Peninsular Malaysia’s oil and gas production dropped by half over last decade: Economy Minister

SINGAPORE: Peninsular Malaysia’s oil and gas production has dropped by half in the last decade, with new reserves now concentrated in Sabah and Sarawak.
From 700,000 barrels a day 10 years ago, production in the peninsula has decreased to 350,000 barrels daily, Economy Minister Rafizi Ramli said on Sunday (Nov 17) at his ministry’s engagement session in Kelantan with the state government.
Malaysia needs to speed up its transition to clean energy as oil and gas remain key drivers of its economic growth and income distribution, said Mr Rafizi. According to the Malaysian Investment Development Authority, the oil and gas sector contributes around 20 per cent to the country’s annual gross domestic product.
“The country must expedite its energy transition process. In this context, the government needs to implement certain policies, including subsidy restructuring,” Mr Rafizi said without elaborating.
Prime Minister Anwar Ibrahim had announced a subsidy cut for Malaysia’s most widely-used RON95 petrol for the top 15 per cent income group in his Budget speech last month. 
“In the peninsula, 30 per cent of our gas is imported to generate electricity for industries and if no actions are taken, we will become increasingly reliant on foreign countries,” Mr Rafizi added.
The decline in oil and gas extraction in the peninsula could also pose a significant challenge for the government, especially in allocating and distributing funds to Malaysian states, he said.
Malaysia is the second-largest oil producer in Southeast Asia and the world’s third largest exporter of liquified natural gas (LNG), with the country’s oil reserves mainly located off the coasts of Kelantan, Terengganu, Sarawak and Sabah.
According to the federal government, Sarawak’s probable and proven reserves of petroleum represent 60.87 per cent of Malaysia’s total reserves, while Sabah’s make up around 18.8 per cent.
Sarawak also accounts for close to 90 per cent of Malaysia’s LNG exports. 
This has prompted demands by the Sarawak state government, led by chief minister Abang Johari Openg, for state-owned oil firm Petronas to relinquish control of LNG distribution and sales to Petroleum Sarawak Bhd (Petros), which is wholly owned by the state government. 
Petronas has held exclusive ownership rights over all oil and natural gas exploration and production activities in the country. This has been contested by Sarawak, which has long insisted that oil and gas resources in its territory must be regulated under a colonial-era Oil Mining Ordinance 1958, which stipulates that the natural resources found within 200 nautical miles of its waters should belong to the state. 
The demand for Petros to be the sole so-called aggregator of Sarawak’s oil and gas reserves represents a direct challenge to the decades-old monopoly Petronas has held over the national oil and gas reserves since its incorporation in 1974.
In September, CNA reported that Petronas is considering filing a court injunction to head off any confrontation between the federal government and the Sarawak state government, to preserve its monopoly as the sole guardian of the country’s natural resources. 
Sarawak initially issued an ultimatum to Petronas to finalise an agreement that would give the state complete rights over the trading of oil and gas extracted from the state by October.
Negotiations between Petronas and Petros over the distribution of natural gas in the Borneo state are still ongoing, Minister in the Prime Minister’s Department Azalina Othman Said in a parliamentary reply last month.