KUALA LUMPUR (Aug 15): Nearly three months after the federal and Sarawak governments signed a joint declaration on gas distribution, Petroliam Nasional Bhd (Petronas) and Petroleum Sarawak Bhd (Petros) have yet to finalise the terms and implementation mechanisms.
According to Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said, Petronas and Petros are still in discussions to refine the cooperation framework based on the agreed principles, in line with commercial considerations.
“The impact on Petronas’ financial performance cannot be determined at this stage, as the terms and implementation mechanisms are still under negotiation and have not been finalised,” she said in a written parliamentary reply on Thursday.
She was responding to Ku Abd Rahman Ku Ismail (PN-Kubang Pasu), who asked about the financial implications of the joint declaration on Petronas.
To recap, Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Tan Sri Abang Johari Tun Openg signed the joint declaration on May 21, setting out fundamental principles to facilitate further negotiations between Petronas and Petros.
Among the agreed points are that all federal and Sarawak laws on gas distribution will co-exist and be respected by all industry players in the state, and that Petronas will continue its role under the Petroleum Development Act 1974.
Petros, meanwhile, will be the gas aggregator for Sarawak’s domestic market from March 1, 2025, with all industry participants required to recognise the appointment.
In addition, Petronas will retain its role across the entire value chain from upstream activities to international LNG sales, with all existing LNG sales agreements between Petronas and/or its subsidiaries and third parties remaining unaffected.
Sabah-Sarawak Gas Pipeline
In a separate written reply to Datuk Seri Madius Tangau (PH-Tuaran), Azalina clarified that Petronas had only ceased operations on certain sections of the Sabah-Sarawak Gas Pipeline (SSGP) running through Lawas, Limbang, Miri and Bintulu in Sarawak.
The remainder of the pipeline, including sections in Sabah, continues to operate as normal, she noted.
She said the decision followed a comprehensive technical and safety assessment which found that recurring ground movement and other factors had compromised the structural integrity of the affected segments, posing risks to operational safety and nearby communities.
Azalina added that the partial shutdown will not affect Petronas’ commitments to customers, stakeholders, or its agreed energy supply obligations.
Earlier in January this year, Petronas, in its Activity Outlook report, announced it would decommission the SSGP as part of its decommissioning plans from 2025 to 2027.
“For the next three years, decommissioning plans include the plugging and abandonment of approximately 153 wells and the abandonment of about 37 offshore facilities and one onshore facility, the Sabah-Sarawak Gas Pipeline (SSGP),” the report stated.
The 500km natural gas pipeline, which links the Sabah Oil and Gas Terminal in Kimanis, Sabah, to Petronas’ liquefied natural gas (LNG) complex in Bintulu, Sarawak, was constructed in 2011 and completed in 2014 at a cost exceeding RM4 billion.
For more Parliament stories, click here.