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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.
1.0 EXECUTIVE SUMMARY 2
2.0 BACKGROUND 3 2.1 SABAH NATURAL GAS SUPPLY SCENARIO 5 Total Discovered Gas Resources in Sabah 5 Sabah Gas Supply Network Infrastructure and Demand Centres 5 Gas Supply to Kimanis and Sipitang 6
3.0 INTRODUCTION TO SOGIP 7 3.1 SOGIP VISION AND MISSION 8 Vision 8 Mission 8
4.0 SOGIP MASTER PLAN 9 4.1 Objective 10 4.2 Terms of Reference 10 4.3 Benchmarking 10
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
6.0 LAYOUT PLANNING 21
7.0 SUPPORT SERVICES PLANNING 23 7.1 Support Services Planning in Sipitang 24 7.2 Support Services Planning in SOGIP 24
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
9.0 UTILITIES PLANNING 29 9.1 Centralised Utility Facilities (CUF) 30 9.2 Water Supply 32 9.3 Telecommunications 32
10.0 INCENTIVES & PROMOTIONS 33 10.1 Incentives 34 10.2 Promotions 35
11.0 IMPACTS & BENEFITS TO SABAH STATE 37
12.0 SOGIP DEVELOPMENT PLAN 39 12.1 Proposed Governance Structure 40 12.2 Statutory Requirements 41
13.0 SOGIP KEY SUCCESS FACTOR 43APPENDICES 45 Governance Structure 45ACKNOWLEDGEMENTS 47ABBREVIATIONS 49
Table of ContentsCHAPTER 1
CHAPTER 2
CHAPTER 3
CHAPTER 4
CHAPTER 5
CHAPTER 6
CHAPTER 7
CHAPTER 8
CHAPTER 9
CHAPTER 10
CHAPTER 11
CHAPTER 12
CHAPTER 13
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN iv
2.0 BACKGROUND 5Figure1 :SummaryofTotalDiscoveredGasResourcesinSabah 5Figure2 :LocationofDemandCentresinSabah/WPLabuan 6Figure3 :NewindustriesinKimanisandSipitang 6Figure4 :SupplyoutlookforKimanisandSipitangCustomers 6
5.0 INVESTMENT SCENARIO & INDUSTRIAL ACTIVITIES PLANNING 14Figure5 :LocationofSipitangandSOGIP 14Figure6 :PotentialammoniaandUreaderivativestobedeveloped 16Figure7 :GrowthinAsiaCrudeConsumption&Comparison ofcrudesupplydistribution 18Figure8 :SOGIPDevelopmentPlan 20
6.0 LAYOUT PLANNING 22Figure9 :LayoutPlanningofSOGIP 22
9.0 UTILITIES PLANNING 30Figure10 :Comparisonbetweencommonconceptand centralisedutilityconcept 30
10.0 INCENTIVES & PROMOTIONS 35Figure11 :PromotionalProgrammesinSOGIP 35
12.0 SOGIP DEVELOPMENT PLAN 40Figure12 :ProposedGovernanceStructure 40Figure13 :SOGIPOrganisationalChart 41
List of FiguresCHAPTER 2
CHAPTER 5
CHAPTER 6
CHAPTER 9
CHAPTER 10
CHAPTER 12
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 1CHAPTER 1
EXECUTIVESUMMARY
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 2
1.0 EXECUTIVE SUMMARY
ThisSOGIPmasterplanprovidesthefoundationwhichidentifiesandexploresthepotentialindustriesindevelopingSOGIPasapremierindustrialparkfocusinginthedevelopmentofpetrochemicals.ThismasterplanisalignedwithSabahDevelopment Corridor (SDC) andMalaysias Economic Transformation Programme (ETP). It serves as aguidancetooutlineandimplementtheplanneddevelopmenttakingintoaccountSOGIPsstrategicpositioningandpotentialinvestmentsbasedongasandnon-gasusage.Utilities,infrastructures,incentives,promotions,statutorystandardsandcentralisedapprovingauthoritiesarealsooutlinedaskeysuccessfactors.
TheSOGIPmasterplanshallbeguidedaccordingtothegasavailability,gascomposition,alignmentofSDCandETPandmaximisationofgasusageinSabahstatebyaddingvaluetothesupplychain.
TheultimatevisionistomakeSOGIPasthepremieroilandgasindustrialparkofchoiceforpetrochemicalhubinAsiaPacific.SOGIPadoptsandemulatesthebestpracticesfromothersuccessfulindustrialparksaroundtheworldnamely Jurong IslandDevelopment in Singapore, Jubail Industrial City in SaudiArabia and JamnagarRefineryComplexinIndia.
With thebenchmarkingagainstotherprominent industrialparks,SOGIPwillemergeasoneof thenewupandcomingindustrialparksfocusingonthedevelopmentofpetrochemicals.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 3
MOUNT KINABALUTallest Mountain in Malaysia, with the highest peak at 4095.2M above sea level.
CHAPTER 2
BACKGROUND
Photo Source :http://www.horizonborneo.com
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 4
2.0 BACKGROUND
The oil and gas sector is the mainstay of Malaysiasgrowth since oil was first drilled in 1910 in Sarawak1.Furthermore,thefoundingofPETRONASin1974istheforceforthedevelopmentoftheoilandgasresourcesandplaysamajorroleindrivingtheindustrysgrowthinMalaysia.Malaysiaisoneoftheworldslargestnaturalgas and crude oil reserves inwhich Sabah has about13.22trillioncubicfeet(tcf)ofgas.
Latest discovery of oil offshore of Sabah, initialestimatesputthewells reservesat227millionbarrelsof oil equivalent2. Sabah has the potential for deepwater exploration, oil andgas services and integratedpetrochemical3.Oneof themajorprojects inSabah islocated atMengalong, Sipitangwhich is 145 km fromKota Kinabalu. Sipitang is a town, district and alsoa parliamentary constituency located in the InteriorDivisionofSabahwithapopulationof34,8624.Thetownisset tobecomeoneofSabahsoilandgas industrialcentres following the state governments decision tobuildaworldclassintegratedindustrialparkdesignatedfor oil and gas related and other heavy industriesthroughindustrialclustering.
Sipitang Oil and Gas Development Corporation(SOGDC)wasformedtospearheadthedevelopmentoftheSipitangOilandGasIndustrialPark(SOGIP).SOGDCwill act as a special purpose vehicle (SPV) companytoown,develop,manageandmarket the4,065acresof land inSOGIP.Under the ambitof theSabah stategovernment, SOGIP site is expected to attract newinvestmentsworthanestimatedRM35.1billionwiththepotentialofcreating3,745newjobopportunities5uponits completion. SOGIP, which was approved in 2010,hasalreadybegunattracting localand foreignoilandgas investors to scout numerous possible investmentopportunitiesonthesite.
The availability of natural gas as feedstock fromSabahs offshore production facilities is one of themanyattractiveproposalsthatenableSOGIPtobewellpositioned to spearhead the development of the oilandgas industry inSabahstate. Industries thatwouldbenefitfromnaturalgasfeedstockinclude:
Petrochemicals plants to manufacture resins,plastics, pharmaceutical products, fertilisers andpackagingmaterials
Heavyindustries Logisticscentreforexports Research&Development (R&D) forbio-fuels and
alternativeenergies Fabrication,constructionandrelatedactivities Bulkproductstorage
Basic infrastructure facilities, utilities and generalamenitiessuchaswatersupply,electricitysupply,androads will be constructed on the site. Following this,jettiesforimportingrawmaterialsandexportingvarioustypesoffinishedproductswill bebuilt togiveSOGIPtheaccesstoglobalmarkets.
Besides that, new residential, retail and commercialdevelopments will be built concurrently within theneighbouring area to make SOGIP site liveable andappealingtotheemployeesworkingonthesite.
Asasignofconfidenceonthesiteseconomicviability,PETRONASChemicalsGroupBhd.(PCG)isbuildinganammonia and urea manufacturing complex in SOGIPatanestimated investmentcostofUSD1.5billion.TheSabah Ammonia-Urea (SAMUR) project is one of theleading initiatives to monetise natural gas obtainedfromSabahsoffshorewells.
