Oil and gas: Bigger Sabah participation, Sabah can unlock its true potential in the industry.
Published on: Sun, Jul 13, 2025
By: Datuk Roger Chin Text Size: THE Commercial Collaboration Agreement (CCA) between Sabah and Petronas marks a significant milestone. It empowers Sabah to exercise greater control over its oil and gas resources, paving the way for a period of renewed growth and development within the state. This positive outlook is further bolstered by the success of SMJ Energy, a Sabahan oil and gas company that has achieved remarkable financial standing, boasting a coveted triple-A bond rating and substantial assets and profitability as demonstrated by its RM50 million maiden dividend to the State Govt in 2023. However, a crucial question remains – how can Sabah leverage these developments to create a truly inclusive oil and gas ecosystem that empowers its local population? Moving Beyond Resource Extraction - A Collaborative Approach While the CCA and SMJ Energy's success are positive indicators, a strategic shift is necessary to translate these developments into tangible benefits for Sabahans. The focus should extend beyond mere resource extraction. Petronas, as the national oil company, has a unique opportunity to foster a collaborative environment. This can be achieved by actively supporting and nurturing the growth of Sabahan companies, enabling them to become key players across various segments of the oil and gas value chain. Moving away from the narrative of a skills gap, Petronas can play a pivotal role in bridging this gap by investing in targeted training programs and mentorship initiatives. Equipping Sabahans with the necessary expertise will unlock their potential to contribute meaningfully across the upstream, midstream, and downstream sectors of the industry. Transparency - Building a Ladder of Opportunity Transparency is paramount in ensuring equitable participation. Demystifying the entire oil and gas value chain – from upstream exploration and production to downstream activities like logistics, maintenance, and even catering services – is crucial. This information, readily available and presented in a clear and concise format, will empower aspiring entrepreneurs and business owners to identify suitable entry points for participation. Imagine a comprehensive breakdown of the different stages within the industry, along with clear outlines of the qualifications and resources needed for participation at each level. This will empower Sabahans, from established businesses to individuals with entrepreneurial ambitions, to identify their ideal entry points. Think of it as a carefully constructed ladder. A local catering company, for example, can begin by providing food services to offshore platforms. As their expertise and capacity grow, they can climb the ladder, potentially securing larger contracts or even expanding into other segments like equipment maintenance or specialized transport. This fosters a dynamic environment where local businesses can continuously improve and evolve alongside the industry. Additional Crucial Measures for Empowering Local Participation Infrastructure Development: Investing in Sabah's transportation networks, communication systems, and power grids will create a more attractive environment for businesses and incentivize further participation. Improved infrastructure will not only reduce operational costs but also enhance productivity and efficiency. Education and Training Alignment: Aligning Sabah's education and training curriculum with the specific needs of the oil and gas industry will ensure a readily available pool of qualified local talent. This includes incorporating relevant technical skills training alongside soft skills development programs to nurture well-rounded professionals. Local Content Requirements: Establishing clear and measurable local content requirements will incentivize contractors and operators to utilize Sabah-based services and workforce. This can be implemented through a tiered system that offers preference to companies demonstrating a commitment to local hiring and procurement. Financial Support Mechanisms: Providing access to financing for Sabahan businesses, particularly SMEs, is crucial for contract competition and joint venture participation. Loan guarantees, tax breaks, and subsidies can level the playing field. Grant programs specifically targeted towards innovation and technological development in the oil and gas sector can further empower local companies. Encouraging Innovation and Entrepreneurship: Fostering a culture of innovation and entrepreneurship will be critical to drive local participation beyond traditional service provision. Supporting the development of homegrown oil and gas technology and service companies will ensure Sabah has a stake in the entire value chain. This can involve establishing business incubators, providing mentorship programs, and organizing innovation challenges focused on addressing industry-specific problems. A Shared Journey Towards Prosperity By fostering an inclusive and transparent environment, Sabah can unlock its true potential in the oil and gas sector. Empowering Sabahans to participate meaningfully will not only contribute to their own economic well-being but also fuel the state's growth and development. The future is bright, and by equipping Sabahans with the right tools and knowledge, we can ensure they are well-positioned to navigate this exciting new chapter and become active participants in the state's oil and gas renaissance. The views expressed here are the views of the writer and do not necessarily reflect those of the Daily Express. If you have something to share, write to us at: [email protected]
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