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Disclaimer

This document is jointly prepared by Sipitang Oil and Gas Development Corporation Sdn Bhd (SOGDC), Sabah Institute for Development Studies (IDS), Malaysia Petroleum Resources Corporation (MPRC), PETRONAS Chemicals Group Bhd (PCG), PETRONAS Gas Bhd (PGB), PETRONAS Malaysia Gas Management (MGM) and Petroleum Management Unit (PMU), Performance Management and Delivery Unit (PEMANDU), PETRONAS Sabah Labuan Regional Office (SLRO) and SOGIP Industry Advisor (all above defined as “the Parties”) that includes general background information about the parties current and planned activities as at the date of this document.

This information is given in summary form and does not purport to be complete. Information in this document, including forecast financial information should not be considered as advice or recommendation to investors or potential investors in relation to holding, purchasing or selling securities or other financial products or instruments and does not take into account any particular investment objectives, financial situation or needs. Before acting on any information, readers should consider the appropriateness of the information having regard to these matters, any relevant offer document and in particular, readers should seek independent financial advice. All securities and financial product or instrument transactions involve risks, which include, among others the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk.

This document may contain forward looking statements including statements regarding the intent, belief or current expectations with respect to the Parties’ businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Readers are cautioned not to place undue reliance on these forward looking statements.

Each forward-looking statement speaks only as of the date of this document. The Parties do not undertake any obligation to publicly release the result of any revisions to these forward looking statements to reflect events or circumstances after the date hereof to reflect the occurrence of unanticipated events. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside the Parties’ control. Past performance is not a reliable indication of future performance.

The images appearing in this document are the exclusive property of PCG unless otherwise stated at the bottom of each images for which the source of the images are expressly stated. The Parties is unable to confirm the copyright of the images that are not owned by the Parties. Therefore, it is advisable for the readers to avoid from reproducing, copying, transmitting or manipulating the images.

Table of Contents

CHAPTER 1

1.0

EXECUTIVE SUMMARY

2

CHAPTER 2

2.0

BACKGROUND

 

3

 

2.1

SABAH NATURAL GAS SUPPLY SCENARIO Total Discovered Gas Resources in Sabah

5

 

5

Sabah Gas Supply Network Infrastructure and Demand Centres

5

Gas Supply to Kimanis and Sipitang

6

CHAPTER 3

3.0

INTRODUCTION TO SOGIP

7

 

3.1

SOGIP VISION AND MISSION

8

 

Vision

8

Mission

8

CHAPTER 4

4.0

SOGIP MASTER PLAN

9

 

4.1 Objective

 

10

4.2 Terms of Reference

10

4.3 Benchmarking

10

CHAPTER 5

5.0

INVESTMENT SCENARIO & INDUSTRIAL PLANNING ACTIVITIES

13

 

5.1 Investment Scenario

14

5.2 Phase 1 SOGIP Development

14

5.3 Phase 2 SOGIP Development

16

CHAPTER 6

6.0

LAYOUT PLANNING

21

CHAPTER 7

7.0

SUPPORT SERVICES PLANNING

23

 

7.1 Support Services Planning in Sipitang

24

7.2 Support Services Planning in SOGIP

24

CHAPTER 8

8.0

INFRASTRUCTURE PLANNING

27

 

8.1 Roads

 

28

8.2 Port and Jetty Facilities

28

8.3 Land and Site Preparation

28

8.4 Land Allocation Process

28

CHAPTER 9

9.0

UTILITIES PLANNING

29

 

9.1 Centralised Utility Facilities (CUF)

30

9.2 Water Supply

32

9.3 Telecommunications

32

CHAPTER 10

10.0

INCENTIVES & PROMOTIONS

33

 

10.1 Incentives

 

34

10.2 Promotions

35

CHAPTER 11

11.0

IMPACTS & BENEFITS TO SABAH STATE

37

CHAPTER 12

12.0

SOGIP DEVELOPMENT PLAN

39

 

12.1 Proposed Governance Structure

40

12.2 Statutory Requirements

41

CHAPTER 13

13.0

SOGIP – KEY SUCCESS FACTOR

43

APPENDICES

 

45

Governance Structure ACKNOWLEDGEMENTS ABBREVIATIONS

45

47

49

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

List of Figures

CHAPTER 2

2.0

BACKGROUND

5

Figure 1 : Summary of Total Discovered Gas Resources in Sabah

5

Figure 2 : Location of Demand Centres in Sabah / WP Labuan 6

Figure 3 : New industries in Kimanis and Sipitang Figure 4 : Supply outlook for Kimanis and Sipitang Customers

6

6

CHAPTER 5

5.0

INVESTMENT SCENARIO & INDUSTRIAL ACTIVITIES PLANNING

14

Figure 5 : Location of Sipitang and SOGIP

14

Figure 6 : Potential ammonia and Urea derivatives to be developed Figure 7 : Growth in Asia Crude Consumption & Comparison

16

 

of crudesupply distribution

18

 

Figure 8 : SOGIP Development Plan

20

CHAPTER 6

6.0

LAYOUT PLANNING

22

Figure 9 : Layout Planning of SOGIP

22

CHAPTER 9

9.0

UTILITIES PLANNING

30

Figure 10 : Comparison between commonconcept and

 

centralised utility concept

30

CHAPTER 10

10.0

INCENTIVES & PROMOTIONS

35

Figure 11 : Promotional Programmes inSOGIP

35

CHAPTER 12

12.0

SOGIP DEVELOPMENT PLAN

40

Figure 12 : Proposed Governance Structure

40

Figure 13 : SOGIP OrganisationalChart

41

CHAPTER 1

EXECUTIVE

SUMMARY

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

1.0 EXECUTIVE SUMMARY

This SOGIP masterplanprovides the foundation whichidentifies and exploresthe potential industries in developing

SOGIPas a premier industrial park focusing inthe development of petrochemicals. This masterplan

Sabah Development Corridor (SDC) and Malaysia’s Economic Transformation Programme (ETP). It serves as a guidance tooutline and implement theplanneddevelopment taking into account SOGIP’s strategic positioning and potential investments based on gas and non-gas usage. Utilities, infrastructures, incentives, promotions, statutory standards and centralised approving authorities are also outlined askey success factors.

is aligned with

The SOGIP master plan shallbe guided according to the gas availability, gascomposition, alignment of SDC andETP and maximisation of gas usage in Sabah stateby adding value to the supply chain.

and gas industrial park of choice for petrochemical hub in

Asia Pacific. SOGIP adoptsand emulates the best practices from other successful industrial parks around the world namely Jurong Island Development in Singapore, Jubail Industrial City in Saudi Arabia and Jamnagar Refinery Complex in India.

The ultimate vision is to make SOGIP as the premier oil

With the benchmarking against other prominent industrial parks, SOGIP will emerge as one of the new up and coming industrial parks focusing on the development of petrochemicals.

CHAPTER 2

BACKGROUND

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

MOUNT KINABALU

Tallest Mountain in Malaysia, with the highest peak at 4095.2M above sea level.

Photo Source :http://www.horizonborneo.com

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2.0 BACKGROUND

The oil and gas sector is the mainstay of Malaysia’s growth since oil was first drilled in 1910 in Sarawak 1 . Furthermore, the founding of PETRONAS in 1974 is the force for the development of the oil and gas resources and plays a major role in driving the industry’s growth inMalaysia. Malaysia isoneof theworld’s largest natural gas and crude oil reserves in which Sabah has about

13.22 trillioncubic feet (tcf) of gas.

Latest discovery of oil offshore of Sabah, initial estimates put the well’s reserves at 227 million barrels of oil equivalent 2 . Sabah has the potential for deep water exploration, oil and gas services and integrated

petrochemical 3 . One of the major projects in Sabah is located at Mengalong, Sipitang which is 145 km from Kota Kinabalu. Sipitang is a town, district and also

a parliamentary constituency located in the Interior

Division of Sabah with a populationof 34,862 4 . Thetown

is set to become one of Sabah’s oil and gas industrial

centres following the state government’s decision to

build a world class integrated industrialpark designated for oil and gas related and other heavy industries through industrial clustering.

