Kota Kinabalu: SMJ Energy on Wednesday clarified its decision not to participate in the recent bidding exercise for the Mutiara Cluster, citing prudent financial strategy and risk management aligned with Sabah’s long-term oil and gas objectives.
The State-owned energy company said in a statement that its current investment focus is guided by the Sabah Government’s priority of securing greater revenue-sharing and stronger participation in the State’s oil and gas sector, as outlined under the landmark Commercial Collaboration Agreement (CCA) signed with national oil company Petronas.
“Since its establishment, SMJ Energy has evolved into a company valued at RM5 billion, with equity holdings in several high-value and cash-generating assets,” said the statement.
window.googletag = window.googletag || {cmd: []};googletag.cmd.push(function() {googletag.defineSlot('/22826383987/dailyexpress_inline', [1, 1], 'gpt-passback').addService(googletag.pubads());googletag.enableServices();googletag.display('gpt-passback');});These include a 50 per cent stake in the Samarang Production Sharing Contract (PSC), 10pc in LNG9, and 25pc in the Samur petrochemical plant, all of which are profitable ventures with proven returns.
Despite being a relatively young company, SMJ Energy has declared dividends totalling RM160 million in under three years of operation, reflecting the strong performance of its asset portfolio.
The company emphasised that oil and gas is a high-investment, high-risk business. “Exploration failures can result in losses amounting to hundreds of millions, or even billions,” it said.
Given the State’s financial limitations and competing development priorities, SMJ Energy said it is taking a cautious and responsible investment approach, focusing on acquiring proven, revenue-generating assets operated by reputable partners with strong environmental, social and governance (ESG) credentials.
For exploration prospects, SMJ Energy prefers to minimise risk through mechanisms such as “free carry” and “back-in rights”, allowing the company to participate only after successful discoveries have been made, without upfront exposure to the high cost and risk of initial exploration.
“To date, SMJ Energy holds free carry and back-in rights in blocks SB409 (20pc), SB403 (20pc), SB306A (7.5pc) and SB306B (7.5pc),”said the statement.
As for the Mutiara Cluster, SMJ Energy said it is classified as a Discovered Resource Opportunity (DRO), which would require substantial exploration and development investment without any guarantee of commercial success.
“Such prospects are not a current priority for SMJ Energy,” said the company, adding that under the CCA, it reserves the right to acquire DRO assets from Petronas once they are successfully developed and de-risked.
The company said this approach reflects its broader strategy of managing risk while building a balanced and profitable portfolio across upstream oil and gas, liquefied natural gas (LNG) and petrochemicals, all while remaining mindful of Sabah’s overall fiscal priorities.
SMJ Energy said it will continue pursuing strategic acquisitions and partnerships in line with this disciplined investment framework, with further announcements expected in due course.