Petronas Seeks Ruling over Sarawak
Petronas said June 4 it has asked the Malaysian federal court to arbitrate on its rights. It is seeking to be upheld as the exclusive owner of the country's petroleum resources, as well as the upstream regulator, throughout Malaysia – including in Sarawak where its exclusivity is challenged by the regional government.
The state-owned gas and oil giant filed an application before the court seeking a declaration on the Petroleum Development Act 1974 (PDA) being the law applicable for the petroleum industry in Malaysia.
Three months ago Sarawak chief minister Abang Johari Abang Openg asserted the region’s right to oil resources, launched a new region-owned oil and gas entity Petros, and said the latter would assume full regulatory control over petroleum in Sarawak by July, according to local media reports.
Petronas said June 4 it “remains committed to support Sarawak’s aspiration to participate in the oil and gas industry in the state, for as long as it is within the framework of the PDA.”
Much of Malaysia’s gas is produced in Sarawak and monetised through three large LNG ventures, collectively known as Malaysian LNG.
Sarawak state government owns 5% equity in MLNG1 (Satu) which started up 1983, 10% equity in MLNG2 (Dua) started up 1995, and 10% also in MLNG3 (Tiga) which started up 2003, according to the latest annual report of the International LNG Importers Group (GIIGNL). The three complexes, all Petronas majority-owned and operated, have liquefaction capacities of respectively 8.4, 9.6 and 7.7mn mt/yr.
Malaysia was the third largest source of global LNG imports in 2017, supplying 26.87mn mt or 9.3% of the world's total traded volume, according to GIIGNL. Only Qatar and Australia supplied more.
A month ago, Malaysia’s voters ditched Malaysian PM Najib Razak, who had become mired in a huge corruption scandal, in favour of his 94-year-old predecessor Mahathir Mohamad in a surprise election result that pitched the governing party out of power after 60 years. Sarawak’s chief minister had previously claimed he had reached an understanding with Razak over the region’s petroleum rights.
Petronas’ action highlights the complex faultlines between national and regional rights in a country of 32mn people that is a constitutional monarchy where nine traditional Malay rulers elect the monarch.
Shell, a leading offshore operator in Malaysia and Sarawak, and partner with Petronas in MLNG3 (Tiga), declined June 4 to comment to NGW about the Petronas statement.