On Dec 7, 2021, Sabah chief minister Hajiji Nor signed a landmark commercial collaboration agreement (CCA) with the national oil company, securing greater participation, decision-making power, and revenue-sharing for the state and its contractors.
Dionysia Kibat, CEO of SMJ Energy Sdn Bhd, which manages Sabah’s participation across the entire oil and gas value chain, told FMT the CCA has given the state “greater say, greater participation, and greater revenue sharing”.
She attributed the rise in local contractor wins to stronger policy support, targeted skills development, and local participation made possible under the CCA’s oil and gas services and equipment (OGSE) sub-committee.
“Before the CCA, we always heard that Sabahan contractors weren’t capable because they didn’t have the exposure, so they could not bid for projects. Maybe they did (small jobs like) logistics or catering; but not the high-skill ones,” she said.
The RM2 billion project value secured last year was shared equally between local contractors in Sabah and Sabahan firms operating outside the state.
In the first eight months of this year alone, a total of RM1.53 billion worth of OGSE contracts was awarded to Sabah-based contractors, a significant increase compared with RM613 million for the entire 2021.
Dionysia said policy intervention was necessary to ensure Sabahans do not lose out on opportunities available in the state.
“We increase the capacity, the capability. We make sure that there is no Ali Baba arrangement,” she said, referring to situations where contracts are awarded to locals in name only while outsiders do the work and take the profits.
To bolster Sabah’s role in the oil and gas value chain, SMJ Energy has taken the lead in driving local participation, most notably through the Sabah Local Content Council, a platform for industry players to collaborate, build capacity, and push for fairer access to opportunities.
The council’s local content policy requires companies to procure a set percentage of goods and services from local businesses.
In the exclusive interview, Dionysia said acquiring oil and gas assets would be meaningless if the human element was overlooked.
“You need a win-win situation where you win, your contractors win, and Sabahans win. When you have better capabilities and the whole ecosystem progresses, then everybody can have a better life in the future,” she said.
The CCA represents a landmark achievement by the Hajiji administration in reclaiming Sabah’s rights under the 1963 Malaysia Agreement (MA63).
Multiplier effects
Sabah’s expanded role in gas strategy has triggered multiplier effects across the wider economy, even if some of the indirect benefits are less visible and harder to measure.
“Employment is a direct impact, but because of the investments coming in, such as from Esteel Sabah and Kibing Solar, you also have expanded supply chains and industrial parks.”
Esteel Sabah is a major steel manufacturing venture with an estimated RM31 billion investment into the Sabah Oil and Gas Industrial Park (SOGIP). backed by Singapore’s Green Esteel Pte Ltd.
Kibing Solar is a major Chinese glass manufacturer looking to invest more than RM10 billion in two solar glass plants in the state.
As an example, Dionysia said even a basic task like delivering a pipe to an industrial park would trigger the need for various supporting services, from logistics to communications.
“Everything will be in the move. So the multiplier effect is significant, not only from big activities but even smaller ones,” she said, adding that it will also bring the locals in the surrounding areas job opportunities and additional exposure.
According to Dionysia, SMJ works closely with the state government to create high-value industries and high-skilled jobs.
“For development projects such as Kota Kinabalu Industrial Park and even SOGIP, the state can identify the types of investments it wants to attract and discuss with the relevant agencies to determine the gas requirements needed by those investors,” she said.
SMJ Energy is currently securing gas supply for a RM20 billion hot briquetted iron plant by E-Steel Enterprise Sdn Bhd (across three phases), and Phase 2 of SBH Kibing New Solar Energy Sdn Bhd’s RM7.2 billion solar glass facility.
It is also supporting the development of the Sabah Gas Master Plan in collaboration with Petronas, alongside efforts to advance the state’s geothermal energy ambitions.