State to reserve 40-50 per cent gas resources as feedstock

BINTULU: About 40 to 50 per cent of production from new gas resources in Sarawak must be retained as feedstock for gas-related industries in the state, said Chief Minister Datuk Patinggi Abang Johari Tun Openg yesterday.

This is to ensure Sarawak has enough gas feedstock to drive the downstream activities of the natural gas industries, particularly the petrochemical industries.

“Now it’s the policy of the state government that any new finding of gas resources in Sarawak, 40-50 per cent must be retained as feedstock for industries in the state,” he said when launching Sarawak’s first methanol plant at Tanjung Kidurong here, yesterday.

Abang Johari (inside the excavator) ready to perform the earth-breaking ceremony for the first methanol plant in Sarawak.

Sarawak is reported to hold the largest share of the remaining gas reserves in Malaysia at 54 per cent and one-third of the country’s remaining oil reserves at 29 per cent.

The chief minister said Sarawak is not contented with the existing development of the oil and gas industry in the State.

“The reason being, our oil and gas products are still commodity base meant for exports. For example, the production of liquefied natural gas, ammonia and urea utilising natural gas as feedstock for the industry.

“The irony is that the value-added activities are done abroad utilising our natural gas as raw materials in their petro-chemical industries,” he told a crowd attending the ceremony.

He revealed Sarawak’s intention to maximise the oil and gas sector’s contribution to the state’s economy by developing another petro-chemical hub in Bintulu by inviting petro-chemical industries to set up their plants in Sarawak.

“To do this, we will be intensely involved in developing high value downstream products of oil and gas industries such as specialised and fine chemicals.

“In this regard, we will consider all feasible proposals to establish petro-chemical industries in the state and will facilitate them accordingly,” he assured.

The methanol and derivative project was one of the two initiatives of the Sarawak government to embark on more downstream value-add petro-chemical industries.

The other planned project is an ammonia and derivative plant.

The chief minister expressed confidence that Sarawak would be able to attract investment in the oil and gas downstream sector given Sarawak’s track record in FDI in the last decade or so.

Sarawak was able to attract about RM30 billion in investments in the energy-intensive sector since the inception of the Sarawak Corridor of Renewable Energy (SCORE).

Established in June 2017, Sarawak Petchem will be the first Sarawak state-owned company that produces methanol, with an annual capacity of 1.7 million metric tons per annum (mtpa).

The plant, built by Samsung Engineering of Korea is expected to come on stream in 2023 and will receive 160 million standard cubic feet per day of natural gas feedstock from Petronas.

Abang Johari (fourth right) with guests.