The tug-of-war between Sarawak and Putrajaya over oil and gas revenues refuses to abate. At the heart of the dispute lies the question: who truly benefits from the vast resources lying beneath Sarawak’s soil and sea?
Former Sarawak attorney-general and state legal adviser JC Fong recently reignited the debate when he alleged that 95% of revenue generated from Sarawak’s oil and gas resources had gone to Petronas, leaving the state with a mere RM49 billion across nearly 50 years. To many Sarawakians, the figure was more than an accounting number; it was a symbol of decades of being short-changed while their land fueled the federal coffers.
Prime Minister Anwar Ibrahim countered, however, that Sarawak had in fact received far more — more than RM96 billion in financial benefits from the oil and gas sector as of 2024. This, he argued, comprised RM49 billion in cash payments, RM28.6 billion in dividends from Sarawak’s shareholding in Malaysia LNG Sdn Bhd, and RM18.66 billion in sales tax. To Putrajaya, this was proof that Sarawak had not been sidelined, but rather adequately compensated.
Yet the figures tell only part of the story. For Sarawak, the deeper grievance is not merely about how much money it has received, but whether it has ever had genuine control over its own resources.
Transparency Demands and Counter-Arguments
Sarawak United People’s Party assemblyman Wilfred Yap has demanded that Petronas open its books to independent scrutiny. If Petronas has nothing to hide, he argues, then transparency will only build trust. Without it, Sarawakians will remain sceptical of claims that “95% vanishes into costs.”
Petronas’s defenders, including former economy minister Rafizi Ramli and Miri MP Chiew Choon Man, insist that the 95% figure is misleading. They argue that under the production sharing contract (PSC) framework, the bulk of revenue is absorbed by high development costs, offshore risks, and profit-sharing with international partners.
According to Rafizi, Petronas’s profit margins are only around 10% to 15% after accounting for costs and dividend payouts. Chiew elaborates that 70% to 80% of revenues go directly into operations. Out of the balance, 5% each goes to Sarawak and the federal government, with the remainder shared among Petronas and its partners.
From Putrajaya’s perspective, the grievance is exaggerated. From Kuching’s perspective, the grievance is existential.
A Royal Commission of Inquiry?
Former law minister Zaid Ibrahim has suggested a Royal Commission of Inquiry (RCI) into Petronas’s management of Sarawak’s resources. But he warned that accountability must cut both ways. If Sarawak insists on transparency from Petronas, then Sarawak’s own leadership must also be scrutinised.
He pointed out that despite trillions of ringgit generated from oil, timber, and palm oil, Sarawak’s rural and indigenous communities remain among the poorest in Malaysia. Leakages of up to 60% in state projects, opaque Petros contracts, and unaddressed land issues have deprived Sarawakians of the wealth that was rightfully theirs.
This dual critique complicates the debate. For if Petronas is guilty of centralising wealth, Sarawak’s elites are equally guilty of mismanaging what little trickled down.
The Limits of Negotiation
Can such a dispute be resolved by negotiation and compromise?
On one hand, history suggests that some progress is possible. The 2018 decision to allow Sarawak to collect a 5% sales tax on petroleum products was one such concession. More recently, Sarawak regained control of gas distribution through Petros, an empowering step that allows the state to direct resources into people-centric programmes.
On the other hand, the structural imbalance remains. As long as Petronas is the national oil company, directly tied to federal revenues, it is unrealistic to expect Putrajaya to surrender a significant slice of control. In fact, Petronas is more than an energy corporation; it is the financial lifeline of the federal government.
Thus, while negotiation may yield incremental gains, it is unlikely to resolve Sarawak’s core demand: to be master of its own resources.
Contest, Not Compromise?
This leads to the uncomfortable possibility that the Petros vs Petronas conflict is less a matter of negotiation and more a matter of political contest.
If Sarawak continues to demand more by arguing and negotiating, it will only secure minor concessions. But if it truly wants to reshape the balance of power, it must expand its influence beyond Borneo.
Put simply, Sarawak cannot fight Petronas without contesting Putrajaya itself.
Expanding into Sabah and Semenanjung
For Sarawak to tip the scales in its favour, it must look beyond state rights and enter the broader national political arena. That means actively shaping the electoral outcomes not just in Sarawak, but in Sabah and Semenanjung Malaysia.
Sabah as a Natural Ally
Sabah shares Sarawak’s grievances over resource exploitation. If Sarawak and Sabah can form a united Bornean bloc, they would hold enormous leverage in Parliament. Already, Gabungan Parti Sarawak (GPS) and Gabungan Rakyat Sabah (GRS) collectively hold more than 40 seats. Together, they could decide who governs Putrajaya.
Influence in Semenanjung Politics
To date, Sarawak has been content to play kingmaker. But to alter the Petros-Petronas equation, it must go further. By contesting parliamentary seats in Peninsular Malaysia — or at least forming durable alliances with Peninsular parties — Sarawak could become a decisive power centre. The dispute over oil and gas wealth would then be reframed not as a grievance of one state, but as the policy platform of a national coalition.
From Negotiation to Bargaining Power
Negotiation is only effective when backed by strength. If Sarawak can prove that it holds the keys to federal stability, its bargaining power over resource control will expand dramatically.
What Is at Stake
At the heart of this struggle is more than just money. JC Fong noted that if Sarawak’s gas roadmap is implemented successfully, it could contribute RM130 billion annually to Malaysia’s GDP. Such figures are not merely technical — they shape the destiny of the federation itself.
Yet Sarawakians remain haunted by a painful paradox: despite their land being the goose that lays Malaysia’s golden eggs, their villages remain poor, their schools underfunded, and their roads unpaved.
The Petros vs Petronas dispute is not merely about numbers; it is about dignity, respect, and autonomy.
Conclusion: Negotiation or Power?
The Petros vs Petronas conflict has now lasted nearly five decades. Transparency may help, negotiations may buy time, and inquiries may uncover truths. But these steps will not alter the central imbalance of power.
Some disputes are resolved by agreement. Others by contest. The Sarawak oil and gas dispute appears to be the latter.
If Sarawak truly wants a settlement in its favour, it must stop pleading and start building power — in Sabah, in Semenanjung, and ultimately in Putrajaya itself.
For only then will Sarawak be able to decide, on its own terms, how its oil and gas wealth is used — not just for the enrichment of elites, but for the uplift of its people.
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