Sipitang Oil and Gas Development Corporation (SOGDC)was formed to spearhead the development of theSipitang Oil and Gas IndustrialPark(SOGIP). SOGDC will act as a special purpose vehicle (SPV) company to own, develop, manage and market the 4,065 acres of land in SOGIP. Under the ambit of the Sabah state government, SOGIP site is expected to attract new investments worth an estimated RM35.1 billion with the potential of creating 3,745 new job opportunities 5 upon its completion. SOGIP, which was approved in 2010, has already begun attracting local and foreign oil and gas investors to scout numerous possible investment opportunities on the site.

The availability of natural gas as feedstock from Sabah’s offshore production facilities is one of the many attractive proposals that enable SOGIP to be well positioned to spearhead the development of the oil and gas industry in Sabah state. Industries that would benefit from natural gas feedstock include:

• Petrochemicals plants to manufacture resins, plastics, pharmaceutical products, fertilisers and packaging materials

• Heavy industries

• Logistics centre for exports

• Research & Development (R&D) for bio-fuels and alternative energies

• Fabrication, construction and relatedactivities

• Bulk product storage

Basic infrastructure facilities, utilities and general amenities such as water supply, electricity supply, and roads will be constructed on the site. Following this, jetties for importing raw materials and exporting various types of finished products will be built to give SOGIP the access to global markets.

Besides that, new residential, retail and commercial developments will be built concurrently within the neighbouring area to make SOGIP site liveable and appealing to the employees working on the site.

As a sign of confidence on the site’s economic viability, PETRONAS Chemicals Group Bhd. (PCG) is building an ammonia and urea manufacturing complex in SOGIP at an estimated investment cost of USD1.5 billion. The Sabah Ammonia-Urea (SAMUR) project is one of the leading initiatives to monetise natural gas obtained from Sabah’s offshore wells.

The SAMUR Project is among the most recent and strategic developments located within SOGIP that supports the oil and gasindustryinSabah. The complex would comprise of an ammonia plant, a urea plant, a

granulation plant, as well as an integrated utility unit and jetty facilities. The ammonia plant is expected to produce 2,100 metric tonnes per day (MTPD) of liquid ammonia while the urea plant will produce 3,500 MTPD of granulated urea. Construction has started in the second quarter of 2012 with completion targeted in

2015 6 .

Further development ofpetrochemicalssector is guided by the estimated gas availability and gas composition which is rich in methane.

1 Economic Transformation Programme Report

2 Economic Transformation Programme Report

3 MyCorridor website: www.mycorridor.malaysia.gov.my

4 www.statistics.gov.my, based on year 2010

5 Sabah Oil & Gas Development Lab Report

6 MPRC website: www.mprc.gov.my

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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2.1 Sabah Natural Gas Supply Scenario Total Discovered Gas Resources in Sabah

As of 1 st January 2013, the total discovered gas resources in Sabah stood at 13.22 Trillion standard cubic feet (Tscf) as detailed in Figure 1. From the total discovered resources, 21% is in producing stage, 42% is in development stage and the remaining 37% of the resources are being activelystudied internally for future monetisation or development plan to meet the gas supply commitment.

Continuous effort to monetise these discoveries are important to ensure the sustainability of gas supply to downstream gas customers. Looking forward,

monetising these fields would betechnicallychallenging.

dependent on the downstream gas price to ensure economic viability of the project.

the monetisation of these resourcesis highly

In addition,

Notwithstanding the challenges mentioned above, PETRONAS is continuously pursuing the explorations efforts in Sabah waters with upstream players such as Lundin Petroleum, Talisman, Murphy Oil, Shell, etc.

With attractive Production Sharing Contract (PSC) terms, PETRONAS is expectinganincreasein investment and participation of new players in the upstream sector.

Resources (Tscf) Total Gas Discovered Resources in Sabah 15 10 5 - Producing NAG Producing
Resources (Tscf)
Total Gas Discovered Resources in Sabah
15
10
5
-
Producing NAG
Producing AG
Development
Pre-Dev
Pre-Dev (Non-
Total
(Committed)
committed)
Discovered
Resources

Figure 1: Summary of Total Discovered Gas Resources in Sabah

Sabah Gas Supply Network Infrastructure and Demand Centres

Currently, there are two (2) major and active PSC in Sabah that are supplying gas to the three (3) existing demand centres via morethan300 kmof gas pipelines.

The three (3) existing demand centres located independently in Sabah and Wilayah Persekutuan Labuan namely Sabah Gas Terminal (SBGAST) in Kg

Gayang, Tuaran and Labuan Gas Terminal 1 (LGAST-1) and Labuan Gas Terminal 2 (LGAST-2) both are located inWilayah Persekutuan Labuan as shown in Figure 2.

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN Figure 2: Location of Demand Centres in Sabah

Figure 2: Location of Demand Centres in Sabah / WP Labuan

By the end of 2013, a new demand centre known as Sabah Oil & Gas Terminal (SOGT) in Kimanis, Sabah will be on stream with a capacity of 1,250 mmscf/d. This development would also include a construction of Sabah-Sarawak Gas Pipeline (SSGP) from Sabah Oil and Gas Terminal (SOGT) to PETRONAS LNG Complex (PLC) in Bintulu.

Thisnew demand center is expected to servethe new gas customers located in Kimanis and Sipitang area mainly for power, petrochemical and reticulation industries as illustrated in Figure 3.

KIMANIS

SOGT
SOGT
 as  illustrated  in  Figure  3. KIMANIS SOGT SIPITANG Power Petrochemical Reticulation

SIPITANG

 as  illustrated  in  Figure  3. KIMANIS SOGT SIPITANG Power Petrochemical Reticulation

Power

Petrochemical

Reticulation

 3. KIMANIS SOGT SIPITANG Power Petrochemical Reticulation Figure 3: New industries in Kimanis and Sipitang

Figure 3: New industries in Kimanis and Sipitang

Gas Supply to Kimanis and Sipitang

PETRONAS has committed a total of 250 mmscf/d of daily gassupply (up to 1.83 tscf of gas resources) for 15-20 yearstothe new gas customers inKimanis and Sipitang as shown in Figure 4.

Resources

(mmscfd) Committed 250 mmscf/d 300 ~1.83 Tscf for 15-20 years 200 200 2014 2019 2024
(mmscfd)
Committed
250 mmscf/d
300
~1.83 Tscf for 15-20 years
200
200
2014
2019
2024
2029
2034
Year

Figure 4: Supply outlook for Kimanis and Sipitang Customers

CHAPTER 3

INTRODUCTION TO SOGIP

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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3.0 INTRODUCTION TO SOGIP

3.1 SOGIP Vision and Mission

Vision

To be the premier oil and gas industrial park of choice for petrochemical hub in Asia Pacific.

Mission

• Maximize use of natural gas in Sabah aligned with the Malaysia Economic Transformation Programme and Sabah Development Corridor.

• Develop SOGIP as petrochemical hub and as a catalyst for oil and gas development in Sabah.

• Create a value added supply chain in Sabah to support domestic requirements in agro-industries.

• Increase GDP and employment opportunities for Sabahan.

• Developand optimise oiland gas related downstream businesses.

• Innovateand explore future needs focusing on energies, food and environment.

• Develop research and development centre for petrochemicals products that will make Sabah self- sufficient, relevant and sustainable for its residents.

 relevant  and  sustainable  for its residents. 3.2 Land  SOGIP  land

3.2 Land

SOGIP land size is 4,065 acres located in Mengalong, Sipitang district. It is approximately 12 kilometres from Sipitangtown. Thearea is near to Sabah Forest Industries (SFI) and situated to the west of SFI. The north of SOGIP is the Brunei Bay shoreline. It is approximately 150km south of Kota Kinabalu city centre which is accessible via the Kota Kinabalu – Sipitang Road. Time to travel from Kota Kinabalu to Sipitang is about 2.5 hours.

The area of SOGIP has been earmarked for oil and gas industry and downstream industries derived from Ammonia and Urea. Out of the total 4,065 acres, PETRONAS Chemical Group Berhadthrough PETRONAS Chemical Fertilizer Sabah Sdn Bhd (PCFSSB) has occupied 153acres for their Urea Plant known as SAMUR which is currently under construction.

andother vegetation. A large part of the area is generally sandy. Mangrove can also be found at the north eastern

section of the site. Paved roads are found at the front portion of the site of SAMUR.

