26-05-2025
Ex-minister Idris Jala proposes council to give Sarawak, Sabah oil royalties based on agreed threshold
Screenshot shows Idris and Leon discussing a point during the podcast.
KUCHING (May 26): A council on oil royalty should be created involving the Prime Minister, Premier of Sarawak, Chief Minister of Sabah, and Petroliam Nasional Berhad (Petronas), said Datuk Seri Idris Jala.
The former senator and federal minister explained that such a council, to be chaired by the Prime Minister, would ensure Petronas continues to operate while both Sarawak and Sabah get fairer oil royalties.
'What do they do? Once a year, Petronas should submit their full Opex requirement, that operating expenditure for the year. And they will say, this is what is need to do for capital investment, for CapEx (capital expenditure). And of course, both Sabah and Sarawak will examine the details, whether they have padded it, what is really necessary, and unnecessary.
'So once that is done, then you agree the numbers there, that is then called the Petronas threshold, in my view. That is what needed to be given to Petronas to make sure it has the money enough to operate and money enough to invest for expansion.
'You take that aside and make sure Petronas has got that from the profit it has made. Then the question arises, is there still enough money to give to Sabah and Sarawak to honour the 20 per cent oil royalty? So, at a very high oil price, surely there's enough money to do it.
'At a low oil price, then it (the royalty) is less. It could be they only get 10 per cent at a very low oil price, and a high oil price to get the maximum 20 per cent. It depends,' he proposed.
Idris, who is also a former Shell executive and Malaysia LNG Sdn Bhd (MLNG) board member, said this in the latest 'The Game of Impossible' podcast episode titled 'What's the Deal with Petros and Petronas?', which he co-hosts with his son Leon.
Idris opined this mechanism will be fair and square for Sarawak and Sabah.
'Nobody in Sabah and Sarawak would want Petronas to die. And I know that for certain, because I've spoken to some of the leaders there in conversation. Of course, everybody in Sabah and Sarawak wants the federation to thrive.
'Nobody in Sabah and Sarawak wants the federation to collapse. We're part of the federation. We all want the federation, the whole of Malaysia to succeed. That is why they are not arguing for 100 percent of the oil revenue belonging to them, because they want to be part of the federation,' he said.
He also explained that such a mechanism is not new in Malaysia, as there is already an automatic price mechanism in the downstream oil and gas sector in Malaysia whereby oil companies annually submit the costs required to run downstream operations.
Regarding Petroleum Sarawak Berhad (Petros), he said Petros was created not to take over the role of Petronas but instead it is taking its role as the aggregator or internal trader.
As such, he said the narrative that the creation of Petros is going to kill the goose that lays the golden egg that is Petronas, is completely fallacious.
'So, which means Petronas will continue its role today in the upstream as the custodian of oil and gas upstream, no change.
'It also continues its role as a regulator for oil and gas upstream, no change. It also is the gifter of production sharing contracts in the upstream, no change. Not only is that, it is also an upstream player, also no change.
'None of that changes. So, the only thing that Petros is doing is take the role of the trader or the aggregator for the optimisation. So, to my mind, there is no way this is going to kill the golden,' he said.
Idris also suggested the goods and services tax (GST) be reintroduced to reduce Malaysia's dependence on Petronas for government revenue. Idris Jala lead oil royalty council Petronas Petros
