Kota kinabalu: The Sabah government, through its entity SMJ Energy Sdn Bhd, has taken a strategic step by signing a head of agreement (HoA) with Petronas LNG Sdn Bhd. This agreement entails acquiring a 25% equity stake in the US$3.1 billion (RM13.17 billion) nearshore floating liquefied natural gas (ZLNG) facility located in Sipitang. The ZLNG facility, which is currently under construction, is scheduled to become operational in the latter half of 2027.
According to BERNAMA News Agency, Chief Minister Datuk Seri Hajiji Noor emphasized that this partnership represents a crucial milestone in Sabah’s efforts to achieve long-term development objectives. These goals include stimulating industrial growth, bolstering energy security, and creating new opportunities to propel the state’s advancement. Hajiji stated, “Through strategic investments such as ZLNG, we will strengthen the state’s economic resilience while ensuring that the benefits of Sabah’s natural resources directly contribute to the well-being of our people.”
The signing of the HoA was witnessed by Hajiji and Petronas’ group president and CEO, Tan Sri Tengku Muhammad Taufik, at the Malaysia Petroleum Club. The Chief Minister highlighted that the ZLNG facility’s capacity of two million tonnes per annum (MPTA) marks a significant enhancement to Malaysia’s LNG landscape. This project complements Sabah’s expanding LNG footprint, alongside two other floating LNG facilities, PFLNG1 (1.2 MTPA) and PFLNG2 (1.5 MTPA), currently operating in Sabah waters.
Furthermore, the state government has announced its intention to acquire a 40% participating interest in PFLNG1 through SMJ Energy, with due diligence expected to commence in the second half of 2025. SMJ Energy has experienced rapid growth since signing the commercial collaboration agreement (CCA) with Petronas in December 2021. The company now holds significant stakes, including a 50% equity stake in the Samarang production sharing contract (PSC) oil production asset, 10% equity in LNG9, 25% equity in the Sabah Ammonia Urea (SAMUR) petrochemical complex, and full ownership of Sabah International Petroleum (SIP), which operates both Floating Production Storage and Offloading (FPSO) and floating storage and offloading (FSO) assets.
Additionally, SMJ Energy possesses free carry and back-in rights in exploration blocks SB409 (20%), SB403 (20%), SB306A (15%), and SB306B (15%). SMJ Energy’s CEO, Datuk Dr. Dionysia Kibat, noted, “We are a prudent financial investor with a disciplined approach to portfolio building. Our entry into ZLNG is part of our strategic plan to further diversify and strengthen our position in the upstream, LNG, and petrochemical sectors. This opportunity aligns with our mandate to generate long-term, stable cash flows from high-quality, cash-generating assets.”
Sabah’s downstream ambitions are progressing rapidly, with Sabah Energy Corporation (SEC) playing a crucial role as the state’s gas aggregator and distributor, ensuring a stable domestic gas supply for Sabah’s industries. One of the landmark projects involves supplying gas to E-Steel’s RM31 billion green steel plant at the Sipitang Oil and Gas Industrial Park (SOGIP), a significant investment supporting Sabah’s industrial diversification.