SPEECH BY THE RIGHT HONOURABLE CHIEF MINISTER OF SABAH, Y.A.B DATUK SERI PANGLIMA MUSA HJ AMAN, AT THE LAUNCH OF SABAH ENERGY CORPORATION SDN BHD'S COMPRESSED NATURAL GAS PROJECT VIA A VIRTUAL PIPELINE SYSTEM, AT GRAND BALLROOM, THE PACIFIC SUTERA RESORT, KOTA KINABALU, ON 19TH JULY 2012

I am pleased to join you here today to launch Sabah Energy Corporation Sdn Bhd's Compressed Natural Gas Project via a Virtual Pipeline System. I am glad to learn that SEC has signed an Engineering, Procurement, Construction and Commissioning (EPCC) contract with Galileo of Argentina and Frugas Synergy Sdn Bhd. In addition, SEC has signed two natural gas Sales and Purchase agreements with Ching Kuan Holdings Sdn Bhd and Colourcoil Industries Sdn Bhd. I am sure a lot of effort was put into ensuring all required issues were resolved to the satisfaction of all parties concerned, and I commend SEC for making today's launch a reality.

Currently, the natural gas market handled by SEC is small and geographically scattered. Due to these factors, it is not economical for SEC to distribute natural gas through the conventional way of underground pipelines. This virtual pipeline is an alternative, and I am happy to note that SEC has taken the initiative to introduce this technology in Malaysia.

Apart from the fact that our state will be the first in Malaysia to adopt this approach, I take note that natural gas, a resource that is so vital to us here in Sabah, can be brought to a wider spectrum of users. As stated by Dato' Harun earlier, it is accessible to users who are located up to 70 kilometres from SEC's station at the Kota Kinabalu Industrial Park (KKIP). I believe SEC is currently also exploring the possibility of bringing natural gas to the east coast of Sabah, and south to the Sipitang area. I encourage you to actively pursue these options as I would like to see the benefits of natural gas made available throughout the state.

I was informed that gas delivered by SEC to its customers will be cheaper than other fuels. This will translate into cheaper cost of production, complementing the State Government's efforts to make business activities in Sabah more cost competitive. From a macro level, oil that commands a premium price in the overseas market can be exported to bring in more foreign exchange to the country.

Natural gas is also a cleaner burning fuel compared to other types of fossil fuel. Using natural gas would therefore translate into less pollution. This is very important when viewed from the context of the State Government's focus towards ensuring that our growth sectors practice initiatives that stress on environmental protection and sustainability. Such a move also fits in with our focus on promoting Sabah as an eco-tourism destination. My message to sectors that use highly polluting fuels is to seriously consider switching to natural gas, so that we can all enjoy a cleaner environment.

Let me now turn to the issue of oil and gas reserves. History tells us that in the case of our timber sector, Sabah did not take full advantage of the resource and instead focused on exporting round logs. We did not place enough emphasis on adding value to our timber, which could have created untold spin offs for the state and the people. Today, the focus has shifted to the oil and gas sector, and we must not miss the opportunity of leveraging on benefits of these two resources through the creation of value added sectors locally. I wish to stress that we are committed in making the best use of oil and gas reserves found offshore Sabah.

In order to achieve this goal, the Sabah State Government is collaborating with Petronas to channel the benefit of oil and gas in invigorating the local economy. Efforts are already taking shape through several projects, such as the Sabah Oil and Gas Terminal (SOGT), the Sabah-Sarawak gas pipeline, the Sabah Ammonia Urea Project (SAMUR) and the Sipitang Oil and Gas Industrial Park (SOGIP). To meet demand for electricity and to ensure that it comes from cleaner sources, gas fired power plants are coming up in Kimanis and Lahad Datu, each with 300 megawatt capacities. Billions are being spent on making these projects reality.

The oil and gas sector is an exciting one and I urge those keen to participate to play an active role. There are many opportunities, and key among them will come from the downstream sector. I also wish to see locals gaining from quality employment and the creation of new entrepreneurs as the sector grows in years to come.

SEC has been given the task to be a key facilitator in the State Government's efforts to maximise local participation in the oil and gas industry. For the SAMUR initiative, SEC has been appointed as an associate to the Consortium running the project. I note that SEC has transformed itself into a dynamic and credible company since its establishment in 1981, and despite challenges that it has faced, the company has constantly worked towards delivering the best. With your track record, I am confident that you will play a significant role in Sabah's future growth, specifically through the oil and gas sector. I am also happy to note that SEC has consistently declared dividends to the State Government, and I wish you continued success.

I must take this opportunity to encourage SEC and other government linked companies to constantly think out of the box, and to create ventures that will increase your worth. Globalisation demands that we keep up with a fast paced world in order to remain competitive and relevant.

On that note, I am pleased to launch SEC's Compressed Natural Gas Project via a Virtual Pipeline System.

Thank you.