PETRONAS remains in talks with Sarawak oil company Petroleum Sarawak Bhd (Petros) over control of the state’s oil resources, said the national oil company’s president and group chief executive officer Wan Zulkiflee Wan Ariffin.

“We are continuing our engagement with Petros. We are continuing our engagement with all our stakeholders in all the states we have operations in,” he said during the group’s full-year financial performance briefing today.

In August, Wan Zulkiflee had said Petronas was in talks with Petros to develop a working arrangement acceptable to all parties in relation to oil and gas activities in Sarawak.

Since July 1, last year, the state government has been regulating oil and gas activities via its state equivalent of Petronas.

Oil and gas players had been given a grace period until the end of this year to operate their businesses as usual, while also working to comply with Sarawak’s new laws on the industry. 

The Sarawak government launched Petros in March last year ahead of the 14th general election.

Petros was given full regulatory authority over upstream and downstream aspects of the industry in Sarawak, and all individuals and companies wishing to do business there, including Petronas, had to acquire the necessary licences, permits, leases and approvals from the state government.

Prior to this, Petronas, vested with the powers under the Petroleum Development Act 1974 (PDA), dictated all aspects of the oil and gas industry in the state.

Petronas then sought a court declaration to rule it was the exclusive owner of all petroleum resources in Malaysia.

The Federal Court dismissed Petronas’ application in June last year. 

Sarawak had also demanded a higher share of royalties as an oil-producing state.

On whether this would impact Petronas’ balance sheet, Wan Zulkiflee said it would wait for the outcome of discussions on the Malaysia Agreement 1963 (MA63) between the federal and state governments.

“I think this comes under the MA63 discussions. We will see what the outcome of the discussions is.” – March 8, 2019.