Much has been debated regarding the recent reports of Petros preparing to take over PETRONAS’ role in all oil and gas-related transactions in Sarawak, as per Sarawak’s Minister of Utility and Telecommunications, YB Dato' Sri Haji Julaihi Narawi’s announcement regarding the transfer of roles beginning 1st July 2024, under the Distribution of Gas Ordinance 2016 (DGO 2016). Petros will manage all activities related to the procurement, supply, and distribution of natural gas in Sarawak, while an agreement between Petros and PETRONAS regarding this transition is to be expected.
However, what was most often conveniently overlooked was the important fact that the establishment of PETRONAS was partly driven by the desires of the Sarawakians to manage their petroleum industry. In a recent book launch, Tengku Razaleigh, or known as Ku Li, shed light on this piece of information while reflecting on his years as part of PETRONAS’ founding members.
While noting that the change in oil and gas authority from PETRONAS to Petros seemed controversial as it implied that Sarawak no longer wanted PETRONAS to continue management of oil and gas resources, he stressed that PETRONAS’ creation was based on a proposal by Sarawak’s former Chief Minister, the late Tun Rahman Ya’kub, who advocated for PETRONAS to be owned by Malaysians. Ku Li recalled that after PETRONAS was established under the Petroleum Development Act 1974, negotiations were held with the British and Shell regarding oil and gas, which saw Malaysia retaining full authority and control over all petroleum resources on its territory and is able to exercise its jurisdiction. The states of Malaysia then agreed to share oil and gas rights, leading to a 5 percent royalty based on profits, and was beneficial to the entire country.
Over time, Sarawakians have been notably vocal regarding their wishes to gain increasing control and independence from Federal powers, with the East Malaysian states frequently citing the signing of the Malaysia Agreement 1963, which then formed the Federation of Malaysia. While some are pinning it down to semantics and going on the basis of ‘separation’ instead of ‘secession’, the principal behind it remains that some political factions are out to prove that Sarawakians are unhappy with the state of federalism. The increased push for the Sarawakian state-level authority in areas such as health, education, and resources, were initially under the purview of the Federal Government, but while the enactment of the DGO 2016 was hailed as a ‘significant economic victory’ for the State Government, it is in essence, contradictory to the spirit of the Federation of Malaysia.
Seceding, nor any form of separation from the Federal Government would not necessarily mean a better outcome for the state, as the late Tun Pehin Sri Haji Abdul Taib bin Mahmud was quoted as saying that Sarawak need not worry about other critical matters related to sovereignty, such as defence and internal security, when being part of the Federation. Additionally, the road to secession would only be a possibility if the East Malaysian states obtained support from other states and from the Conference of Rulers, according to the Federal Constitution.
As the Sarawak state begins to chart its own course in the oil and gas industry, noting the history and original mandate given to the Federal Government is equally important, so as not to lose sight of the main objective for any regulatory body tasked to manage Sarawak’s oil and gas resources. It would be beneficial for Petros to recognise the value of continued collaboration with the national oil company, to build on existing success, and enhance Sarawak’s economy through conducive business and investment environments, as part of a larger objective to strengthen Malaysia’s oil and gas industry and overall economic growth.
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