Petros appointed exclusive gas aggregator in Sarawak: Legislation overhauls gas distribution for affordability

Julaihi tabling the Sarawak Distribution of Gas (Amendment) Bill 2023 in DUN Sitting on Nov 21, 2023.

KUCHING, Nov 21: Petroleum Sarawak Berhad (Petros) has been designated as the exclusive gas aggregator responsible for procuring natural gas from all sources, ensuring its distribution and supply to consumers, industries and potential investors at reasonable and affordable prices in the State.

This appointment follows the passing of the Sarawak Distribution of Gas (Amendment) Bill 2023 in the Sarawak Legislative Assembly (DUN) today.

In emphasising the significance of this legislative move, Minister of Utility and Telecommunication Datuk Julaihi Narawi highlighted the necessity to address the existing inequitable arrangement where PETRONAS currently acts as the gas aggregator, determining gas production levels within Sarawak, allocations for industries or power generation, and setting the price of gas.

“Under the current PETRONAS Production Sharing Contrators (PSC) terms, all gas produced in Sarawak have to be sold by PSCs, such as Shell to PETRONAS, who purports to act as an aggregator of the gas.

“Presently, nearly all gas produced offshore Sarawak are converted into Liquefied Natural Gas (LNG) for export by PETRONAS overseas. Almost all of gas produced in Sarawak is allocated by PETRONAS to supply gas to feed the LNG plants in Bintulu. Consequently, the volume of gas available for local industry and power sectors is a very low percentage of gas produced in Sarawak,” he said during his winding up of the Bill.

As such, Julaihi explained that there is uncertainty over the availability of gas, its price as well as insufficient volume of gas for industrial use in Sarawak which makes it challenging to attract foreign investors, who require gas for their industrial processes and to establish their plants in Sarawak.

“This has hampered our efforts to accelerate industrial growth to enable Sarawak to have a high income economy by 2030,” he explained.

To address these issues, the principal functions of the gas aggregator include developing, expanding, managing and maintaining the gas distribution network and systems, which encompasses pipelines, terminals for receiving gas, processing plants and storage facilities.

To enhance the enforcement provided under the Ordinance, this Bill also introduces provisions to remand those who are arrested under the Ordinance and seizure of property when offenders cannot be found, as well as the handling of seized items.

Julaihi assured that the appointment of a gas aggregator would not in any way prejudice or adversely affect the existing arrangements entered into by upstream gas producers.

“Petros, a company wholly owned by the Sarawak government, has the requisite experience and knowledge in gas distribution. Currently, Petros is already a licensed distributor of Liquefied Petroleum Gas (LPG) in Sarawak and will be appointed as the sole distributor for LPG effective Dec 1, 2023,” he said.

The Ministry will mandate that all entities undertaking activities listed under Section 7 of the Distribution of Gas Ordinance 2016, obtain a license from the Director of Gas Distribution.

Furthermore, individuals with licenses for the distribution, supply, and sale of gas in Sarawak under Section 7 of the Ordinance will be required to sell and deliver their gas to Petros.

This ensures Petros can procure sufficient gas for distribution, including to LNG plants, at reasonable prices for consumers in Sarawak. — DayakDaily