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New Straits Times
11-06-2025
- Business
- New Straits Times
Petronas breaches Sarawak gas sales agreement, court told
KUCHING: Lawyers for Petroleum Sarawak Berhad (Petros) and the Sarawak government argued that national oil company Petronas had failed to comply with state laws as required under the Sarawak Gas Sales Agreement (SGSA) signed on Dec 30, 2019, and still sought to supply gas to Petros without a valid licence. During a hearing on Petros' originating summons at the Kuching High Court today, in which the state-owned company seeks to restrain and nullify Petronas' demand under a RM7.95 million Maybank Islamic bank guarantee, described by Petros as "unconscionable, illegal, and therefore null and void", Datuk Seri J.C. Fong, appearing as amicus curiae (friend of the court) for the Sarawak government, said Petronas was attempting to bypass legal requirements. "Petronas wants to continue supplying gas to Petros without a licence and does not want to recognise Petros as the gas aggregator in Sarawak. Petronas cannot approbate and reprobate," Fong told judicial commissioner Datuk Faridz Gohim Abdullah. He cited Article 24.2 of the SGSA, which states that "nothing in this agreement shall entitle the parties, Petronas and Petros, to exercise the rights, privileges, and powers conferred on them which would contravene any written laws in force in Malaysia". Fong also said that the Distribution of Gas Ordinance 2016 (DGO 2016), passed by the Sarawak State Legislative Assembly, was a valid written law in force in Malaysia. He added that Article 2.3 of the SGSA further stipulated that should any new codes, regulations, or rules be issued that affect the sale and purchase of gas, both parties are required to take necessary steps to comply. In 2023, the Sarawak assembly amended the DGO to include two key provisions: that only a gas aggregator may supply gas, and that the state cabinet has the authority to appoint the aggregator. Subsequently, Petros was officially appointed as the sole gas aggregator in the state. Responding to claims of Petronas' "unconscionable conduct", Fong told the court that unchallenged evidence in an affidavit showed that Petronas was obstructing upstream gas suppliers, licensed under the DGO, from selling to Petros, thus hindering Petros from carrying out its statutory functions. "Petronas's failure to comply with the DGO, its continued supply of gas without a proper licence, and its prevention of other licensed suppliers from dealing with Petros must constitute unconscionable conduct," he said. On Petronas' argument that it was acting within its rights under the Petroleum Development Act 1974 (PDA74), Fong said the SGSA had no connection to the PDA or to Petronas' business under it, as those rights had been transferred to Petros. "There is nothing in the SGSA to suggest that it was entered into pursuant to the PDA. It is purely a commercial agreement based solely on commercial considerations," he said. Responding to Petronas' claim that Sarawak had relinquished its rights over petroleum and gas in return for annual payments, Fong said the "yearly payments" (oil royalty) were for "the purported vesting of petroleum in Petronas". He said that this had no bearing on Sarawak's constitutional right to regulate the distribution of gas. "There is nothing in the PDA or any agreements between Petronas and the Sarawak government, based on evidence before the court, to indicate that the annual payments were in exchange for Sarawak relinquishing its legislative and executive powers over gas distribution," he added.
