THE people of Sipitang, a district with a population of around 35,000, are reported to be excited over the construction of a mega ammonia-urea plant by Petronas. Although the project is expected to start only next year, local folk are already talking about the prospect of an exciting time ahead.
Several residents in Sipitang have expressed hope that the proposed Sabah Ammonia and Urea Project (Samur) would spur economic activities in and around this town, whose majority population are still engaged in subsistence farming and fishing.
Petronas Chemicals Group Bhd shares at the Kuala Lumpur stocks exchange advanced on July 1 after the company announced the previous day it would proceed with its US$1.5 billion Sabah ammonia urea project which would have urea capacity of 1.2 million tonnes per annum.
It said on June 30 the plant would be built on 166 acres in the Sipitang industrial park in Sabah. The RM1.5 billion development cost would be financed from internal cash reserves and external borrowings.
Closest to Sarawak
Sipitang is the closest town in Sabah to the Sarawak border, and is 44 km south of Beaufort and 144 km south of Kota Kinabalu, the state capital.
Sipitang was a territory of the Brunei sultanate before 1884. On Nov 5, 1884, the Brunei Sultan ceded his territory, from Sipitang to the British North Borneo Company (BNBC).
The major economic activities in Sipitang district are timber related. A pulp and paper mill plant was constructed in 1987 and is operated by Sabah Forest Industries, currently a subsidiary of Indian company, Ballarpur Industries Limited.
Generally, these activities do not directly benefit the locals. Most of the locals are still involved in subsistence farming and fishing.
The town is set to become one of Sabah’s oil and gas industry centre following decision by the national oil company Petronas to build the Sabah ammonia and urea plant in this town.
According to a report by Bernama, Liaw Sin Kuang originally from Sipitang said the proposed Samur project would definitely bring a new economic era for this district.
“Of course, this huge Petronas project will create spin-off opportunities to the locals and it will be a challenge for the local authorities to improve infrastructure facilities in this town to cater for the expected influx of visitors.
“Even now, the town is already quite busy because Sipitang is the entry passage to Sabah for people coming from Sarawak and Brunei,” says Liaw, press secretary to the State Minister for Agriculture and Food Industries.
Oil & gas centre
Liaw said the Samur project was indeed very good and welcomed as it would not only help Sipitang to become an important oil and gas centre in Sabah but would also create many businesses and jobs for the locals.
“I think it’s important for Sipitang folk to think ahead on how to fully capitalise on the spin-off opportunities from this huge project, including the prospects of harnessing the tourism sector,” he said.
Another civil servant, Liman Yusof said that by logic, the Samur project would bring economic impact to the people in Sipitang district.
However, infrastructure facilities needed to be developed to support the plant’s operations.
Petronas general manager (Sabah and Labuan regional office) Joseph Podtung (left) said the fertiliser plant in Sipitang would create opportunities for enterprising Sabahans to venture into ammonia-related businesses such as textile, melamine and adhesives.
He said the Samur project, slated for completion in 2014, would provide the impetus to transform Sabah into one of the region’s largest fertiliser producers.
Fertilisers from this facility would be exported to lucrative overseas market, while a sizeable volume would still be made available to serve Sabah’s rapidly-growing agricultural sector.
Podtung says these projects will transform the landscape of Sabah’s oil and gas industry into a vibrant oil and gas centre in the region.
Will benefit Sabahans
Petronas is confident that its multi-billion ringgit key projects planned for Sabah as a whole would provide tremendous opportunities for present and future generations of people in the state.
Podtung said these projects would transform the landscape of Sabah’s oil and gas industry into a vibrant oil and gas centre in the region.
Podtung however said Petronas’ mega projects in Sabah were not just about providing opportunities but also required the readiness of the local industry to fully grab them.
“Capacity and capability require time to develop, and it is worth noting that the expected benefits and spin-offs will only materialise in the long term.
“Based on Petronas’ experience in Kerteh and Bintulu, it took decades for these places to be what they are today,” he said.
Podtung was presented an overview of Petronas’ activities in Sabah at the recent two-day Sabah Oil and Gas Industries forum, organised by the Sabah Oil and Gas Contractors Association (SOGCA) in Kota Kinabalu.
He said Petronas’ efforts in developing Sabah’s oil and gas resources had generated substantial revenues, allowing the national petroleum company to pay the state petroleum royalty totalling RM6.8 billion since 1976, while its total investment to date was RM63 billion.
“Our ongoing exploration and development activities in the state have resulted in steadily growing production of oil and gas, contributing to a steady increase in petroleum royalty paid to Sabah.
“All these royalty payments contribute significantly to the state’s fiscal revenue, which in turn will benefit the rakyat,” he said.
On Petronas’ key projects in Sabah, Podtung said the Sabah-Sarawak Integrated Oil and Gas Projects (SSIOGP) would be the cornerstone of an integrated oil and gas master plan for Sabah.
Commenting on Petronas’ planned to build a RM4.6 billion Ammonia-Urea plant in Sipitang, Podtung believed it would definitely provide tremendous spin-off opportunities for the local down-stream small-and-medium industries and enterprises.
“Fertilisers from this facility will be exported to lucrative overseas markets, but a sizeable volume will still be made available to serve the state’s rapidly growing agricultural sector.
“Ammonia can also be used for various end applications such as textiles, melamine and adhesives, creating opportunities for enterprising Sabahans to venture into these businesses.
“This in turn will create more jobs and spur greater economic activity,” he added.