Malaysiakini Yoursay

Yoursay: Oil states left high and dry with royalty reversal?

Yoursay  |  Published:  |  Modified:

YOURSAY | ‘Why did Harapan promise what it knew couldn’t be fulfilled?’

Azmin: End of Petronas if royalty set at 20pct gross value

Justice Now: Petronas gets 65 percent on gross oil and 50-55 percent on gross gas production from all concession operating oil companies, including Petronas Carigali.

Putrajaya and the states get five percent, and except for Petronas Carigali, Petronas does not share capital expenditure except when it is gallivanting around the globe trying to outdo other oil and gas giants – of course, formerly mismanaged and misdirected by the BN government.

So if Sabah and Sarawak receive 20 percent gross oil and gas, Petronas still has 50 percent gross oil and 40 percent gross gas.

There is no problem. For over 40 years, the Borneo states have been left with nothing thanks to Petronas and corrupt leaders. Pakatan Harapan must make a difference for these two partners of Malaysia.

Ghost Who Walks: Just leave the fossil fuel underground for the next generation of East Malaysians, instead of enriching the West with LRT, MRT, KLIA, Kuala Lumpur-Singapore High-Speed Rail, East Coast Rail Line, and the ‘Sabah and Sarawak Twin Towers’ (but unfortunately built in Kuala Lumpur and named the Petronas Twin Towers).

The sustained development in the peninsula was mostly financed by Sabah and Sarawak fossil fuels for the last 60 years.

And yet in East Malaysia, many roads are just dirt tracks to kampung, roads linking important towns are laden with potholes, many children in kampung walking miles to attend schools, schools in a deplorable state, no water and electricity in many kampung, no electricity in some schools.

And all Economic Affairs Minister Mohamed Azmin Ali has to say is Petronas will not survive if Harapan live up to its own manifesto of giving back 20 percent oil and gas royalty to Sabah and Sarawak.

It’s time for the peninsula to tighten up its belt and keep to the promise of our founding fathers – treat our Sabah and Sarawak brothers and sisters well, and not like unwanted stepchildren.

Anonymous 973581483581485: Peninsular Malaysia took away 13 percent of the oil royalty from Petronas all this while, in the form of five percent royalty and eight percent in tax revenue from Sarawak oil.

We are just asking the peninsula to stop robbing us and return to us additional two percent as interest for the oil money that they have stolen from us, and this will supposedly bury the entire Malaysian petroleum industry?

Sinan Belawan: The oil in Texas belongs to Texas, and not the United States. Likewise, the oil in Sabah and Sarawak belongs to the two states, not Malaysia, and they must control and decide what they do with the oil.

Petronas could play the role of a consultant. The peninsula must stop behaving like oil barons.

Anonymous 2436471476414726: The question is, what is the current five percent royalty based on? If it is on gross production, surely the oil producing states cannot be blamed for thinking that the 20 percent royalty is also based on gross production.

If it is based on net profit and subject to oil prices and other costs variances, the 20 percent royalty could in effect be less than five percent of gross production.

If this is the case, then the oil-producing states would have every reason to feel cheated by false promises if the Harapan government insists on royalty based on net profit.

Anonymous 973581483581485: You know why meritocracy is down the drain in Malaysia? Because you don't need to work hard and to become competitive to earn the money, you just need to suck on petrol money stolen from Sabah and Sarawak and you will be able to live a comfortable life.

Take this away and then you will realise what has gone wrong with Malaysia.

MPJY: The ‘20 percent’ royalty could also be viewed as a starting point in negotiations, without prejudice. Maybe the other benefits to Sarawak can also be factored into the total 'royalties' – such as job creation and sponsoring of relevant training courses in the state, and the hiring of Sarawakian contractors. Perhaps more board members from Sarawak as well. Transparency is key.

But profits can be manipulated, just ask any accountant. Revenue is a much more transparent measure. If paying 20 percent royalties to the owner (Sarawak) will render Petronas unviable, then it is time to shut it down and let other entities take over.

All royalties received must be carefully scrutinised by the federal and state governments to see how the money is spent. The people of Sarawak have been short-changed for too long.

0101010101: I think the ministers are backtracking now. The solution is simple. Give the oil-producing states options to exercise: either Harapan keeps its promise of 20 percent royalty, according to general definition of royalty over revenue, or they let oil states run their own fields and get what they can from it.

Maybe Petronas is not competent anymore to deliver on behalf?

Sarawakian: I agree with Azmin. What’s Petronas’ profit margin after less costs and capital expenditure? Most manufacturing operations have a net profit of 20 to 30 percent. If 20 percent is given out based on production what’s left for Petronas, particularly if there is a precipitous drop on market prices?

On what benchmark price is the 20 percent based on production calculated anyway? Based on oil price two years ago, when it was US$35 per barrel, or eight years ago, when it was US$150?

Royalties based on profit is most reasonable I think. A win-win for everybody, particularly if the price of oil increases beyond expectation.

Someone Out There: I’m not an oil and gas person, but still can understand that oil production is not your ordinary factory manufactured goods with simple raw material plus cost of production minus from sales revenue-type profit calculation.

In oil and gas, there are the costs of (high-risk) exploration, extraction as well as production, which can vary greatly due to the terrain it's mined from.

Thus I can understand giving a 20 percent royalty based on sales can be a challenge. Twenty percent based on profit seems more manageable.

Kader: Oil revenue is the sovereign wealth of the nation and should be managed by the federal government. Allocations should be given to all the states in accordance to the national budget. It is not any one state’s privilege.

Anonymous 2405371458107314: Petronas cannot pay 20 percent based on gross production. Some fields do not even have 20 percent gross profit from extraction.

Petronas would have to cease production from those fields and the states get nothing. They can take back those fields and find the billions needed to invest in their own extraction. Even five percent royalty is generous for marginal fields.

Leong U18: Don't treat Petronas as a cash cow. It needs to reinvest a lot for exploration. Draining its reserves will kill it eventually.

Man In Street: Harapan’s 100 days are coming up. No royal commission of inquiry into 1MDB as stated in its manifesto, no one involved in the 1MDB scandal charged, and nothing concrete on the RM2.6 billion shown.

The charges Najib are facing here are related to SRC International, and even then, they say the documents are incomplete and the trial pushed to February next year.

Don’t tell me Harapan lied about Najib the same way they lied in their manifesto. Why promise in the first place if you know it cannot be fulfilled? That is the same as lying.

If they can lie in a written black and white manifesto repeatedly, what else can they or won't hesitate to lie about?

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