Sabah govt wants OGSE companies to seize opportunities

NEWS & MEDIA

Sabah govt wants OGSE companies to seize opportunities

7 March 2025

KOTA KINABALU: Sabahan oil and gas services and equipment (OGSE) companies are important drivers of economic growth in the state, said Sabah Finance Minister Datuk Seri Masidi Manjun.

He said the state government was empowering local businesses to seize the immense opportunities within their reach.

“This is not just a forecast, it’s a call to action. To succeed, Sabahan companies must rise to the challenge by meeting Petronas’ stringent standards.

“Companies need to forge strategic partnerships to unlock new capabilities and experiences.”

He said this at the unveiling of the Kinabalu Activity Outlook 2025-2027 here recently.

In the past year, contracts awarded to Sabahan businesses surged from RM613 million in 2021 to more than RM2 billion in 2024.

The Sabah government and Petronas have set ambitious targets for 2025-2027.

They include achieving a 50 to 100 per cent increase in local jobs awarded to Sabahan companies and a 50 to 100 per cent increase in the number of contracts awarded to Sabah OGSE companies.

Petronas group procurement vice-president Rahsidah Alias said it was important for Petronas and the state government to have a sustainable partnership.

“Petronas is fully committed to supporting the growth and development of Sabah’s OGSE sector.

“By working together, we can create a thriving and sustainable industry that benefits all Sabahans.”

Sabah Finance Minister Datuk Seri Masidi Manjun said that Sabahan oil and gas services and equipment (OGSE) companies are important drivers of economic growth in the state. — STR/MOHD ADAM ARININ

Source: New Straits Times

SMJ Energy signs two more exploration deals offshore Sabah East Coast

NEWS & MEDIA

SMJ Energy signs two more exploration deals offshore Sabah East Coast

18 February 2025

KOTA KINABALU (Feb 18): The Sabah Government, through its wholly owned company SMJ Energy Sdn Bhd, maintains its strong momentum in the new year with the signing of two agreements involving Exploration Blocks SB306A and SB306B, offshore Sabah’s East Coast.

With the signing of the agreements, SMJ Energy has secured a 15% participating right in both blocks, comprising a 7.5% free carry right from INPEX and a 7.5% Back-In right from Petronas Carigali Sdn Bhd.

SB306A is operated by INPEX, holding 50 percent Participating Interest (PI) while Petronas Carigali Sdn Bhd (PCSB) holds 42.5 percent PI and SMJ Energy with 7.5 percent PI. For SB306B, PCSB serves as the operator with a 50 percent PI, with INPEX holding 42.5 percent PI and SMJ Energy holds 7.5 percent PI.

Under the Free Carry and Back-In arrangement, SMJ Energy does not carry exploration risks and will decide whether to exercise the participation rights subject to exploration success and other commercial considerations.

At the Malaysia Bidding Round 2024 (MBR2024) Award Signing Ceremony held at the Kuala Lumpur Convention Center on Monday, Dr Dionysia Kibat, CEO of SMJ Energy, signed the Production Sharing Contract for Block SB306A and SB306B, with representatives from Petronas, PCSB and INPEX.

The event marks SMJ Energy’s additional exploration deals in Sabah. The first Back-In right was signed on 15 February 2023 for Exploration Block SB409, and the second Back-In right was signed on 23 January 2024 for Exploration Block SB403, both located offshore West Coast Sabah.

SMJ Energy also holds a 50 percent participating Interest in the Samarang PSC Joint Venture, 25 percent interest in SAMUR petchem plant and 10 percent interest in Petronas LNG9 Sdn Bhd. It also owns 100 percent of Sabah International Petroleum, which is now debt-free, generating strong cash flow from its FPSO (Floating Production Storage and Offloading) and FSO (Floating Storage Unit) operations.

SMJ Energy was set up on 10 November 2021 and declared RM110 million dividends in total for 2023 and 2024.

Dr Dionysia (middle), Malaysia Petroleum Management Senior Vice President Datuk Ir. Bacho Pilong together with representatives from SMJ Energy, Petronas’s, PCSB and INPEX after the signing ceremony.

