For the first time in any of its state budget speech, Sarawak yesterday replaced the words "oil/gas royalties" with "compensation for oil and gas rights".

In tabling the 2002 state budget, Deputy Chief Minister Dr George Chan Hong Nam, who is also Finance and Public Utilities Minister, said Sarawak expects to receive a record RM735 million revenue from the "compensation of oil and gas rights".

This represented an almost 60 percent increase from the previous year's royalties from oil and gas.

Some state officials told malaysiakini that lawyers acting for Petronas had advised the change of terms, bearing in mind the present legal dispute between the Terengganu state government and the national oil company over royalty payments.

Chan described the oil and gas revenue under a non-tax revenue category.

High prices

With this revenue estimate from oil and gas, it comes close to what traditionally has been Sarawak's own biggest source of income - from timber which is estimated this year at around RM850 million, with next year's forecast only three percent down.

The substantial increase from oil and gas income is due to the exceptionally high prices in late 2000 and early part of 2001.

Timber, oil and gas contribute mostly to the state's revenue but new industries are beginning to assert a presence as well. With its largely undeveloped resources, both natural and mineral, Sarawak's revenue base has been expanding rapidly, especially in the last few years, making it one of the richest states in Malaysia today.

This year, because of oil and gas alone, the state has seen what Chan described as an exceptionally large revenue estimate (revised) of RM2.492 billion.