Published on: Saturday, October 12, 2024
By: Jesselton Jason
In this article, Jesselton will delve into the current state of play, the contributions of key players like Petronas, the Sabah State Government, and the Sabah Oil and Gas Services Council (SOGSC) and the path forward to a more prosperous future.
AS a Vice President of the Sabah Oil and Gas Services Council (SOGSC), I’ve had the privilege of witnessing firsthand the dynamic landscape of Sabah’s oil and gas industry.
This sector, a cornerstone of our state’s economy, presents both immense opportunities and complex challenges.
In this article, I’ll delve into the current state of play, the contributions of key players like Petronas, the Sabah State Government, and the Sabah Oil and Gas Services Council (SOGSC) and the path forward to a more prosperous future.
Shifting Gears: Maximising Sabah’s Oil and Gas Potential
Sabah, the Land Below the Wind, is rich in natural resources, and oil and gas have played a pivotal role in its development. However, navigating this industry requires a strategic approach to maximize benefits for the state.
The need for a more strategic approach to Sabah’s oil and gas development is paramount. Traditionally, the focus has been on resource extraction, with limited benefits for the state.
This model is undergoing a necessary transformation. The signing of the commercial collaboration agreement between Petronas and Sabah on Dec 7, 2021 marked a pivotal moment.
Through state-owned companies like SMJ Energy Sdn Bhd, Sabah is now actively involved in the development and monetisation of its natural resources.
Petronas: A Catalyst for Growth
Petronas, the national oil and gas company, is a crucial partner in this journey.
Alongside its production-sharing partners like Shell, KPOC, PTTEP, and Hibiscus, Petronas Has played a vital role in fostering the growth of Sabah’s Oil and Gas Service and Equipment (OGSE) segment.
This translates to increased participation of local Sabahan businesses in the industry, creating a ripple effect that benefits the state’s economy.
Empowering Local Players: The Sabah Local Content Council (SLCC)
The establishment of the Sabah Local Content Council (SLCC) on May 18, 2024 is a testament to the State Government and Petronas commitment to empowering local talent.
This council aims to solidify the position of Sabahan OGSE players and workforce by implementing the ambitious “80:30” targeted policy by the end of 2024.
This policy set a target of minimum 80pc Sabahan workforce participation and a 30pc contract award target to local businesses within the oil and gas sector.
Collaboration is Key: Partnerships for Success
The recent Sabah Oil and Gas Conference and Exhibition echoed this call for collaboration.
Sabahan companies actively signed memorandums of understanding with technical partners such as McDermott, Reinhausen, and Endress Hauser.
These partnerships provide access to technical expertise, ensuring Sabahan players are equipped to compete effectively within the highly technical O&G sector.
SOGSC: A Champion for Sabah’s Growth
SOGSC has been a dedicated advocate for the advancement of Sabah’s oil and gas industry. Their unwavering commitment to this journey ensures that the benefits of resource development reach the heart of Sabah’s economy and its people.
Achieving Higher Standards: A Roadmap for Success
So, how can Sabah achieve higher standards in its oil and gas development? Here are some key considerations:
Skilled Workforce Development: Investing in training and educational programs to equip Sabahans with the necessary technical and operational expertise is crucial.
This will create a pool of qualified professionals ready to take on technical and leadership roles within the industry.
Technological Innovation: Embracing new technologies like automation and data analytics can improve efficiency, safety, and environmental performance.
Low-Hanging Fruits: Immediate Opportunities for Sabah’s OGSE Sector
While achieving long-term growth in Sabah’s O&G industry requires strategic development, there are several “low-hanging fruits” – readily available contract opportunities – that Sabahan businesses can grasp in the near future.
These opportunities are ripe for harvest thanks to recent initiatives undertaken by the Sabah State Government and Petronas.
Initiatives Paving the Way for Local Participation:
Streamlining Procurement Processes: The red tape often associated with large-scale tenders can be a significant hurdle for smaller companies.
Simplifying and streamlining procurement processes can significantly improve access for Sabahan businesses.
This could involve implementing online bidding platforms (Smart GEP), offering clear and concise tender documents, and providing readily available support for navigating the tender process (Pre Tender briefing for interested Sabahan Bidders).
Focus on Small and Medium Enterprises (SMEs): A robust and diverse supply chain is essential for a thriving O&G industry.
Encouraging the growth of local SMEs within the OGSE sector fosters a more resilient ecosystem. Initiatives like providing access to financing and technical assistance, and mentorship programs can empower them to compete effectively.
Knowledge Sharing and Mentorship Programmes: Bridging the knowledge gap between established OGSE players and emerging Sabahan companies can unlock immense potential. Implementing knowledge-sharing initiatives like recent Sabah Mentorship workshops and conferences can equip local businesses with the expertise needed to meet industry standards.
This can be further enhanced by Petronas releasing its Kinabalu Activity Outlook (KAO) for the period 2024-2026.
The KAO is a valuable tool as it provides a specific contract outlook tailored for Sabah.
By understanding Petronas’ planned activities for the next few years, local vendors can strategically plan their capabilities and confidently enter into tenders.
Focusing on these “low-hanging fruits” presents a win-win situation for Sabah and the OGSE industry.
By simplifying access to opportunities and equipping local businesses with the necessary knowledge and skills, Sabah can take a significant step towards achieving its ambitious “80:30” target and establishing itself as a leader in regional O&G development.
The Global Stage: Sabah’s Potential
Sabah’s oil and gas industry has the potential to reach significant heights within a regional and even global context.
Here’s how Sabah can achieve this:
Focus on Sustainability: Adopting sustainable practices throughout the oil and gas value chain can attract environmentally conscious investors and international partners.
Collaboration with Regional Players: Establishing partnerships with neighboring countries in Southeast Asia can create synergies and unlock new market opportunities.
Focus on LNG Production: With the Sabah Gas Masterplan in place, capitalizing on liquefied natural gas (LNG) production can position Sabah as a key player in the global energy market.
The Way Forward: Collaboration and Sustainability
For Sabah to truly enjoy the fruits of its natural resources, a collaborative approach is essential.
All stakeholders – the State government, Petronas, SOGSC, and OGSE players – must work together to:
Prioritise Sustainable Practices: Implement environmentally friendly technologies and best practices to minimize the industry’s environmental footprint.
Promote Transparency and Accountability: Ensure responsible resource management and fair distribution of benefits for the people of Sabah.
Invest in Education and Training: Create a skilled Sabahan workforce equipped to lead the industry and maximize local participation.
By working together and embracing sustainable practices, Sabah can develop its O&G industry into a pillar for economic growth, environmental responsibility, and prosperity for its people.
Sabah’s oil and gas landscape is at a turning point. The collective efforts of Petronas, the Sabah State Government, SOGSC, and OGSE players offer a promising path forward.
By prioritising both economic growth and environmental sustainability, Sabah can unlock the full potential of its O&G resources and ensure that future generations benefit from these riches.
For those who are interested in learning more about SOGSC’s initiatives and to know more about Sabah O&G scene, feel free to contact SOGSC via email at info@sogsc.my or by visiting the SOGSC website at www.sogsc.my.
# Jesselton Jason is Vice President of the Sabah Oil and Gas Services Council (SOGSC)
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