PUTRAJAYA (Jan 30): The Federal Court has fixed March 16 to hear Petroliam Nasional Bhd’s (PETRONAS) application for leave (permission) for a referral over an interpretation to decide on its legal position to operate in Sarawak.
The date was fixed following its first case management on the matter before Federal Court deputy registrar Azaraorni Abd Rahman on Friday.
Both the federal and Sarawak state governments have been named as respondents.
The application seeks to determine PETRONAS' legal position to ensure the national oil and gas outfit continues to operate in full compliance with the applicable laws and sound governance practices in Sarawak.
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).
One of the counsels involved and familiar with the matter, who spoke on condition of anonymity with The Edge, said parties have been given some dates to file affidavits in reply to the application.
“The hearing of the leave application has been fixed [for] March 16,” the counsel added.
In a referral involving constitutional matters to be heard before the apex court, leave had to be gained before the apex court, which is the constitutional court, to hear the merits of the application at another date.
This is to ensure that the application for determination is not frivolous and vexatious.
It is understood representatives from PETRONAS as well as the federal and Sarawak governments were present during case management on Friday via video conferencing before Azaraorni.
Parties have been asked to keep the matter confidential. Even access to the court document on PETRONAS has been prohibited.
On Jan 12, PETRONAS, in a statement, disclosed that it had filed the referral to the apex court for determination, where an origination motion was filed on Jan 10 with the federal government being a respondent in the application due to being custodian of the PDA.
“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,” PETRONAS said.
The development follows a prolonged dispute between PETRONAS and Sarawak state-owned Petros on the oversight of oil and gas assets in the state.
Subject to debate between Peninsular and Sarawak politicians
The issue over oil and gas rights between PETRONAS and Petros has been the subject of debate since Petros was appointed as the sole gas aggregator in Sarawak in February 2024.
Politicians from the peninsula and Sarawak have been debating the matter despite Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Tan Sri Abang Johari Tun Openg having inked a joint declaration that recognises 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," the statement said.
The 2020 agreement, signed on the back of a heightened push for stronger federal commitment towards the Malaysia Agreement 1963 (MA63), had resolved issues like state sales tax and operations of certain onshore oil and gas operations.
The decision to file the referral 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 added.
Minister in the Prime Minister’s Department for Law and Institutional Reform Datuk Seri Azalina Othman Said, earlier this week, told Parliament that federalism remains the guiding principle in Malaysia’s petroleum governance amid a prolonged dispute with Petros over the oversight of oil and gas assets in the Bornean state.
According to Azalina, based on input from PETRONAS, such a guiding principle ensures that the division of powers between the federal and state governments is carried out clearly and in an orderly manner under the Federal Constitution.
The PDA remains the primary legislation governing petroleum management in Malaysia, vesting exclusive ownership, rights, powers, and privileges for exploration, production, and management of petroleum — both onshore and offshore — with PETRONAS, Azalina said.
Earlier, Abang Johari had said the court should decide on PETRONAS' bid for regulatory clarity.
Petros and PETRONAS decision on bank guarantee deferred to Feb 25
Meanwhile, in a related development, Kuching High Court Judicial Commissioner Datuk Faridz Gohim Abdullah had deferred its decision on the Petros and PETRONAS dispute over a RM7.95 million bank guarantee which had been recalled by PETRONAS in October 2024, from Friday (Jan 30) to Feb 25.
Faridz told parties about the postponement of his decision.
“Upon YA's (the JC’s) instruction, the decision is rescheduled to Feb 25, at 9am, and today’s date is vacated,” read the Sarawak and Sabah e-filing remark on the case.
This case, which was heard last November, stems from a bid by Petros to recover RM7.95 million paid to PETRONAS after the company called on a bank guarantee in October 2024.
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.