The SAMUR Project is among the most recent andstrategic developments located within SOGIP thatsupportstheoilandgasindustryinSabah.Thecomplexwould comprise of an ammonia plant, a urea plant, agranulation plant, as well as an integrated utility unitand jetty facilities. The ammonia plant is expected toproduce2,100metrictonnesperday(MTPD)of liquidammoniawhiletheureaplantwillproduce3,500MTPDof granulated urea. Construction has started in thesecond quarter of 2012 with completion targeted in20156.
Furtherdevelopmentofpetrochemicalssectorisguidedby theestimatedgasavailabilityandgascompositionwhichisrichinmethane.
1EconomicTransformationProgrammeReport2EconomicTransformationProgrammeReport3MyCorridorwebsite:www.mycorridor.malaysia.gov.my4www.statistics.gov.my,basedonyear20105SabahOil&GasDevelopmentLabReport6MPRCwebsite:www.mprc.gov.my
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 5
2.1 Sabah Natural Gas Supply Scenario
Total Discovered Gas Resources in Sabah
As of 1st January 2013, the total discovered gasresources in Sabah stood at 13.22 Trillion standardcubicfeet(Tscf)asdetailedinFigure1.Fromthetotaldiscovered resources, 21% is in producing stage, 42%is indevelopmentstageandtheremaining37%oftheresourcesarebeingactivelystudiedinternallyforfuturemonetisation or development plan to meet the gassupplycommitment.
Continuous effort to monetise these discoveries areimportant to ensure the sustainability of gas supplyto downstream gas customers. Looking forward,
monetisingthesefieldswouldbetechnicallychallenging.Inaddition,themonetisationoftheseresourcesishighlydependent on the downstream gas price to ensureeconomicviabilityoftheproject.
Notwithstanding the challenges mentioned above,PETRONAS is continuously pursuing the explorationsefforts inSabahwaterswithupstreamplayerssuchasLundinPetroleum,Talisman,MurphyOil,Shell,etc.
With attractive Production Sharing Contract (PSC)terms,PETRONASisexpectinganincreaseininvestmentandparticipationofnewplayersintheupstreamsector.
Total Gas Discovered Resources in SabahResources (Tscf)
15
10
5
-
Producing NAG Producing AG
Figure 1 : Summary of Total Discovered Gas Resources in Sabah
Development Pre-Dev(Committed)
TotalDiscoveredResources
Pre-Dev (Non-committed)
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 inSabahthataresupplyinggastothethree(3)existingdemandcentresviamorethan300kmofgaspipelines.
The three (3) existing demand centres locatedindependently in Sabah and Wilayah PersekutuanLabuan namely Sabah Gas Terminal (SBGAST) in Kg
Gayang, Tuaran and LabuanGas Terminal 1 (LGAST-1)andLabuanGasTerminal2(LGAST-2)botharelocatedinWilayahPersekutuanLabuanasshowninFigure2.
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 6
By the end of 2013, a new demand centre known asSabah Oil & Gas Terminal (SOGT) in Kimanis, Sabahwill be on stream with a capacity of 1,250 mmscf/d.This development would also include a constructionofSabah-SarawakGasPipeline(SSGP)fromSabahOilandGasTerminal(SOGT)toPETRONASLNGComplex(PLC)inBintulu.
ThisnewdemandcenterisexpectedtoservethenewgascustomerslocatedinKimanisandSipitangareamainlyforpower,petrochemicalandreticulation industriesasillustratedinFigure3.
Figure 2: Location of Demand Centres in Sabah / WP Labuan
Gas Supply to Kimanis and Sipitang
PETRONAShascommittedatotalof250mmscf/dofdailygassupply(upto1.83tscfofgasresources)for15-20yearstothenewgascustomersinKimanisandSipitangasshowninFigure4.
Figure 3: New industries in Kimanis and Sipitang
KIMANISPower
Petrochemical
ReticulationSIPITANG
SOGT
Figure 3 : New Industries in Kimanis and Sipitang
Figure 4: Supply outlook for Kimanis and Sipitang Customers
Resources(mmscfd) Committed
250 mmscf/d~1.83 Tscf for 15-20 years300
200
200
2014 2019 2024 2029 2034Year
Figure 4 : Supply outlook for Kimanis and Sipitang Customers
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 7CHAPTER 3
INTRODUCTION TO SOGIP
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 8
3.0 INTRODUCTION TO SOGIP
3.1 SOGIP Vision and Mission
Vision
TobethepremieroilandgasindustrialparkofchoiceforpetrochemicalhubinAsiaPacific.
Mission
Maximize use of natural gas in Sabah alignedwiththeMalaysia Economic Transformation ProgrammeandSabahDevelopmentCorridor.
Develop SOGIP as petrochemical hub and as acatalystforoilandgasdevelopmentinSabah.
Create a value added supply chain in Sabah tosupportdomesticrequirementsinagro-industries.
Increase GDP and employment opportunities forSabahan.
Developandoptimiseoilandgasrelateddownstreambusinesses.
Innovateand explore future needs focusing onenergies,foodandenvironment.
Develop research and development centre forpetrochemicalsproductsthatwillmakeSabahself-sufficient,relevantandsustainableforitsresidents.
3.2 Land
SOGIP land size is 4,065 acres located inMengalong,Sipitangdistrict.It isapproximately12kilometresfromSipitangtown.TheareaisneartoSabahForestIndustries(SFI)andsituatedtothewestofSFI.ThenorthofSOGIPis theBruneiBay shoreline. It is approximately 150kmsouthofKotaKinabalucitycentrewhich isaccessiblevia theKotaKinabalu SipitangRoad. Time to travelfromKotaKinabalutoSipitangisabout2.5hours.
The area of SOGIP has been earmarked for oil andgas industry and downstream industries derived fromAmmonia and Urea. Out of the total 4,065 acres,PETRONASChemicalGroupBerhadthroughPETRONASChemical Fertilizer Sabah Sdn Bhd (PCFSSB) hasoccupied153acresfortheirUreaPlantknownasSAMURwhichiscurrentlyunderconstruction.
Theexistingsiteconditionisflat,overgrownwithshrubsandothervegetation.Alargepartoftheareaisgenerallysandy.Mangrovecanalsobefoundatthenortheasternsectionofthesite.PavedroadsarefoundatthefrontportionofthesiteofSAMUR.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 9CHAPTER 4
SOGIP MASTER PLAN
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 10
4.0 SOGIP MASTER PLAN
Since formation of SOGDC and SOGIP in 2010, thedevelopment of the park has progressed to a criticalstage where a master plan is required to drive theinvestmentinitiatives.Aslikealldevelopmentofnaturalhydrocarbon resources in Malaysia, PETRONAS is theforefrontpartnerinthedevelopmentoftheoilandgasresourcesinSabah.
4.1 Objective
This document describes SOGIP master plan whichidentifies and explores the potential industries indevelopingSOGIPasapremierindustrialparkfocusinginthedevelopmentofpetrochemicals.Thismasterplanis aligned with Malaysias Economic TransformationProgramme (ETP) and Sabah Development Corridor(SDC). It serves as a principal guidance to outlineand implement the planned development taking intoaccount theSOGIPstrategicpositioningandpotentialinvestmentsbasedongasandnon-gasusage.Utilities,infrastructures, incentives, promotions, statutorystandardsandcentralisedapprovingauthoritiesarealsooutlinedaskeysuccessfactors.
4.2 Terms of Reference
SOGIP master plan shall be principally guided by
the followings:
Gasavailability o Phase1:allocationof90mmscfdofnaturalgas
toSOGIP o Phase2:subjecttofutureavailabilityofgasand
thegascomposition Natureoftheindustriesshallbebasedonmethane
richgascompositionasfeedstockorfuel InalignmentwithETP,SDCandSabahGovernments
aspirationofdevelopingtheoilandgasindustries Capabilitydevelopmentof local residentsofSabah
toparticipateintheoilandgasindustries Retaining resources and value within Sabah and
Malaysia. Maximisation of value added to supplychaininSabahstate
Integratedpetrochemicalcomplexwithfertilisersasthekeyproducts
Gasdistributiontobedevelopedforsmallmediumindustries(SMI)Centralisationofutilityfacilitiesforthe optimisation of gas usage and the supply ofutilities
Enable socio-economic developments spinning-offfromSOGIP
4.3 Benchmarking7
In transforming SOGIP into the premier oil and gasindustrialpark forpetrochemicals inAsiaPacific,bestpractices from three successful industrial parks havebeen identified to be adopted. The three identifiedindustrialparksareJamnagarRefineryComplex(India),Jurong Island Development (Singapore) and JubailIndustryCity(SaudiArabia).
