License freeze, Sabah O&G contractors in the cold

It's ironic that Petronas' RM45 billion O&G project in Sabah may not have local contractors' participation.

KOTA KINABALU: National oil company, Petronas’ decision to put a freeze on upstream oil and gas industry license renewals and registrations will basically block Sabah O&G contractors from competing for its RM45 billion mega project contracts.

Integral to Petronas’ RM45 billion plan is the Sabah-Sarawak Integrated Oil and Gas Project which encompasses upstream development of offshore O& G fields and downstream development of Sabah Oil and Gas Terminal and the Sabah-Sarawak Gas Pipeline.

Petronas’s announcement was received with mixed feelings in Sabah and excitement simmered among local contractors who saw it as a sound business opportunity.

But any prevailing enthusiasm over the RM45 billion project hit a wall recently when Petronas informed contractors that there was a freeze of license renewals.

According to Malay Chambers of Commerce Sabah president Awang Buhtaman Awang Mahmun, Petronas had last month sent out letters to contractors saying they were suspending the renewals of licenses and registration of applications.

He said the reason given in the letter was that Petronas was upgrading its database.

A disappointed Awang Buhtaman said there had been a lot of interest among local contractors ever since Petronas announced the mega project.

“We have seen a lot of interest and our contractors are willing to bid for contracts and be part of the project.

“But now with the suspension on license renewals, it makes it impossible for us to participate in the project.

“An active license is important if you want to participate … we are expecting a lot of invitations to bid in January but with the renewal of licenses suspended, it will not be possible for us to take part,” he said.

Petronas too stringent

Petronas is replacing its existing eLARIS.net system with a new license and registration application system. The new system will take effect in January.

In preparation for the smooth implementation of the new system, Petronas had frozen all applications for new licenses and registrations beginning Oct 1 until the end of the year.

Awang Buhtaman said that although they received Petronas’ letter there has been no briefing yet on the new system

He also raised contractors’ concerns over the lack of vendor development programme (VDP) in Sabah.

He said Petronas, strangely enough, did not have a physical registration and renewal counter Sabah and contractors wishing to register or renew had to fly to Kuala Lumpur to do it.

“Petronas is very stringent. If a document is missing we are required to reproduce the whole set instead of just the document.

“Currently we have to do the documentation manually and fly to Kuala Lumpur to renew our licenses. The process takes a long time and is a lot of hassle,” he said.

While he urged Petronas to lift the freeze on renewals, he also added that it was time Petronas introduced an instrument to enhance the participation and capacity of local Sabahans to start off with the VDP in Sabah.