The existing site condition is flat, overgrown withshrubs

 at  the  front  portion of the  site of SAMUR. The existing

CHAPTER 4

SOGIP MASTER PLAN

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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4.0 SOGIP MASTER PLAN

Since formation of SOGDC and SOGIP in 2010, the development of the park has progressed to a critical stage where a master plan is required to drive the investment initiatives. As like all development of natural hydrocarbon resources in Malaysia, PETRONAS is the forefront partner in the development of the oil and gas resources in Sabah.

4.1 Objective

This document describes SOGIP master plan which identifies and explores the potential industries in developing SOGIP as a premier industrial park focusing in the development of petrochemicals. This master plan is aligned with Malaysia’s Economic Transformation Programme (ETP) and Sabah Development Corridor (SDC). It serves as a principal guidance to outline and implement the planned development taking into account the SOGIP strategic positioning and potential investments based on gas and non-gas usage. Utilities, infrastructures, incentives, promotions, statutory standards and centralised approvingauthorities are also outlined as key success factors.

4.2 Terms of Reference

SOGIP master plan shall be principally guided by the followings:

• Gas availability

o Phase 1: allocation of 90 mmscfd of natural gas to SOGIP

o Phase 2: subject to future availability of gas and the gas composition

• Nature of the industries shall be based on methane rich gas composition as feedstock or fuel • Inalignment with ETP, SDCandSabahGovernment’s aspiration of developing the oil and gas industries • Capability development of local residents of Sabah to participate in the oil and gas industries • Retaining resources and value within Sabah and Malaysia. Maximisation of value added to supply chain in Sabah state • Integrated petrochemical complex with fertilisers as the key products

• Gas distribution to be developed for small medium industries (SMI) Centralisation of utility facilities for the optimisation of gas usage and the supply of utilities

• Enable socio-economic developments spinning-off from SOGIP

4.3 Benchmarking 7

In transforming SOGIP into the premier oil and gas industrial park for petrochemicals in Asia Pacific, best practices from three successful industrial parks have been identified to be adopted. The three identified industrial parks are Jamnagar Refinery Complex (India), Jurong Island Development (Singapore) and Jubail Industry City (Saudi Arabia).

4.3.1 Jamnagar Industrial Park

Jamnagar, located in the state of Gujarat, has three refineries owned by Reliance Petroleum and Essar Oil. There are presently no major downstream facilities located in Jamnagar. The total area for Jamnagar is 7,885 acres with total investment of USD14.3 billion. The estimated jobs created are around 3,500 by the year 2010. Refining and petrochemical are the two main industries in Jamnagar. Reliance’s Petrochemical Complex andEssar Oil Refinery are locatedat adistance of 7 km from each other and are not integrated.

Through analysis of the Jamnagar Industrial Park, four best practices have been identified that greatly promoted its growth and investor’s attractiveness;

1. Financial incentives

In Gujarat, many financial incentives have been introduced under Special Economic Zone (SEZ) schemes to reduce tax burden and provide a competitive investment environment.

2. Integrated

pipelines

onshore

product

distribution

Both Reliance and Essar Oil refineries transport their products to North India through integrated crude, product and gas pipe-lines. This helps the refineries to cut down on their distribution and transportation costs.

7 Source : MPRC, Pengerang Masterplan Draft report Arthur D Little

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3. Superior refinery product slate

The refineries produce a high proportion of high- valueLiquid PetroleumGas (LPG)andpetrochemical feedstocks such as propylene (adding to over 10% on crude processed, compared to 2-3% for older refineries). The refineries are of full conversion type and have no production of low-value fuel oil (comparedto 12-20% on crude processed for simpler refinery configurations).

4. Proximity to major crude supply

The industrial park is ideally located on the west coast of India and has close proximity to the Middle East, a major source of crude supply.

5. Dedicated infrastructure and utilities

The industrial park has their own dedicated power plant, water and waste water treatment plants and common port and terminals facilities.

4.3.2 Jurong Island

Jurong Island is a man-made island located to the southwest of Singapore, with an area of about 8,000 acres and act as a hub for the refining, petrochemical and chemical industries. It is estimated around 8,000 jobs has been created with the total investment of USD26 billion. The Jurong Town Corporation (JTC) is Singapore’s principal developer and manager of Jurong industrial estates and their related facilities.

Through analysis of the Jurong Island,five best practices have been identified that have greatly promoted its development and investor’s attractiveness;

1. Availability of critical mass

Three major refineries and a cracker were already established before any land reclamation commenced. Critical mass ensures security of supply and thus attraction for downstream players to establish facilities close to thesesources,therebyreducing the cost of transportation.

2. Centralised service corridor and the “Plug and Play” concept

Centralised provisioning of inputs, utilities and services reduce investment requirement for primary industry players as well as operating cost for all investors across the island, making investment quick and easy.

3. Tight vertical and horizontal integration

Connection of adjoining industries in the value chain through a common pipe network facilitates the transfer of intermediate streams vertically and horizontally between producing and consuming facilities.

4. Human resource development

Chemical Industry Manpower Advisory Committee (CHIMAC) and Chemical Process Technology Centre were set up by the Singapore government to ensure an adequate supply of quality manpower for the petrochemical industry.

5. Stable

friendly

environment

Singapore is well known for efficient processes and transparent systems, and ranks consistently among the very top countries in the world in terms of ease of doing business.

government

and

business

4.3.3 Jubail Industrial City

Jubail is an industrial city on the Arabian Gulf coast of Saudi Arabia. Thecity is a hubfor refining, petrochemical and metals-based industries. The Jubail Industrial City (JIC) development has been plannedin two zones (JIC–I and JIC–II); these zones are located side-by-side and cover a total area of approximately 40,000 acres. It is estimated around 55,000 jobs (for Jubail Industrial City II) has been created with the total investment of SR65 billion (USD17.3 billion) in 2004. It is expected that by 2022, an additional SR200 billion (USD53.3 billion) of investments will be attracted in Jubail Industrial City II. The Royal Commission on Jubail and Yanbu (RCJY) is the government body managing the development and operations at the industrial cities of Jubail and Yanbu. Through analysis of the Jubail Industrial City, four best practices have been identified that have greatly promotedits development and investor’s attractiveness;

1. High vertical integration

Development plans for Jubail focuses on high downstream integration of petroleum based industries for producing petrochemicals, fuels and other feedstock.Theseoutputs notonly will increase value-added exports but also provide critical raw material for development of further downstream industries, including fertilisers, cement, etc. for domestic and export markets.

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2. Efficiency of infrastructure concentration

Substantial investments have been made to develop supporting infrastructure needed for the petrochemical industry. Strategic locations have been identified for infrastructure and utilities which facilitate themostcost-effective and environmentally sustainable development.

3. Development of human capital

Significant national investment programs in advanced training have been made to meet the national manpower demand which would be needed for construction and later project operations in the industrial city.

4. Availability of deep water port facility

The planned development of deep-water port to accommodate required super tankers will be key success criteria for development of the Jubail Industrial City 8

for  development  of  the  Jubail  Industrial City 8 8 Arthur

8 Arthur De Little – Pengerang Master Plan Report Photo Source: http://www.blpge.com

CHAPTER 5

INVESTMENT SCENARIO & INDUSTRIAL PLANNING ACTIVITIES

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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5.0 INVESTMENT SCENARIO & INDUSTRIAL ACTIVITIES PLANNING

5.1 Investment Scenario

SOGIP is the first oil and gas development in Sabah focusing on petrochemicals. It will be the catalyst for the development in Sabah along the west coast. The development of the park must be aligned with ETP and SDC for oil and gas sector and be beneficialto the state of Sabah.

Sabah state and PETRONAS are partners in developing the natural gas into methane based primary petrochemicals such as ammonia and urea. Using these primary petrochemicals, development of potential downstream value added products such as ammonium sulphate, ammonium nitrate, diammonium phosphate, caprolactam and others are explored (Refer to figure 5).

Diammonium Phosphate (DAP) is one of ammonia derivatives whichmain use is inproductionof NPK. DAP is also suitable fertiliser to be applied for cashcrops such as vegetables and tubers. There are also opportunity to create further value for production of high nitrogen

5.1.1 Advantages of Sipitang Oil and Gas Industrial Park

fertiliser such as fertiliser grade Ammonium Nitrate which could also be used to assist in the growth and metabolic processes that plant undergoes.

