Oil royalties for Sabah and Sarawak: Dead on arrival

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Brent crude oil prices dipping below US$30 and US oil prices turning negative for the first time in history is bad news for Sabah and Sarawak, which are dependent on oil royalties as a major source of revenue. Analysts predicted the depressed oil price will continue in the short and middle term as demand continues to fall. Oil producers like Petronas facing a glut market are riding in uncharted deep waters as Covid-19 batters the world oil markets. For Sabah, petroleum royalty remains the highest contributor to the state coffers. For 2020, the total projected revenue from oil is RM1,7 billion. Oil royalty accounts for 40.55% of the state revenue. This estimate is based on royalty payment received from Petronas in 2019 amounting to RM1,703.5 million, the highest amount received since the Petroleum Development Act 1974 was passed. As a major oil-producing state, the plunging oil pr…