KOTA KINABALU: The Sabah government has signed a Letter of Understanding (LoU) with PETRONAS Carigali Sdn Bhd (PCSB) and E&P Malaysia Venture (EPMV) on the back-in option arrangement on the Block SB409 Production Sharing Contract (PSC).
With the signing of the LoU, the state government through its wholly-owned company SMJ Sdn Bhd (SMJSB), will be offered a back-in option of up to 20% participating interest, exercisable upon completion of work commitment or commercial discovery, whichever is earlier.
This means the state, through SMJSB, will have a 20% stake in the PSC if the exploration was successful.
The state will also pay its share to cover the cost of a successful exploration but at the same time will not have to make any payment if the exploration proved to be futile.
No cost will be incurred by the state during the exploration phase.
Situated offshore southwest Sabah covering 14,556sq km of area, Block SB409 was awarded to PCSB and EPMV by national oil company PETRONAS during the 2022 Malaysia Bidding Round (MBR).
The LoU was signed by SMJSB chief executive officer Dr Dionysia Aloysius Kibat, PCSB chief executive officer Hasliza Othman and EPMV head Aliff Anwar at the Kuala Lumpur Convention Centre on Wednesday (Feb 15).
According to a statement issued by the Chief Minister’s Department’s Media and Communications Office, the LoU was the latest achievement of the Gabungan Rakyat Sabah-led state government following the signing of the Commercial Collaboration Agreement (CCA) with PETRONAS on Dec 7, 2021.
The CCA allows the Sabah government through SMJSB to increase revenue sharing, to have greater participation and say in the oil and gas production and its value chain in the state.
Chief Minister Datuk Seri Hajiji Noor had previously said that the CCA would create a more inclusive environment for the oil and gas industry in Sabah including offshore and onshore, adding that it has been the state government’s aspiration that the state gets more from its oil and gas production.
The state government is pursuing more deals with PETRONAS which will be announced in due course.
