Every growth story has its next chapter. For Sabah, that chapter is increasingly unfolding along its east coast, where untapped potential, strategic investments and growing industry activity are converging to create new opportunities for the state's future.
Sandakan, Sabah’s second-largest town, and Tawau, which borders North Kalimantan, are well positioned to benefit from this momentum.
“While Sabah’s west coast has long been an important producing region, the east coast now represents one of the most promising frontiers for Sabah’s next phase of growth,” said Datuk Bacho Pilong, Senior Vice President of Malaysia Petroleum Management, Petronas.
Against this backdrop, Sabah’s energy landscape stretches from the established producing assets of the Kinabalu Basin in the west to the emerging frontier basins of Sandakan and Tawau in the east, reflecting both current industry strength and future growth potential.
In his Industry Address at the Oil & Gas Services and Equipment (OGSE) Conference & Exhibition Sabah 2026, Bacho highlighted the vast potential of Sabah’s east coast.
Charting New Frontiers in TawauRealising the potential of Sabah's east coast will require sustained investment and a deeper understanding of its resource landscape.
In Tawau, these efforts are already taking shape through technical programmes aimed at improving subsurface understanding and progressively de-risking exploration opportunities.
At Pulau Sebatik, a 3D seismic programme covering close to 200 sq km is in progress to improve structural imaging in this emerging onshore area.
Complementing the seismic acquisition programme, seabed geochemical surveys are also being undertaken offshore Tawau to enhance data quality and further assess the area's hydrocarbon potential.
In January this year, Petronas showcased its ongoing work through a demonstration of the 3D seismic acquisition programme in Pulau Sebatik. The visit also included a community engagement session with the local fishing community at Kampung Wallace Bay, reflecting the importance of fostering understanding and collaboration as exploration activities progress.
Sandakan’s Industrial GrowthIn Sandakan, developments point to its steady emergence as a key industrial node.
This outlook is underpinned by sustained investment in basin enrichment and data acquisition to unlock the potential of Sabah's frontier basins.
In the Mutiara Cluster and SB505, Petronas has invested in new seismic acquisition, with processing currently underway as part of broader technical programmes to progressively de-risk exploration and mature the basin. These efforts form part of Petronas' commitment to accelerate the maturation of frontier basins, with Sabah remaining a major focus.
A reliable and sustainable power supply will therefore be a key enabler in strengthening Sandakan’s position as an emerging industrial hub.
One project expected to play a pivotal role is the Sandakan Gas Development Project (SGDP), an onshore gas facility planned within the Sawit Kinabalu Sandakan Industrial Park (SKSIP). By bringing gas closer to industry, the project is expected to strengthen Sandakan's industrial ecosystem and support broader economic activity across Sabah's east coast.
The SGDP is expected to act as a catalyst for Sabah's east coast, creating a ripple effect that could attract new investments, stimulate downstream industries, enhance supporting infrastructure and generate long-term employment opportunities for Sabahans.
Such growth could position Sandakan to follow a similar trajectory to Kerteh, Bintulu and Labuan, where upstream success has catalysed the development of wider industrial ecosystems built around gas availability and infrastructure.
For Sabahans, this represents more than the development of new energy resources.
It is an opportunity to create high-value employment, strengthen local industries, improve supporting infrastructure and build a more competitive economy, ensuring the benefits of industry growth are shared more widely across the state.
In Sandakan, including Tagahan, Suan Lamba, and Labuk Bay seismic data is currently being acquired to improve subsurface clarity and build on early indications of strong basin potential and future gas hub prospects.
“However, this growth story must be understood clearly. It is not automatic, and it is not linear,” he said, underscoring that long-term progress will require the right foundations and sustained industry support.
Unlocking the Growth Together“Success in Sabah cannot be achieved in silos. As the industry expands, the supporting ecosystem must grow alongside it,” Bacho said.
Opportunities across Sabah's east coast are substantial but realising them will require collective effort.
As the industry expands, collaboration across the ecosystem, particularly with the state and local industry players, will be critical.
This includes strengthening collaboration through the Commercial Collaboration Agreement (CCA), enhancing partnerships with Sabah-based players such as SMJ Energy Sdn Bhd (SMJE), and ensuring strong execution across the value chain.
For OGSE companies, this means raising standards, strengthening execution discipline and enhancing competitiveness to support Sabah's long-term growth ambitions.
“The seed has already been planted, but like any emerging growth centre, it will require all stakeholders, namely Petronas, the State Government, state GLCs and industry players, to nurture this opportunity and help it take root and thrive,” Bacho reflected.
Today, Sabah hosts more than 30 active Production Sharing Contracts (PSCs), involving both local and international operators and equity partners, reinforcing its position as a key hub in Malaysia’s upstream sector.
Sabah already possesses many of the attributes needed to strengthen its position as a leading energy hub for Malaysia and the wider region, including a strong resource base, strategic geography, growing infrastructure, supportive partnerships and capable local talent.
Building on these strengths will require deeper collaboration among Petronas, the State Government, Petroleum Arrangement Contractors (PACs), investors, OGSE players and local communities to translate opportunity into sustainable, long-term growth.
“The journey ahead may be long, but I am confident that together we can rise to meet the challenges ahead and unlock even greater opportunities for Sabah. And I remain optimistic that the best chapters of Sabah’s story are still ahead of us,” Bacho concluded.
