PUTRAJAYA (Feb 5): The Court of Appeal has moved to clarify a payment order involving a high-stakes gas dispute between Petroliam Nasional Bhd (PETRONAS), Shell MDS (Malaysia) Sdn Bhd and Petroleum Sarawak Bhd (Petros).
The clarification focuses on the specific wording of a "draft order" — the formal legal document that dictates how Shell MDS must pay for gas supplied by PETRONAS, after the lifting of an injunction in September 2025 that paused payments owed by Shell MDS to the national oil and gas firm, following competing invoice claims from Petros.
The dispute began in late 2024 when Shell MDS received invoices from both PETRONAS and Petros for the same gas supply. Fearing it would be forced to pay twice or face operational shutdown in Bintulu, Shell MDS sought a court order to halt payment to both parties until the legal owner was identified.
While a lower court initially allowed Shell MDS to pause payments, the Court of Appeal overturned that decision on Sept 22, 2025, ruling that PETRONAS must be paid to avoid a "risk of injustice". In the order, the bench directed Shell MDS to pay PETRONAS the outstanding amounts owed from August 2024 up to Oct 5 last year, with payment due by Oct 6.
Why the wording matters
In seeking the clarification on Thursday, Shell MDS’ counsel Christopher Leong argued that the wording of the formal order must be made precise for corporate governance purposes, because Shell MDS represents several other companies. Essentially, Shell MDS needs a clear legal instruction to justify transferring nearly RM1 billion (in outstanding sum and interest) to PETRONAS while the dispute with Petros is still pending.
Representing PETRONAS, counsel Khoo Guan Huat confirmed that while all parties had agreed to a draft, they remained at odds over the specific phrasing regarding how interest and future payments should be handled.
The amended order
The three-member bench, led by Federal Court judge Datuk Azimah Omar, ultimately agreed to amend the order to ensure there is no ambiguity. The new order states:
Subject to the order of the High Court upon the final disposal of the interpleader summons, the first respondent (Shell MDS) shall:
a. pay on or before 5pm on Oct 6, 2025, all sums due and payable (past and present) including interests on late payment under the first respondent’s agreement with the appellant dated July 17, 2020 (PETRONAS GSA) taking into account all accrued interest in the interest bearing account; and
b. pay to the appellant all amounts due and payable in respect of future supplies in accordance with the terms of the PETRONAS Gas Supply Agreement 2020.
Meanwhile, the broader dispute over who truly owns the gas rights in Sarawak is still being fought at the High Court. High Court judge Mahazan Mat Taib had decided that a full trial with witnesses would not be necessary, saying the matter involves matters of law rather than facts.
A hearing date has yet to be fixed on the matter, Leong informed the bench on Thursday, as the parties are still exchanging affidavits. The Court of Appeal ordered that the matter be expedited.
For now, PETRONAS remains the primary recipient of payments by Shell MDS — estimated at RM70 million to RM80 million per month — until the High Court makes a final ruling on the interpleader summons between PETRONAS and Petros.