OIL and gas companies in Sarawak want the state government to stop Petronas from being biased in the awarding of lucrative contracts.

They said the national oil company has overlooked them in favour of peninsula-based companies.

Their hopes for change have been buoyed by Petronas’ recent reversals in several legal battles with the Sarawak government over who controls the resources in the state.

The companies, particularly the so-called “small companies”, seemed to have taken the cue from Assistant Minister in the Chief Minister’s Department, Sharifah Hasidah Sayeed Aman Ghazali who earlier this month said that “the state government will now focus on strengthening Petros and Sarawakian companies’ participation in the oil and gas sector”.

Petros is the oil company owned by Sarawak.

Hasidah made the statement after the state government and the comptroller of state sales tax withdrew their civil suit against Petronas to recover SST arrears of about RM1.3 billion, including penalties for late payment and interest.

The removal of the last legal hurdle paves the way for Petronas to pay up at last.
 
The Sarawak companies’ grouses have been heard for a good part of the last two decades, said the pro-tem secretary of the two month-old Sarawak Petroleum Contractors’ Association (Speca), Ahmad Sazali.

With more than half of the contracts given to companies on the peninsula, it is not hard to understand the anger among the Sarawak companies, he added.

“It’s not fair. The resources are ours. The work is in Sarawak waters, yet over 51% of the contracts go to peninsular companies,” he told The Malaysian Insight. 

“We are not even the biggest beneficiaries of our resources. 

It’s not that we don’t have the expertise. We do. It’s just that many of us do not have the ‘technical know who’,” he added, implying that a company had to know the right people or have the right connections to land the contracts.

Ahmad is unhappy that the big contracts are awarded to peninsula-based companies.

“Say there’s a fabrication contract for installation in Sarawak waters. These West Malaysian companies will fabricate in Lumut, not in Sarawak even though we have the fabrication yards.

“We not only lose out on the fabrication work, we also lose out on the many sub-contracts related to the fabrication contract,” he said.

It is estimated that only about 100 of the 400 Sarawak companies registered with Petronas as contractors are considered “active”.

Consortium

Speca pro-tem president Rahman Lariwoo recently said he was appalled that multi billion ringgit contracts for the Pan Malaysia integrated offshore installation, maintenance, construction and modification services, and integrated hook-up had been awarded “to the same contractors” on the peninsula.

Rahman said this happened because there were no “big” Sarawak companies that were qualified to be considered for the contracts.

But he has thought out a plan and forwarded it to the state government for consideration.

To ensure there are such “big” Sarawakian companies available to take up the contracts, Rahman wants the small companies to form a consortium on a contract to contract basis.

While Speca’s Ahmad agrees forming a consortium should be a private sector driven business decision, he nonetheless wants a backing from the Sarawak government.

“We need that backing to break Petronas’ bias if they are still around to give contracts. Petronas have been known to do things to their whims and fancies.

 “We need to do something. We can’t be doing nothing and expecting something to happen.

“Why let other people enjoy what we should be enjoying ourselves.”

Bintulu move

Ahmad is also trying to prod the state government to move the supply base in Labuan to Bintulu.

He said Petronas two years ago issued a “memo” to all their contractors to move their base of operations to Bintulu. 

Petronas was reportedly acting at the  behest of then chief minister Adenan Satem.

When Adenan died, the memo was quietly forgotten, Ahmad said.

Relocating the supply base to Bintulu, he said, could help reduce the cost of the contracts.

“The distance from Bintulu to the offshore installations is nearly half of that from Labuan.”

One contractor however said Speca “should be doing more as what they are saying is only scratching the surface of an age old problem plaguing the industry”.

The contractor, who did not wish to be identified, said the biggest problem for most companies was capital.

He agreed that most of the Sarawak companies had the expertise and technical know-how to for the jobs but did not have the capital.

 He said banks and other financial institutions would not even consider giving them loans even if they have “the letter (of the contract award) in their hand”.

Support from the banks, he said, was key for the small companies to be competitive and survive in the business. – August 16, 2020.