KUALA LUMPUR (Aug 12): Petroliam Nasional Bhd (Petronas) will remain the entity responsible for developing Sabah’s oil and gas (O&G) industry, said Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said.
She noted that under the Petroleum Development Act 1974, the national oil company is tasked with developing the country’s O&G industry.
“Nevertheless, Petronas remains committed to progressively and structurally strengthening Sabah’s participation, based on the principles of technical feasibility and sustainable commercial terms,” Azalina said in a written parliamentary reply on Monday.
Azalina was responding to Datuk Seri Jeffrey Gapari Kitingan (GRS–Keningau), who had asked when the government and Petronas would implement the agreement with the Sabah government on returning the state’s O&G rights, revenue sharing, and recognising Sabah as the sole gas aggregator.
She said that since Petronas and the Sabah government inked the Commercial Collaborative Agreement (CCA) on Dec 7, 2021, the state has gained broader participation in the O&G value chain, particularly through state-owned enterprises such as Sabah Energy Corporation Sdn Bhd (SEC) and SMJ Energy Sdn Bhd (SMJE).
Contracts awarded to Sabah-based companies by Petronas have more than tripled to RM2 billion in 2024, from RM630 million in 2021, she noted, adding that 326 Sabah-based companies have been licensed as Petronas vendors as of the first quarter of 2025.
“These developments reflect the growing participation and commercial benefits enjoyed by Sabah in the national oil and gas industry,” Azalina said.
Several key deals were also inked in 2025, she added, including an additional gas supply agreement between Petronas and SEC, which will raise natural gas deliveries from 104 million standard cubic feet per day (mmscf/d) to 224 mmscf/d, with 150 mmscf/d allocated to Esteel Enterprise Sabah Sdn Bhd in the Sipitang Industrial Park.
SMJE also acquired a 25% equity stake in a near-shore floating liquefied natural gas (ZLNG) facility, and joined a technical exploration agreement in the Layang-Layang Basin with industry partners, Azalina said.
Separately, on Petronas’ restructuring exercise that will cut about 10% of its workforce, Azalina said it is part of a broader transformation strategy to strengthen the company’s resilience and competitiveness amid the global energy transition.
The plan, she added, is designed to avoid disrupting Petronas’ pledged RM32 billion contribution to national revenue and its role in supporting long-term development policies.
Azalina stressed that Petronas has reaffirmed its commitment to safeguarding employee welfare, including setting up a Transition Council and a Human Capital Development Committee to oversee a structured “talent mapping” exercise.
Employees affected by the restructuring will receive competitive separation packages, along with comprehensive assistance under a transition programme, she said.
This includes career coaching, emotional support, skills upgrading, financial planning, and job placement services in collaboration with the Social Security Organisation (Perkeso), government-linked companies and Petronas’ own entrepreneurship initiatives.
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