OCTOBER 14 — Two years ago in 2024, I wrote that Petronas is truly Malaysian.
That year in this month, Petronas celebrated its 50th anniversary following the passing of the Petroleum Development Act 1974 (PDA).
Calling the PDA “historic”, the Minister of Primary Industries Abdul Taib bin Mahmud disclosed to Parliament that the Federal Government had “a very long consultation with the State Governments such as Sarawak and Sabah” and offered his heartfelt gratitude to both states as follows:
“On behalf of the Federal Government, I would like to express my gratitude to the Sarawak and Sabah State Governments for their willingness, for the sake of national interest, to cooperate with the Federal Government.... I reckon that Honourable members will agree that the [passing of the Act] demonstrates the ability and competence of the leaders of the two states.”
Another prominent Sarawakian, Abdul Rahman bin Ya’kub, who was the first to rise during the parliamentary debate to support the legislation, explained the support of the East Malaysian states as follows:
“There is no doubt that the time has come for our country Malaysia to take one very important step that can guarantee that the exploration and exploitation of petroleum will not be dominated and controlled, but also given the highest attention by the Government.
“Petroleum, which is so important to the country, should not be a matter of contention between the states in the federation, it must be considered of national interest. It is for this reason that the State Government of Sarawak and the Government of Sabah have agreed with the Federal Government that [the legislation] be [before] this House.”
As I wrote in 2024, Petronas, through its wholly owned Petronas Carigali Sdn Bhd, recorded 19 exploration discoveries over the course of 2023. The discoveries, made from drilling 25 wells, contributed more than 1 billion barrels of oil equivalent (BOE) of new resources.
BOE is used to summarise the amount of energy that is equivalent to the amount of energy found in a barrel of crude oil.
More than half of the discoveries were made in the Sarawak basin.
In that year (2023), the national oil and gas company’s total capital investments (Capex) amounted to RM52.8 billion, mainly attributed to upstream and gas projects. Domestic Capex increased by 41 per cent against the year before mainly for investments in Sabah and Sarawak.
In 2024, Capex increased to RM54.2 billion, with more than 60 per cent of it being invested directly into Malaysian projects, marking a 27 per cent increase in domestic spending compared to 2023.
In 2025, Capex decreased but still stood at RM41.6 billion, mainly from upstream development and production activities.
Based on the Capex in Malaysian projects alone, including in Sarawak, it makes sense that Petronas should file a petition at the Federal Court to seek clarity on the applicable regulatory framework governing its operations in Sarawak. The respondents are the Federal Government and State Government of Sarawak.
Legal clarity is needed on Petronas’ operations in Sarawak, to ensure that the company continues to operate in full compliance with the applicable laws and sound governance practices.
Petronas said it in clear terms that the legal action is not intended to challenge Sarawak’s development aspirations or hinder the role of Petroleum Sarawak Berhad (Petros) in the state’s energy sector.
The legal action followed constructive engagements since 2024 with Petros and both the Federal and State Governments through a series of dialogues and negotiations.
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 Sarawak Government in turn has filed its own petition at the same court to challenge three federal laws, intending to oppose Petronas’ petition for legal clarity.
Deputy minister in the Sarawak premier’s department Sharifah Hasidah Sayeed Aman Ghazali said the petition sought to determine the constitutional validity and continued applicability of the three laws – that is, the PDA, the Continental Shelf Act 1966 (CSA) and the Petroleum Mining Act 1966 (PMA).
“These federal Acts adversely affect and deprive the rights of Sarawak to the natural resources, including oil and gas, found in the seabed of the continental shelf within the boundaries as defined by the Sarawak Order in Council 1954 and the Sarawak Order in Council 1958,” Sharifah Hasidah said.
Read here on Order in Council and here on laws passed before Malaysia Day.
“Sarawak is justified in safeguarding the legitimate interests and rights of Sarawak and its people, enshrined in the Federal Constitution as well as in the Malaysia Agreement 1963, by seeking a ruling from the Federal Court on the continuing application and effect of these federal Acts in Sarawak” she added.
It’s kind of ironic that the Sarawak government should challenge the PDA when two of the state’s most prominent “sons” had informed Parliament in 1974 that the state had agreed to the legislation, considered to be “of national interest”.
Be that as it may, the parties before the Federal Court will lock horns in a battle for legal clarity and constitutionality in January 2027.
Let the legal battle take its course.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