Investment in SOGIP can beexpanded into manufacturing of other chemicals using the available petrochemicals from nearby manufacturers such as methanol from Labuan. Other products that can be manufactured in SOGIP through this route are other solvents, bio diesel and glycerine (for cosmetics and pharmaceuticals industry).

Support service industries like Centralised Utilities Facility (CUF), fabrication yards for pressure vessels, sea crafts and offshore structure are also planned.Basic infrastructure (road, drainage and port facilities) and utilities (electricity, water and telecommunications) will be made available at SOGIP for investors to utilise in operating their businesses. Special tax incentives are available to the benefits of the investors. (Refer to Chapter 10Incentives and Promotions)

SIPITANG
SIPITANG

Figure 5: Location of Sipitang and SOGIP

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SOGIP is to be developed as an integrated industrial park designated for oil and gas industry. SOGIP has the following strengths as an integrated industrial park:

• The availability of natural gas from offshore Sabah

• Strong partnership between Sabah state and PETRONAS

• Availability of 4,065 acres of land for development

• Strategically located nearby to major shipping lane and close proximity to Labuan and Brunei • Sheltered bay and sufficient water depth (16m – 25m) to cater for Single Buoy Mooring (SBM) for Very Large Crude Carriers (VLCC) and availability of vessel anchorage • Opportunity of tax incentives to SOGIP investors • Minimal impact on relocation of local residents • Gas city gate within the industrial park tee-off from the Sabah Sarawak Gas Pipeline • Proximity to trunk road that connects Sarawak and Brunei to Sabah • Synergy between on-going SAMUR project and SOGIPmasterplanwill convert SOGIP into a fertiliser hub which in return provides opportunities for investors to create downstream industries • Readily availablemarket where agriculture is a major industry in Sabah

The location of SOGIP as shown in Figure 5 is ideal for the development of integrated petrochemical complexes focusing on agricultural products, bio feed, renewable energy and other chemical products for cosmetics and pharmaceutical uses.

5.1.2 Investment in SOGIP

It is expected that SOGIP will be developed over two phases spanning from 2014 to 2024 (Refer to Figure 8) with participation from multiple investors.

Phase 1A: Planned Investment by Investors

1. Fertilisers

i. Ammonia Plant

ii. Ammonia Derivatives

iii. Urea Derivatives

2. Bulk Storage

i. Bulk Oil Storage

ii. Bulk Refined Petroleum Products Distribution Terminal

3. Other Investments

i. Bio Based Industries

ii. Fabrication (shipping, onshore and offshore structures)

iii. Refinery

4. Utilities

i. Centralised Utilities Facility (CUF)

ii. Gas Reticulation

Phase 1B: Planned Development by SOGIP

1. Infrastructure

i. Road and Street Lights

ii. Drainage

iii. Port and Jetty

iv. Telecommunications

Phase 2: Planned Future Investment (Subject to future availability of gas)

1. Methanol Derivatives

2. Ammonia Derivatives

3. Urea Derivatives

4. Other Industries

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Methane Rich Natural Gas
Methane
Rich
Natural
Gas

Methanol

Power

Generation

Oversupply of market

Insuf cient gas volume for world scale plant

Caprolactam

Ammonium

Sulphate

Ammonium

Chloride

AmmoniaDiammonium Phosphate NPK

Diammonium

Phosphate

NPKAmmonia Diammonium Phosphate

Ammonium

Nitrate

Urea

Mela- mine
Mela-
mine
UF
UF

Power demand in Sabah is limited

100mmscfd = 600 MW

Fertilizer :

agriculture

limited  100mmscfd = 600 MW Fertilizer : agriculture Fertilizer : palm/rubber Fertilizer : cash crops

Fertilizer :

palm/rubber

600 MW Fertilizer : agriculture Fertilizer : palm/rubber Fertilizer : cash crops Arti cial bre Note

Fertilizer :

cash crops

Fertilizer : palm/rubber Fertilizer : cash crops Arti cial bre Note : ethance volume is not

Arti cial bre

palm/rubber Fertilizer : cash crops Arti cial bre Note : ethance volume is not sufficient to

Note : ethance volume is not sufficient to develop ethylene and derivatives complex UF - Urea Formaldehyde

Figure 6: Potential ammonia and urea derivatives to be developed

5.2 Phase 1 SOGIP Development 5.2.1 Fertilisers

Fertiliser is a key industrythat supports globalchallenge in food production. The need for improvement in food production and quality create higher demand in fertilisers.Both demand and supply forfood is expected to grow rapidly for the next 20 years in line with the growth of population. SOGIP aspires to provide total fertilisers solutions to the agriculture industry, supporting Sabahstateas the largest producers of palm oil in Malaysia. Seven (7) value added products have been identified for investment within this cluster namely ammonia, urea, NPK, ammonium nitrate, caprolactam, ammonium sulphate, and diammonium phosphates.

Spearheading SOGIP development is the currently ongoing construction of SAMUR 9 . SAMUR project will cost approximately RM4.6 billion (USD1.5 billion) and will produce about 1.2 million tonnes per annum of granulated urea. Once completed, SAMUR will be the largest single train granular urea facility in South East Asia, transforming Sabahinto one of the region’s largest producers of fertilisers.

9 Source: PETRONAS Chemicals Group Berhad

Fertilisers from this facility will be exported to lucrative overseas markets. However, a sizeable volume will be made available to serve Sabah state’s rapidly growing agricultural sector.

A new ammonia plant is also being planned in SOGIP

slated to be commissioned in 2018. The investment of new ammonia plant is expected to bring Gross National Income (GNI) of approximately RM646 million by year 2020. The products will be used as feedstock

for ammonia derivatives, which in turn will be used as

fertilisers for cash crops, tubers,

paddy and palm oil.

The investment in ammonia derivatives production such as caprolactam will potentially pave way to further downstream products such as Nylon 6 which subsequently lead to the growth in textile and engineering plastic industry in Sabah state.

The future investment opportunities for fertilisers industry in SOGIP are in Agrochemicals and Enhanced Efficiency Fertilisers. Agrochemical products such as herbicide and pesticide, and Enhanced Efficiency Fertilisers such as coated fertilisers will provide further solution to the agriculture industry.

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5.2.2 Gas Distribution

A joint venture company between Sabah Energy Corporation (SEC) and PETRONAS Gas Berhad (PGB) is committed to provide gas distribution infrastructure with a total investment estimated to be around RM 40 – 80 million. With this infrastructure, SMI in SOGIP can leverage on the availability of natural gas from the nearest tee-off point at the gas distribution network (pipeline).

Total of 15 mmscfd of natural gas will be allocated ascatalyst for the SMI especially in the areas of waste treatment and incineration, metals preheating (particularly for iron and steel), drying and dehumidification, glass melting, food processing and fuelling industrial boilers.

5.2.3 Bulk storage

Bulk storage terminal for both crude oil and petroleum products are potential investment opportunities in SOGIP.

Annually,an estimated 420,000 barrels of crudeoil and 730,000 barrels of petroleum products (refer to figure 7) are consumed daily across Asia. Petroleum product imports and exports for China, Indiaand Southeast Asia are expected to increase by 1.8 million barrels per day from 2010 to 2020. The implications on oil storage are two-fold 10 ;

1. The continued growth in demand for energy in this region will drive a need for increased storagecapacity of crude oil and refined petroleum products.

2. Increased inflow of crude oil from Africa and Latin America would result in longer transit times and translate into a need for larger buffer storage of crude oil.

With close proximity to major shipping routes, land availability and deep water marine accessibility, Sipitang is well positioned for oil storage terminals.

Distribution of refined petroleumproducts such as diesel and gasolineto nearby areas arenot currently available. Hence, the bulk storage facility will also function as a distribution terminal in SOGIP.

10 Economic Transformation Programme (ETP)

5.2.4 Refinery

Subject to future economic feasibility study and

of the refined petroleum

products, a refinery to process crude oil will be

considered in the first

depending on market demand

phase.

