By DayakDaily Team
KUCHING, Nov 18: Justice Dato Faridz Gohim Abdullah will deliver his judgment on January 30, 2026, on PETROS’ claim seeking a court declaration that PETRONAS’ call on a bank guarantee issued by a bank was unconscionable, unlawful, and therefore null and void.
PETRONAS called on the bank guarantee after PETROS refused to pay for gas delivered in August 2024 by PETRONAS without a license issued to PETRONAS under the Distribution of Gas Ordinance (DGO).
The court, after strong objections by PETROS’ counsel, granted the request by Datuk Cyrus Das and senior federal counsel for PETRONAS and the federal government to file additional submissions by November 28. The court also allowed PETROS and the Sarawak government to deliver final reply submissions by December 14.
Earlier in his submission on behalf of the Sarawak government, State legal advisor Dato Sri JC Fong said that, based on the evidence, the unconscionable conduct of the PETRONAS was as follows:
- Despite having agreed to comply with all written laws under Article 24.2 of the Sarawak Gas Sales Agreement (SGSA), PETRONAS refused to comply with the DGO— a validly enacted State law—which requires PETRONAS to be licensed to supply gas in Sarawak,
- Preventing other upstream gas producers like Petroleum Sarawak Exploration and Production Sdn Bhd, who were licensed under DGO, from selling gas to PETROS as the gas aggregator,
- Insisting on delivering gas to PETROS after the SGSA had become frustrated, in contravention of the DGO, and
- By such conduct, PETRONAS undermined the DGO, which was passed pursuant to an order made under Article 95C of the Federal Constitution as recommended by the IGC Report.
Fong said the Sarawak government has a duty to ensure that laws passed by the legislature for the benefit of the people are duly complied with by PETRONAS.
“The refusal by PETRONAS to comply with the licensing requirements of the DGO is unconscionable conduct and totally unacceptable. Hence, the Sarawak government supports PETROS’ claim for a court declaration that PETRONAS’ call on the bank guarantee, to recover the price of gas supplied, without license or illegally, as unconscionable and unlawful,” he said.
Fong added that once the court finds that there had been unconscionable conduct on the part of PETRONAS, it is irrelevant whether the bank guarantee is an ‘on demand guarantee’ or a ‘conditional or unconditional guarantee’.
Tan Sri Cecil Abraham, submitting for PETROS, reiterated that the DGO and its amendments in 2023 were passed within the legislative competence of the Sarawak Legislature.
He refuted PETRONAS’ allegations that PETROS had launched a collateral attack on the validity and constitutionality of the PDA.
What PETROS contended, he said, was that the PDA does not exempt PETRONAS from complying with any written law such as the DGO, and that after the passing of the Gas Supply Act, 1993 (GSA)—which applies only to Peninsular Malaysia—any inconsistency between the PDA and the GSA, the GSA shall prevail.
Cecil further argued that if PETRONAS has to be licensed under Section 11 of GSA to supply gas in Peninsular Malaysia, despite the PDA, how can PETRONAS maintain that it has a more privileged position in Sarawak, that it does need a license in Sarawak?
He added, therefore, that PETRONAS needs a license under the DGO, which is the legislation governing the distribution of gas in Sarawak, to undertake the distribution of gas in Sarawak. — DayakDaily
