By Simon Peter
KUCHING, March 12, 2025: Petroliam Nasional Berhad (Petronas) and Petrol Sarawak Berhad (Petros) should consider asking the court to determine the meaning of “sole gas aggregator” that is a subject of different interpretations by both parties.
Professor of Asian Studies, University of Tasmania, Australia, Professor James Chin said it is his view that going to court is the most effective way to settle the matter.
“It appears that the agreement between Premier Tan Sri Abang Johari Openg and Prime Minister Datuk Seri Anwar Ibrahim is real, but only because both parties have differing interpretations of what was actually settled.
“So, does a deal exist? Yes, it does—a political deal, to be precise—but the crux lies in the details. These details seem to pertain more to the commercial sphere than the political one,” he said on his Facebook when commenting on a new article published in online news portal Free Malaysia Today.
However, he said both sides hesitate to pursue the matter to court, likely because it could unearth other inconvenient issues like Petroleum Development Act 1974 (PDA74) and Oil Mining Ordinance 1958 (OMO58).
“As a result, we can anticipate ongoing friction, with the Abang Johari and Anwar needing to reconvene again to clarify the terms,” Chin said.
He said many Sarawakians feel that Sarawak is being bullied by Petronas, and many will view Gabungan Parti Sarawak (GPS) as negligent for not securing a clearer agreement back in January.
“Petronas is really behaving badly because it is not used to anymore taking a piece of its rice bowl,” he said, adding that it keeps forgetting that Sarawakians/Sabahans have been paying for Petronas's rice bowl since 1974.
“We are fed up; even in this 'deal'. it is lopsided with Petronas still keeping the LNG, where the bulk of the money is,” Chin said.
According to FMT, quoting a source, Petronas and Petros appear deadlocked in negotiations over gas rights, with Sarawak sticking to its original demands despite giving assurances to the contrary.
“Sarawak’s stance has not changed since last year although federal and Sarawak government leaders have announced that negotiations were progressing,” source told FMT.
The source said the Sarawak government is insisting that all domestic gas users, including liquefied natural gas (LNG) plants located in the state, must comply with its Distribution of Gas Ordinance 2016(DGO16) and buy their gas from Petros.
“Needless to say, such an arrangement is bound to disrupt existing commercial agreements Petronas has with end users in the state,” said the source.
On Feb 17, Anwar told Parliament that Sarawak had agreed that the Petroleum Development Act 1974 (PDA) will remain the overarching framework for governance in Malaysia’s oil and gas industry.
The prime minister also announced that all Petronas’s existing agreements will remain intact and governed entirely by the PDA, and that Petronas and its subsidiaries will not be obliged to comply with any additional requirements imposed under state law.
However, Anwar said Petros would be allowed to perform its role as Sarawak’s gas aggregator under the DGO, which “must be read together” with the PDA.
“The inability of both sides to come to a compromise highlights the complexity of having two overlapping laws.
“Both Petronas and Petros are adamant that they are exercising their strict legal rights, with Petronas pointing to the PDA and Petros to the DGO to support their respective positions,” said the source.
The source said this was why Anwar called for a “commercial solution” to resolve the long-running dispute.
“Unless a commercial compromise is achieved, both oil companies and their respective governments will find themselves in a ‘lose-lose’ position over the longer term,” the source said.
Earlier this week, Deputy Prime Minister Datuk Seri Fadillah Yusof said Petronas and Petros were still hammering out the details of their proposed collaboration.
He said Petros had recently submitted a letter to Petronas setting out its proposed terms, which have yet to be agreed upon.
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