Sabah: Building a local workforce

With significant recent gas discoveries off the coast of Sabah, excitement about the country’s future as an oil and gas producer is growing. In the meantime, the national oil giant Petronas is moving forward with its plans to ensure Sabahans receive the necessary training to meet the need for skilled workers in the oil and gas fields.

Petronas’ first discovery was via the Zuhal East-1 well located in the Samarang Asam Paya Block, which was spudded in 38 metres of water and reached a total depth of 2336 metres. The estimate of gas initially in place (GIIP) is about 550bn standard cu ft (scf). The second discovery, located in Block SB312, was spudded in a water depth of 204 metres and reached a total depth of 2100 metres. Its GIIP is estimated to be about 650bn scf.

Meanwhile, Lundin Petroleum, a Swedish oil and gas exploration company, announced in mid-August its second gas discovery, with the drilling of the Cempulut-1 well in Block SB303. The well, drilled to a total depth of 1095 metres, has a gross total vertical pay thickness of approximately 50 metres.

These discoveries should augur well for Sabah, which in 2010 contributed 26.9% of Malaysia’s crude oil production. According to Petronas, since 1975 the company has invested RM61bn ($20.48bn) in Sabah and paid royalties of RM6.8bn ($2.28bn) from 1975 to 2010.

Furthermore, Petronas recently announced plans to develop long-term projects that will result in increased revenue to the state. These projects involve a combined capital investment of RM45bn ($15.1bn) and are expected to add value to Sabah’s petroleum resources.

In mid-August, Johan Ariffin A Samad, the deputy director of the Yayasan Sabah Group, which is tasked in part with providing education for Sabahan youth, said in comments to local press that one of the main challenges in managing the development of the oil and gas industry in Sabah is the lack of infrastructure support.

Johan added that the state needs to train additional skilled workers to meet the requirements of the oil and gas industries and to invest more in the right training schemes.

One past obstacle in creating a local supply of skilled oil and gas professionals has been the lack of job security in the oil and gas industry, according to Iskandar Malik, the president of the Sabah Oil and Gas Contractors Association.

Speaking at an open house meeting at the end of August, Malik said that skilled workers from Sabah who have left the state to seek work elsewhere have sometimes been reluctant to return due to the lack of job opportunities in their homeland.

“We do have demand for skilled manpower with the current development of oil and gas in the state, but it is not enough to attract them to return home,” Malik said. “They are worried that after a couple of years, they may be out of job. To encourage them to return home, the state government has to establish more oil- and gas-related industries so they will have a reason to stay and render their services here.” He added that another issue is ensuring these skilled workers are paid an appropriate wage.

Petronas is already addressing this issue head-on and has announced plans to partner with Universiti Malaysia Sabah (UMS) to train graduates to work in the oil and gas sector. Rosalam Sarbatly, an associate professor and the dean of engineering and information technology at UMS, said on August 20 that partnering with Petronas would complement each institution’s strengths.

“The UMS can produce the well-equipped and much-needed trained human capital for the wide range of Petronas activities such as exploration, production and downstream operations,” Rosalam said. “Petronas can provide space for students to learn about the real challenges of the industry.”

Sabah contributes more than a quarter of the nation's crude oil and gas and provides the state with the energy it needs. “This is where Petronas can play a role by extending their support in capitalising the newly found wealth for imparting training to the engineering graduates, technocrats in the field of oil and gas wealth,” he said.

In September UMS will begin offering the country’s first masters degree in engineering in oil and gas, a programme Rosalam said was initiated to generate a group of quality graduates to cater to the needs of the state’s oil and gas sector. Meanwhile, Petronas is building the Kimanis Training Centre, which is expected to be completed by 2013.

As these new institutions begin to send graduates into the field, Sabah appears ready to have more Sabahans earning wages in the oil and gas sector and thus directly reaping the benefits of the newly discovered deposits offshore.