In the area of oil related investment, a refined product distribution terminal is a value added operations to be included in SOGIP. This terminal will serve the local transportation operations by providing diesel, gasoline, Jet A1, kerosene and marine fuel oil (MFO) for bunkering operations.

5.2.5 Other Investments

Other investments that require minimal gas volume as part of the manufacturing process will be assessed. These potential investments must satisfy all the pre- requisites as depicted in the guiding principles.

In the case of bio based industries, bio-protein feed manufacturing has been identified. It uses natural gas as fuel and feedstock to manufacture amino acid based protein product suitable for use within Sabah and Malaysia. The bio-protein is mixed with fibres and minerals for use as animal feeds which supports SMI industry in SOGIP.

Marine services, ship buildings and repairs, onshore or offshore structure fabrication bode well into SOGIP Master Plan because of the accessibility to the various oil and gas operations in East Malaysia.

SMI has potential to be developed based on required support and services for the fertilisers hub such as technology driven industries such as packaging, warehousing, logistic, ICT service (refer to Chapter 7, section 7.2).

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

Asia’s appetite for crude oil is continuing to grow at 420 kbd per year

Growth in Asia crude consumption

Million barrels per day

23.7 Growth rate of 420 kbd per year +2.1 21.6 +2.1 19.5 2005 2010 2015
23.7
Growth rate
of 420 kbd
per year
+2.1
21.6
+2.1
19.5
2005
2010
2015

Asia’s crude sypply will take longer to arrive

Comparison of crude supply distribution 2005 Percent of Asia crude oil source 2015 Average transit
Comparison of crude supply distribution
2005
Percent of Asia crude oil source
2015
Average transit
time (days)
10.9
14.3
55 53
41
32
15
2
3 1
Regional
Arab Gulf
Europe/
Latin
Africa/
America
Med
Distance to Asia
Distance to Asia

Source: ETP Report Figure 7: Growth in Asia Crude Consumption & Comparison of crude supply distribution

5.3 Phase 2 SOGIP Development

Subject to the future availability of gas, phase 2 SOGIP development will focus on methanol derivatives, ammonia derivatives, urea derivatives and other industries.

5.3.1 Offshore and supply base services

SOGIP is an ideal location for offshore structures fabrication and repairs of floating installation. Sipitang is blessed with sheltered bay and it is accessible throughout the year.

With high expectation on investments andestablishment of port facilities in SOGIP, there is a potential for a fabrication yard to be set up and provide engineering and construction services. Sabah is surrounded by offshore oilfields which make it feasible for SOGIP to be another supply base complementing Labuan.

5.3.2 Marine services - Ship Fabrication and Repairs

SOGIP location is suitable for shipbuilding and repairs operations due to its access to shipping routes and sheltered bay.

Ship andsupply vessels refurbishment andrepaircan be easily carried out during monsoonseason.

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5.3.3 Bio and Renewable Energy – Biotechnology Research Centre

With the proposed implementationof the B10standards 11 , bio diesel industries shouldbe indemandfrom mid-2014. B10 standard requirement proposes retail diesel to incorporate 10% of bio-diesel.

This move is proposed to reduce the dependency of fossil fuels and also to encourage the development of the bio fuels industries.

the  development  of the  bio fuels  industries. Bio-dieselproduction requires methanoland palm oil

Bio-dieselproduction requires methanoland palm oil as feedstocks. Methanol is available from Labuan andpalm oil from theareasurrounding Sipitang, makingthis an ideal location for centralised development of bio fuels technology.

A by-product of this process is glycerine which is a good base for many pharmaceutical and cosmetic products.

11 B10 standard is 10 per cent palm biodiesel with 90 per cent petroleum diesel.

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

INDUSTRIES

Phase 1

Phase 2

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

PETROCHEMICAL & FERTILISERS MARKISA (Ammonia Plant) Ammonia Derivatives Urea Derivatives Methanol Derivatives
PETROCHEMICAL & FERTILISERS
MARKISA (Ammonia Plant)
Ammonia Derivatives
Urea Derivatives
Methanol Derivatives
Bio-based Industries
BULK STORAGE & HEAVY INDUSTRIES
Bulk Storage
Bulk Products Distribution Terminal
Oli Refinery
Fabrication Yard
Ship Repair Services
SUPPORTING INDUSTRIES
Transportation
Warehouse (Storage Facilities)
Packing
Printing
SMI
UTILITIES & INFRASTRUCTURE
Road, Streetlights & Drainage
Electricity, Water & ICT
Centralised Utilities Facility (CUF)
Gas Reticulation
Port & Jetty
Phase 1
Phase 2
Phase 3
Phase 4A
Phase 4B

Figure 8 : SOGIP Development Plan

CHAPTER 6

LAYOUT

PLANNING

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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6.0 LAYOUT PLANNING

GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 6.0 LAYOUT PLANNING Figure 9: Layout Planning of SOGIP Conceptually, SOGIP

Figure 9: Layout Planning of SOGIP

Conceptually, SOGIP will attract a varietyof investments in different manufacturing and operations. Some of the operations include hazardous and toxic materials which require special handling. Therefore, zoning criteria is developed based on the followings:-

a. Safety consideration (flammable, toxic and explosiveness of materials). b. Logical layout of manufacturingoperations toreduce pipingruns. c. Reduce traffic congestion and unnecessary movements withinthe park limit by clustering related industries.

Land size can becustom fit to investors’ need tooptimise the land usage.

Sea front land parcels are reserved for special requirement such as port facilities, marine and offshore services and supply base.

for  special  requirement  such  as  port  facilities,  marine

CHAPTER 7

SUPPORT

SERVICES

PLANNING

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

Photo source :http://commons.wikimedia.org

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7.0 SUPPORT SERVICES PLANNING

7.1 Support Services Planning in Sipitang

SOGIP will be supported by external common facilities and supporting services to complement the park and beneficial to Sipitang development. These facilities include:

• Office Complexes • Housing • Hospital • Schools and Training Centres • Commercial Complex • Security • Fire Fighting

With the availability of these facilities, SOGIP will be fully supported as an industrial park. SOGIP will directly or indirectly carry out its corporate and social responsibilities for the employees within SOGIP and for the people of Sipitang district as well.

7.2 Support Services Planning in SOGIP

With several clusters of industries being set-up within SOGIP, ranging from oil refinery and petrochemicals, number of supporting services has been identified in order to support the overall function of the industries and SOGIP as a whole. List of potential services are as below:

• Packaging

o Packaging of products that are produced in SOGIP.

• Printing

o Labelling of end products for identification purposes.

• Transportation Services

o For transporting or delivering raw materials, finished goods or other products to destination.

• Warehousing Facilities

o As a base for storage of products, dry and break bulk and other materials before delivery.

Competitiveness of SOGIP shall be enhanced by development of identified infrastructures and facilities. The planned central warehousing facilities will support the investment in SOGIP in raw material and product handling, storage and distribution.

 support  the  investment  in SOGIP  in raw  material and

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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A central warehousing facility is necessary forthe storage

of certain products that are required by the industry

users before it is transported out of SOGIP. There are two types of warehouses that will be made available in

SOGIP to cater for the

or imported by the user of theindustrialpark; warehouse for hazardous goods and non-hazardous goods. There are several types of hazardous goods, which are:

different type of goods produce

o Gaseous Materials

o Inflammable Liquids

o Inflammable Solids

o Materials containing peroxides, easily oxidising contents

o Substances highly toxic

o Radioactive substances and materials

o Erosive Materials

o Other hazardous materials and substances miscellaneous in nature

o Safety management system is to be in-place in managing the warehouse which holds hazardous goods. Hence, segregation for hazardous goods and non-hazardous goods is crucial in ensuring the safety of the products.

• Scheduled Waste Management

o Handling scheduledwaste within SOGIP.

o Scheduled waste shall be collected and disposed by government approvedservice provider. SOGIP is exploring the possibility of providing the services.

o Scheduled wastes are exemplified as wastes or a total combination of wastes that has a significant present or possess conceivable hazard to the health of humans and living organisms. This excludes municipal waste and municipal sewage. Scheduled wastes are broadly defined into the categories of chemical wastes, biological wastes, explosives and radio-active wastes.

o Scheduled waste shall be collected and disposed by a government approved service provider. SOGIP is exploring the possibility of providing the services within the Industrial Park as to avoid illegal waste dumping as well as to maintain the eco-system.

the  Industrial  Park  as  to avoid  illegal  waste  dumping

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

• Human Resource Training Facility

o A centre to conduct and provide human capital training for the industries within SOGIP.

