Kota Kinabalu: Sabah’s East Coast needs an integrated oil and gas terminal built in advance around actual offshore demand, said former Asian Supply Base (ASB) Chief Executive Officer Datuk Harris Tan.
He said the Sandakan and Tawau basins were recognised frontier basins with high-impact exploration prospects, while POIC Lahad Datu already provided a strong industrial and port foundation.
“What is needed next is an integrated oil and gas terminal built around actual offshore demand, not conventional port logistics,” he said.
Tan said the East Coast was emerging as a credible delivery hub for Sabah’s next phase of oil and gas growth, but the window of opportunity would not remain open indefinitely.
He said Sabah’s West Coast had long been an important producing region, but the East Coast offered strategic advantages.
“The East Coast’s greatest advantage is proximity to future offshore fields with shorter vessel journeys, lower logistics costs, faster response times.
“That is a competitive edge money cannot replicate elsewhere,” he said.
However, Tan stressed that the East Coast must be connected to Sabah’s wider energy network, from Sipitang to Kimanis and Kota Kinabalu, rather than developed in isolation.
He said Malaysia’s energy demand would continue to grow and infrastructure must be built ahead of that curve rather than after it.
Tan, who has been involved in Sabah’s oil and gas sector since the early 1990s, said the industry had undergone significant transformation over the past three decades.
When he first entered the sector, the industry in Sabah was still finding its footing amid volatile oil prices and the challenge of attracting international operators to Sabah’s blocks while meeting their demands for cost-effective and efficient services.
During his time at ASB, he said the key question was not whether the company could operate, but whether international operators would come to Sabah at all.
ASB’s operations then spanned only 98 acres and one of its biggest challenges was transitioning from a shallow-water supply base into one capable of supporting complex deep-water operations.
“We had to build capabilities, almost from the ground up, including preparing the land, managing materials and equipping vessels for deeper waters,” he said.
Through close collaboration with international partners and support from Petronas, Tan said ASB gradually developed the infrastructure and expertise needed to support the industry.
By the time he stepped down as CEO, ASB had expanded to nearly 400 acres, supported more than 1,000 employees and partnered with more than 10 Petroleum Arrangement Contractors, including Petronas Carigali Sdn Bhd, Shell and Murphy Oil.
He said ASB’s transformation mirrored the evolution of Sabah’s oil and gas ecosystem, which was built through learning by doing at a time when policies, guidelines and collaborative platforms were still taking shape.
Tan said overcoming the challenges faced during those pioneering years laid the groundwork for the industry Sabah has today.
On the Sabah-Petronas Commercial Collaboration Agreement (CCA) signed in 2021, he said it represented a fundamental shift in how Sabah participated in its energy future.
“The CCA is aimed not merely at increasing local contracts, but at creating a more meaningful role for Sabah across the energy value chain.”Citing SMJ Energy (SMJE) Chief Executive Officer Datuk Dr Dionysia Kibat, Tan said the CCA gave Sabah “a greater say, greater participation and greater revenue share”.
He said capable Sabah vendors were now moving beyond basic or peripheral work through the Regional Mandated Tender Threshold, priority work categories, mentorship arrangements and joint venture models.
The establishment of SMJE had also enabled Sabah to participate as an investor in strategic energy assets, he said.
Tan noted that SMJE had evolved into a RM5.1 billion enterprise by focusing on producing, cash-generating assets that create long-term value rather than pursuing high-risk expansion.
However, he said gaps remained, with many promising Sabah companies still plateauing at the sub-contracting level due to limited access to capital, certification barriers and a lack of track records needed to secure higher-value contracts.
“For Sabah’s OGSE companies, the significance extends beyond equity stakes or balance sheets.
“Every strategic investment creates opportunities for local businesses to move up the value chain, build technical capabilities and compete for increasingly sophisticated work,” he said.
Tan said the health of the industry should not be measured by the number of companies registered or tenders issued, but by how many local companies became principal contractors, held technology, took asset positions and produced leaders capable of making consequential decisions.
He also echoed remarks by Petronas Malaysia Petroleum Management Senior Vice President Datuk Ir Bacho Pilong during OGSE Sabah 2026 that Sabah had the ingredients to become a stronger energy hub for Malaysia and the region, including strong resources, strategic geography, growing infrastructure, supportive partnerships and capable talent.
Tan said these strengths were now coming together through the CCA, the East Coast’s strategic advantage and the Roadmap, supported by the Sabah Maju Jaya vision.
“Together, these foundations position Sabah to strengthen its role as a competitive, resilient and future-ready energy hub for Malaysia and the region.
“What remains is the will to execute and excel, with the same resourcefulness that pushed us, decades ago, to prepare for an industry that wasn’t sure it wanted us.
“We were ready then. Sabah must be ready now,” he said.
