KUALA LUMPUR (Feb 5): National oil company Petroliam Nasional Bhd (Petronas) recognises Sarawak state-owned Petroleum Sarawak Bhd (Petros) as the state’s gas aggregator, excluding liquefied natural gas (LNG).

Further, Petronas and its subsidiaries are not required to obtain a licence or comply with any additional procedures to conduct petroleum operations in Sarawak beyond those outlined in Act 144, according to Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said.

In a written parliamentary reply to Chong Chieng Jen (Pakatan Harapan–Stampin),  Azalina stated that these are the key agreements reached between Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Tan Sri Abang Johari Tun Openg during their meeting on Jan 7, 2025.  

Under Petroleum Development Act 1974, Petronas is tasked to develop the country's hydrcarbon resources, including natural gas.

Chong had inquired about the terms of the settlement between Petronas and the Sarawak government regarding the state’s claim to oil and gas produced in Sarawak.

According to Azalina, other key agreements include Sarawak’s acknowledgment of the Petroleum Development Act 1974 (Act 144) as the governing law for Malaysia’s petroleum industry.

"Petronas accepts the role of Petros as a gas aggregator (not LNG) in Sarawak, and is willing to cooperate with Petros in the state," she added.

All existing agreements between Petronas and third parties, including Petros, related to petroleum activities in Sarawak will remain valid and must continue without changes. Petronas and Petros have also committed to full cooperation in all related matters.

Azalina further stated that the federal government, Petronas, the Sarawak government, and Petros are currently refining several aspects of the agreement, including its legal implications.

Under Sarawak state laws, a gas aggregator is the appointed entity responsible for procuring natural gas for distribution or supply, and for developing, expanding and maintaining the state’s gas distribution network. Sarawak, a key gas-producing state, supplies gas to countries such as South Korea, Japan and China.

Previously, Petronas held this role nationwide. However, following an amendment to the state's Distribution of Gas Ordinance 2016, Petros should be the sole gas aggregator for Sarawak, effective Feb 1, 2024. In this regard,  any party that carries out gas distribution activities in Sarawak should apply for a license under Section 7, DGO 2016.

Concerns over Petronas' LNG exports from the state have led to nearly a year of negotiations between the federal and state governments regarding Sarawak's role as the sole gas aggregator.

Finally, in January this year, Prime Minister Anwar said that while the DGO is acknowledged, it should co-exist with the Federal Constitution or other federal laws, and that Petronas’ position remains unaffected. 

Petronas recognizes the state as the sole gas distributor, excluding LNG, which means that the national oil company will continue its role as the LNG exporter.

Read also:
Anwar recognises Petros as Sarawak's gas aggregator, says Abang Jo 

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