THE Sarawak Legislative Assembly (DUN) unanimously passed the Distribution of Gas (Amendment) Bill 2023 for a Gas Aggregator to procure adequate gas for distribution and supply for use in the state.
The bill was passed by a majority vote in favour with 16 members of the state assembly participating in the debate session.
Minister for Utility and Telecommunication Datuk Julaihi Narawi who tabled the bill said the state owned oil and gas company – Petroleum Sarawak Berhad (PETROS) would be appointed as a gas aggregator due to their requisite experience and knowledge in gas distribution.
“Currently, PETROS is already a licensed distributor of Liquefied Petroleum Gas (LPG) in Sarawak and will be appointed as the sole distributor for LPG effective December 1, 2023,” he said when tabling the bill.
With the passing of the bill, it would ensure adequate supply of gas to meet the needs of domestic consumers, industries and potential investors as well as to strengthen, improve and expand the existing gas distribution network and systems.
Currently, he said, under the PETRONAS Production Sharing Contract (PSC) terms, all gas produced in Sarawak have to be sold by PSCs, such as SHELL to PETRONAS, who purports to act as an aggregator of the gas.
“It is PETRONAS who determines how much gas produced within the boundaries of Sarawak, allocated for industries or power generation in Sarawak and the price for such gas.
“Nearly all gas produced offshore Sarawak are converted into Liquefied Natural Gas (LNG) for export by PETRONAS overseas. Almost all of the gas produced in Sarawak is allocated by PETRONAS to supply gas to feed the LNG plants in Bintulu.
“Consequently, the volume of gas available for local industry and power sectors is a very low percentage of gas produced in Sarawak. Based on the above inequitable arrangement, there is insufficient volume of gas for industrial use in Sarawak,” he said.
With uncertainty over availability of gas and the price thereof, Julaihi said, it has become very challenging to attract foreign investors, who require gas for their industrial processes, to establish or locate their plants in Sarawak.
“This has hampered our efforts to accelerate industrial growth to enable Sarawak to have a high income economy by 2030,” he said.
To overcome the challenges, he said, the Sarawak government had decided that it would appoint its own gas aggregator to procure adequate gas for distribution and supply for use in Sarawak at reasonable and affordable prices.
Additionally, it would allow Sarawak to build, expand, manage and maintain gas distribution networks and infrastructures state-wide to supply gas to industries and other consumers who require gas.
Julaihi said his ministry would ensure that all persons undertaking activities listed under Section 7 of the Distribution of Gas Ordinance, 2016, must obtain licences from the Director of Gas Distribution.
All persons issued with licences under Section 7 of the Ordinance for the distribution, supply and sale of gas in Sarawak shall sell and deliver their gas to PETROS, to enable PETROS to procure sufficient gas for distribution and supply to consumers in Sarawak, including LNG plants at a reasonable price.
He assured that the appointment of the gas aggregator would not in any way prejudice or adversely affect the existing arrangements entered into by upstream gas producers.
“They are rest assured that Sarawak Government will continue to support their upstream operations which are critical for sustainability of gas supply,” he said.
The principal functions of the gas aggregator, he explained, including to manage the procurement of natural gas from all sources for distribution and supply to any person, plant, facility and premises in Sarawak; to develop, expand, manage and maintain gas distribution network and systems including but not limited to, pipelines, terminals for receiving gas, processing plants and storage facilities; and to carry out such other functions related to the distribution of gas in Sarawak as the Majlis Mesyuarat Kerajaan Negeri may direct in writing.