4.3.1 Jamnagar Industrial Park
Jamnagar, located in the state of Gujarat, has threerefineriesownedbyReliancePetroleumandEssarOil.There are presently no major downstream facilitieslocated in Jamnagar. The total area for Jamnagar is7,885 acres with total investment of USD14.3 billion.The estimated jobs created are around 3,500 by theyear 2010. Refining and petrochemical are the twomain industries in Jamnagar. Reliances PetrochemicalComplexandEssarOilRefineryarelocatedatadistanceof7kmfromeachotherandarenotintegrated.
Through analysis of the Jamnagar Industrial Park,four best practices have been identified that greatlypromoteditsgrowthandinvestorsattractiveness;
1. Financial incentives
In Gujarat, many financial incentives have beenintroduced under Special Economic Zone (SEZ)schemes to reduce tax burden and provide acompetitiveinvestmentenvironment.
2. Integrated onshore product distribution
pipelines
BothRelianceandEssarOilrefineriestransporttheirproducts to North India through integrated crude,productandgaspipe-lines.Thishelpstherefineriestocutdownontheirdistributionandtransportationcosts.
7Source :MPRC,PengerangMasterplanDraftreportArthurDLittle
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 11
3. Superior refinery product slate
The refineries produce a high proportion of high-valueLiquidPetroleumGas(LPG)andpetrochemicalfeedstocks such as propylene (adding to over 10%on crude processed, compared to 2-3% for olderrefineries). The refineries are of full conversiontype and have no production of low-value fuel oil(comparedto12-20%oncrudeprocessedforsimplerrefineryconfigurations).
4. Proximity to major crude supply
The industrial park is ideally located on the westcoastofIndiaandhascloseproximitytotheMiddleEast,amajorsourceofcrudesupply.
5. Dedicated infrastructure and utilities
The industrial park has their owndedicatedpowerplant,waterandwastewater treatmentplantsandcommonportandterminalsfacilities.
4.3.2 Jurong Island
Jurong Island is a man-made island located to thesouthwest of Singapore,with an area of about 8,000acresandactasahub for the refining,petrochemicaland chemical industries. It is estimated around 8,000jobs has been created with the total investment ofUSD26 billion. The Jurong Town Corporation (JTC) isSingaporesprincipaldeveloperandmanagerofJurongindustrialestatesandtheirrelatedfacilities.
ThroughanalysisoftheJurongIsland,fivebestpracticeshave been identified that have greatly promoted itsdevelopmentandinvestorsattractiveness;
1. Availability of critical mass
Three major refineries and a cracker were alreadyestablishedbeforeanylandreclamationcommenced.Critical mass ensures security of supply and thusattraction for downstream players to establishfacilitiesclosetothesesources,therebyreducingthecostoftransportation.
2. Centralised service corridor and the Plug and
Play concept
Centralised provisioning of inputs, utilities andservicesreduceinvestmentrequirementforprimaryindustry players as well as operating cost for allinvestorsacrosstheisland,makinginvestmentquickandeasy.
3. Tight vertical and horizontal integration
Connection of adjoining industries in the valuechain through a common pipe network facilitatesthe transfer of intermediate streams vertically andhorizontally between producing and consumingfacilities.
4. Human resource development
Chemical Industry Manpower Advisory Committee(CHIMAC)andChemicalProcessTechnologyCentreweresetupbytheSingaporegovernmenttoensurean adequate supply of quality manpower for thepetrochemicalindustry.
5. Stable government and business friendly
environment
Singaporeiswellknownforefficientprocessesandtransparent systems,and ranksconsistentlyamongtheverytopcountriesintheworldintermsofeaseofdoingbusiness.
4.3.3 Jubail Industrial City
JubailisanindustrialcityontheArabianGulfcoastofSaudiArabia.Thecityisahubforrefining,petrochemicalandmetals-based industries.TheJubail IndustrialCity(JIC)developmenthasbeenplannedintwozones(JICIand JICII); these zones are located side-by-side andcoveratotalareaofapproximately40,000acres. It isestimatedaround55,000jobs(forJubailIndustrialCityII)hasbeencreatedwiththetotalinvestmentofSR65billion(USD17.3billion) in2004. It isexpectedthatby2022, an additional SR200billion (USD53.3billion)ofinvestmentswillbeattractedinJubailIndustrialCityII.TheRoyalCommissiononJubailandYanbu(RCJY) isthegovernmentbodymanagingthedevelopmentandoperationsat the industrialcitiesofJubailandYanbu.Through analysis of the Jubail Industrial City, fourbest practices have been identified that have greatlypromoteditsdevelopmentandinvestorsattractiveness;
1. High vertical integration
Development plans for Jubail focuses on highdownstream integration of petroleum basedindustries for producing petrochemicals, fuels andotherfeedstock.Theseoutputsnotonlywillincreasevalue-added exports but also provide critical rawmaterial for development of further downstreamindustries, including fertilisers, cement, etc. fordomesticandexportmarkets.
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 12
2. Efficiency of infrastructure concentration
Substantial investments have been made todevelop supporting infrastructure needed for thepetrochemical industry. Strategic locations havebeenidentifiedfor infrastructureandutilitieswhichfacilitatethemostcost-effectiveandenvironmentallysustainabledevelopment.
3. Development of human capital
Significant national investment programs inadvanced training have been made to meet thenationalmanpowerdemandwhichwouldbeneededforconstructionand laterprojectoperations in theindustrialcity.
8ArthurDeLittlePengerangMasterPlanReportPhotoSource:http://www.blpge.com
4. Availability of deep water port facility
The planned development of deep-water port toaccommodate required super tankers will be keysuccess criteria for development of the JubailIndustrialCity8
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 13CHAPTER 5
INVESTMENTSCENARIO & INDUSTRIALPLANNINGACTIVITIES
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 14
5.0 INVESTMENT SCENARIO & INDUSTRIAL ACTIVITIES PLANNING
5.1 Investment Scenario
SOGIP is the first oil and gas development in Sabahfocusing on petrochemicals. Itwill be the catalyst forthe development in Sabah along the west coast. ThedevelopmentoftheparkmustbealignedwithETPandSDCforoilandgassectorandbebeneficialtothestateofSabah.
SabahstateandPETRONASarepartnersindevelopingthe natural gas into methane based primarypetrochemicalssuchasammoniaandurea.Usingtheseprimary petrochemicals, development of potentialdownstreamvalueaddedproductssuchasammoniumsulphate, ammonium nitrate, diammonium phosphate,caprolactamandothersareexplored(Refertofigure5).
Diammonium Phosphate (DAP) is one of ammoniaderivativeswhichmainuseisinproductionofNPK.DAPisalsosuitablefertilisertobeappliedforcashcropssuchas vegetables and tubers. There are also opportunitytocreatefurthervalueforproductionofhighnitrogen
fertiliser such as fertiliser grade Ammonium Nitratewhich could alsobe used to assist in thegrowth andmetabolicprocessesthatplantundergoes.
InvestmentinSOGIPcanbeexpandedintomanufacturingof other chemicals using the available petrochemicalsfrom nearby manufacturers such as methanol fromLabuan. Other products that can bemanufactured inSOGIPthroughthisrouteareothersolvents,biodieseland glycerine (for cosmetics and pharmaceuticalsindustry).
