Kota Kinabalu: The signing of land lease agreements for the Sabah Oil and Gas Terminal (SOGT) and Sabah-Sarawak Gas Pipeline (SSGP) will provide long-term certainty for the operation of two strategic energy infrastructure facilities vital to Sabah’s oil and gas industry.
Malaysia Petroleum Management (MPM) Petronas Senior Vice-President Datuk Ir Bacho Pilong said the agreements between the Sabah Economic Development Corporation (Sedco) and Petronas went beyond land arrangements, providing a foundation for operational continuity, maintenance and long-term planning.
He said certainty over land use was particularly important in the oil and gas industry, where some facilities were expected to remain operational for up to 50 years.
“Honestly, this is a multi-decade industry. Some of these facilities will last for decades to come, up to 50 years.
“Therefore, this agreement is important to ensure that we have the sites needed to continue operations and develop the oil and gas industry,” he said at the signing ceremony at Hyatt Regency Kinabalu.
Bacho said the continued operation of both facilities was important not only to Petronas but also to Sabah, as they supported the energy value chain, downstream industrial development and the State’s economic growth.
“The signing of this agreement is another practical step towards strengthening the foundation of our cooperation.
“It provides the certainty needed to ensure that these strategic infrastructure facilities continue operating, while supporting broader industrial development aspirations,” he said.
SOGT serves as a strategic facility for receiving, collecting, storing and carrying out the initial processing of crude oil, condensate and natural gas from offshore fields, including Gumusut-Kakap and Malikai.
The hydrocarbons are processed according to specified requirements before being channelled to subsequent processing facilities and markets.
Meanwhile, SSGP plays an important role in transporting gas from the Papar area towards Sipitang, connecting gas supplies to users and industrial activities along the network.
Bacho said the facilities also enabled Sabah’s energy resources to support downstream activities, including industrial development and power generation.
Examples of gas utilisation include the Kimanis Power Plant, the petrochemical industry and the proposed eSteel iron manufacturing development at the Sipitang Oil and Gas Industrial Park (SOGIP), which is expected to begin around 2027.
He said reliable gas supplies and dependable infrastructure were essential to developing the industrial ecosystem, particularly in Sipitang.
Such infrastructure could help create a conducive environment for industrial growth, attract investment and open up new economic opportunities for Sabah.
Bacho said the value of the agreements lay not only in providing operational certainty but also in the economic opportunities that could be developed around the existing infrastructure.
“This reliable infrastructure provides the foundation for industrial growth. Such growth, in turn, has the potential to attract investments, strengthen local industry players’ capabilities and create more job opportunities for Sabahans,” he said.
He said cooperation between Petronas and the Sabah Government had also been strengthened through the Commercial Collaboration Agreement (CCA), which provides a platform for cooperation across various areas of the oil and gas industry.
The collaboration extends beyond upstream activities to include the gas value chain, liquefied natural gas (LNG), vendor development, human capital and community development.
Bacho said the objective was not merely to advance the industry but also to ensure its growth generated wider benefits for Sabah and its people through stronger local industry capabilities, business opportunities and economic development.
He stressed the importance of continued coordination among the State Government, relevant agencies, Petronas, Sedco and industry partners, including small and medium-sized enterprises in the energy sector.
All parties must fulfil their respective roles to ensure the industry’s development translated into sustainable economic progress and long-term benefits for the State, he said.
Bacho said the cooperation between Petronas, Sedco and the State Government provided a strong foundation for further industrial development through mutual understanding, openness and commitment to shared objectives.
He expressed hope that the agreements would mark the beginning of broader efforts to translate Sabah’s resource and infrastructure potential into tangible economic opportunities, a more competitive industry and a more prosperous future for its people.
He also thanked Sedco, the State Government, Petronas colleagues and relevant agencies for their cooperation and contributions towards the successful signing of the agreements.
