Petronas’s profit margins from oil and gas (O&G) projects range between 10% and 15% after accounting for substantial development costs and dividend obligations, according to former economy minister Rafizi Ramli.
Addressing claims by Sarawak government legal adviser JC Fong on the Yang Berhenti Menteri podcast, Rafizi refuted the assertion that Petronas had claimed 95% of Sarawak’s O&G revenues over the past five decades. The Pandan MP described the figure as misleading and based on incomplete data, overlooking the hundreds of billions of ringgit Petronas has invested in developing East Malaysia’s O&G sector.
Under the production sharing contract (PSC) framework, Rafizi explained, an explored block yields a 5% royalty to both Sarawak and the federal government in Putrajaya. The remaining portion covers operational costs and is shared with partners.
“For a single PSC, after allocating a 10% dividend, 90% remains. Of that, approximately 70% goes toward costs, which doesn’t directly benefit Petronas. Some contracts are awarded to Sarawak-based companies,” he said. “The remaining 20% is divided among partners and used to meet other financial obligations, leaving Petronas with a profit margin of about 10% to 15%.”
Escalating operational costs, he noted, have further compressed these margins.
Rafizi emphasized that Petronas channels significant earnings back to the federal government through dividends, with additional funds allocated to Sarawak through targeted programs. He argued that the 10% to 15% margin retained by Petronas is reasonable, given the company’s responsibility for investments, risks, operations, and long-term infrastructure development.
With Sarawak now assuming control of gas distribution through its state-owned entity Petros, Rafizi said the state is better positioned to direct resources toward community-focused initiatives.
“I’m not arguing against Sarawak’s push for greater control over its resource development,” he clarified. “But we must educate the public. It’s inaccurate and unfair to claim that 95% of revenues go to Petronas.”
