KOTA KINABALU: Sabah's oil and gas services and equipment (OGSE) industry has secured RM2bil in contracts from PETRONAS and Petroleum Arrangement Contractors (PACs) between 2021 and 2024.
Of this, RM1bil was awarded in 2023 alone, marking a 229% increase from RM613mil in 2021.
Chief Minister Datuk Seri Hajiji Noor attributed this success to collaborative efforts following the signing of the Commercial Collaboration Agreement (CCA) with PETRONAS in December 2021.
This initiative has helped sustain and enhance the capabilities of Sabahan vendors, with the number of local OGSE companies increasing by 91%, from 79 to 151 during the same period.
Speaking at the Sabah OGSE Vendors Commemoration at the Sabah International Convention Centre on Thursday (Jan 23), Hajiji commended PETRONAS for its commitment to fostering a vibrant and sustainable oil and gas ecosystem in the state.
His speech was delivered by Finance Minister Datuk Seri Masidi Manjun.
The CCA has paved the way for strategic initiatives such as the Sabah Mentorship Programme, a joint effort between PETRONAS and the Sabah Government.
This initiative pairs experienced technical service providers with local vendors, facilitating knowledge transfer, collaboration, and skills development aligned with Sabah’s oil and gas sector.
"The programme has not only empowered Sabahans with the necessary expertise but has also strengthened the pipeline of qualified vendors, ensuring a sustainable future for the industry," Hajiji said.
To further support local businesses, the Sabah Local Content Council was established under SMJ Energy (SMJE) in May 2023, providing a platform for industry stakeholders to address challenges and identify opportunities for enhancing local content capacity.
In line with these efforts, the state government has mandated industry players to invest in training and development programmes for Sabahans, set to roll out in 2025.
Hajiji spoke of the importance of prioritising Sabahan employment in all projects and operations within the state.
"I urge all industry players to adhere to this fundamental requirement as a core principle of our local development agenda," he said.
He expressed satisfaction that 88 Sabahan vendors had successfully secured contracts and purchase orders from PETRONAS and PACs in 2024.
Among them, four companies secured contracts for complex projects, including Integrated Well Continuity Services (IWCS), marking a milestone for the state’s OGSE sector.
"This demonstrates the trust and confidence PETRONAS and PACs have placed in Sabahan companies, empowering them to take on critical roles in the oil and gas value chain," Hajiji added.
Hajiji reaffirmed the State Government’s commitment to supporting Sabah OGSE companies in creating a thriving business environment.
"I encourage Sabah OGSE companies to up their game by bidding for larger, more complex projects. Those with limited technical capabilities should seek strategic partnerships locally and internationally," he said.
He also urged companies to leverage market intelligence to explore new revenue streams, expand operations, and create job opportunities for Sabahans.
During the event, PETRONAS vice president of group procurement, Rashidah Alias, recognised the outstanding growth of Sabah’s OGSE sector, with 88 local vendors securing contracts in 2024, an increase from 25 in 2023 and just 10 at the event’s inception in 2022.
The ceremony included the awarding of contracts to four Sabahan vendors for IWCS, covering well interventions, well abandonment, workover operations, and subsea intervention.
Additionally, PETRONAS awarded three contracts under the Pan-Malaysia Offshore Maintenance, Construction and Modification (MCM) and Hook-Up and Commissioning (HUC) services to four local vendors.
PETRONAS Malaysia Petroleum Management senior vice president, Datuk Bacho Pilong, highlighted the company’s unwavering commitment to Sabah’s development.
"Over the years, PETRONAS and Sabah have built a strong partnership rooted in mutual growth, resource management, and advancing the state’s energy sector," he said.
PETRONAS has also supported the Sabah OGSE ecosystem through the Vendor Financing Programme (VFP), facilitating over RM120mil in financing for 17 Sabah companies since 2018.
Beyond the OGSE sector, PETRONAS has invested more than RM425mil in Sabah since 2010, benefiting over 1.3mil individuals through education and human capital development initiatives.
Sabah Oil and Gas Service Council (SOGSC) president Datuk Harris Anuar Tan praised the collaboration between the state government, PETRONAS, SMJE, and SOGSC for empowering local businesses and enabling them to secure high-value tenders.
Persatuan Kontraktor Petroleum Bumiputera Sabah president Mohd Safian Saludin commended SMJE’s enforcement of new tender requirements, which mandate collaboration with local contractors, enhancing knowledge transfer and job opportunities.
Veteran oil and gas professional and SOGSC advisor Datuk Willie Ng highlighted the impressive growth in Sabah-based companies, which increased from 263 in 2022 to 475 in 2024, an 81% surge.
Active companies grew from 79 to 150, creating over 1,000 new jobs.
Through SMJE, the Sabah Government remains committed to strengthening the OGSE industry by enforcing new requirements that promote collaboration between local and non-Sabahan companies, leading to greater knowledge transfer and employment opportunities.