Sabah’s oil and gas dealt a severe blow by Shell

SHELL’S announcement on October 15 that the Plaza Shell Office at Kota Kinabalu will be closed with a relocation of all Sabah staff to the new Miri headquarters in 2021 was received with unceremonious silence.

The Kota Kinabalu office was set up in November 2015 with promises of Shell’s significant presence, strategic partnership and offer of measurable progress for the Sabah state. This change of commitments, a sad truth on change of events, draws much reservation, suspicion and unveils unprecedented break of promises from Shell to Sabah, its people and communities.

The well-set and progressive 200 Shell staff occupying four floors of the 14-storey Plaza Shell, a distinguished landmark in Kota Kinabalu being strategically located in the city’s business district may see the last of its pivotal presence very soon. Their lives, sadly, may never be the same again.

The oil and gas entity in Sabah comes under Sabah Shell Petroleum Company, which is a separate entity from Sarawak Shell Bhd. Sabah Shell manages all Sabah platforms and handles Malaysia’s largest and only deepwater oil rigs, Gumusut-Kakap and Malikai. Gumusut-Kakap produces 150,000 barrels of oil daily whilst Malikai produces 65,000 barrels per day. At such massive daily production capacity, Shell’s presence lends very significant importance to the state’s economical, social, technological and political wellbeing, and especially as a business entity in the oil and gas sector. About 20% of Malaysia’s production comes from these oil wells.

The multi-faceted importance that arises with its presence offers far-reaching benefits and opportunities to Sabahans. With such significant contribution from the state, it is unprecedented for Shell to move out of Sabah and leave the state, its people and large array of stakeholders in such a distress state and at a disadvantage.

With grievous impact expected from this untimely move and demise of the Sabah oil and gas’ importance to the local community, this valiant call is made to you, our honourable Chief Minister Hajiji Mohd Noor, to seriously question the change of promises by Shell to Sabah and their decision to close the office and move the office to Miri, Sarawak.

The following justifications as to why Shell should stay in Sabah are as follows:

Both its deepwater oil rigs are the country’s only and largest in Sabah waters.

These oil rigs generate huge revenue for Shell and gross domestic product for Sabah.

A sizable number of Sabahans are engaged by Shell with families in Sabah.

Technological, social, economic and other benefits would be compromised and lost forever with the move out of the state.

Severe disruption of oil and gas supply chain provided by more than 200 local vendors, who would lose in business opportunity once Shell moves out of the state benefiting directly the Sarawakians instead.

This change of events will cost a potential loss of business to the tune of RM40 million and hit some 3,000 local workers hard.

Indirect cost of loss of property rentals, investments, services, hospitality and ensuing services will be humongous, to the tune of RM24 million per year.

Sabahans are required to apply for a work permit in Sarawak, placing them at a disadvantageous and precarious position with possible rejection from the Sarawakian authority as the preference is always for locals to fill such essential posts.

Sabah needs to safeguard its MA63 rights with resources tapped for the benefits of the Sabahans and not on the opposite end.

Shell’s reasons for moving out are ill-supported and lack solid justifications.

Sabah should not have its limited resources continue to be taken advantage of again and again. Why are we allowing it to happen again?

Dear chief minister, it is an opportune time and with the mandate given to you by Sabahans in the recent election, we make this desperate call to you to exercise your esteemed wisdom and exert your timely intervention against such an unprecedented decision by Sabah Shell Petroleum Company to move log, stock and barrel out of Sabah. With the deepwater oil rigs still positioned in Sabah’s water it is our sovereign right to safeguard, protect our resources and ensure our interests are not unduly and unfairly exploited. Our soul, our people, and our beloved state must be protected. It is our very right to do so.

Save the state, save our people, save our oil and gas. We have faith in you, chief minister. We await your say on this pressing issue. You are the only one who can provide a justifiable answer and in ensuring Shell stays in the state. On behalf of the Sabah oil and gas community we thank you, and look forward to a discernible response. – October 23, 2020.

* This is an open statement by the oil and gas community of Shell Sabah.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.

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