07/05/2025
Here is a straight look at what is happening between PETROS and PETRONAS.
Sarawak has told Petronas Carigali that the Miri Crude Oil Terminal needs a state licence under the Oil Mining Ordinance of 1958. The state is using law that predates the Petroleum Development Act of 1974 to push both sides back to the negotiating table. Lawyers call this a compliance notice; it is basically a formal reminder to sort out paperwork and revenue sharing, not an act of hostility.
Earlier this year the federal cabinet recognised PETROS as the single gas aggregator in Sarawak. That means any gas sold in the state will pass through a Sarawak owned company first. Petronas still runs the wells offshore and controls LNG exports, but Sarawak now gets a bigger say over pricing and local supply. They are working on a new Commercial Settlement Agreement (CSA 2.0) to spell out royalties, licences and how a joint regulator will work.
The legal tug of war exists because the 1974 act was passed during an emergency period that ended in 2011. Sarawak argues that once emergency powers lapsed, rights promised in the Malaysia Agreement of 1963 should come back into full force. Courts have so far refused to declare any side the clear winner, so everything rests on negotiation.
Investors are watching closely. ConocoPhillips did walk away from a deep water project, but Shell, TotalEnergies and several Japanese partners are still expanding in Sarawak. What they need is certainty. A clear rule book and a revenue formula that feels fair will keep capital flowing.
Federalism is not collapsing. It is being stress tested. A balanced deal that respects Sarawak’s rights, keeps Petronas strong and satisfies investors would show that the federation can evolve without breaking apart. Cool heads and transparent numbers will get us there faster than loud rhetoric.
