Honour Anwar-Abang Jo framework to resolve oil dispute, says analyst

James Chin says the deal struck between the two leaders promises stability and mutual respect, and allows for investor confidence.

Prime Minister Anwar Ibrahim and Sarawak premier Abang Johari Openg agreed last May that Petros would be the domestic gas aggregator in Sarawak while Petronas would handle liquefied natural gas exports.

PETALING JAYA:

 An analyst has urged parties in the dispute involving oil and gas in Sarawak to honour the deal made last May between Prime Minister Anwar Ibrahim and premier Abang Johari Openg, calling it a “prudent alternative” to adversarial posturing that could strain federal-state ties.

James Chin, of the University of Tasmania, noted that the agreed framework acknowledges the coexistence of the Petroleum Development Act 1974 (PDA) and Sarawak’s Distribution of Gas Ordinance 2016 (DGO).

It stipulates that Petros would be named gas aggregator for Sarawak while Petronas handles liquefied natural gas exports, he said.

The joint declaration also stated that any agreements and arrangements entered into by Petronas and or its subsidiaries with third parties, for the purpose of selling liquefied natural gas from the upstream sector across the value chain will remain unaffected.

“This framework promised stability and mutual respect, allowing time for a durable resolution without upending investor confidence,” he said in a letter to Dayak Daily.

James Chin.

Eight months ago, the federal and Sarawak governments reaffirmed the respective roles of national oil company Petronas and Petros in developing the state’s oil and gas industry.

The joint statement recognised Sarawak and Petros’s growing capabilities, while preserving Petronas’s strategic role at the national level.

Despite a series of dialogues and negotiations with Petros since 2024, Petronas said there were still differences that had led to uncertainty over its obligations in Sarawak.

Last month, Petronas filed a motion seeking leave to commence proceedings in the Federal Court for clarity over the applicable regulatory framework governing its operations in Sarawak and ensure compliance with applicable laws and governance practices.

Petronas said the suit was not meant to challenge Sarawak’s development aspirations or hinder Petros, but to obtain the apex court’s definitive determination on the legal position applicable to the state’s petroleum sector.

The national oil company named both the federal and Sarawak governments as respondents.

The Federal Court has since set March 16 to decide on Petronas’s application.

In his letter, Chin urged the federal government to treat Petronas’s suit with “extreme caution”, warning that it could “unleash uncontrollable forces”.

He said there were already calls in Sarawak for the PDA to be debated in the state legislative assembly, and warned that similar demands would likely follow in Sabah.

These issues could then cascade into the state assemblies in the peninsula, particularly in Kelantan and Terengganu, which harbour their own historical complaints over oil revenues, Chin said.

“Imagine a domino effect of state legislatures challenging federal overreach – what starts as a Sarawak skirmish could fracture national unity and federal-state relations,” he said.

Chin said the PDA faced fierce opposition from the chief ministers of both Sabah and Sarawak before its coming into force.

“If such details and other behind-the-scenes negotiations surface at the state assemblies it could spark widespread outrage over how Borneo resources were effectively ceded without proper democratic process,” he said. - FMT