Support service industries like Centralised UtilitiesFacility (CUF), fabrication yards for pressure vessels,seacraftsandoffshorestructurearealsoplanned.Basicinfrastructure (road, drainage and port facilities) andutilities (electricity, water and telecommunications)willbemadeavailableatSOGIPforinvestorstoutilisein operating their businesses. Special tax incentivesareavailabletothebenefitsoftheinvestors.(RefertoChapter10IncentivesandPromotions)
Figure 5: Location of Sipitang and SOGIP
5.1.1 Advantages of Sipitang Oil and Gas Industrial Park
SIPITANG
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 15
SOGIP is to be developed as an integrated industrialparkdesignatedforoilandgasindustry.SOGIPhasthefollowingstrengthsasanintegratedindustrialpark:
TheavailabilityofnaturalgasfromoffshoreSabah Strong partnership between Sabah state and
PETRONAS Availabilityof4,065acresoflandfordevelopment Strategically locatednearbytomajorshipping lane
andcloseproximitytoLabuanandBrunei Sheltered bay and sufficient water depth (16m
25m) to cater for Single Buoy Mooring (SBM) forVeryLargeCrudeCarriers(VLCC)andavailabilityofvesselanchorage
OpportunityoftaxincentivestoSOGIPinvestors Minimalimpactonrelocationoflocalresidents Gascitygatewithintheindustrialparktee-offfrom
theSabahSarawakGasPipeline ProximitytotrunkroadthatconnectsSarawakand
BruneitoSabah Synergy between on-going SAMUR project and
SOGIPmasterplanwillconvertSOGIPintoafertiliserhub which in return provides opportunities forinvestorstocreatedownstreamindustries
ReadilyavailablemarketwhereagricultureisamajorindustryinSabah
ThelocationofSOGIPasshowninFigure5isidealforthedevelopmentofintegratedpetrochemicalcomplexesfocusingonagriculturalproducts,bio feed, renewableenergyandotherchemicalproductsforcosmeticsandpharmaceuticaluses.
5.1.2 Investment in SOGIP
It is expected that SOGIPwill bedevelopedover twophasesspanningfrom2014to2024(RefertoFigure8)withparticipationfrommultipleinvestors.
Phase 1A: Planned Investment by Investors
1. Fertilisers i. AmmoniaPlant ii. AmmoniaDerivatives iii.UreaDerivatives 2.BulkStorage i. BulkOilStorage ii. BulkRefinedPetroleumProductsDistribution
Terminal 3.OtherInvestments i. BioBasedIndustries ii. Fabrication (shipping, onshore and offshore
structures) iii.Refinery 4.Utilities i. CentralisedUtilitiesFacility(CUF) ii. GasReticulation
Phase 1B: Planned Development by SOGIP
1. Infrastructure i. RoadandStreetLights ii. Drainage iii.PortandJetty iv.Telecommunications
Phase 2: Planned Future Investment (Subject to
future availability of gas)
1. MethanolDerivatives 2.AmmoniaDerivatives 3.UreaDerivatives 4.OtherIndustries
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 16
5.2 Phase 1 SOGIP Development
5.2.1 Fertilisers
Fertiliserisakeyindustrythatsupportsglobalchallengein food production. The need for improvement infood production and quality create higher demand infertilisers.Bothdemandandsupplyforfoodisexpectedto grow rapidly for the next 20 years in linewith thegrowth of population. SOGIP aspires to providetotal fertilisers solutions to the agriculture industry,supportingSabahstateasthelargestproducersofpalmoil in Malaysia. Seven (7) value added products havebeenidentifiedforinvestmentwithinthisclusternamelyammonia, urea, NPK, ammonium nitrate, caprolactam,ammoniumsulphate,anddiammoniumphosphates.
Spearheading SOGIP development is the currentlyongoing construction of SAMUR9. SAMUR projectwillcost approximately RM4.6 billion (USD1.5 billion) andwill produce about 1.2 million tonnes per annum ofgranulated urea.Once completed, SAMURwill be thelargest single traingranularurea facility inSouthEastAsia,transformingSabahintooneoftheregionslargestproducersoffertilisers.
Figure 6: Potential ammonia and urea derivatives to be developed
Ammonia
PowerGeneration
Methanol
Urea
AmmoniumChloride
Insufcient gas volumefor world scale plant
Oversupply of market
Power demand in Sabah islimited100mmscfd = 600 MW
ethance volume is not sufficient to develop ethylene and derivatives complexUF - Urea Formaldehyde
Note :
AmmoniumNitrate
DiammoniumPhosphate
AmmoniumSulphate
Caprolactam
Fertilizer :agriculture
Fertilizer :palm/rubber
Fertilizer :cash crops
Articialbre
NPK
Mela-mine
UF
MethaneRich
NaturalGas
Fertilisersfromthisfacilitywillbeexportedtolucrativeoverseasmarkets. However, a sizeable volumewill bemadeavailable toserveSabahstates rapidlygrowingagriculturalsector.
Anewammoniaplant isalsobeingplanned inSOGIPslated to be commissioned in 2018. The investmentof new ammonia plant is expected to bring GrossNationalIncome(GNI)ofapproximatelyRM646millionbyyear2020.Theproductswillbeusedas feedstockforammoniaderivatives,which inturnwillbeusedasfertilisersforcashcrops,tubers,paddyandpalmoil.
The investment in ammonia derivatives productionsuch as caprolactam will potentially pave way tofurther downstream products such as Nylon 6 whichsubsequently lead to the growth in textile andengineeringplasticindustryinSabahstate.
The future investment opportunities for fertilisersindustry inSOGIPare inAgrochemicalsandEnhancedEfficiency Fertilisers. Agrochemical products suchas herbicide and pesticide, and Enhanced EfficiencyFertiliserssuchascoatedfertiliserswillprovidefurthersolutiontotheagricultureindustry.
9Source:PETRONASChemicalsGroupBerhad
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 17
5.2.2 Gas Distribution
A joint venture company between Sabah EnergyCorporation(SEC)andPETRONASGasBerhad(PGB)iscommittedtoprovidegasdistribution infrastructurewith a total investment estimated to be aroundRM4080million.Withthisinfrastructure,SMIinSOGIPcanleverageontheavailabilityofnaturalgasfromthenearest tee-off point at the gas distribution network(pipeline).
Total of 15 mmscfd of natural gas will be allocatedascatalyst for the SMI especially in the areas ofwaste treatment and incineration, metals preheating(particularly for iron and steel), drying anddehumidification, glass melting, food processing andfuellingindustrialboilers.
5.2.3 Bulk storage
Bulkstorageterminalforbothcrudeoilandpetroleumproducts are potential investment opportunities inSOGIP.
Annually,anestimated420,000barrelsofcrudeoiland730,000barrelsofpetroleumproducts(refertofigure7)areconsumeddailyacrossAsia.PetroleumproductimportsandexportsforChina,IndiaandSoutheastAsiaareexpectedto increaseby1.8millionbarrelsperdayfrom2010to2020.Theimplicationsonoilstoragearetwo-fold10;
1. Thecontinuedgrowthindemandforenergyinthisregionwilldriveaneedforincreasedstoragecapacityofcrudeoilandrefinedpetroleumproducts.
2. Increased inflowof crudeoil fromAfricaandLatinAmerica would result in longer transit times andtranslate into a need for larger buffer storage ofcrudeoil.
With close proximity to major shipping routes, landavailabilityanddeepwatermarineaccessibility,Sipitangiswellpositionedforoilstorageterminals.
Distributionofrefinedpetroleumproductssuchasdieselandgasolinetonearbyareasarenotcurrentlyavailable.Hence, thebulk storage facilitywill also function as adistributionterminalinSOGIP.
10EconomicTransformationProgramme(ETP)
5.2.4 Refinery
Subject to future economic feasibility study anddependingonmarketdemandoftherefinedpetroleumproducts, a refinery to process crude oil will beconsideredinthefirstphase.
Intheareaofoilrelatedinvestment,arefinedproductdistribution terminal is a value added operations tobeincludedinSOGIP.Thisterminalwillservethelocaltransportationoperationsbyprovidingdiesel,gasoline,JetA1,keroseneandmarinefueloil(MFO)forbunkeringoperations.
5.2.5 Other Investments
Other investmentsthatrequireminimalgasvolumeaspart of the manufacturing process will be assessed.These potential investments must satisfy all the pre-requisitesasdepictedintheguidingprinciples.
In the case of bio based industries, bio-protein feedmanufacturing has been identified. It uses naturalgas as fuel and feedstock tomanufacture amino acidbased protein product suitable for use within SabahandMalaysia.Thebio-protein ismixedwithfibresandminerals for use as animal feeds which supports SMIindustryinSOGIP.
Marineservices,shipbuildingsandrepairs,onshoreoroffshore structure fabrication bode well into SOGIPMasterPlanbecauseoftheaccessibilitytothevariousoilandgasoperationsinEastMalaysia.
SMI has potential to be developedbased on requiredsupport and services for the fertilisers hub such astechnology driven industries such as packaging,warehousing, logistic, ICT service (refer to Chapter 7,section7.2).