Borneo Post
11-06-2025
- Business
- Borneo Post
Petros vs Petronas: Failure to comply with DGO constitutes ‘unconscionable conduct', court told
Fong (right) exits the courtroom after the proceedings. KUCHING (July 11): The Distribution of Gas Ordinance (DGO) 2016 is a written law passed by the Sarawak Legislature and is therefore a written law in force in Malaysia, the High Court here was told today. State Legal Counsel Dato Sri JC Fong said Petroliam Nasional Berhad's (Petronas) failure to comply with the DGO and continuing to supply gas without a licence issued under the DGO, and then preventing other licensed gas suppliers or producers from selling gas to Petroleum Sarawak Berhad (Petros) as the state's gas aggregator, constitutes 'unconscionable conduct' on the part of national oil firm. In his submission to the court in the lawsuit brought by Petros against Petronas, Fong, appearing for the Sarawak government, said Petros is invoking the court's inherent jurisdiction to declare that the demand by Petronas on a bank guarantee issued by Maybank Islamic Berhad is 'unconscionable, unlawful, null and void'. He said all parties, including the federal and Sarawak governments, have agreed that 'unconscionability' is a ground to restrain a beneficiary of a bank guarantee or performance bond from making a call on a bank guarantee or performance bond. 'In this case, the underlying contract is the Sarawak Gas Sales Agreement (SGSA) dated Dec 30, 2019. 'The bank guarantee was issued pursuant to this underlying contract to secure payment for gas supplied by Petronas to Petros. Petronas is the beneficiary of the bank guarantee. 'Petronas did not sign the SGSA because the PDA (Petroleum Development Act) 1974 guarantees the role of Petronas nationwide,' said Fong. He said Petronas entered into the SGSA because it had sold and transferred its business of supplying gas to customers in Bintulu and Miri to Petros, and is selling gas to Petros to enable the state-owned company to fulfil its obligations to its customers who were previously customers of Petronas. 'This SGSA has nothing to do with the PDA or the business of Petronas under the PDA, which had been sold and transferred to Petros. There is nothing in the SGSA which even suggests that Petronas entered into this SGSA in pursuance of the PDA. 'It was purely a commercial contract based on purely commercial consideration, but the mode of performance thereof must not contravene any written law in force in Malaysia.' Fong said for Petronas to consciously disobey, disregard, and disrespect the DGO amounts to a contravention of an important constitutional safeguard and an attempt to undermine the Sarawak government's executive authority under Article 80(2) of the Federal Constitution. 'This itself is clearly unconscionable conduct which this honourable court should not condone at all. 'Consequently, the calling upon the bank guarantee by Petronas, in these circumstances to obtain payment from Petros for gas supplied in contravention of the DGO and also in breach of Article 24.2 of the SGSA, is clearly unconscionable and unlawful,' he said. Article 24.2 of the SGSA stipulates that 'Nothing in this Agreement shall entitle the Parties (i.e. Petronas and Petros) to exercise the rights, privileges and powers conferred on it in a manner which would contravene any written law for the time being in force in Malaysia.' Petros is seeking a court order for the return of RM7.95 million paid to Petronas under the bank guarantee. The conflict began in October 2024 when Petronas called on the bank guarantee in response to a RM28.1 million demand from Petros related to gas supply. Petros then initiated legal proceedings against Petronas and sought an injunction to stop the disbursement of the funds. However, the injunction request became academic after Maybank Islamic Berhad released the payment to Petronas. Petronas was represented by counsels Datuk Dr Cyrus Das and Khoo Guan Huat, while Petros was represented by counsels Tan Sri Cecil Abraham, Sim Hui Chuang and Lim Lip Tze. The proceeding was heard before Judicial Commissioner Datuk Faridz Gohim Abdullah, who fixed Aug 25 and 26 for the next hearing. DGO Distribution of Gas Ordinance JC Fong Petronas Petros
Borneo Post
28-05-2025
- Business
- Borneo Post
Joint declaration marks new era of S'wak-federal cooperation on resource governance, says SUPP sec-gen
KUCHING (May 28): The joint declaration signed by Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg on May 21 is a significant milestone in redefining federal-state relations, particularly in the governance of natural resources, said Datuk Sebastian Ting. Speaking at a press conference at the State Legislative Assembly (DUN) today, the Sarawak United People's Party (SUPP) secretary-general said this agreement reflects a collaborative and constructive approach between the federal and state governments, setting a commendable precedent for resolving resource-related issues amicably and in a mutually-beneficial manner. 'In essence, SUPP views the joint declaration as a balanced and strategic approach to resource governance – an important step towards realising Sarawak's aspirations for greater autonomy and equitable development. 'We remain committed to supporting its implementation and to ensuring that its agreed-upon principles are translated into benefits for the people of Sarawak,' he said. He pointed out the arrangement between Petroliam Nasional Berhad (Petronas) and Petroleum Sarawak Berhad (Petros) was a true 'win-win' outcome – one grounded in a shared understanding while respecting each party's rights and responsibilities. He said the decision was in full alignment with Sarawak's Distribution of Gas Ordinance 2016 (DGO 2016), reinforcing the state's legal framework for the management of its gas resources. 'The joint declaration acknowledges both the Petroleum Development Act 1974 (PDA) and DGO, ensuring that federal and state laws co-exist and are respected by all parties involved in the oil and gas industry, including Petronas,' he said. He said the declaration reaffirms the commitment to uphold Sarawak's rights and autonomy as enshrined in the Malaysia Agreement 1963 (MA63), the Inter-Governmental Committee (IGC) Report, and the Sarawak and Federal Constitutions. 'On behalf of SUPP and all my fellow ADUNs (elected representatives) – some are here with me today – we wish to commend and congratulate our Right Honourable Premier, Datuk Patinggi Tan Sri Abang Johari for his inspiring, comprehensive and forward-looking winding-up speech. 'We also wish to congratulate the Prime Minister and our Premier for the signing of the joint declaration,' he said.
