By Dorcas Ting
KUCHING, June 11: In a landmark legal case that could redefine energy governance in Malaysia, the Sarawak government has taken national oil company Petroliam Nasional Berhad (PETRONAS) to court over what it describes as “unconscionable and unlawful” conduct in its gas supply operations within the State.
The dispute centres on Sarawak’s assertion that PETRONAS violated State laws and constitutional rights by continuing to supply gas without a valid license under the Sarawak Distribution of Gas Ordinance (DGO) 2016.
This is despite amendments made in 2023 that designated Petroleum Sarawak Berhad (PETROS) as the sole gas aggregator.
The Sarawak’s legal team cited the 1963 Borneo States (Legislative Powers) Order, which affirms Sarawak’s authority over gas distribution.
During today’s High Court hearing, Sarawak Legal Counsel Dato’ Sri JC Fong challenged PETRONAS’ claim on a bank guarantee issued by Maybank Islamic Bhd under the 2019 Sarawak Gas Sales Agreement (SGSA).
Fong argued that the company’s actions violated both contractual obligations and Sarawak’s constitutional rights.
At the heart of the legal argument is Article 24.2 of the Sarawak Gas Sales Agreement (SGSA), which prohibits actions that contravene Malaysian law.
Fong asserted that PETRONAS’ continued operations without a State license are inconsistent with this clause and undermine Sarawak’s regulatory regime.
“The Distribution of Gas Ordinance 2016 is not just another statute—it forms the foundation of Sarawak’s gas distribution framework,” he told Judicial Commissioner Datuk Faridz Gohim Abdullah.
He further cited the 1963 Borneo States (Legislative Powers) Order as a constitutional guarantee of Sarawak’s legislative authority, calling it a permanent safeguard under Article 95C(1)(a) of the Federal Constitution.
The State’s legal team also pointed to long-standing Federal recognition of Sarawak’s regulatory rights, including the deliberate exclusion of Sarawak from Federal energy laws, a 2021 exemption that removed gas distribution from the Petroleum Development Act (PDA), and consistent parliamentary practices affirming this arrangement.
In response to PETRONAS’ claim that annual payments and binding agreements imply relinquishment of State rights, Fong said such interpretations lack evidentiary support and should be struck from the record.
He further argued that licensing violations cannot be dismissed as inconsequential, describing them as serious breaches of Sarawak’s regulatory framework and constitutional mandate.
With no constitutional challenge raised by federal counsel against the DGO, Fong urged the Court to act promptly to safeguard the Sarawak’s jurisdiction.
“PETRONAS’ conduct raises fundamental questions about the protection of Sarawak’s constitutional powers,” he concluded.
The case will resume on Aug 25 and 26. – DayakDaily
