Uncertainty Surrounds Petronas and Sarawak’s Oil and Gas Deal
PETALING JAYA: An industry insider has expressed doubts over the ability of Putrajaya and Sarawak to resolve their competing claims to oil and gas, citing "much uncertainty" created by comments from Kuching.
The insider, who wished to remain anonymous, warned that if the matter is not addressed properly, it could have a negative impact on Petronas’s finances moving forward.
Petronas’s Financials
On Tuesday, the national oil company announced a sharp 32% decline in net profits for 2024, reporting a profit after tax of RM55.1 billion, down from RM80.7 billion in the preceding financial year. Revenue from its gas and maritime segment, which includes liquified natural gas (LNG), stood at RM131.1 billion last year, up from RM127.4 billion in 2023.
Agreement and Counter-Claims
Last week, Prime Minister Anwar Ibrahim told the Dewan Rakyat that the Sarawak government had reaffirmed the primacy of the Petroleum Development Act 1974 (PDA), acknowledging Petronas’s exclusive ownership of all oil and gas resources throughout the country. The agreement will also see Petroleum Sarawak Berhad (Petros) appointed sole aggregator of gas in the state.
Sarawak will receive up to 1.2 billion cubic feet of natural gas per day to meet its domestic needs, "with guarantees for additional supply based on future requirements." However, in a statement issued the following day, Sarawak Premier Abang Johari Openg said the state also intends to request the right to explore for gas in areas off its coast and in the continental shelf.
Uncertainty and Implications
The insider warned that Abang Johari’s demands will "eat into Petronas’s own resources and will likely send its revenues and profits tumbling further." The Sarawak premier’s comments also created uncertainty surrounding Petronas’s LNG exports, as he did not address potential new business opportunities or future projects.
Petronas’s History and Contributions
Petronas was established in 1974 under the PDA, as part of Malaysia’s efforts to assert control over its oil and gas resources. Between 1976 and 2017, the company contributed RM1.2 trillion to the national economy. In the Dewan Rakyat last week, the prime minister commended Petronas for "fulfilling the nation’s mandate" and being its "major revenue generator for nearly half a century."
Conclusion
The uncertainty surrounding the deal has raised concerns over the potential impact on Petronas’s finances. The lack of clarity on future collaborations and new business opportunities has created an environment of uncertainty, which may affect the company’s ability to move forward.
Frequently Asked Questions
- What is the Petroleum Development Act 1974 (PDA)?
The PDA is a law that established Petronas and regulated the oil and gas industry in Malaysia. - What is the agreement between Petronas and Sarawak?
The agreement sees Petronas maintaining its exclusive ownership of all oil and gas resources in the country, while Sarawak receives up to 1.2 billion cubic feet of natural gas per day to meet its domestic needs. - What are the implications of Abang Johari’s demands?
The demands may create uncertainty surrounding Petronas’s LNG exports and potentially impact the company’s revenues and profits.