Oil royalty to states stays at 5pc (NST)

2008/05/14

Dewan Rakyat: Oil royalty to states stays at 5pc

By : Reports by V. Vasudevan, B. Suresh Ram, Eileen Ng, R.S. Kamini, Ili Liyana Mokhtar and Joseph Sipalan

THE five per cent royalty going to Sabah, Sarawak and Terengganu on oil and gas extracted by Petronas will not be reviewed.

Minister in the Prime Minister's Department, Senator Datuk Amirsham A. Aziz, said financial considerations prevented the government from acceding to their requests for an increase in royalty.

This was because any increase in royalty to the states would eat into the 10 per cent royalty the government received from Petronas.

He was replying to a supplementary question from Alexander Nanta Linggi (BN-Kapit) on whether the federal government would look into increasing its royalty from 10 per cent to 20 per cent.

To another supplementary question from Datin Seri Dr Wan Azizah Wan Ismail (PKR-Permatang Pauh), Amirsham said the formula involving royalty on oil and gas saw the government receiving 10 per cent, of which five per cent was given to the three states.

To the original question from Dr Wan Azizah, Amirsham said that between 2004 and last year, Petronas paid a total of RM26.839 billion in royalty to the federal government, Sabah, Sarawak and Terengganu.

The Federal Government received RM13.4 billion, Terengganu (RM7.3 billion), Sabah (RM1.2 billion) and Sarawak (RM4.8 billion).

Amirsham said that based on current oil extraction methods, crude oil and oil condensates were expected to last 22 years while gas reserves would last 39 years.

"Even though there are many years for the reserve period (oil and gas) to expire, the fact is that the country also imports oil and gas to meet some local energy needs.

"Thus, the country is expected to be a net energy importer by 2014," Amirsham said.

To another question, Amirsham said oil production in Terengganu, Sabah and Sarawak for the financial year ending March 31, last year, stood at 241.3 million barrels of crude oil.

Gas production was 2,081.4 billion square feet, he added.

He said crude oil and gas products exported by the subsidiaries of Petronas were sold at current world prices whereas the price for domestic sale of gas-based products for the electrical and non-electrical sector was fixed by the government.