Petronas Stands Firm: Gas Supply Assured as Legal Dust Settles in Sarawak

Malaysia’s national energy champion, Petronas, is sending a powerful message of stability and commitment following a landmark Federal Court victory. The company has emphatically reaffirmed its unwavering dedication to ensuring a consistent and reliable gas supply, particularly to Sarawak, effectively dispelling any lingering concerns that may have arisen from a recent legal challenge.

The pivotal ruling from the Federal Court clarified that the Sarawak state government lacks the constitutional authority to impose sales tax on petroleum products.

The court decisively affirmed that the federal government possesses exclusive jurisdiction over the taxation of such resources, a decision that underscores the foundational principles of Malaysia’s economic and resource management framework.

This legal outcome brings much-needed clarity to a dispute that had simmered for some time.

Petronas, while consistently upholding its financial obligations by making sales tax payments to Sarawak – totaling RM2.95 billion for 2019 and RM600 million for 2020 – had concurrently pursued legal avenues to clarify the constitutional position. Its stance has always been rooted in the Petroleum Development Act (PDA) 1974, which explicitly vests ownership of petroleum resources in the national oil company, entrusted to manage these assets for the benefit of all Malaysians.

Tengku Muhammad Taufik Tengku Aziz, the President and Group CEO of Petronas, has consistently articulated the company’s dedication to collaborative progress.

Even amidst the legal proceedings, Petronas maintained an open dialogue with the Sarawak state government, emphasizing its commitment to fostering a conducive environment for the oil and gas industry’s sustainable growth. This spirit of cooperation is paramount, especially given Sarawak’s vital role as a key contributor to Malaysia’s energy landscape.

The company's leadership has highlighted that while the legal clarity is crucial, the ultimate goal remains a long-term, commercially viable resolution that supports the aspirations of both the state and the nation.

Efforts are actively underway to iron out a "commercial settlement" framework, aiming to transition from legal confrontation to a partnership built on mutual benefit and sustainable development. This approach is designed to ensure that the vital economic contributions of the oil and gas sector continue uninterrupted, fostering prosperity for all stakeholders.

Petronas assures its customers and partners, both domestic and international, that its commitment to fulfilling gas supply agreements remains paramount.

The company is steadfast in its mission to power Malaysia's growth and continue its role as a responsible and reliable energy provider, leveraging its strategic position to navigate complexities and deliver on its promises for a stable and prosperous energy future.