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With the Sabah crisis still up in the air, the state's massive potential in the oil and gas (O&G) industry may see some reassessment if it turns into a prolonged engagement.
Apart from national oil company Petroliam Nasional Bhd (Petronas), big oil players include ConocoPhilips Co and Royal Dutch Shell plc, their operations are some distance away from the eastern coast of Sabah where the incursion took place.
Petronas officials were not available for comment, but MIDF Research Sdn Bhd analyst Aaron Tan Wei Min said the national oil company is not expected to be affected. Tan also expects foreign oil companies to be unaffected but they will put more thought about future investment in Sabah if the troubles prolong but he added that "it's unlikely that investors would shy away in a significant way."
"After this incident, they will definitely place more emphasis on the location and area they are investing in the state," Tan told The Malaysian Reserve yesterday.
Apart from the ongoing offshore exploration and production activities, Petronas is also developing the Sabah Oil and Gas Terminal (SOGT) in Kimanis and the Sipitang Oil and Gas Industrial Park (SOGIP) where it is partnering Mitsui Co from Japan to build a urea processing plant.
Tan said examples in other hotspots in the world, like Nigeria, showed that global oil majors and services companies do still invest heavily in the region.
He said these companies are investing in the Niger River Delta in Nigeria where certain factions have caused much political and security unrest in the region.
"The reason being, certain calculated risks are worth taking," he said.
To a question on how the current event in Sabah is affecting Petronas with its current business presence and the ones that are in the pipeline for the company, Tan said the volatile Sabah situation should not have a big impact on Petronas because most of its presence is on the other side of the state.
The SOGT is located in Kimanis and SOGIP in Sipitang, both located around three-six hours south-west from Kota Kinabalu.
Also, almost all of its major oil fields are located on the west side and only one major field SB305 (concession holders are Nordic Maritime Pte Ltd and Tanjung Offshore Services Sdn Bhd) is located on the east side of Sabah, fronting Sandakan to the eastern-most tip of Sabah away from the "troubled" south-east areas, he said.
Sabah is being developed as a regional deep water and O&G services hub. Sabah's offshore O&G fields have attracted investment from international O&G companies and many fields have been developed.
The government is also actively wooing more foreign investors to the state with more deep water and other infrastructure projects being planned or underway.
"However, it is important that the current situation is resolved quickly. Militant activities in other oil-rich countries have shown how quickly the O&G industry can be disrupted," said Frost & Sullivan Asia Pacific Energy and Power Systems director Subramanya Bettadapura.
He said if the situation is prolonged or is allowed to spread to other regions in the state, investor confidence will definitely be shaken. Malaysia has been a very peaceful country with no major security concerns for the national oil company.
However, in view of the recent developments, Petronas would have to factor in external threats to its important O&G installations both onshore and offshore, Subramanya said.
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