Are there puppet masters behind Petros?

“Petros is fortunate to gain Saau’s experience, talent and vision. I am confident that he is the right person to lead Petros into the future, adding value to the careers of talented young Sarawakians while making Petros the best place to work,” proclaimed Sarawak Chief Minister Abang Johari Tun Openg when announcing Saau Kakok, a former special projects vice-president for Asia of the US-based independent oil company Hess Corporation, as the CEO of Petroleum Sarawak or Petros in March 2018.

For context, Hess has a collection of gas fields in the North Malay Basin offshore Malaysia and in the Malaysia-Thailand Joint Development Area as a 50 percent equal partner with Petronas. Hess currently supplies 25 percent of peninsular Malaysia gas, which makes its assets here a key core holding for Hess International.

Oddly enough, just in February 2018, Saau, representing Hess, signed a deal in Korea with Samsung and Petronas (represented by Datuk Mohd Anuar Taib) for an Engineering, Procurement, Construction and Commissioning (EPCC) FOR THE Terengganu Gas Terminal Project. This was one month before he was announced as the CEO of Petros, the agency that the state as mandated to from Petronas its authority to continue to regulate and develop the industry in Sarawak.

Reuters reported last month that the Southeast Asian offshore gas assets of Hess, estimated to be worth as much as $5 billion, have attracted takeover interest from firms including Thailand’s PTTEP PCL and Austrian energy group OMV AG.

OMV, which was one of the candidates to buy Hess assets in Malaysia, instead bought into Sapura Energy.

Tan Sri Dr. Hamid Bugo, the Chairman of Petros is the Senior Director at Sapura Energy. Petros has stated that it will support and work with other companies and vendors in the state in its oil and natural gas exploration activities. Chief among them is Brooke Dockyard & Engineering (Brooke), whoSE chairman is Datuk Abang Abdul Karim Tun Openg, brother of the current Chief Minister of Sarawak. Brooke is a government statutory body, founded in 1912 and is, aside from Petros, the state of Sarawak’s sole entity involved in upstream oil and gas.

In April 2018, Brooke signed an MOU Upland Resources (Upland), an oil junior and consultancy to jointly assess, explore for and develop hydrocarbons in Sarawak.

Upland said then the MOU was a unique arrangement within the Sarawak upstream oil and gas market, and the first such public/private collaboration with a Sarawakian entity, at a time of major change for the Malaysian oil industry.

In its announcement available on its website, the company said both Upland and Brooke enjoy good relations with Petros and are in an excellent position to assist Petros in establishing itself in its role for the mutual benefit of all parties. It added that the MOU also comes at a time of considerable change and opportunity in the Malaysian oil sector.

Upland surprisingly added that the joint venture follows meetings with, and is at the behest of, the Chief Minister and State Secretary of Sarawak and so enjoys the full backing of the State of Sarawak. It said Upland brings international experience and technical expertise whilst Brooke provides excellent local contacts.

Upland CEO Steve Staley said he believes the recent Malaysia election results will have little impact on its interests in the state of Sarawak.

“Plans for greater independence for Sarawak in upstream oil & gas were confirmed to be unchanged after the national election, the result having had little impact on this process,” the company said in a statement.

“This push for more independence in this industry is clearly popular with the people of Sarawak and enjoys broad cross-party support.”

Upland noted that Petros is now moving quickly to take on active roles as the effective Sarawak state oil company, and, it is expected that companies will need to apply to Petros for licences.

Those partnered with Sarawak companies are expected to be given preference in the award of permits, he added.

“During our visit to Kuching, we were pleased to see how the future is now unfolding in Sarawak. The recent national election result does not appear to have affected Sarawak’s ambitions for their oil & gas industry and Petros is clearly moving forward with its plans at a faster pace than we expected.”

A bold statement by an opportunistic CEO of a foreign company. It begs the question if Petros and Sarawak, for all its clamouring about wanting independence and having local expertise, is still in awe of foreigners over Malaysians?

The action by Brooke and statement by Upland is in direct contradiction with the Chief Minister who was quoted as saying “Local companies involvement will be further enhanced with participation in contracts and supply of services offered by Petros,” He further confirmed the state government will issue guidelines to Petros to ensure greater and more meaningful participation by Sarawakians and Sarawak companies in this sector.

The move by Brooke also seems to be a stab in the back for Petronas, which signed two contracts worth RM480 million with Brooke in 2017 to undertake work on Bokor Phase 3 Re-development and Anjung Gas Development projects offshore Sarawak.

The first contract, worth approximately RM290 million and awarded on 12 April 2017, was for the provision of front-end engineering design and detail engineering, procurement, construction, installation and commissioning of three wellhead platform for the Bokor Phase 3 Re-development project.

The second contract, estimated at RM189 million and awarded on 25 April 2017, was for the provision of engineering, procurement, construction and commissioning of one wellhead platform and jacket for Anjung Gas Development Project, 200km offshore Bintulu.

Petronas said in a statement back then the partnership with Brooke Dockyard started 20 years ago, adding the contract awards are a testament of its commitment to support the Sarawak’s aspiration to grow local expertise that add value to the industry. “We are pleased to be associated with Brooke Dockyard, a company that is equally committed to this cause.”

As the intrigue builds, the people of Sarawak must ask the question if Brooke, Petros and its puppet masters are still committed to this cause, and if so, how is working with foreign companies better than partnering home-grown champions?

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