by DayakDaily Team
KUCHING, March 5: The Federal and Sarawak governments reaffirmation of Petroleum Development Act 1974’s (PDA) validity, and acknowledgement of Petroleum Sarawak Bhd (Petros) as the State’s sole gas aggregator are viewed as a tentative “step in the right direction”, says Bank Muamalat Malaysia chief economist Afzanizam Rashid.
However, he pointed out that foreign investors will want more clarity on the regulatory framework governing oil and gas (O&G) projects in Sarawak, even as the Federal and Sarawak governments have reached amicable agreements on this.
According to a news report by Free Malaysia Today (FMT) today, he said the details of its implementation are still scant at the current juncture.
“In any negotiation, it would involve making some concessions so that both parties will reach a common goal and can work together,” Afzanizam told FMT.
Afzanizam further shared that O&G companies, both local and international, would understandably prefer more certainty with regards to projects in and offshore Sarawak.
“It is paramount for investors to understand the parameters, especially in areas which require approval from the relevant authority. This is especially true when competition to attract foreign investors goes beyond tax incentives. It also includes the degree of bureaucracy.
“Therefore, speedier approvals and how soon a project can be started is equally important and that would mean investors want greater clarity from the authorities,” he was cited by FMT as saying.
He also said the Federal government recognises Petros’ establishment to facilitate Sarawak’s own gas exploration and distribution initiatives, with Petros granted authority as the State’s sole gas aggregator.
However, there are still ongoing ambiguities on the extent to which the PDA 1974 applies to Sarawak.
Further complicating the matter, Sarawak also insists that all oil and gas companies operating in the State must comply with Sarawak laws, including those relating to land use, state sales tax, and the Oil Mining Ordinance.
Amid this tussle over Sarawak’s gas resources, international oil giant Shell obtained an interim order in January from the Kuala Lumpur High Court to temporarily suspend payment on natural gas supplies from the Bintulu gas facility in Sarawak.
The High Court granted an interim injunction in favour of Shell MDS (Malaysia) Sdn Bhd (SMDS), temporarily suspending payment obligations for natural gas supplies in Bintulu.
According to previous reports, the decision comes amid an ongoing legal dispute between Petroliam and Petros.
The dispute arose after SMDS found itself caught between two conflicting gas supply agreements (GSAs) — one signed with Petronas on July 17, 2020, and another with Petros on August 16, 2024.
SMDS argued that the conflicting agreements put the company at risk of double payments and potential operational disruptions at its Bintulu facility. – DayakDaily
