STATE power company Sarawak Energy Bhd (SEB) today signed a term sheet with Malaysia LNG to supply 90Mw of electricity over 20 years to the LNG complex in Tanjung Kidurong, Bintulu.

SEB unit Syarikat Sesco Bhd will be supplying the power.

Chief Minister Abang Johari Openg, who witnessed the virtual signing ceremony at his office in Wisma Bapa Malaysia this morning, said Sarawak and Petronas were “marking a key milestone” in their relationship.

“This term sheet signing allows Sarawak to continue to share its renewable energy resources with other energy players in developing a sustainable energy future.”

He said the agreement was a sign of not just Petronas’ confidence in SEB’s ability to provide power but of the national oil company’s long-term presence in Sarawak.

A term sheet is a non-binding agreement stating the basic terms and conditions of an investment to serve as a template for more detailed, legally binding documents to come.

Sarawak has had a patchy relationship with Petronas in the last few years due to a squabble over the rights to the state’s hydrocarbon resources.

Petronas attempted a monopoly under the Petroleum Development Act 1974 while the state argued the parliament legislated law had no legal jurisdiction in Sarawak where the  Oil Mining Ordinance has been in force since 1958.

Petronas took the case to court and lost. The dispute was eventually settled and a commercial settlement agreement thrashed out.

Abang Johari said the “historic signing” of the CSA on December 7 last year “should also be an indication of an enduring partnership between both parties in the development of both the upstream and downstream of the oil and gas resources in Sarawak for our common benefits”.

The agreement today also builds upon the Memorandum of Understanding (MoU) signed last year between the two parties to jointly explore the commercial production of green hydrogen to progress a green hydrogen economy for Sarawak and beyond.

The chief minister also said the signing of the term sheet reaffirmed Sarawak’s position as an ideal sustainability-driven investment destination.

Its competitively priced electricity tariff, lower than in the peninsular and neighbouring countries, has attracted large foreign investments.

Between 2008 and last year, the state signed 12 power purchase agreements with industries sited in the state’s industrial belt known, as the Sarawak Corridor of Renewable Energy.

Sarawak also has a power exchange agreement with the Indonesian state-owned electricity company PT Perusahaan Listrik Negara for the interconnection for 2,900Mw of electricity for the province of West Kalimantan.

Despite the economic downturn as a result of the Covid-19 pandemic, Abang Johari said Sarawak continues to be among the top five investment destinations in the country recording an approved investment worth RM19.6 billion last year. – March 4, 2021.