SABAH will retain gas that was previously sent to Bintulu following Petronas’ decision to decommission the Sabah-Sarawak Gas Pipeline (SSGP) after more than a decade of operation.
The 500-kilometer pipeline, which has transported gas from Sabah’s Sipitang to Sarawak’s LNG complex in Bintulu since 2014, has faced numerous challenges, including frequent leaks that led to costly repairs.
Petronas has now decided that maintaining the pipeline is no longer financially viable.
Finance Minister Datuk Seri Masidi Manjun said Petronas is reassessing its priorities, and with the construction of offshore JLNG facilities in Sipitang, Sabah’s gas will now stay within the state instead of being exported via the pipeline.
"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. Even from the beginning, there were what we call leakages that resulted in very expensive repairs.
"Second, Petronas is also building a ZLNG 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,” he told reporters when met during the state Chinese New Year celebrations held in Kota Kinabalu, Wednesday.
The pipeline decommissioning means Sabah’s gas will no longer be transported to Bintulu, raising questions about whether the state will suffer financial losses.
Masidi dismissed concerns that Sabah would be negatively affected.
"No, no, not at all. I don’t think so. I think it’s not proper for me to reveal here, but I believe we can benefit from this..." he said.
When pressed on whether Sabah was gaining from the decommissioning work, Masidi was careful with his words.
"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."
"We will not lose out. Sabah, as a whole, will not lose anything from the cessation of gas delivery from Sabah to Bintulu."
For more than 11 years, Sarawak’s Bintulu LNG complex—one of the world’s largest—has processed gas from Sabah, feeding both domestic and international markets.
With the pipeline now being phased out, there is uncertainty over whether this will disrupt Sarawak’s gas supply.
Masidi acknowledged that the Bintulu LNG plant has always been the key processing hub, but said Petronas is now looking at other options.
"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 channelled there," he said.
"But considering the hundreds of millions in repair costs every time there’s a problem with the pipes, they feel they need to explore other alternatives, other options. And basically, what they are doing now is looking at other options to utilise the gas."
The decision to decommission the pipeline comes as East Malaysia’s energy dynamics are shifting.
Sarawak has recently asserted greater control over its gas industry through its state-owned firm, Petros, sidelining Petronas from domestic gas distribution. - January 30, 2025
