Sabah Energy Corporation signs major gas supply deal with Petronas

SABAH Energy Corporation Sdn Bhd (SEC) signed an agreement with Petronas to supply 150 million standard cubic feet per day (MMscfd) of natural gas - 100 MMscfd for manufacturing and 50 MMscfd for power generation.

The supply, valued at RM1 billion annually, will go to Esteel Enterprise Sabah Sdn Bhd.

“This agreement marks a crucial step towards Sabah’s long-term development goals, promoting industrial growth, energy security, and new opportunities for progress.

“We look forward to continuing our collaboration with Petronas while safeguarding Sabah’s best interests,” said Chief Minister Datuk Seri Hajiji Noor after witnessing the signing at Menara Kinabalu in Kota Kinabalu.

Under the agreement, Petronas will supply an additional 104 MMscfd of natural gas to SEC, bringing the total supply to 370 MMscfd to support Sabah’s industrial and energy needs.

Petronas was represented by Senior General Manager of Integrated Hydrocarbon Management MPM, Anuar Ismail, while SEC was represented by its CEO, Datuk Adzmir Abdul Rahman.

Petronas Senior Vice President of MPM, Datuk Ir. Bacho Pilong, highlighted the company’s commitment to providing reliable energy solutions that contribute to Sabah’s growth while supporting sustainable energy use.

SEC maintains a gas delivery efficiency of 98% and continues to enhance its technical capacity and operational efficiency to drive growth in the energy sector.

The gas supply will support Esteel’s green steel project, expected to begin operations in the fourth quarter of 2027 on a 180-hectare site.

Phase 1 of the project, with an investment of USD 1.93 billion (RM8.92 billion), will create 2,795 direct jobs and produce 2.5 million tonnes of cleaner hot briquetted iron.

The three-phase project is expected to attract a total investment of USD 4.39 billion (RM19.6 billion).

It will use natural gas as a reducing agent instead of coke and coal, reducing carbon emissions by 70% and ensuring a low-carbon, efficient, and environmentally friendly operation.

Hajiji said the project reflects Sabah’s confidence in green steel as a pillar of economic growth and state development strategy.- February 28, 2025