• ICT Services

o Provide telecommunications and broadband network services in SOGIP.

• Bonded Area

o To increase interests from investors, SOGIP plans to have a bonded area around its vicinity. The availability of bonded area is to facilitate increase import goods to Sabah which will result in the possibility of creating businesses for the locals and SOGIP.

• Helipad Facilities

o Helipad facilities will be planned within SOGIP for emergency uses and as alternative to land transportation.

CHAPTER 8

INFRASTRUCTURE

PLANNING

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

Kertih Integrated Petrochemical Complex

Kertih IPC principally consists of ethylene-based petrochemical plant and the plants are integrated with common shared infrastructure facilities and process plants.

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8.0 INFRASTRUCTURE PLANNING

In order to enhance the development of SOGIP, an

integrated planning of infrastructureis required. Among the facilities that would be beneficial to the overall development of the industrial park are:

• Roads

• Ports and Jetty

• Land and Site Preparation Land Arrangement

• Other common facilities (telecommunications, etc.)

8.1 Roads

The road network within SOGIP will be of an industrial standard to cater heavy machineries and lorries that would frequent the industrial users premise. Paths and typesof theroads shallabide to theindustrialstandards as well. The connectivity and linkages shall be designed

in a way to provide minimal congestion and better

access for the industrial user’s inbound and outbound transportation in SOGIP.

A single carriageway of an industrial standard shall be

constructed to cater for the movement of goods or raw materials by prime movers and lorry trailers that would be transported to SOGIP. However, there is a need of future expansion for dual carriage way in SOGIP.

8.2 Port and Jetty Facilities

For SOGIP, a port will be planned for cargo handling and process of goods movement by ocean freight to cater for the industry users. The port facilities such as cranes,loading arms and cargo storage will abide to the requirement of the users product type and output.

A multipurpose jetty is required for the overall use

the output and requirements of the industry users, this multipurpose jetty would provide ship docking facility, loading and unloading of cargo and otherfacilities such as the conveyor belt.

outbound of products for the users of SOGIP. Based on

and

The management and operation of the port and jetty will be outsourced to third party e.g. Sabah Port Sdn Bhd.

8.3 Land and Site Preparation

8.3.1 Site Preparation

Basic infrastructures to support the site preparation such as access roads, drainage and street lighting will be developed within SOGIP. Investors will undertake the site clearing, earthworks and develop the selected plot of land within their respective boundary limit. Since oil and gas downstream industries utilises heavy machineries and equipment, the site may need heavy duty reinforcement or piling. Withthis regards, investors shall be able to develop the selected area according to their respective needs.

8.4 Land Allocation Process

A structured registration process will guide investors in

acquiring or leasing the land required for investment in SOGIP. The following are required for registration:

• A project description

• A project socio-economic feasibility study to show that the project will have positive contribution to the Sabah State

• Full disclosure of shareholders

• The company objectives and business plan

• The company governance policy and organisation structure

• Financial plan to support the project

Upon submission of this information, SOGDCwill evaluate

the viability, strategic fit of the business and alignment to the overall SOGIP master plan. Once evaluation is

completed, SOGDC will issue a letter of offerstating the initial conditions to the potential investor.

The final landallocation will be determinedaccordingto SOGDC prevailing policy.

CHAPTER 9

UTILITIES

PLANNING

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

9.0 UTILITIES PLANNING

9.1 Centralised Utility Facilities (CUF)

UTILITIES PLANNING 9.1 Centralised Utility Facilities (CUF) Figure 10: Comparison between common concept and centralised

Figure 10: Comparison between common concept and centralised utility concept

As the industrial park owner, SOGIP plans to set up a Centralise Utility Facilities (CUF) which will provide added advantages to the investors. Takingtheadvantage of economic of scale, CUF is proposedto supportthe development of the industrial park. In addition to a reliable supply of utilities, other added advantages are;

• Lower initial CAPEX investment for tenants

• Optimisation of production cost by reducingany duplication of equipment and manpower

• Better focus onto their core business

List of Utilities:

Electricity

Steam

Cooling Water

Industrial

Gasses

Demineralise

Water

Waste Water Treatment

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31

9.1.1 Electricity and Steam

Taking into consideration of adding more value to the natural resources, CUF will be generatingelectricity and steam using Combine Generation (COGEN) system.

Acknowledging the importance of stable and reliable electricity supply for oil and gas industries, SOGIP with its partner, PETRONAS Gas Berhad (PGB) shall ensure electricity supply will be stable and reliable. PGB have more than 10 years of experience operating CUF in Kerteh, Terengganu and Gebeng, Pahang.

To increase the reliability, connection to SESB grid for stand by supply is essential. It is expected that the demand for electricity by the industries in SOGIP will be at 118 MW in the next five years. SESB is planning to construct a new275kV transmission linefrom Kimanisto Sipitang as currently the transmission linethat is available is 33kV which is not sufficient forSOGIP 12 . As this is part of SESB’s master plan for Sabah, implementation of this project will be implemented sooner or later but only

subject to the availability of funding. With this, SESB requires a land size of 40 acres for its substation and PMU.

Another essential utility in industrial operation is steam due to its vast usage in industries; i.e. sterilisation, cleaning, moulding, pipe andvesseljacketing. Generated from the COGEN system, steam shall be made available to SOGIP’s tenant with significantly small CAPEX investment (mainly for the pipeline) compared to self- generation. Centralising the production of steam will also eliminate the need for each tenant to fulfil DOSH requirement.

9.1.2 Waste Water Treatment

Protecting the pristine and precious Sabah’s natural environment, waste water treatment is very crucial to reduce the impact of industrialisation towards environment. CUF shall provide the service to treat the waste water before discharging it.

 to  treat  the waste  water  before  discharging it. 1 2

12 Sabah Oil and Gas Development Lab Report

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9.2 Water Supply

Currently, there are two (2) sources of water supply servicing Sipitang which are Mesapol water treatment plant and Kampung Ulau water treatment plant both generating 4 MLD and 15 MLD respectively. By the first quarter of 2014, a new water treatment plant will completed with the capacity of 40 MLD which 27 MLD will be catered for SAMUR.

By 2017, the demand for water supply in SOGIP will be at 91.2 MLD and by the following year and onwards the demand would increase to 111.2 MLD. With these huge demands being needed, a new water treatment plant must be constructed to supply to these industries in SOGIP. As of now, the Sabah Water Department is preparing a proposal to conduct a study on a new source of water supply for Sipitang district which includes a study onthe environmentalimpact andclimatechange.

9.3 Telecommunications

A high speed telecommunication network is

planned for SOGIP. A private entity will provide the telecommunication services for the various operations such as:- a. High speed fibre optic network for voice call and computer communication b. Network for security surveillance to protect high value investments

CHAPTER 10

INCENTIVES & PROMOTIONS

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

Putrajaya

Located 25km south of Kuala Lumpur, it serves as an administrative centre of Malaysia.

Photo source :http://www.puim.my

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10.0 INCENTIVES & PROMOTIONS

10.1 Incentives

Incentivesare an important factor inattractinginvestors into the industrial park.

On 1 st November 2012, Federal Treasury has approved the followingblanketfinancial incentives for the relevant activities in SOGIP.

Thefollowingincentive policy applies to all applications received by SEDIA up until 31 st December 2020.

Manufacturing (Downstream activities)

Medium & heavy industries

• Full income tax exemptionfor a period of 10 years; or 100%investment tax allowance (ITA) • 100%of eligible expenses incurred anddeducted 100%of statutory income for a period of 5 years (subject tothe products / activities promoted under the Promotion of Investments Act 1986)

• Urea & ammonia production

• Solar glass

• Ship building & repairs

• Marine supply base & fabrication yard

• Iron ore pelletizing

• Hot briquette iron

 

• Combined cycle power plant

Shipbuilding and ship repair industry

• Full income tax exemptionfor a period of 5 years; or • 100%investment tax allowance incentive (ITA) of eligible expenses incurredand deducted 100% of statutory income for a period of 5 years

For land development purposes, investors who are eligible for facilitation fund can apply through UKAS (Public Private Partnership Unit) for a certain amount of compensation for the land development cost.

