Malaysian PM: Petronas will adhere to contractual commitments

Anwar Ibrahim, Prime Minister of Malaysia, said that Petroliam Nasional Berhad, the state-owned energy company, will continue to fulfill all contractual obligations. This was after discussions over gas distribution between Petros and Petroleum Sarawak Berhad, sparked industry concerns.

The recent deadlock between Petronas (run by Petros) and Sarawak (home to 60% of Malaysia's natural gas reserves), has stirred up a lot of controversy.

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Over the likely impact of the former, which is a major contributor to the government's coffers.

Anwar informed the parliament on Monday that all negotiations between them would be conducted in accordance with transparent commercial principles and both parties would work together for the national interest.

Petronas "will maintain all existing domestic as well as international contractual obligations," added he.

Sarawak Premier Abang Johari tun Openg had told the Borneo Post that negotiations were not yet resolved because some "grey" areas remained.

He said that the federal government decided to recognize Petros because Borneo had, through Petronas funded Malaysia's initial growth.

On February 5, Azalina Othman, Minister of Law

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Petros is the gas distributor for the state, but excludes LNG.

Anwar, a Malaysian energy expert, said that the Petroleum Development Act of 1975, which is recognized by the federal government and the state governments, continues to be a powerful tool for the development of Malaysia's industry.

Petros, however, will be Sarawak's gas aggregater under the 2016 state ordinance for gas distribution which is scheduled to come into effect on 1 March.

He said that the measure guaranteed up to 1.2 billion cubic feet of natural gas per day for Sarawak’s domestic needs. Petros also had the authority and power to expand new activities, as well as benefit from Petronas’s cooperation.

Anwar stated that the oil and gas industry in Sarawak has developed at a cost of over 280 billion Ringgit ($63 billion), including infrastructure and upstream investments.

Sarawak has been seeking greater control over its natural resources for many years. In February last year, it appointed Petros as the company to purchase, distribute, supply, and sell all natural gases produced in Sarawak to downstream buyers.

The deadlock of negotiations in Sarawak and Petronas last year has caused some concern in the industry. Reporting by Ashley Tang, Editing by John Mair & Clarence Fernandez.

(source: Reuters)