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 18
5.3 Phase 2 SOGIP Development
Subjecttothefutureavailabilityofgas,phase2SOGIPdevelopment will focus on methanol derivatives,ammonia derivatives, urea derivatives and otherindustries.
5.3.1 Offshore and supply base servicesSOGIP is an ideal location for offshore structuresfabricationandrepairsoffloating installation.Sipitangis blessed with sheltered bay and it is accessiblethroughouttheyear.
Withhighexpectationoninvestmentsandestablishmentof port facilities in SOGIP, there is a potential for afabricationyard tobesetupandprovideengineeringand construction services. Sabah is surrounded byoffshoreoilfieldswhichmakeitfeasibleforSOGIPtobeanothersupplybasecomplementingLabuan.
Average transittime (days)
10.9 14.3
2005 2010
41 32
55
23.7
21.6
19.5
2015
Regional Arab Gulf Europe/Africa/Med
LatinAmerica
Growth rateof 420 kbdper year
Asias appetite for crude oil is continuing togrow at 420 kbd per year Asias crude sypply will take longer to arrive
Comparison of crude supply distributionGrowth in Asia crude consumptionMillion barrels per day Percent of Asia crude oil source
+2.1
+2.1
53
20052015
315
1 2
Distance to Asia
Source: ETP Report Figure 7: Growth in Asia Crude Consumption & Comparison of crude supply distribution
5.3.2 Marine services - Ship Fabrication and Repairs
SOGIP location issuitable forshipbuildingandrepairsoperations due to its access to shipping routes andshelteredbay.
Shipandsupplyvesselsrefurbishmentandrepaircanbeeasilycarriedoutduringmonsoonseason.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 19
11B10standardis10percentpalmbiodieselwith90percentpetroleumdiesel.
5.3.3 Bio and Renewable Energy Biotechnology Research Centre
WiththeproposedimplementationoftheB10standards11,biodieselindustriesshouldbeindemandfrommid-2014.B10standardrequirementproposesretaildieseltoincorporate10%ofbio-diesel.
Thismoveisproposedtoreducethedependencyoffossilfuelsandalsotoencouragethedevelopmentofthebiofuelsindustries.
Bio-dieselproductionrequiresmethanolandpalmoilasfeedstocks.MethanolisavailablefromLabuanandpalmoilfromtheareasurroundingSipitang,makingthisanideallocationforcentraliseddevelopmentofbiofuelstechnology.Aby-productofthisprocessisglycerinewhichisagoodbaseformanypharmaceuticalandcosmeticproducts.
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PETROCHEMICAL & FERTILISERS
INDUSTRIES
Phase 1
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Phase 2
BULK STORAGE & HEAVY INDUSTRIES
SUPPORTING INDUSTRIES
UTILITIES & INFRASTRUCTURE
MARKISA (Ammonia Plant)
Ammonia Derivatives
Urea Derivatives
Methanol Derivatives
Bio-based Industries
Bulk StorageBulk Products Distribution TerminalOli RefineryFabrication YardShip Repair Services
TransportationWarehouse (Storage Facilities)PackingPrintingSMI
Road, Streetlights & DrainageElectricity, Water & ICTCentralised Utilities Facility (CUF)Gas ReticulationPort & Jetty
Phase 1Phase 2Phase 3Phase 4APhase 4B
Figure 8 : SOGIP Development Plan
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 21CHAPTER 6
LAYOUT PLANNING
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6.0 LAYOUT PLANNING
Figure 9: Layout Planning of SOGIP
Conceptually,SOGIPwillattractavarietyofinvestmentsindifferentmanufacturingandoperations.Someoftheoperationsincludehazardousandtoxicmaterialswhichrequire special handling. Therefore, zoning criteria isdevelopedbasedonthefollowings:-
a. Safety consideration (flammable, toxic andexplosivenessofmaterials).
b. Logicallayoutofmanufacturingoperationstoreducepipingruns.
c. Reduce traffic congestion and unnecessarymovementswithintheparklimitbyclusteringrelatedindustries.
Landsizecanbecustomfittoinvestorsneedtooptimisethelandusage.
Sea front land parcels are reserved for specialrequirementsuchasportfacilities,marineandoffshoreservicesandsupplybase.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 23CHAPTER 7
SUPPORT SERVICES PLANNING
Photo source :http://commons.wikimedia.org
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 24
7.0 SUPPORT SERVICES PLANNING
7.1 Support Services Planning in Sipitang
SOGIPwillbesupportedbyexternalcommonfacilitiesand supporting services to complement the park andbeneficial to Sipitang development. These facilitiesinclude:
OfficeComplexes Housing Hospital SchoolsandTrainingCentres CommercialComplex Security FireFighting
With the availability of these facilities, SOGIP willbe fully supported as an industrial park. SOGIP willdirectlyor indirectlycarryout itscorporateandsocialresponsibilitiesfortheemployeeswithinSOGIPandforthepeopleofSipitangdistrictaswell.
7.2 Support Services Planning in SOGIP
With several clustersof industriesbeing set-upwithinSOGIP, ranging from oil refinery and petrochemicals,number of supporting services has been identified inorder to support theoverall functionof the industriesandSOGIPasawhole.Listofpotentialservicesareasbelow:
Packaging o Packaging of products that are produced in
SOGIP. Printing o Labelling of end products for identification
purposes. TransportationServices o For transporting or delivering raw materials,
finishedgoodsorotherproductstodestination. WarehousingFacilities o Asabaseforstorageofproducts,dryandbreak
bulkandothermaterialsbeforedelivery.
Competitiveness of SOGIP shall be enhanced bydevelopmentof identifiedinfrastructuresandfacilities.Theplannedcentralwarehousingfacilitieswillsupportthe investment in SOGIP in rawmaterial and producthandling,storageanddistribution.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 25
Acentralwarehousingfacilityisnecessaryforthestorageof certain products that are required by the industryusersbefore it is transportedoutofSOGIP.TherearetwotypesofwarehousesthatwillbemadeavailableinSOGIPtocaterforthedifferenttypeofgoodsproduceorimportedbytheuseroftheindustrialpark;warehouseforhazardousgoodsandnon-hazardousgoods.Thereareseveraltypesofhazardousgoods,whichare:
o GaseousMaterials o InflammableLiquids o InflammableSolids o Materials containing peroxides, easily oxidising
contents o Substanceshighlytoxic o Radioactivesubstancesandmaterials o ErosiveMaterials o Other hazardous materials and substances
miscellaneousinnature o Safetymanagement system is to be in-place in
managingthewarehousewhichholdshazardousgoods.Hence,segregation forhazardousgoodsand non-hazardous goods is crucial in ensuringthesafetyoftheproducts.
ScheduledWasteManagement o HandlingscheduledwastewithinSOGIP. o Scheduledwasteshallbecollectedanddisposed
bygovernmentapprovedserviceprovider.SOGIPis exploring the possibility of providing theservices.
o Scheduledwastesareexemplifiedaswastesoratotalcombinationofwastesthathasasignificantpresent or possess conceivable hazard to thehealth of humans and living organisms. Thisexcludesmunicipalwasteandmunicipalsewage.Scheduled wastes are broadly defined into thecategoriesofchemicalwastes,biologicalwastes,explosivesandradio-activewastes.
o Scheduledwasteshallbecollectedanddisposedby a government approved service provider.SOGIP is exploring the possibility of providingtheserviceswithintheIndustrialParkastoavoidillegalwastedumpingaswellastomaintaintheeco-system.
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HumanResourceTrainingFacility o AcentretoconductandprovidehumancapitaltrainingfortheindustrieswithinSOGIP.
ICTServices o ProvidetelecommunicationsandbroadbandnetworkservicesinSOGIP.
BondedArea o Toincreaseinterestsfrominvestors,SOGIPplanstohaveabondedareaarounditsvicinity.Theavailability
ofbondedareaistofacilitateincreaseimportgoodstoSabahwhichwillresultinthepossibilityofcreatingbusinessesforthelocalsandSOGIP.
HelipadFacilities o HelipadfacilitieswillbeplannedwithinSOGIPforemergencyusesandasalternativetolandtransportation.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 27
Kertih Integrated Petrochemical ComplexKertih IPC principally consists of ethylene-based petrochemical plant and the plants are integrated with common shared infrastructure facilities and process plants.
