THE Sarawak government has denied it will drop its demand for 20% oil royalty as reported by international news service Reuters.

The Sarawak chief minister’s office said in a statement that the state government “has not dropped the demand and the current negotiation with the federal government is based on the demand”.

The office said the article was “misleading and vexatious in intent”.

The report said Sarawak will drop the demand for quadrupling royalties paid by Petronas but is pushing for production-sharing and other agreements.

The report is based on information provided by “a key negotiator”.

The report stated Sarawak and Sabah’s longstanding royalty demand will cost the government-owned Petronas up to US$7 billion (RM29 billion) a year, citing calculations by a source.

Prime Minister Dr Mahathir Mohamad had last month said that Pakatan Harapan’s election manifesto of increasing royalties to the states to 20% was not workable and could “kill” Petronas, the world’s third largest exporter of liquefied natural gas.

Petronas is the biggest cash cow of the debt-laden federal government and raising the royalty could cripple its expansion programme, the Reuters report had also said.

The company this year has promised to invest billions of dollars in oilfields in Brazil. – October 31, 2019.