Petronas to honor contracts despite Sarawak gas dispute, says Malaysian PM

(Originally posted on : Invezz )

Malaysian Prime Minister Anwar Ibrahim has confirmed that Petronas, the state energy firm, will uphold all its current contractual obligations. 

This announcement follows discussions with Petroleum Sarawak Berhad (Petros) regarding gas distribution, which had raised concerns within the industry.

Talks between Petronas and the Sarawak state-run Petros recently reached a deadlock, causing concern over Petronas’ revenue. 

This is due to Petros controlling over 60% of Malaysia’s gas reserves, and Petronas being a major contributor to government funds, according to a Reuters report.

The Malaysian prime minister announced to parliament on Monday that all future comprehensive negotiations between the two parties will adhere to transparent commercial principles and be conducted in the best interests of the nation.

Commitments

Anwar Ibrahim said:

(Petronas will) maintain all existing domestic and international contractual obligations.

The assurance provided by relevant parties came in the wake of a report published by the Borneo Post newspaper, in which Sarawak Premier Abang Johari Tun Openg stated that ongoing negotiations had not yet concluded.

The premier indicated that certain unresolved issues, referred to as “grey areas,” were still present and required further discussion and clarification before a final agreement could be reached.

The federal government’s decision to recognize Petros was influenced by the state’s significant contribution to Malaysia’s early economic development. 

This contribution was primarily facilitated through Petronas, the state-owned oil and gas company, which played a crucial role in funding and supporting the nation’s growth. 

The state, located on the island of Borneo, leveraged its rich natural resources and strategic position to establish Petronas as a key player in the energy sector. 

Through its operations and investments, Petronas generated substantial revenue and contributed significantly to the national treasury. 

This financial support enabled the federal government to implement various development projects and initiatives, which propelled Malaysia’s economic growth.

Petro’s role as gas distributor

Petros’ role as the state’s gas distributor, excluding liquefied natural gas (LNG), was confirmed by Law Minister Azalina Othman on February 5.

Anwar Ibrahim stated that both the federal and state governments recognize the Petroleum Development Act of 1974, which continues to drive policy, governance, and development in Malaysia’s energy sector.

He also stated that Petros will act as Sarawak’s gas aggregator by a 2016 state ordinance on gas distribution which will come into effect on March 1.

Sarawak’s domestic needs will be guaranteed up to 1.2 billion cubic feet of natural gas per day, he said.

Petros has the authority to expand into new activities and benefit from cooperation with Petronas, according to the report.

Anwar further said that the total value of oil and gas industry development in Sarawak, which includes upstream investment and infrastructure, has surpassed 280 billion ringgit ($63 billion) since 1976.

Petros was appointed by Sarawak in February 2024 to handle the procurement, distribution, supply, and sale of all state-produced natural gas to downstream buyers, as part of the state’s long-standing efforts to gain greater control over its natural resources.

Concerns arose within the industry last year regarding the potential effects on Petronas and energy operations in Sarawak due to a negotiation deadlock.

The post Petronas to honor contracts despite Sarawak gas dispute, says Malaysian PM appeared first on Invezz

Source link