CHAPTER 8
INFRASTRUCTURE PLANNING
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8.0 INFRASTRUCTURE PLANNING
In order to enhance the development of SOGIP, anintegratedplanningofinfrastructureisrequired.Amongthe facilities that would be beneficial to the overalldevelopmentoftheindustrialparkare:
Roads PortsandJetty LandandSitePreparationLandArrangement Othercommonfacilities(telecommunications,etc.)
8.1 Roads
TheroadnetworkwithinSOGIPwillbeofanindustrialstandard to cater heavy machineries and lorries thatwouldfrequenttheindustrialuserspremise.Pathsandtypesoftheroadsshallabidetotheindustrialstandardsaswell.Theconnectivityandlinkagesshallbedesignedin a way to provide minimal congestion and betteraccess for the industrialusers inboundandoutboundtransportationinSOGIP.
Asinglecarriagewayofanindustrialstandardshallbeconstructedtocaterforthemovementofgoodsorrawmaterialsbyprimemoversandlorrytrailersthatwouldbe transported to SOGIP.However, there is a needoffutureexpansionfordualcarriagewayinSOGIP.
8.2 Port and Jetty Facilities
For SOGIP, a portwill be planned for cargo handlingand process of goodsmovement by ocean freight tocater forthe industryusers.Theport facilitiessuchascranes,loadingarmsandcargostoragewillabidetotherequirementoftheusersproducttypeandoutput.
AmultipurposejettyisrequiredfortheoveralluseandoutboundofproductsfortheusersofSOGIP.Basedontheoutputandrequirementsoftheindustryusers,thismultipurpose jettywouldprovideshipdockingfacility,loadingandunloadingofcargoandotherfacilitiessuchastheconveyorbelt.
Themanagement andoperationof theport and jettywill be outsourced to third party e.g. SabahPort SdnBhd.
8.3 Land and Site Preparation
8.3.1 Site Preparation
Basic infrastructures to support the site preparationsuchasaccess roads,drainageandstreet lightingwillbe developed within SOGIP. Investors will undertakethesiteclearing,earthworksanddeveloptheselectedplot of land within their respective boundary limit.Sinceoilandgasdownstreamindustriesutilisesheavymachineries and equipment, the sitemay need heavydutyreinforcementorpiling.Withthisregards,investorsshallbeabletodeveloptheselectedareaaccordingtotheirrespectiveneeds.
8.4 Land Allocation Process
AstructuredregistrationprocesswillguideinvestorsinacquiringorleasingthelandrequiredforinvestmentinSOGIP.Thefollowingarerequiredforregistration:
Aprojectdescription Aproject socio-economic feasibility study to show
thattheprojectwillhavepositivecontributiontotheSabahState
Fulldisclosureofshareholders Thecompanyobjectivesandbusinessplan The company governance policy and organisation
structure Financialplantosupporttheproject
Uponsubmissionofthisinformation,SOGDCwillevaluatetheviability,strategicfitofthebusinessandalignmentto the overall SOGIP master plan. Once evaluation iscompleted,SOGDCwillissuealetterofofferstatingtheinitialconditionstothepotentialinvestor.
ThefinallandallocationwillbedeterminedaccordingtoSOGDCprevailingpolicy.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 29CHAPTER 9
UTILITIES PLANNING
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 30
9.0 UTILITIES PLANNING
9.1 Centralised Utility Facilities (CUF)
Figure 10: Comparison between common concept and centralised utility concept
Astheindustrialparkowner,SOGIPplanstosetupaCentraliseUtilityFacilities(CUF)whichwillprovideaddedadvantagestotheinvestors.Takingtheadvantageofeconomicofscale,CUFisproposedtosupportthedevelopmentoftheindustrialpark.Inadditiontoareliablesupplyofutilities,otheraddedadvantagesare;
LowerinitialCAPEXinvestmentfortenants Optimisationofproductioncostbyreducinganyduplicationofequipmentandmanpower Betterfocusontotheircorebusiness
WasteWaterTreatment
DemineraliseWater
IndustrialGasses
CoolingWaterSteamElectricity
ListofUtilities:
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 31
9.1.1 Electricity and Steam
Taking intoconsiderationofaddingmorevalue to thenaturalresources,CUFwillbegeneratingelectricityandsteamusingCombineGeneration(COGEN)system.
Acknowledging the importance of stable and reliableelectricitysupplyforoilandgasindustries,SOGIPwithitspartner,PETRONASGasBerhad(PGB)shallensureelectricitysupplywillbestableandreliable.PGBhavemore than 10 years of experience operating CUF inKerteh,TerengganuandGebeng,Pahang.
To increasethereliability,connectiontoSESBgrid forstand by supply is essential. It is expected that thedemand for electricity by the industries in SOGIPwillbeat118MWinthenextfiveyears.SESBisplanningtoconstructanew275kVtransmissionlinefromKimanistoSipitangascurrentlythetransmissionlinethatisavailableis33kVwhichisnotsufficientforSOGIP12.AsthisispartofSESBsmasterplanforSabah,implementationofthisproject will be implemented sooner or later but only
subject to the availability of funding.With this, SESBrequiresa landsizeof40acres for its substationandPMU.
Anotheressentialutilityinindustrialoperationissteamdue to its vast usage in industries; i.e. sterilisation,cleaning,moulding,pipeandvesseljacketing.GeneratedfromtheCOGENsystem,steamshallbemadeavailableto SOGIPs tenant with significantly small CAPEXinvestment(mainlyforthepipeline)comparedtoself-generation. Centralising the production of steam willalsoeliminate theneed foreachtenant to fulfilDOSHrequirement.
9.1.2 Waste Water Treatment
Protecting the pristine and precious Sabahs naturalenvironment, waste water treatment is very crucialto reduce the impact of industrialisation towardsenvironment.CUFshallprovidetheservicetotreatthewastewaterbeforedischargingit.
12SabahOilandGasDevelopmentLabReport
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 32
9.2 Water Supply
Currently, there are two (2) sources of water supplyservicingSipitangwhichareMesapolwater treatmentplant and Kampung Ulau water treatment plant bothgenerating 4 MLD and 15 MLD respectively. By thefirstquarterof2014,anewwater treatmentplantwillcompletedwiththecapacityof40MLDwhich27MLDwillbecateredforSAMUR.
By2017,thedemandforwatersupplyinSOGIPwillbeat91.2MLDandbythefollowingyearandonwardsthedemandwould increaseto 111.2MLD.Withthesehugedemands being needed, a newwater treatment plantmust be constructed to supply to these industriesin SOGIP. As of now, the SabahWater Department ispreparingaproposaltoconductastudyonanewsourceof water supply for Sipitang district which includes astudyontheenvironmentalimpactandclimatechange.
9.3 Telecommunications
A high speed telecommunication network isplanned for SOGIP. A private entity will provide thetelecommunicationservices for thevariousoperationssuchas:-a. High speed fibre optic network for voice call and
computercommunicationb.Network for security surveillance to protect high
valueinvestments
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 33
PutrajayaLocated 25km south of Kuala Lumpur, it serves as an administrative centre of Malaysia.
CHAPTER 10
INCENTIVES & PROMOTIONS
Photo source :http://www.puim.my
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 34
10.0 INCENTIVES & PROMOTIONS
10.1 Incentives
Incentivesareanimportantfactorinattractinginvestorsintotheindustrialpark.
On 1stNovember 2012, Federal Treasury has approvedthefollowingblanketfinancialincentivesfortherelevantactivitiesinSOGIP.
ThefollowingincentivepolicyappliestoallapplicationsreceivedbySEDIAupuntil31stDecember2020.
