KUALA LUMPUR (Reuters) – Malaysian state energy firm Petroliam Nasional Berhad (Petronas) will maintain all its contractual obligations, Prime Minister Anwar Ibrahim said, after talks over gas distribution with Petroleum Sarawak Berhad (Petros) fanned industry concerns.
A recent deadlock in talks between Petronas and Petros, run by the state of Sarawak, home to more than 60% of Malaysia’s gas reserves, stirred concern over the likely impact on the revenues of the former, a major contributor to government coffers.
On Monday, Anwar told parliament all detailed negotiations between the two would follow transparent commercial principles, and they would work together in the interest of the nation.
Petronas will “maintain all existing domestic and international contractual obligations,” he added.
The assurance followed comments reported by the Borneo Post newspaper from Sarawak premier Abang Johari Tun Openg that the negotiations had yet to be resolved as some “grey areas” remained.
The federal government’s decision to recognise Petros came about because the state, on the island of Borneo, had helped, through Petronas, in funding Malaysia’s early growth, he added.
On February 5, Law Minister Azalina Othman confirmed Petros’ role as the state’s gas distributor, excluding liquefied natural gas (LNG).
Policy, governance and development of Malaysia’s energy industry continue to thrive under the mandate of its Petroleum Development Act of 1974, recognised by both the federal and state governments, Anwar said.
But Petros will serve as Sarawak’s gas aggregator under a 2016 state ordinance on gas distribution that is set to take effect on March 1, he added.
The measure guarantees up to 1.2 billion cubic feet a day of natural gas for Sarawak’s domestic needs, he said, adding that Petros had the authority to expand into new activities and benefit from cooperation with Petronas.
Oil and gas industry development in Sarawak, including upstream investment and infrastructure, was valued at a total of more than 280 billion ringgit ($63 billion) since 1976, Anwar said.
Sarawak has long sought greater control of its natural resources. Last February it appointed Petros to procure, distribute, supply and sell all natural gas produced in the state to downstream buyers.
A deadlock in negotiations last year had sparked some industry worries over the potential impact on Petronas and energy activities in Sarawak.
($1=4.4260 ringgit)
(Reporting by Ashley Tang; Editing by John Mair and Clarence Fernandez)
