By Lian Cheng & Yvonne Tuah
KUCHING, Aug 27: One of the most remarkable and visionary initiatives introduced by Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg was the establishment of Petroleum Sarawak Berhad (PETROS), officially launched on March 6, 2018. Abang Johari first shared his vision for PETROS in June 2017, and by July 4, 2017, he elaborated that the company would be wholly owned by the Sarawak government and would operate on equal footing with Petroliam Nasional Berhad (PETRONAS).
On the momentous day of August 7, 2017, PETROS was officially incorporated. It was then launched on March 6, 2018, marking the beginning of a new era for Sarawak’s oil and gas industry (O&G).
A True Sarawakian O&G Company
A few months following the official launch of PETROS, the Oil Mining (Amendment) Bill 2018 was passed by the Sarawak Legislature on July 10, 2018, enabling the State to strengthen regulatory control over petroleum exploration and prospection, both onshore and offshore. PETROS was set to play a central role in discovering, managing, and developing Sarawak’s petroleum resources, ensuring that the State benefits more directly from its natural wealth.
By exploring, producing, and marketing O&G, PETROS is expected to generate income, thus enhancing Sarawak’s revenue streams and reducing its reliance on development funding from the federal government. As part of its operations, PETROS is also expected to focus on responsible resource management, including environmentally sustainable practices, which include adopting advanced technologies and practices that minimise the environmental impact of O&G activities.
PETROS, the Sole Gas Aggregator
On November 21, 2023, PETROS was designated as the exclusive gas distributor for the State, following the passing of the Sarawak Distribution of Gas (Amendment) Bill 2023 in the Sarawak Legislative Assembly. This legislative shift vested PETROS with the responsibility to procure natural gas from all sources and ensure its equitable distribution to consumers, industries, and investors at fair and affordable prices.
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 national oil company PETRONAS acted as the State’s gas aggregator, determining gas production levels, allocations for industries or power generation, and setting gas prices within Sarawak. Under the then PETRONAS Production Sharing Contractors (PSC) terms, all gas produced in Sarawak has to be sold by PSCs, such as Shell, to PETRONAS. Then, nearly all gas exported from Sarawak was converted into liquefied natural gas (LNG) while the remainder was supplied to its plants in Bintulu. This arrangement had resulted in only a minimal percentage of Sarawak’s gas production being made available to the local industries and power sectors.
As such, Julaihi highlighted the uncertainties surrounding the availability of gas, its pricings, and the insufficient volume allocated for local use. These challenges cast a shadow over Sarawak’s industrial sector and present significant hurdles in attracting foreign investors who require stable and ample gas supplies for their operations. This situation could ultimately hamper Sarawak’s efforts to accelerate industrial growth to enable Sarawak to transform into a high-income economy by 2030.
To address these issues, under the Sarawak Distribution of Gas (Amendment) Ordinance 2023, PETROS was appointed as the sole gas aggregator, transfering the principal functions of gas distribution from PETRONAS to the State-owned entity. Following the amendment, PETROS would assume responsibility for developing, expanding, managing and maintaining Sarawak’s gas distribution network and systems, which includes pipelines, receiving terminals, processing plants, and storage facilities within the State. Julaihi assured that the designation of PETROS as the sole gas aggregator would neither prejudice nor adversely affect existing contractual arrangements with upstream gas producers.
PETROS as Licensor
PETROS became the licensed distributor for Liquefied Petroleum Gas (LPG) in Sarawak and is the sole distributor for LPG effective December 1, 2023. The Sarawak government has also mandated that all entities undertaking activities listed under Section 7 of the Distribution of Gas Ordinance 2016 (DGO2016) must obtain a licence from the Director of Gas Distribution.
Furthermore, under Section 7 of the Ordinance, individuals or entities holding licences for the distribution, supply and sale of gas in Sarawak are required to sell and deliver their gas to PETROS. This measure ensures that PETROS can procure sufficient gas for distribution, including to LNG plants, at reasonable prices for consumers across the State. It is worth noting that Sarawak supplies 90 per cent of Malaysia’s LNG exports. According to Federal government reports, Sarawak’s proven and probable petroleum reserves account for 60.87 per cent of Malaysia’s total reserves, with Sabah contributing approximately 18.8 per cent.
No Wavering on PETROS’ Stance
By August 7, 2024, Sarawak had issued 13 licences to upstream gas sellers, including major corporations such as PETRONAS and Shell, enabling them to supply and sell natural gas within the region. Additionally, 10 licences were granted to downstream gas players. On November 18, 2024, while delivering his ministerial winding-up speech at the Sarawak Legislative Assembly, Julaihi reiterated Sarawak’s non-negotiable stance on PETROS as the State’s sole gas aggregator.
He stressed that all parties involved in gas distribution activities must apply for a licence under Section 7 of the DGO2016. Failure to comply would constitute an offence under Section 20 of the Ordinance, potentially resulting in fines, imprisonment, or both from crude oil, liquefied natural gas (LNG), and other petroleum products. On January 13, 2025, during a town hall session held in conjunction with the Premier of Sarawak’s Eighth Anniversary, Abang Johari reaffirmed the true purpose of PETROS. He stated that the company’s establishment was firmly rooted in Sarawak’s constitutional rights and dismissed any claims suggesting it represented a power grab.
PETROS now stands as a glowing beacon in Sarawak’s pursuit of greater autonomy, a symbol of the State’s resolve to reclaim control over its natural resources. Its establishment was not merely a strategic move, but a necessary step to safeguard Sarawak’s rightful authority over its O&G reserves and to secure greater income for its people. – DayakDaily