Manufacturing (Downstream activities)
Medium&heavyindustries Urea&ammoniaproduction Solarglass Shipbuilding&repairs Marinesupplybase&fabricationyard Ironorepelletizing Hotbriquetteiron Combinedcyclepowerplant
Fullincometaxexemptionforaperiodof10years;or100%investmenttaxallowance(ITA)
100%ofeligibleexpensesincurredanddeducted100%ofstatutoryincomeforaperiodof5years(subjecttotheproducts/activitiespromotedunderthePromotionofInvestmentsAct1986)
Shipbuildingandshiprepairindustry Fullincometaxexemptionforaperiodof5years;or
100%investmenttaxallowanceincentive(ITA)ofeligibleexpensesincurredanddeducted100%ofstatutoryincomeforaperiodof5years
For landdevelopmentpurposes, investorswhoareeligibleforfacilitationfundcanapplythroughUKAS(PublicPrivatePartnershipUnit)foracertainamountofcompensationforthelanddevelopmentcost.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 35
Figure 11: Promotional Programmes in SOGIP
InvestmentOpportunitiesProgramme
Objective
To promote SOGIPto attract domesticand foreigninvestors
To promoteemploymentopportunities inSOGIP
To promotebusinessopportunities inSOGIP to localbusiness owners
Identify list of business opportunities in SOGIP
Create a platform for businesses to registertheir company profile
Advertise tenders via various platform,website, magazines and local newspapers
Organise talks and road shows at schools andlocal universities, training academies &institutions
Advertise in social media, website,newspapers and magazines
Employment tolocal Sabahan
Provideopportunies forlocal contractors toparticipate incontracts derivedfrom SOGIP
Utilise social media and website as a platformfor investors to register interest
Increase theinvestment inSOGIP
Provide income toSOGIP
Participate in state, national and internationallevel conferences and seminars
Activities to be done Benefits
EmploymentOpportunitiesProgramme
BusinessOpportunitiesProgramme
1
2
3
10.2 Promotions
ThereareanumberofpromotionalprogramsthatSOGIPhavecomeupwith.Theyare: InvestmentOpportunitiesProgram EmploymentOpportunitiesProgram BusinessOpportunitiesProgramEachoftheprogramshasitsownfunctiontorealiseSOGIPsambitiontopromotetheindustrialparkaswellastoperformitscorporateandsocialresponsibility(CSR)forthestateofSabah.Thefigurebelowshowstheobjectives,activitiesthatwillbedoneandthebenefits.
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 36
Otherthanorganisingitsownconference,seminarandexhibitions,SOGIPwillalsorideonpromotionalactivitiesbytheFederalandSabahstateagenciessuchasMITI,MIDA, MATRADE, MID, MPRC and SEDIA in order topromoteSOGIPlocallyandabroad.
SOGIPneeds tocreate its corporatewebsite toeasilydisburseinformationtopotentialinvestorsintendingtoaccumulateinformationonSOGIP.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 37CHAPTER 11
IMPACTS & BENEFITS TO SABAH STATE
Photo source :http://www.mymalaysiabooks.com
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 38
11.0 IMPACTS & BENEFITS TO SABAH STATE
SOGIPisanintegratedindustrialareadesignatedforoilandgasrelatedindustry.Thisindustrialparkwillprovideseveral impacts andbenefits to the stateof Sabahasthefollowing:
1. CreationofjobopportunitiesforSabahans.2. Economic spin off to spur further downstream
activities.3. Attract foreign direct investments and facilitate
technologytransfer4.BringdevelopmentintoSipitangandnearbydistricts
i.e.Beaufort,TenomandKeningauthroughspillovereffects.
5. ReduceSabah importsof fertiliser tosupport localagricultureindustry.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 39CHAPTER 12
SOGIP DEVELOPMENT
PLAN
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 40
12.0 GOVERNANCE STRUCTURE
SOGIPisthefirstdedicatedoilandgasindustrialparkinSabah.SOGIPwhichshallbemanagedbyaprofessionalpark developer will be a liaison to various governingbodies andagencies. In addition, SOGIP shall supportinvestorstoestablishtheirbusinessintheindustrialpark.Aneffectivegovernancestructure iskey forSOGIP toachieveitstaskefficiently.
12.1 Proposed Governance Structure
Compliance to states statutory requirements is theinitialstepsforestablishingabusinessinSOGIP.ListofapprovalsforthevariousregulatoryrequirementsasperAppendixI.
SOGDC has envisioned a one stop centre concept toserviceandaiditsfutureinvestorsforapprovalprocess.
CurrentlySOGDCownsSOGIPandisalsoresponsibletomanageandmarketthe industrialpark.SOGDCscopeis not designed for statutory requirements approvalandthereforeaonestopcentreisneededtoexpeditecompliancewithstatutoryrequirements.Figure13istheproposedgovernancestructuretorealisetheonestopcentreconcept.
Figure 12: Proposed Governance Structure
WiththenewstructureSOGDCwouldbeanintermediatebody that will expedite statutory requirements forinvestors within SOGIP. In the new SOGDC will bechairedbytheChiefMinisterofSabahandconsistoftopgovernmentofficial.Thebodydoesnotoverridecurrentpowersofrespectivestatutorybodiesbutactasenablerforstatutoryrequirements.
SOGIPwillbeincorporatedanddesigntocatersolelyonSOGIPdevelopmentwhilstpolicymatterwillbehandledbySOGDC.ThusSOGIPwillbetheonestopcentreforthe investors and any regulatory approval would besubmittedtoSOGDCforacceleratedapproval.
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 41
12.2 Statutory Requirements
As an industrial park related to Oil & Gas and heavyindustries there are several statutory requirementsthat need to be observe. Statutory requirements arelegal requirements set by local authorities to engagein a particular activity. Failure to comply with theserequirements will result in legal directive to ceaseactivity. Statutory approval may be in the form ofofficialapproval,license,registrationorpermit.Itshouldbe noted that certain statutory requirements wouldinfluencetheindustrialparklayout.
12.2.1 Initial Statutory Requirements
FortheinitialdevelopmentofSOGIPthemainstatutoryrequirementwouldfallundertheEnvironmentalQualityAct(EQA)1974.Underthisacttheregulationthereunder,industrialactivitiesarerequiredtoobtainthefollowingapprovals from the Director General of environmentqualitypriortoprojectimplementation:a. EnvironmentalImpactAssessment(EIA)b.Sitesuitabilityevaluationc.Writtenpermissiontoconstructd.Written approval for installation of incinerator, fuel
burningequipmentandchimneye. License to occupy and prescribed premises and
prescribedconveyances
Figure 13: SOGIP Organisational Chart
The initial EIA would also serve as a global EIA forinvestor pertaining to management of earthworks.However it should be noted that earthwork activitiesby investors involvingmore than40,000cubicmetricwouldrequireanindividualEIA.
12.2.2 Industry Specific Statutory Requirements
There are two main regulatory bodies pertaining toenvironmentalissue.ThesebodiesaretheEnvironmentalProtection Department (EPD) and Department ofEnvironment (DOE). EPD is a state department thatis responsible for the approval and managementof earthworks. DOE is a federal department that isresponsible for the assessment and approval of theprocessengineeringworks that isnormallyassociatedwith investors facilities. In addition to environmentalstatutoryrequirementsthereareotherrelatedstatutoryrequirements that would be relevant to the investorswithinSOGIP.
Inorderforabusinessentitytolegallystartoperatingitbusinessesseveralstatutoryneedstobecomplied.Thiscompliancewillbeintheformoflicensing,whichcouldbe a general licence, an industry specific licence oractivityspecific licence.Business licencesarerequiredbylegislationandadministeredbyvariousgovernmentagencies,statutorybodiesandlocalauthorities.Businesslicencescouldbecategorisedunderthreecategories.
