KUALA LUMPUR (Jan 12): Petroliam Nasional Bhd (PETRONAS) has gone to the Federal Court to decide on the legal position of its operations in Sarawak. 

With the federal government and Sarawak state government both named as respondents, the application seeks to determine its legal position to ensure PETRONAS continues to operate in full compliance with the applicable laws and sound governance practices, it said in a statement on Monday.

In essence, the application sets out to determine the conflict between the Petroleum Development Act 1974 (PDA) and the Distribution of Gas Ordinance 2016 (DGO).

“It is not intended to challenge Sarawak’s development aspirations or hinder the role of Petros (Petroleum Sarawak Bhd) in the state’s energy sector,” the national oil and gas outfit said. 

An originating motion was filed for the matter on Saturday (Jan 10). The federal government is a respondent in the application due to being the custodian of the PDA. 

The development follows a prolonged dispute between PETRONAS and Sarawak state-owned Petros on the oversight of oil and gas assets in the state. 

Just last May, Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Tan Sri Abang Johari Tun Openg inked a joint declaration which recognised both the PDA, which is federal legislation, and the DGO, which is a state law enforced in Sarawak. 

"While progress has been made on many commercial arrangements and partnerships – including the signing of Commercial Settlement Agreement (CSA) in 2020 – there have been differences which led to uncertainty in respect of the obligations applicable to PETRONAS," it said. The 2020 agreement, signed on the back of heightened push for stronger federal commitment towards the Malaysia Agreement 1963, had resolved issues like state sales tax and operations of certain onshore oil and gas operations.

The decision came although there have been "constructive engagements since 2024 with Petros and both the federal and state governments through a series of dialogues and negotiations", it said.

“PETRONAS thereby encourages all parties to respect and allow the judicial process to take its course and be resolved by the Federal Court, and refrain from public commentary,” it noted. 

PETRONAS added that it is committed to safe, reliable and efficient operations in Sarawak. 

PETRONAS also has a separate court case with Petros, after Petros refused to pay for gas supplied in August 2024 on the argument that PETRONAS lacked a valid licence under the DGO to supply gas in Sarawak. A decision is slated for Jan 30.