Source: Borneo Post Online

Sabah’s O&G aspirations quietly brewing

NEWS & MEDIA

Sabah’s O&G aspirations quietly brewing

30 November 2024

KUALA LUMPUR (Nov 30): Much has been reported about the Sarawak government’s negotiations via Petroleum Sarawak Bhd (Petros) with Petroliam Nasional Bhd (Petronas) for the Bornean state’s rights to regulate the oil and gas (O&G) developments within its boundaries. Next door, however, information on Sabah’s progress has seemed scant by comparison, given that both states are on a similar quest.

For the most part, people watching the unfolding of events in Sarawak have perceived Sabah to be sitting in the shadows, as if waiting to ride the efforts of its gallant neighbour.

Up until about a year ago, SMJ Energy Sdn Bhd, which is, if you will, Sabah’s version of Petros, stayed out of the public eye, maintaining a carefully positioned narrative of having transformed into a RM5.1 billion company since its inception in December 2021, after its acquired assets bore fruit last year.

Although both states have separate agreements with Petronas, SMJ Energy (formerly known as SMJ Sdn Bhd) says its method to steer the state’s O&G sector is, at least for now, profoundly different from that of Sarawak.

SMJ Energy has made known that it wants a bigger share and a bigger say in its O&G assets without the exploration risks that come with development. Currently, SMJ Energy is still in discussion with Petronas on various opportunities, and ironing out the “nitty-gritty of assets”.

Meanwhile, a snapshot at Sabah state as a whole reveals that in 2023, the state contributed 5.5% of national gross domestic product (GDP), making it the sixth biggest state by GDP contribution, ahead of Perak (5.4%) but lagging behind Penang (7.6%), neighbouring Sarawak (9.3%), Johor (9.7%), Kuala Lumpur (16.3%) and Selangor (26.7%).

While Sabah’s GDP contribution lags behind more economically vibrant states such as Selangor or Penang, the state has made much progress from the standpoint of financial strength, thanks to a bigger share of O&G returns.

Oil revenue in Sabah, which now comprises both petroleum state sales tax (SST) and oil royalty, has exceeded RM2 billion annually since 2021, when the SST came into force, and touched a high of RM3.53 billion in 2022.

Source: The Edge Malaysia

SMJ Energy not party to agreement

NEWS & MEDIA

SMJ Energy not party to agreement

25 September 2024

KOTA KINABALU (Sept 25): SMJ Energy Sdn Bhd advises that it currently has no equity stake in the SB-403 Production Sharing Contract (PSC) and is not a party to the agreement.

However, SMJ Energy has a ‘back-in right’ that allows it to decide whether to join as a partner in the future in the event of exploration success taking also into account commercial, technical, environmental and other factors.

“SMJ Energy acts as a prudent financial investor and works with reputable oil and gas companies with proven ESG (Environmental, Social & Governance) track records,” said the company in a statement today.

It was responding to the call of RimbaWatch urging the Sabah state government to not approve any oil and gas exploration activities within a site called Block SB-403, which it claimed was situated entirely within the state’s protected marine park.

The environmental watchdog said the Tun Mustapha Marine (TMP) Park in Sabah is listed as International Union for Conservation of Nature’s (IUCN) Category VI marine protected area, which only permits low-impact activities.

TMP was gazetted by the Sabah government in 2016.

RimbaWatch claimed in a statement on Wednesday that a production sharing contract has been signed for SB-403 between Petronas Carigali, EPMV and SMJ Energy. The block is located entirely within the TMP’s boundaries.

Oil and gas activities are contrary to the aims of IUCN Category VI protected areas, and the zoning plans of the TMP. These activities risk damaging the marine environment of the TMP; including risks to 45,000ha of reefs, 17,000ha of mangroves and over 180 vulnerable and endangered species, said the group.

It added these activities also threaten the fishing-dependent livelihoods of over 85,000 villagers, including from the Bajau Laut and Ubian communities.

RimbaWatch further claimed that Petronas and the Sabah State Government are not transparent on the fact that oil and gas activities are planned in a marine protected area and no environmental impact assessment (EIA) can be found for existing activities.

