A PROMISE has been made. But the Sabah people are not yet rejoicing at the potentially huge rewards of having their own full-fledged petrochemical industry.

The federal decision on Friday lacked details and industry players are worried that it is just a pipe dream, and not something as concrete as the decision to build a 512km gas pipeline from Kimanis in Sabah to Bintulu in Sarawak.

Industry players and observers hope that Kimanis on the state's west coast will be turned into a "petroleum city" in the likes of Miri and Bintulu.

One concern, however, lies in the phrase "excess gas", that which will be pumped to Bintulu, when the cabinet announced that the pipeline would be built and a petrochemical industry developed for Sabah.

Sabah Oil and Gas Contractors Association vice-president Albert Boyou said it was unclear how much of the natural resource would actually be used for the proposed petrochemical industry and how much would be pumped to Petronas' liquefied natural gas complex in Bintulu.
"We don't know right now if the reserve we have is sufficient for both states. We also don't know if the petrochemical industry in Sabah will be developed first, or if the pipe-line will be constructed first.

"The pipeline is a massive investment and if it is developed, there must be enough gas to feed it. The 500km distance is very long and it involves constructing a line that passes through 300 rivers and streams and mountainous regions. It would be illogical for it to be developed simply to have excess gas pumped to Bintulu. So we have to be clear on this."

The media reported in March that Petronas Carigali Sdn Bhd awarded a contract worth RM1.6 billion to a consortium led by Dialog Group Bhd to build the gas pipeline, expected to be ready by 2011. The consortium comprises Dialog E&C Sdn Bhd, India's Punj Lloyd Ltd and Sabah's Petrosab Logistik Sdn Bhd.

A month later, a subsidiary of Wah Seong Corp Bhd won a RM390 million contract to manufacture, coat, deliver and store pipes for the project.

Minister in the Prime Minister's Department Tan Sri Ber-nard Dompok, who related the cabinet's decision, said Petro-nas had been entrusted with making sure a full-fledged petrochemical industry was set up and that most of the supply would be used for the development of related sectors.

Sabah's gas reserve is estimated at 7.5 trillion cubic feet.

Various quarters in Sabah had protested against the pipeline, demanding that the gas be used to generate electricity or for industries in the state. At one point, Dompok's party was rumoured to be even considering pulling out of Barisan Nasional if the pipe-line project was not called off.

Boyou reiterated this sore point.

"Gas can be used to generate power. Here we are talking about building a coal-fired plant which could be environmentally unfriendly. We need natural gas that is available in Sabah not just to develop the petrochemical industry, but also for our power supply needs.

"We need assurance that we will actually get our own petrochemical industry as there is also a lot of potential in the downstream sector.

"We have skilled locals who are being driven away to Sa-rawak, Terengganu and Arab states because there is nothing for them to do here."

Universiti Malaysia Sabah has even set up the Tun Ahmadshah Oil and Gas Academy at its School of Engineering and Information Technology to train locals and conduct research in the petrochemical sector, utilisation of gas and in renewable energy.

An observer echoed Boyou's sentiments, saying it was odd for Petronas to not want to build a pipeline from Sabah's west coast to the east coast for power generation needs there, considering that it was a shorter distance compared to the Bintulu LNG plant.

"Sabah is being milked of its resources. It has lost its timber, even many of its oil palm plantations are owned by companies from outside the state. Yet from what we know, Petronas does not seem keen on assisting Sabah in overcoming its electricity shortage woes, let alone developing a petrochemical industry.

"It is a real issue and something we in Sabah are concerned about. It should not be viewed as a political issue," the observer said, in reference to Dompok, who is also United Pasok Momogun Kadazandu-sun Murut Organisation (Upko) president, raising the matter on numerous occasions.

Upko has been vocal about the matter, raising it at its October congress. Youth wing information chief Monih Epin had even said that the development of the oil and gas industry in Sabah would help with economic growth but that Petronas did not seem interested in helping out.

Institute for Development Studies (Sabah) executive director Datuk Dr Mohd Yaakub Johari said oil and gas resources must bring direct benefit to the state.

"Sabah has a high level of poverty and this should not be happening considering that the state has many natural resources. Sabah people are not being selfish. We have yet to be assured that extraction of oil and gas (from reserves off the state) will benefit all stakeholders in an equitable manner. The onus is now on Pet-ronas. It has to be responsible for concerns at state level."



Federation of Sabah Manufacturers president Datuk Wong Khen Thau said it was difficult to give a correct perspective on the issue as it has never been clear how the pipe-line would benefit the state.

"If sending gas to Sarawak and having it sent back here (after processing) is the cheapest option, then maybe it is all right, but we really don't know. The government must conduct a detailed study to look at the needs of all concerned."





With poverty standing at 16 per cent and imbalances in regional growth, issues which the Sabah Development Corridor blueprint is hoping to address, a petrochemical industry with all its spin-offs may just be the answer -- but only if it becomes a reality, not a dream as gas is piped away to Sarawak.