Good times not rolling for Miri

Opinion  |  Tony Thien
Published:  |  Modified:

To carry on calling Miri an oil-rich town is not exactly correct these days. Reason: Shell, the oil company, gave up all land exploration and production activities on land way back in the 1970s.

Instead, it has moved offshore into what is known in the oil and gas industry as acreages allocated to it by Petronas, the custodian of Malaysia's hydrocarbon reserves, off Sarawak's coast from Balingian to Kuala Baram.

There are together 22 offshore platforms, most of them engaged in the exploration and production of natural gas. Only a few of these platforms or wells produce crude oil.

In its heyday way back in the 50s and 60s, Sarawak Shell employed some 3,000 people in Miri. Directly and indirectly, its high-paying jobs were supporting about 12,000 people at the time when there were literally a few hundred oil wells on land between Lutong and Pujut road.

Sarawak Shell even built the airstrip at Lutong (used also for commercial flights), the local hospital, the Lutong-Miri road, operated the Kuala Miri ferry and even piped gas into local homes.

But the picture has changed a lot since the National Petroleum Act came into force in the late 60s and particularly the signing of production sharing agreements (PSCs) which effectively turned Shell into a contractor for Petronas, the national oil company.

Most of Shell's assets, including land in and around Miri that formed part of the oil concessions and that for staff quarters, has been handed back to the Government.

Golden handshake with sour taste

Shell's workforce in Miri has dwindled to only several hundreds most of them senior discipline experts and technical personnel engaged in offshore oil and gas exploration and production.

Over the past several years, a few hundred Miri Shell staff have been laid off under voluntary separation schemes, many of them leaving with a 'golden handshake'.

But at the same time, however, the exercise has also left something of a sour taste on local tastebuds. There are, for locals, far fewer economic opportunities from Shell. At one time, Shell used to rent a lot of houses for its executives, but this is no longer the case.

In the current sitting of the Sarawak Legislative Assembly, the Barisan Nasional (BN) Member for Senadin (Miri) Lee Kim Shin, urged Petronas and oil companies, especially Shell, to set-up downstream manufacturing industries and create new economic opportunities for the people in Miri.

Apart from exploration and production, Shell has been refining a small amount of crude oil in Lutong. The rest has been shipped elsewhere, including the Pulau Bukom refineries in Singapore, before it is exported. Major refining activities in Lutong has to all intents and purposes stopped.

With Shell's land-based activities increasingly focused on Bintulu, there has been talk that the Shell Sarawak headquarters may be moved out too. But this has been denied by Shell public relations officials.

Shell may move on to Lutong, Bintulu

They say the head-office in Lutong will remain for Shell's exploration and production operations for the whole country, including peninsular Malaysia and Sabah Shell.

Shell Malaysia's current crude oil production for the whole country is about 250,000 barrels per day, the bulk of it, about 140,000, from Sarawak. But most of its activities now are centred on gas production which accounts for the major portion of its revenue.

Lee's statement in the Sarawak Legislative Assembly echoes the concern of many of his countrymen on Shell's diminished role in land-based oil exploration and production activities which in turn have affected the local economy.

Timber and timber-based manufacturing activities and tourism have helped to offset this but according to locals, it is not enough. Those in the know say it is unlikely that Shell will set up any major plant in Miri.

Any new investment on its part will be in Bintulu where it has several projects, including liquefied natural gas(LNG) and middle-distillate synthesis(MDS) plants in joint ventures with other parties.

With reported discoveries of commercial quantities of natural gas off the Sabah coast, it is widely expected that Shell is looking into the setting up of a plant in that state. Company officials have not denied this is part of Shell's long-term plan.

Fewer visitors

To add to its woes, there has been a noticeable slowdown in the number of Bruneians visiting Miri during the weekends. This is attributed to the Brunei Government's directive to state employees to cut down on their spending when outside of the country, following the country's recent financial crisis.

Miri has also been affected by a new Brunei directive issued before the APEC meeting banning the import of what its officials have described as non-halal meat into the sultanate. This move has also affected Limbang and Lawas , the two Malaysian towns in northern Sarawak near the border with Brunei.

Miri is also facing a glut of commercial and residential properties and major hotels are still struggling to fill up their rooms. Food and entertainment outlets are not doing as brisk a business as before.

The airport is being expanded to take in bigger aircraft and until this is completed in two years it will have to make do with existing services.

One regular visitor to Miri said things can only get better when the new airport is ready and more tourists and visitors arrive. Hopefully, logging activities in the Baram and Niah areas will resume their previous momentum and more new industries are set up with more jobs for locals, he added.

"Until then, the present situation cannot be described as very good," said a local businessman. "Let's hope YB Lee's words catch the attention of those concerned. This place needs a big boost to lift it from its present situation," he said.


TONY THIEN is a freelance writer based in Kuching.

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