Sarawak's Petronas-Petros dispute likely to be resolved, according to Malaysia's Anwar, optimistic.
Tussle Over Gas Distribution Rights in Malaysia
The ongoing tiff between Petronas and Sarawak's petroleum company, Petroleum Sarawak Bhd, escalated this week, with PetronasCarigali allegedly receiving notices from the state government about its activities there. While Petronas remained tight-lipped about the matter, local media reported that Sarawak authorities deemed the Miri Crude Oil Terminal as operating illegally because no proper license was obtained.
The Sarawak government gave PetronasCarigali a 21-day window to procure the necessary license or face financial repercussions as per local state law, according to the reports.
This dispute dates back a while, with the core issue being Sarawak's insistence that Petronas complies with state laws - specifically the Distribution of Gas Ordinance (DGO) 2016.
The ongoing conflict between Petronas and Petros has caused operational and financial uncertainties, casting a shadow on industry stability and investor confidence. For instance, Shell MDS, a contractor, requested a court injunction to halt payment until the Petronas-Petros dispute gets settled, causing broader worries.
The federal and Sarawak state governments are actively seeking a peaceful resolution to end the tensions in the oil and gas industry. Despite assertions that state rights over gas have been agreed upon, final details are still being ironed out between Petronas and Petros.
The Sarawak government has enforced the DGO 2016, requiring Petronas to obtain a license from Petros to operate legally within the state. A breach of these requirements makes Petronas liable for potential financial penalties, though the exact penalties remain undisclosed. Petros is recognized as the sole gas aggregator in Sarawak, emphasizing the state's stance that Petronas must comply with licensing regulations to legally operate within Sarawak.
To sum up, the quandary persists but is under active negotiation, with license procurement and compliance serving as the focal points. Sarawak insists Petronas must comply with state licensing conditions and the DGO 2016 or face penalties, while Petros requires financial guarantees related to ongoing operations. Both federal and state governments are working towards a diplomatic settlement to prevent further disruption to Sarawak's oil and gas sector.
The lingering dispute between Petronas and Petroleum Sarawak Bhd, centered around industry regulations and business practices, involves issues such as obtaining licenses and adhering to the Distribution of Gas Ordinance 2016. This conflict, if not resolved, could have significant financial implications for all parties involved, as well as potentially affecting the stability of the energy sector and investor confidence in the finance industry.