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 42
1. General Licences
General licences are a requirement and shall beapplicableoncetheinvestorhasdecidedtoincorporateacompany.Listofgenerallicenceareasfollows: CompanyRegistration CompanyandEmployeesincometaxregistration EmployeeProvidentFund SocialSecurityOrganisation HumanResourcesDevelopmentFund
2. Sector Industry Specific Licence
This type of licence is industry specific. Examples oftheselicencesareasfollows: ManufacturingLicence TelecommunicationLicence BroadcastingLicence OilExplorationLicence
3. Activity Specific Licences
Activity Specific Licences are licences to regulate aparticularactivity.Thesetypeoflicencerequiresinvestortocomplywithasetsofspecificguidelinesdesignedtoprotect the interestof thecitizen,employment,safetyofworkers,environmentandgeneralpublic.Examplesofthelicencesareasfollow: CertificateofFitnessforCertifiedMachinery ApprovalforExpatriatePost Approval to install/resite/alterAirPollutionControl
Equipment(BagfilterandChimney) BuildingPlanApproval SalesTaxLicence
In addition to general business licence and the basicapproval from the Director General of EnvironmentQuality under the EQA 1974, investor may need toadheretootherstatutoryrequirementsthatarerelevantto their respective industries. The possible relevantstatutoryrequirementsforindustriesareasfollows:a. WrittennotificationtoDirectorGeneraltocarryout
work on solidwaste transfer station or land fill, orconstruct on land any facility or building thatmayproduceleachate
b.WrittennotificationtoDirectorGeneralonchangesof industrial activities thatmay causedischargeofeffluentormixedeffluent
c.Complywithgaseousemissionregulationd.Stack Gas Emission Standards from Environmental
Quality(CleanAir)Regulations1978e. Recommended Air Quality Guidelines (Ambient
Standards)f. SewagedischargeStandardsg.Industrialeffluentsdischargelimits
h.Leachatedischargelimitsi. ProhibitionsonOzoneDepletingSubstance(ODS)j. Environmental Quality (Schedule Wastes)
Regulations2005k. Environmental Quality (Prescribed Conveyance)
(ScheduleWastes)Order2005l. Environmental Quality (Prescribed Premises)
(ScheduleWastesTreatmentandDisposalFacilities)Order1989
m.Environmental Quality (Prescribed Premises)(ScheduleWastesTreatmentandDisposalFacilities)Regulations1989
n. Customs(ProhibitionofExport)Order(Amendment)(No.2)1993
o. Customs(ProhibitionofImport)Order(Amendment)(No.2)1993
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 43CHAPTER 13
SOGIP KEY SUCCESS FACTOR
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 44
13.0 SOGIP KEY SUCCESS FACTOR
InsupportingtheimplementationofthisSOGIPmasterplan, the following key success factors have beenidentified:-
i. AvailabilityofFunds Federal and State Governments support in
providing funds for infrastructure developmentasatippingpointtobridgeprojectviabilitygap
SOGDCsbusinessmodelneedtobesustainabletocaterforfutureexpansionoftheindustrialpark
ii. FinancialIncentivesforInvestors The Ministry of Finance had approved tax
incentives to be listed under the SabahDevelopment Corridor. The approved incentivesunderSOGIPisFulltaxexemptiononstatutoryincomefor10years;orInvestmentTaxAllowancesof 100% on qualified capital expenditure for 5years
iii.HumanCapitalDevelopment Humancapitalprogrammesandtrainingcentres
are required to be built government to ensureanadequatesupplyofqualitymanpowerfortheindustry
iv.CentralisedServiceConcept Centralised provisioning of inputs, utilities and
services reduces investment requirement forindustryplayersaswellasoperatingcost forallinvestorsacrossSOGIP,makinginvestmenteasy.
v. EfficiencyofInfrastructure Dedicatedinternalinfrastructureintheindustrial
park such as roadways, ports, electricity, watersupply,telecommunicationandetc.
Port facility development planned toaccommodate both traffic and vessel types (ie.VLCCs)
vi.OneStopServiceCentre OneStopServiceCentreforallgovernmentaland
logisticalfunctions
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 45
APPENDICES
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 46
List of Authority
Bil. Authority State of Sabah Federal
1 PejabatKetuaMenteriSabah
2 MajlisDaerahSipitang(MDS)
3 PejabatDaerahSipitang
4 JabatanPerancangBandarDanWilayahNegeri
5 JabatanKeselamatanDanKesihatanPekerjaan(DOSH)
6 JabatanBombaDanPenyelamatMalaysia(BOMBA)
7 SabahElectricitySdnBhd(SESB)
8 SuruhanjayaKomunikasiDanMultimediaMalaysia(MCMC)
9 JabatanPenerbanganAwamMalaysia(DCA)
10 TelekomMalaysia
11 SIRIM
12 JabatanAlamSekitar(JAS)
13 JabatanPerlindunganAlamSekitar(JPAS)
14 JabatanKastamDirajaMalaysia(JKDM)
15 JabatanKerjaRayaSabah(JKR)
16 LembagaPerlesenanTenagaAtom(AELB)
17 JabatanAirNegeriSabah(JAS)
18 JabatanPengairanDanSaliranSabah(JPS)
19 JabatanKesihatanNegeriSabah(JKNS)
20 JabatanTenagaKerja(JTK)
21 SuruhanjayaTenaga(ST)
22 CIDB
23 JabatanImigresen
24 JabatanPengangkutanJalan(JPJ)
25 JabatanTanahDanUkurNegeriSabah(JTU)
26 LembagaPelabuhanDanDermaga(JPDS)
27 LembagaPelabuahan-PelabuhanSabah(LPPS)
28 JabatanLautMalaysiaWilayahSabah(JLM)
29 PolisDirajaMalaysia(PDRM)
30 StateEconomicPlanningUnit(EPU)
31 JabatanPerhutananSabah(JPHT)
32 MinistryofConsumerAffair
33 MinistryofFinance(MOF)
34 JabatanKeselamatanKerajaanMalaysia,JabatanPerdanaMenteri
35 MinistryofTradeandIndustryMalaysia
36 MalaysiaInvestmentDevelopmentAuthority(MIDA)
37 JabatanHasilBumiNegeriSabah
38 PenolongPemungutHasilTanah(PPHT)
39 JabatanHalEhwalAgamaIslamNegeriSabah(JHEINS)
40 JabatanPertanianSabah(PersatuanPeladangDaerahSipitang)
APPENDICES
I. Governance Structure
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 47
ACKNOWLEDGEMENTS
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 48
ACKNOWLEDGEMENTS
The SipitangOil & Gas Development Corporation (SOGDC) teamwould like to thank the staff of PETRONAS,InstituteforDevelopmentStudies(Sabah),PEMANDUandMalaysiaPetroleumResourcesCorporation(MPRC)whoassistedinpreparingthisMasterPlan:
Company Names
Malaysia Petroleum Resources Corporation MohammadFadhliJamaluddinDimpleA/PKerisninJustinChiaJuSian
PEMANDU MohdTaufikAbdMujib
PETRONAS PETRONAS Chemicals Group Bhd.AAzizOthmanJamuriZenNorizanYahayaFadzilatunAhmadJohanAriefIbrahimMZameerZahurHussain
PETRONAS Malaysia Gas Management and Petroleum Management UnitFaizalMydinPitchayAhmadJohariJaffarKarenTonySulilMajangkimKuNorAzmiraMRoslimNoorAzlinaMorad
PETRONAS Gas Bhd.FairuzRoslanAMufashshalRoslinFarihHamshiMFatmi
PETRONAS Sabah Labuan Regional OfficeJulitaOntolRoslanAhmadNordin
IndustryAdvisorSOGIP DrChuahChenHeng
InstituteforDevelopmentStudies(Sabah) JoeAngChangLeongJulianaP.J.RinggingonMohdAzmirRamli
SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN | 49
ABBREVIATIONS
| SIPITANG OIL & GAS INDUSTRIAL PARK (SOGIP) MASTERPLAN 50
ABBREVIATIONS
CHIMAC ChemicalIndustryManpowerAdvisoryCommittee
PCG PETRONASChemicalsGroupBhd.
CUF CentralisedUtilityFacilities
PEMANDU PerformanceManagementAndDeliveryUnit
DOE DepartmentofEnvironment
PGB PETRONASGasBerhad
EIA EnvironmentalImpactAssessment
PETRONAS PetroliamNasionalBerhad
EPD EnvironmentalProtectionDepartment
PLC PETRONASLNGComplex
EQA EnvironmentalQualityAct
ODS OzoneDepletingSubstance
ETP EconomicTransformationProgramme
RCJY RoyalCommissiononJubailandYanbu
GDP GrowthDomesticProduct
SAMUR SabahAmmonia-Urea
JIC JubailIndustrialCity
SDC SabahDevelopmentCorridor
JTC JurongTownCorporation
SEC SabahEnergyCorporation
KBD ThousandBarrelperDay
SEZ SpecialEconomicZone
LPG LiquidPetroleumGas
SMI SmallMediumIndustry
M3/DAY Cubicmetreperday
SOGDC SipitangOilGasDevelopmentCorporation
MFO MarinFuelOil
SOGIP SipitangOilandGasIndustrialPark
MMSCFD MillionStandardCubicFeetperDay
SOGT SabahOilandGasTerminal
MTPD MetricsTonperDay
SSGP Sabah-SarawakGasPipeline
MPRC MalaysiaPetroleumResourcesCorporation
TSCF TrillionStandardCubicFeet