Don’t count on higher oil royalties during slump, says analyst


Dateline 2020-09-23, FMT:

An oil and gas analyst has cautioned against expectations of higher oil and gas royalties because of the worldwide slump in the industry.

Renato Lima de Oliveira said an increase in oil royalties, a hot topic in the Sabah state election, was unlikely because the industry had yet to recover from the fall in oil prices in 2014, as well as the absence of new, significant reserves.

“Production of oil and gas from Malaysia has also been stagnant, so there is no incentive for oil and gas companies to revise existing contracts,” said de Oliveira, an assistant professor at the Asia School of Business.

He was commenting on recent remarks by Sabah Barisan Nasional chief Bung Moktar Radin that oil royalty payments for Sabah and Sarawak could not be raised to 20% as it involved pre-existing agreements with oil corporations, including international ones.

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