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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10.2 Promotions

There are a number of promotional programs that SOGIP have come upwith. They are:

• Investment Opportunities Program

• Employment Opportunities Program

• Business Opportunities Program

Each of the programs has its own function to realise SOGIP’s ambition to promote the industrial park as well as to

perform

its corporate and social responsibility (CSR)for the stateof Sabah. Thefigure below shows the objectives,

activities that will be done and the benefits.

 

Objective

Activities to be done

Benefits

   

To promote SOGIP to attract domestic    Utilise social media and website as a platform for investors to register interest  

Utilise social media and website as a platform for investors to register interest    To promote SOGIP to attract domestic   Increase the

 

Increase thepromote SOGIP to attract domestic Utilise social media and website as a platform for investors to

Investment

investment in

Opportunities

 

Participate in state, national and international level conferences and seminarsOpportunities   SOGIP

SOGIP

Programme

 

and foreign investors

Provide income to SOGIPProgramme   and foreign investors

Employment

To promoteEmployment Organise talks and road shows at schools and Employment to local Sabahan

Organise talks and road shows at schools andEmployment To promote Employment to local Sabahan

Employment tolocal Sabahan

local Sabahan

Opportunities

employment

local universities, training academies & institutions

 

Programme

opportunities in

SOGIP

Advertise in social media, website, newspapers and magazinesSOGIP

   

Identify list of business opportunities in SOGIPProvide opportunies for local contractors to participate in contracts derived from SOGIP

Provide opportunies for local contractors to participate in contracts derived from SOGIPIdentify list of business opportunities in SOGIP

Business

 

To promote business opportunities in SOGIP to local business ownersBusiness  

Opportunities

Create a platform for businesses to register their company profileOpportunities

Programme

Advertise tenders via various platform, website, magazines and local newspapersProgramme

 
1
1
2
2
3
3

Figure 11: Promotional Programmes in SOGIP

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

Other than organising its own conference, seminar and exhibitions, SOGIP will also rideonpromotional activities by the Federal and Sabah state agencies such as MITI, MIDA, MATRADE, MID, MPRC and SEDIA in order to promote SOGIP locally and abroad.

SOGIP needs to create its corporate website to easily disburse information to potential investors intending to accumulate information on SOGIP.

 to  easily  disburse information  to  potential  investors  intending

CHAPTER 11

IMPACTS & BENEFITS TO SABAH STATE

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

Photo source :http://www.mymalaysiabooks.com

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11.0 IMPACTS & BENEFITS TO SABAH STATE

SOGIP is an integrated industrial area designated for oil and gas relatedindustry. This industrial park will provide several impacts and benefits to the state of Sabah as the following:

1. Creation of job opportunities for Sabahans. 2. Economic spin off to spur further downstream activities. 3. Attract foreign direct investments and facilitate technology transfer 4. Bring development into Sipitang andnearby districts i.e. Beaufort, Tenom and Keningau through spill over effects. 5. Reduce Sabah imports of fertiliser to support local agriculture industry.

spill  over  effects. 5.  Reduce  Sabah imports  of  fertiliser to

CHAPTER 12

SOGIP

DEVELOPMENT

PLAN

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

CHAPTER 12 SOGIP DEVELOPMENT PLAN SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

12.0 GOVERNANCE STRUCTURE

SOGIP is thefirst dedicated oil andgas industrial park in Sabah. SOGIP whichshallbe managed by a professional park developer will be a liaison to various governing bodies and agencies. In addition, SOGIP shall support investorsto establishtheirbusiness inthe industrialpark. An effective governance structure is key for SOGIP to achieve its task efficiently.

12.1 Proposed Governance Structure

Compliance to states statutory requirements is the initial steps for establishing a business in SOGIP. List of approvalsfor the various regulatoryrequirements as per Appendix I.

SOGDC has envisioned a one stop centre concept to service andaidits future investorsfor approval process.

Currently SOGDC owns SOGIP and is also responsible to manage and market the industrial park. SOGDC scope is not designed for statutory requirements approval and therefore a one stop centre is needed to expedite compliance with statutory requirements. Figure 13is the proposed governance structure to realise the one stop centre concept.

structure  to  realise the one  stop  centre concept. Figure 12: Proposed Governance

Figure 12: Proposed Governance Structure

With thenewstructure SOGDC would be an intermediate body that will expedite statutory requirements for investors within SOGIP. In the new SOGDC will be chaired by theChief Ministerof Sabahand consist of top governmentofficial. The body does not override current powers ofrespectivestatutory bodies but act as enabler for statutory requirements.

SOGIP will beincorporatedanddesign to cater solely on

SOGIP

by SOGDC. Thus SOGIP will be the one stop centre for

the investors and any regulatory approval would be submittedto SOGDC for accelerated approval.

development whilst policy matter will be handled

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 41 Figure 13: SOGIP Organisational Chart 12.2 Statutory

Figure 13: SOGIP Organisational Chart

12.2 Statutory Requirements

As an industrial park related to Oil & Gas and heavy industries there are several statutory requirements that need to be observe. Statutory requirements are legal requirements set by local authorities to engage in a particular activity. Failure to comply with these requirements will result in legal directive to cease activity. Statutory approval may be in the form of official approval, license, registration or permit. It should be noted that certain statutory requirements would influence the industrial park layout.

12.2.1 Initial Statutory Requirements

For theinitialdevelopment of SOGIP the main statutory requirement would fallunder the EnvironmentalQuality

Act(EQA) 1974.Under this actthe regulation thereunder, industrial activities are required to obtain the following approvals from the Director General of environment quality prior to project implementation:

a. Environmental Impact Assessment (EIA)

b. Site suitability evaluation

c. Written permission to construct

d. Written approval for installation of incinerator, fuel burning equipment and chimney

e. License to occupy and prescribed premises and prescribed conveyances

The initial EIA would also serve as a global EIA for investor pertaining to management of earthworks. However it should be noted that earthwork activities by investors involving more than 40,000 cubic metric wouldrequire an individualEIA.

12.2.2 Industry Specific Statutory Requirements

There are two main regulatory bodies pertaining to environmental issue. These bodies are the Environmental Protection Department (EPD) and Department of Environment (DOE). EPD is a state department that is responsible for the approval and management of earthworks. DOE is a federal department that is responsible for the assessment and approval of the process engineering works that is normally associated with investors’ facilities. In addition to environmental statutoryrequirements there are other related statutory requirements that would be relevant to the investors within SOGIP.

In order for a businessentity to legally start operatingit businesses several statutory needs to be complied. This compliance will be in the form of licensing, which could be a general licence, an industry specific licence or activity specific licence. Business licences are required by legislation and administered by various government agencies, statutory bodies and local authorities. Business licences could be categorised under three categories.

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

1. General Licences

General licences are a requirement and shall be

applicableonce the investorhas decided to incorporate

a company. List of general licence areas follows:

• Company Registration

• Company and Employees income tax registration

• Employee Provident Fund

• Social Security Organisation

• Human Resources Development Fund

2. Sector Industry Specific Licence

This type of licence is industry specific. Examples of these licences are as follows:

• Manufacturing Licence

• Telecommunication Licence

• Broadcasting Licence

• Oil Exploration Licence

3. Activity Specific Licences

Activity Specific Licences are licences to regulate a

particular activity.These type of licence requires investor to comply with a sets of specific guidelines designed to protect the interest of the citizen, employment, safety of workers, environment and general public. Examples of the licences are as follow:

• Certificate of Fitness for Certified Machinery

• Approval for Expatriate Post

• Approval to install/resite/alter Air Pollution Control Equipment (Bagfilter and Chimney) • Building Plan Approval • Sales Tax Licence

