KUCHING: Petroliam Nasional Bhd (Petronas) would risk financial ruin if the state government pursues its demand for greater royalty from the oil and gas industry in the midst of a challenging economic environment and while oil prices are low.
Chief Minister Datuk Amar Abang Johari Abang Openg said it would be a tremendous burden for the national oil company to grant such a request now, while oil prices are currently hovering at between US$50 (RM220) and US$55 (RM242) per barrel.
"If Sarawak was to raise the state's oil royalty to 20 per cent, Petronas would have to provide the same amount to the Federal government.
"And when the cost of production is quite high, Petronas will likely close shop.
"(We in the state government) are rational people, and not emotionally-driven in this pursuit," Abang Johari told reporters after his working visit to the Sarawak police headquarters at Jalan Baharuddin here, today.
Also present were State Secretary Tan Sri Mohamad Morshidi Abdul Ghani and Sarawak police commissioner Datuk Mazlan Mansor.
Since Petronas is unable to grant Sarawak's request for greater oil royalty at the moment, he said the state government is looking into other ways Sarawak can benefit from the oil and gas industry.
Abang Johari, who is also the State Natural Resources Planning Minister, said options include tapping into marginal fields of oil and gas reserves, as well as other related downstream activities in the state.
"We have some common platforms between Petronas and our side, which I cannot divulge.
"One thing for certain is that Petronas is helping us to be involved in the oil and gas industry," he added.