of licences, answer queries and run regular licensing and tendering workshops.

The chief minister said in the first quarter of this year, 80 Sarawak companies had secured contracts close to RM350 million.

He said that in 2013, Sarawak companies had secured contracts worth RM2.1 billion – which has since been used a the baseline value – and last year, RM2.4 billion.

The little progress, however, failed to pacify the state's opposition.

Yesterday, DAP's Meradong assemblywoman Ting Sze Fui said if the close ties between Putrajaya and Petrajaya existed as Adenan said, “our unanimous resolution passed in this August House to demand for 20% oil royalties shall not fail and we shall be given 20% cash royalties right away”.

“When the motion on oil royalty was passed, all sectors of the society lauded the move but as months have passed, all Sarawakians have become disappointed with the denial of a fair deal of the valuable resources obtained and drilled from the State and its territorial waters,” said Ting.

She also said that Adenan had compromised the state's negotiating position by accepting Petronas’ offer of a 10% share in the Malaysia Liquefied Natural Gas Sdn Bhd (MLNG) “which we actually paid for” and the RM2.1 billion contracts.

Independent lawmaker Fong Pau Teck yesterday said that Sarawak was short-changed on “our returns from oil and gas found on our land”.

The former DAP assemblyman representing the Pujut constituency said the “paltry sum that we received cannot even build a decent highway from one end of Sarawak to the other end after 52 years”.

Ting estimated that Sarawak, depending on the world oil price, would earn RM5.49 billion annually if it were given the 20% royalty payment. – The Malaysian Insider