In addition to general business licence and the basic approval from the Director General of Environment Quality under the EQA 1974, investor may need to adhere to other statutory requirements that are relevant to their respective industries. The possible relevant statutory requirements for industries areas follows:

a. Written notification to Director General to carry out work on solid waste transfer station or land fill, or construct on land any facility or building that may produce leachate

b. Written notification to Director General on changes of industrial activities that may cause discharge of effluent or mixed effluent

c. Comply with gaseous emission regulation

d. Stack Gas Emission Standards from Environmental Quality (Clean Air) Regulations 1978

e. Recommended Air Quality Guidelines (Ambient Standards)

f. Sewage discharge Standards

g. Industrial effluents discharge limits

h. Leachate discharge limits

i. Prohibitions on Ozone Depleting Substance (ODS)

j. Environmental Quality (Schedule Wastes)

Regulations2005

k. Environmental Quality (Prescribed Conveyance) (Schedule Wastes) Order 2005

l. Environmental Quality (Prescribed Premises)

(Schedule Wastes Treatment and Disposal Facilities) Order 1989 m. Environmental Quality (Prescribed Premises) (Schedule Wastes Treatment and Disposal Facilities) Regulations 1989

n. Customs (Prohibition of Export) Order (Amendment) (No. 2) 1993

o. Customs (Prohibition of Import)Order (Amendment) (No. 2) 1993

CHAPTER 13

SOGIP – KEY SUCCESS FACTOR

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

13.0 SOGIP – KEY SUCCESS FACTOR

In supporting the implementation of this SOGIP master plan, the following key success factors have been

identified:-

i. Availability of Funds

• Federal and State Government’s support in providing funds for infrastructure development

as a tipping point to bridge project viability gap

• SOGDC’s business model need to be sustainable to cater forfuture expansion of the industrial park ii. Financial Incentives for Investors

• The Ministry of Finance had approved tax incentives to be listed under the Sabah Development Corridor. The approved incentives under SOGIP is “Full tax exemption on statutory incomefor 10 years; orInvestment Tax Allowances of 100% on qualified capital expenditure for 5 years”

iii.Human  Capital Development   •  Human  capital  programmes  and
iii.Human Capital
Development
• Human capital programmes and training centres
are required to be built government to ensure
an adequate supply of quality manpower for the
industry
iv.
Centralised Service Concept
• Centralised provisioning of inputs, utilities and
services reduces investment requirement for
industry players as well as operating cost for all
investors across SOGIP, making investment easy.
v.
Efficiency of Infrastructure
• Dedicated internal infrastructure in the industrial
park such as roadways, ports, electricity, water
supply, telecommunication and etc.
• Port facility development planned to
accommodate both traffic and vessel types (ie.
VLCCs)
vi.
One Stop Service Centre
• One Stop Service Centre for allgovernmental and
logistical functions

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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APPENDICES

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

APPENDICES

I. Governance Structure

 

List of Authority

Bil.

Authority

State of Sabah

Federal

1

Pejabat Ketua Menteri Sabah

 

2

Majlis Daerah Sipitang (MDS)

 

3

Pejabat Daerah Sipitang

 

4

Jabatan Perancang Bandar Dan Wilayah Negeri

 

5

Jabatan Keselamatan Dan Kesihatan Pekerjaan (DOSH)

6

Jabatan Bomba Dan Penyelamat Malaysia (BOMBA)

7

Sabah Electricity Sdn Bhd (SESB)

8

Suruhanjaya Komunikasi Dan Multimedia Malaysia (MCMC)

 

9

Jabatan Penerbangan Awam Malaysia (DCA)

10

Telekom Malaysia

11

SIRIM

12

Jabatan Alam Sekitar (JAS)

 

13

Jabatan Perlindungan Alam Sekitar (JPAS)

14

Jabatan Kastam Diraja Malaysia (JKDM)

15

Jabatan Kerja Raya Sabah (JKR)

16

Lembaga PerlesenanTenaga Atom (AELB)

 

17

Jabatan Air Negeri Sabah (JAS)

18

Jabatan Pengairan Dan Saliran Sabah (JPS)

19

Jabatan Kesihatan Negeri Sabah (JKNS)

 

20

Jabatan Tenaga Kerja (JTK)

21

Suruhanjaya Tenaga (ST)

22

CIDB

23

Jabatan Imigresen

24

Jabatan Pengangkutan Jalan (JPJ)

25

Jabatan Tanah Dan Ukur Negeri Sabah (JTU)

26

Lembaga Pelabuhan Dan Dermaga (JPDS)

27

Lembaga Pelabuahan-Pelabuhan Sabah (LPPS)

28

Jabatan Laut Malaysia Wilayah Sabah (JLM)

29

Polis Diraja Malaysia (PDRM)

30

State Economic Planning Unit (EPU)

31

Jabatan Perhutanan Sabah (JPHT)

32

Ministry of Consumer Affair

33

Ministry of Finance (MOF)

34

Jabatan Keselamatan Kerajaan Malaysia, Jabatan Perdana Menteri

 

35

Ministry of Trade and Industry Malaysia

 

36

Malaysia Investment Development Authority (MIDA)

37

Jabatan Hasil Bumi Negeri Sabah

 

38

Penolong Pemungut Hasil Tanah (PPHT)

 

39

Jabatan Hal Ehwal Agama Islam Negeri Sabah (JHEINS)

 

40

Jabatan Pertanian Sabah (Persatuan Peladang Daerah Sipitang)

 

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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ACKNOWLEDGEMENTS

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

ACKNOWLEDGEMENTS

The Sipitang Oil & Gas Development Corporation (SOGDC) team would like to thank the staff of PETRONAS, Institutefor Development Studies (Sabah),PEMANDU and MalaysiaPetroleum Resources Corporation(MPRC) who assisted in preparing this Master Plan:

Company

Names

Malaysia Petroleum Resources Corporation

• Mohammad Fadhli Jamaluddin

• Dimple A/P Kerisnin

• Justin Chia Ju Sian

PEMANDU

Mohd Taufik Abd Mujib

PETRONAS

PETRONAS Chemicals Group Bhd.

• A Aziz Othman

• Jamuri Zen

• Norizan Yahaya

• Fadzilatun Ahmad

• Johan Arief Ibrahim

• M Zameer Zahur Hussain

PETRONAS Malaysia Gas Management and Petroleum Management Unit

• Faizal MydinPitchay

• Ahmad Johari Jaffar

• Karen Tony Sulil

• Majangkim

• Ku Nor Azmira MRoslim

• Noor AzlinaMorad

PETRONAS Gas Bhd.

• Fairuz Roslan

• A Mufashshal

• Roslin Farih

• Hamshi M Fatmi

PETRONAS Sabah Labuan Regional Office

• Julita Ontol

• Roslan Ahmad Nordin

Industry Advisor SOGIP

Dr Chuah Chen Heng

Institute for Development Studies (Sabah)

• Joe Ang Chang Leong

• Juliana P.J. Ringgingon

• Mohd Azmir Ramli

SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

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ABBREVIATIONS

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SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN

ABBREVIATIONS

CHIMAC

Chemical Industry Manpower Advisory Committee

PCG

PETRONAS Chemicals Group Bhd.

CUF

Centralised Utility Facilities

PEMANDU

Performance Management And Delivery Unit

DOE

Department of Environment

PGB

PETRONAS Gas Berhad

EIA

Environmental Impact Assessment

PETRONAS

Petroliam Nasional Berhad

EPD

Environmental Protection Department

PLC

PETRONAS LNG Complex

EQA

Environmental Quality Act

ODS

Ozone Depleting Substance

ETP

Economic Transformation Programme

RCJY

Royal Commission onJubail and Yanbu

GDP

Growth Domestic Product

SAMUR

Sabah Ammonia-Urea

JIC

Jubail Industrial City

SDC

Sabah Development Corridor

JTC

Jurong Town Corporation

SEC

Sabah Energy Corporation

KBD

Thousand Barrel per Day

SEZ

Special Economic Zone

LPG

Liquid Petroleum Gas

SMI

Small MediumIndustry

M3/DAY

Cubic metre per day

SOGDC

Sipitang Oil Gas Development Corporation

MFO

Marin Fuel Oil

SOGIP

Sipitang Oil and Gas Industrial Park

MMSCFD

Million Standard Cubic Feet per Day

SOGT

Sabah Oil and Gas Terminal

MTPD

Metrics Ton per Day

SSGP

Sabah-Sarawak

Gas Pipeline

MPRC

Malaysia Petroleum Resources Corporation

TSCF

Trillion Standard Cubic Feet