Sabah will retain its gas after Petronas decided to shut down the Sabah-Sarawak Gas Pipeline (SSGP), which has been in operation since 2014.

The 500-km pipeline, stretching from Sipitang to Sarawak’s LNG complex in Bintulu, has been plagued by leaks and costly repairs, making it financially unviable.

Finance Minister Datuk Seri Masidi Manjun said the decision aligns with Petronas’ changing priorities and the construction of offshore ZLNG facilities in Sipitang.

Masidi is Sabah’s go to person on matters related to oil and gas.

“My understanding is two things. First, I think Petronas is reconsidering its priorities, given that the gas pipeline between Sipitang and Bintulu has been facing many challenges.

“Second, Petronas is also building an offshore facility in Sipitang. So, during the negotiations, we felt that the gas should stay in Sabah because it comes from Sabah.

“In any case, it makes financial sense because every time there is a problem, the cost of repairing the very, very long gas pipeline is extremely high.

“Even from the beginning, there were what we call leakages that resulted in very expensive repairs,”Masidi said at a Chinese New Year event in Kota Kinabalu on Thursday.

A Reuters report cited Petronas’ plans to decommission the 500km Sabah-Sarawak Gas Pipeline, which has faced persistent issues since 2014.

The decision is part of its broader decommissioning strategy, which includes plugging 153 wells and dismantling 37 offshore facilities over the next three years.

This follows the lifting of force majeure in November 2024 on gas supply to Malaysia LNG Dua, which was shut down in 2022 due to a leak.

With the pipeline decommissioned, Sabah’s gas will no longer be exported to Bintulu, raising concerns over potential financial losses.

Masidi dismissed such worries, insisting that Sabah would not be affected.

“No, no, not at all. I don’t think so. In fact, I think it’s not proper for me to reveal here, but I believe we can actually benefit from this. It doesn’t look good to say we are benefiting from someone else’s problems, but what I am saying is that we are not losing anything. I think that’s a better way to put it,” he said, without elaborating.

For over a decade, Bintulu’s LNG complex—one of the world’s largest—has processed gas from Sabah for both local and international markets.

With the pipeline’s closure, questions remain over its impact on Sarawak’s gas supply.

Masidi acknowledged Bintulu’s role as a key processing hub but said Petronas is exploring alternatives.

““Don’t forget, Bintulu is where the LNG plant is. It’s one of the largest plants in the world. That’s why from the beginning, all the gas was channeled there,” he said.jis

The move comes as Sarawak tightens its grip on its gas industry through state-owned Petros, sidelining Petronas from domestic distribution. – January 30, 2025