Malaysian Reserve
23-05-2025
- Business
- Malaysian Reserve
Wan Ahmad Fayhsal calls for clarity on Petronas-Petros roles in federal govt-Sarawak agreement
by NURUL NAJMIN ABU BAKAR PARTI Pribumi Bersatu Malaysia leader Wan Ahmad Fayhsal Wan Ahmad Kamal is calling for greater clarity on the ongoing discussions between the federal government and Sarawak regarding the roles of Petroliam Nasional Bhd (Petronas) and Petroleum Sarawak Bhd (Petros). The Machang MP said that the recent joint statement between Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Tan Seri Abang Johari Openg represents a positive step towards a more constructive and equitable dialogue. However, the implementation of the agreement remains unclear, particularly on how the Petroleum Development Act (PDA) and the Sarawak Distribution of Gas Ordinance (DGO) are expected to 'co-exist'. 'What does it actually mean for the PDA and DGO to 'co-exist'? If Petronas no longer needs to obtain a licence but must apply for an exemption, how will this be implemented in practice? 'Clarity on these matters is critical to ensure the arrangement is substantive and not merely symbolic,' he said in a statement. The joint statement issued on May 21 noted the shared role of Petronas and Petros in Sarawak's energy landscape. Abang Johari said Petronas and its subsidiaries are no longer required to obtain operating licences from the Sarawak government to operate in the state. He said while Petros is formally recognised as the sole gas aggregator in Sarawak under the joint statement, the authority to issue operating licences remains with the state's Ministry of Utility and Telecommunication. Wan Ahmad Fayhsal stressed that while Sarawak's aspiration for greater control over its natural resources is valid, Petronas continues to play a vital strategic and economic role for Malaysia.
Borneo Post
22-05-2025
- Borneo Post
Ba Kelalan trader pleads guilty to dealing in LPG cylinders without licence, fined RM10,000
committed the offence at a premises in Kampung Punang Kelalan, near the international border in Ba Kelalan, at 1.30pm on April 22 this year. – Stock photo MIRI (May 22): A trader was today fined RM10,000 in default 10 months in jail by the Limbang Sessions Court for dealing in subsidised gas cylinders without a licence. Dison Sakai, 55, from Ba Kelalan pleaded guilty before Judge Monica Linsua to a charge under Section 20(8) of the Distribution of Gas Ordinance (DGO) 2016, which provides a fine of between RM10,000 and RM100,000 or imprisonment for two years, or both, upon conviction. According to the facts of the case, the accused was caught attempting to transport 30 liquefied petroleum gas (LPG) cylinders out of Sarawak without a valid licence. He committed the offence at a premises in Kampung Punang Kelalan, near the international border in Ba Kelalan, at 1.30pm on April 22 this year. Investigations revealed Dison was running a retail LPG business using a business licence issued by the Lawas District Office, without obtaining a licence from the Director of Gas Distribution Sarawak as required by law. In mitigation, Dison's lawyers Eunice Ding and Joshua Baru pleaded for a lenient sentence as this was their client's first offence, and that he would apply for the necessary licence in accordance with the DGO 2016. The prosecution, led by deputy public prosecutor Ronald Felix Hardin and prosecuting officers Paddril Peter and Luqman Hakim from the State Security and Enforcement Unit (UKPS), had earlier argued that the accused's act of selling LPG to foreign parties could undermine the regulation of Sarawak's oil and gas industry. Also present during the proceedings were officers from the UKPS and the Ministry of Utility and Telecommunication. ba kelalan fine licence subsidised LPG cylinders