It recommended the Sabah authorities to ensure that no permits are approved for oil and gas activities in the park; Petronas should commit to not exploring for oil and gas in protected areas; and the Department of Environment should disclose the status of any EIAs.

Source: Borneo Post Online

Sabah Finance Ministry says no conflict of interest in SMJE payment of SIP’s debts

NEWS & MEDIA

SMJ Energy acquires 10% PLNG 9 stake from SIP

30 May 2024

KOTA KINABALU: Sabah’s Finance Ministry refutes claims of a conflict of interest over state-owned SMJ Energy Sdn Bhd’s (SMJE) payment of Sabah International Petroleum Sdn Bhd’s (SIP) debts following its acquisition.

The Ministry’s permanent secretary, Datuk Mohd Sofian Alfian Nair, explained that the state-supported corporate exercise not only reduced the high interest costs of SIP’s legacy debts but also strategically re-capitalised Sabah Development Bank Bhd (SD Bank) by redeeming SIP’s debts owed to the bank.

 

He said this in response to a news report on Wednesday (May 29) quoting Sabah Opposition leader Datuk Seri Mohd Shafie Apdal, who called for a probe into SMJE’s affairs.

The Parti Warisan president raised questions about the debt payment, noting that SMJE’s technical adviser is also the SD Bank executive chairman.

Mohd Shafie had highlighted that SMJE acquired the debt-ridden SIP through a sukuk exercise in October last year with RM900mil raised from the exercise intended to pay off the RM1.2bil debt owed to SD Bank.

He questioned why SMJE decided to settle the debt all at once instead of opting for gradual payments.

In clarifying the matter, Mohd Sofian insisted there was “absolutely no element of a conflict of interest in this corporate exercise when SMJE, SIP, and SD Bank are all ultimately owned by the State government of Sabah.”

He emphasised that the Sabah government, as the owner of these GLCs, must be responsible for all historical debts.

“The state government has been decisive in dealing with the historical financial problems of SIP and SD Bank. SMJE operates under strict governance, and the board, chaired by state Finance Minister Datuk Seri Masidi Manjun, is committed to transparency and accountability.

“It is supported by experienced independent directors from both the oil and gas (O&G) and investment fields to ensure professional management,” he said.

Mohd Sofian also dismissed Mohd Shafie’s allegation that SMJE suffered a loss of RM7mil due to the sukuk issuance as baseless.

“As a start-up company, SMJE had to incur pre-operating costs and expenses that are irrelevant to the sukuk issued by SMJE.

“It should be noted that SMJE achieved the most competitive rates for the issuance of the first tranche of the sukuk of RM900mil, which was 3.9 times oversubscribed and described by an online business portal as the most successful non-IPO fundraising in 2023,” he elaborated.

To remove any doubts, Mohd Sofian also listed several key advantages of acquiring SIP.

He said SMJE will generate significant revenue through dividends, cash flow from existing operations, and reduced debt servicing costs.

“The acquisition has added value to SMJE as a whole and enabled the consolidation of the O&G assets of the state under one corporate entity.

“Petronas LNG 9 (PLNG9) declared cash payments of RM343mil in 2023 for the 10% equity stake owned by SIP. PLNG9 generates healthy annual dividends, and through the SIP acquisition, SMJE can expect approximately RM150mil annually in dividends for the next 13 years,” he said.

He also pointed out the consistent cash flow from SIP’s floating production, storage, and offloading facilities (FPSOs/FSOs), where he said RM271mil had been channelled to SMJE since the acquisition.

“The acquisition also reduced SIP’s debt burden, as its main challenge was the high-interest debt of its legacy loans.

“SMJE successfully issued a sukuk with a much lower interest rate. This refinancing exercise has resulted in savings of over RM60mil in financing charges in 2023 alone. Importantly, no additional debt was created at the state level,” he said.

To sum it up, Mohd Sofian concluded that the acquisition of SIP has been a positive development for Sabah, and SMJE should be commended for initiating the consolidation and restructuring exercise, which benefits both SMJE and the State financially.

Source: The Star