KUALA LUMPUR (March 2): The High Court delayed Shell MDS (Malaysia) Sdn Bhd's gas payment dispute with Petroliam Nasional Bhd (PETRONAS) and Petros until after March 16, 2026, when the Federal Court will decide on PETRONAS’ application for leave to clarify its operations in Sarawak, amid conflicting federal and state laws.
PETRONAS’ lawyer Khoo Guan Huat told judge Mahazan Mat Taib that PETRONAS filed a referral with the Federal Court in January, with a hearing set for March 16, and the Sarawak government also filed a petition last month.
“Since there are two Federal Court matters and that the issues raised are going to have bearing on the matters here, possibly it would be better to wait for the outcome,” Khoo said.
Furthermore, Khoo said Sarawak senior counsel Mohd Adzrul Adzlan, who was also present at Monday’s proceedings, agreed as the issues are similar.
“We (PETRONAS and Sarawak government) have crystalised (the issues) in the Federal Court papers and have (had) a chat and we felt there would be clarity on the issues at hand after March 16.
“Since Shell MDS and Petroleum Sarawak (Petros) have left the matter to the court, we asked for a case management date (after March 16),” he added.
Adzrul agreed that the case involves the Petroleum Development Act 1974 (PDA) and Sarawak’s Distribution of Gas Ordinance 2016 (DGO), and clarity is expected after the Federal Court hearings.
Shell MDS, represented by Janet Chai, and Petros, represented by Foo Joon Liang, said they were leaving the matter to the court. Chai also noted that Khoo wanted to speak to the court first.
Mahazan set the High Court case management of Shell MDS's dispute for March 30.
The hearing for Shell MDS’ case against PETRONAS and Petros, originally set for November 2024, was to decide whether Shell should pay PETRONAS or Petros for gas supplied to its Bintulu plant. Shell signed a gas supply agreement with PETRONAS in 2020 and another with Petros in 2024 after Sarawak made Petros the state’s sole gas aggregator. Shell had a court order to pause payments while continuing gas supply, but after PETRONAS challenged it, the Court of Appeal ordered Shell to pay PETRONAS and urged a quick resolution.
According to Khoo when met outside the court, the Federal Court has scheduled another case management for PETRONAS’ referral and Sarawak’s petition on March 5.
PETRONAS and Sarawak government file separate Federal Court actions
PETRONAS and the Sarawak government have filed separate applications at the Federal Court over petroleum and gas rights in Sarawak.
PETRONAS in January sought the Federal Court’s leave to clarify the legal position of its petroleum operations in Sarawak, citing uncertainty due to overlapping federal and state laws. The national oil company wants the court to determine how the PDA interacts with Sarawak’s DGO, following ongoing disputes with state-owned Petros over licensing, regulation and gas supply.
PETRONAS said the move is not meant to challenge Sarawak’s development plans or Petros’ role, but to ensure it operates in compliance with the law.
The PETRONAS motion, where it also named the Sarawak government and the federal government as respondents, is fixed for hearing on March 16.
In late February, the Sarawak government filed a Federal Court petition challenging the constitutionality of three federal laws — the PDA, Continental Shelf Act 1966, and Petroleum Mining Act 1966.
The state says these laws infringe on Sarawak’s rights to its oil and gas, which were vested in the state under the Malaysia Agreement 1963, and that the state assembly has authority to regulate them. It also noted that the federal laws were originally for Malaya and only extended to Sarawak after the 1969 Emergency.