KUALA LUMPUR (Nov 19): The Kuching High Court will deliver its judgement on Jan 30, 2026, in the dispute between national oil company Petroliam Nasional Bhd (PETRONAS) and Sarawak state oil company Petros.
The case involves Petros’ bid to recover RM7.95 million paid to PETRONAS after the company called on a bank guarantee in October 2024.
Judge Datuk Faridz Gohim Abdullah set the date following a case management session, which also outlined deadlines for final submissions. PETRONAS and the federal attorney general must file their written submissions by Nov 28, while Petros and the Sarawak state attorney general must respond by Dec 14.
According to The Borneo Post, during hearings on Nov 17 and 18, Sarawak state legal counsel Datuk Seri JC Fong accused PETRONAS of acting “unconscionably”.
Fong said the federal government already conceded that the Sarawak state assembly has the power to pass laws on gas distribution, meaning the Distribution of Gas Ordinance 2016 (DGO) and its 2023 amendments are valid. Therefore, PETRONAS must follow the DGO and cannot supply gas to Petros under the Sarawak gas sales agreement (SGSA) without a licence.
He argued that PETRONAS had breached the law by refusing to comply with the DGO, blocking other licensed gas producers, such as Petroleum Sarawak Exploration and Production Sdn Bhd, from selling to Petros, and continuing to supply gas even after the SGSA was frustrated.
Fong said these actions undermined a valid state law, and the Sarawak government supports Petros’ claim that PETRONAS’ call on the bank guarantee was unlawful. He added that once unconscionable conduct is shown, any guarantee call becomes invalid.
Petros' lead counsel was Tan Sri Cecil Abraham while PETRONAS was represented by Datuk Dr Cyrus Das and Khoo Guan Huat.
Far from a truce despite joint declaration between Putrajaya and Wisma Bapa
The proceedings follow a one-month adjournment back in August to make way for talks between PETRONAS and Petros with the signing of a joint declaration between the federal government and Sarawak on May 21, recognising both the Petroleum Development Act 1974 (PDA) and the DGO, with the aim of bringing the matters to resolution. However, no update was provided on the status of the negotiations when the hearing resumed on Sept 30.
Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said however in a written parliamentary reply told the Dewan Rakyat last week that negotiations between PETRONAS and Sarawak’s state-owned Petros — Petroleum Sarawak Bhd — over gas distribution in the state are still ongoing.
She said the discussions are taking time as they must take into account commercial principles, shared interests and industry sustainability. It also aims to establish a long-term, strategic, inclusive, and equitable cooperation framework, Azalina added.
Petros filed an originating summons disputing PETRONAS’ claim on its bank guarantee, as part of payments claimed for gas supply in the state, among others, on the grounds that PETRONAS does not have a licence to operate in Sarawak under the state law — the DGO — and its amendments in 2023.
In its submission in early October sighted by The Edge, PETRONAS said that it does not need a licence from the Sarawak authorities to supply gas there.
Petronas also submitted in court that it is “not required to be licensed due to its existing rights under the PDA”, and as such the licensing requirement under state law does not apply.
While the PDA, a federal law, grants PETRONAS the rights over onshore and offshore petroleum nationwide, the DGO designates Petros as the sole gas aggregator in Sarawak, the largest gas-producing state in the country.