PUTRAJAYA (July 17): National oil corporation Petroliam Nasional Bhd (Petronas) has on Thursday sought an early hearing date from the Court of Appeal to set aside an injunction imposed by the High Court on Petronas to continue to supply gas to Shell MDS (Malaysia) Sdn Bhd in the Bintulu facility in Sarawak, without receiving any due payment yet.
The non-payment by Shell MDS has arisen owing to competing invoices from Petronas and Petroleum Sarawak Bhd (Petros), and Shell MDS’ concern of having to make double payment while jurisdictional issues are ironed out between Petronas and Petros.
Petronas counsel Datuk Dr Cyrus Das, who appeared with Khoo Guan Huat and Datuk Azian Mohd Aziz, indicated that Petronas is losing more than RM80 million monthly from the non-payment, which is kept in a Shell MDS account following the Kuala Lumpur High Court order granted in January.
Das told judge Datuk Azimah Omar, who heads the three-member bench, that they are even prepared to do the appeal on Thursday, after the bench allowed Petronas to adduce two further documents, including a joint-declaration made by the federal government and the Sarawak government, and also an invoice to show the amount affected in the appeal.
Petros, which is an intervener in the proceeding, wants to produce their own invoice.
Initially, Petros counsel Foo Joon Liang had opposed Petronas adducing their invoice, which they claimed contained factual inaccuracies, and hence, they also want to produce their invoice.
Following consent, Azimah and judges Datuk Wong Kian Kheong and Datuk Ismail Brahim allowed both Petronas and Petros to adduce further documents that are to be used in the hearing of the appeal.
Das then indicated that they were willing to proceed, but Azimah told parties — that also included Shell MDS that was represented by counsel Christopher Leong and Janet Chai Pei Ying — that the bench has to fix another date, as parties need to file a further supplementary record of appeal following the admission of the three documents and also further submissions.
“My client requests an early hearing date — if possible next week — as my client is losing more than RM80 million in revenue following the injunction, despite Petronas supplying the gas,” Das added.
Following a short break and meeting with the Court of Appeal registrars, the court set Aug 11 as a tentative date, but, if not all parties are able to attend that, then the next date is fixed for Sept 22.
Conflicting sums claimed by Petronas and Petros, double payment concerns by Shell
While it was not mentioned in court, Petronas’ purported loss of revenue from the injunction amounts to more than RM523 million, while it is understood that Petros is seeking close to RM600 million.
Shell MDS had sought an injunction, which was granted by Kuala Lumpur High Court judicial commissioner Arziah Apandi, to suspend payments to both Petronas and Petros, while ensuring continued gas supply.
In her decision to grant the injunction, Arziah said that Shell MDS faces immediate risks and threats of disruption to its gas supply under two competing gas sales agreements (GSA), with financial implications, given the monthly payments in the region of RM70 million to RM100 million.
Shell MDS, she added, has attempted to mitigate the situation by offering to set aside payments in an interest-bearing account pending resolution. However, Petronas has proceeded to call on the bank guarantee, the judgment read.
The injunction is on the grounds of Shell MDS’ involvement in two separate gas supply agreements, one with Petronas (signed on July 17, 2020) and the other with Petros (signed on Aug 16, 2024), and the British oil firm was concerned over the risk of disruption to its gas supply.
Shell MDS manages the gas-to-liquid (GTL) plant in Bintulu — touted as the world’s first unique GTL plant — and employs more than 450 staff, nearly 90% of whom are Sarawakians. The Shell group has interests in several gas projects in Sarawak, including Rosmari-Marjoram, SK408, Jerun, and Timi, which contribute to the Petronas-operated Bintulu LNG export facility.
Shell MDS in its affidavit states that it signed the GSA with Petronas in 2020. However, it signed another GSA with Petros in 2024, following notification from the Sarawak government that Petros is now the sole gas aggregator.
Shell MDS claims that it has notified Petronas of the GSA it signed with Petros, and the national oil firm took note of it. Petronas, however, points out that the Shell-Petros GSA is related to the natural gas supplied under the Shell-Petronas GSA, the affidavit reads.
Last September, Shell MDS received invoices from both Petronas and Petros for the August 2024 supply. Shell MDS observed that the conflict over gas distribution rights in Sarawak might lead to double payment for gas, and operational disruptions in Bintulu.
Following that, Shell MDS filed the injunction application to seek the continuous supply of the gas while the court determined later on who should get the amount.
It is to be noted that Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Chief Minister Tan Sri Abang Johari Tun Openg signed a joint declaration on May 23 this year, between the federal government and Sarawak government, concerning Petros, and this declaration was one of the documents submitted to the appellate court today.
The declaration is a clear manifestation of mutual respect and recognition of Sarawak’s regulatory framework, particularly the State Distribution of Gas Ordinance 2016 (DGO 2016) as was reported in May.
The Petros-Petronas court case revolves around a jurisdictional dispute over the control of oil and gas resources in Sarawak, which is pending in Kuching High Court.
This follows the conflicting jurisdiction on the Petroleum Development Act 1974 and the Sarawak enactment.
According to the joint declaration, Petronas will continue its functions, activities, responsibilities, and obligations entrusted to the company in Malaysia, under the Petroleum Development Act 1974 (PDA 1974) and its regulations.
Any agreement and arrangement between Petronas and its subsidiaries with third parties for the purpose of liquefied natural gas (LNG) sales from upstream operations through to LNG exports to foreign parties remain unaffected.