KUALA LUMPUR, 7 Nov 2008: The gas pipeline project from Kimanis, Sabah to Bintulu, Sarawak will stay. But Sabah will now get its own petrochemical industry using the bulk of the state’s oil and gas resources. Only excess gas will be channelled to Bintulu via the pipeline.
With this new development, it looks like Upko (United Pasokmomogun Kadazandusun Murut Organisation), which has been threatening to review its position in the Barisan Nasional (BN) over the project and several other grouses, may remain in the coalition for now.
Upko president Tan Sri Bernard Dompok said in a press statement that the cabinet made the decision today on Sabah getting its own petrochemical industry after he raised the pipeline issue.
Upko has said it might review its position in the BN if the pipeline, to be built by Petronas, was not scrapped. The party, which has four Members of Parliament, has been against the project on the grounds that it denies Sabah access to its own gas resources while only earning 5% royalty in return.
“I raised the pipeline [issue] in the cabinet meeting today and the cabinet has agreed to establish a full-fledged petrochemical industry in Sabah using oil and gas from the state. Only excess gas will be channelled to Sarawak because the pipeline from Kimanis to Bintulu will be continued,” said Dompok, who is also a federal minister in the Prime Minister’s Department.
He thanked the federal government on behalf of Upko and the people of Sabah, as a petrochemical industry would be a catalyst for the state’s economic growth.
“Sabah has all the while been left behind in the oil and gas industry even though it is one of the three oil-producing states in Malaysia,” he said.
The 500km, RM1.5 billion pipeline has drawn the ire of political parties in Sabah, more so after Prime Minister Datuk Seri Abdullah Ahmad Badawi made an about-turn on 1 Nov, by saying that the project would go on. On 31 May, when meeting Sabah BN leaders after the general election, he had said the project would be scrapped.
The pipeline is expected to be operational in 2011 and work is under way. It was originally meant to link a gas landing point in Kimanis to Bintulu, where gas would be processed and exported as liquefied natural gas.
It is not clear where the new petrochemical plant for Sabah will be built.