Petronas warned of July 1 being the cut-off date

EVERYBODY knows that national oil company Petroliam Nasional Bhd (Petronas) has been losing its clout in Sarawak in the last few years. It came to light in 2016 when Sarawak issued a moratorium on all new applications for work permits for staff outside the state, including Petronas. It was reported that the state government’s decision was prompted by complaints from Petronas officers from Sarawak whose services were terminated or retrenched because of the downturn in the oil price. In April last year, Sarawak announced the setting up of Petroleum Sarawak Bhd (Petros), a company that would enable Sarawak to actively participate in oil and gas (O&G) extraction activities in the state. Petronas since then has said that it has had a series of discussions with the state, but there is not much progress. In the last one year, Sarawak has embarked on several initiatives that would see Petros come into force from July this year. The grim reminder came in an official letter from Sarawak Attorney General (AG) Datuk Talat Mahmood Abdul Rashid to Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin on June 13. The letter stated that starting from July 1, the state government would regulate the downstream and upstream O&G industry in accordance to state laws, including the Oil Mining Ordinance 1958 (OMO), the Land Code of Sarawak and the Gas Distribution Ordinance 2016. The letter stated that Petronas has to comply with the state laws for the exploration, prospecting and mining of petroleum including natural gas, and the distribution of gas within the state. “Any such activities and the use or occupation of state land, both onshore and offshore, carried out without the required licences or leases issued under the state laws after July 1 would be deemed illegal and appropriate action would be taken,” the letter stated. Petronas was told to liaise “immediately” with the Sarawak stateowned oil exploration company Petros to discuss arrangements on the exploration and prospect of mining petroleum and natural gas in the state. The letter also stated that the state government would be holding a dialogue session with all persons or companies involved in upstream and downstream O&G activities in Sarawak. Petronas responded on May 22, more than a month after the issuance of the letter from the Sarawak AG and two weeks into the formation of a new government at the federal level under Pakatan Harapan. Petronas issued a lengthy letter stating that the company disagreed with the state on its authority over the exploration and mining activities of O&G resources. “Petronas is not required to apply for any such licences or leases from the state under the OMO ... there is no requirement for Petronas to liase with Petros. In all instances, Petronas fully reserves its rights in respect of the foregoing,” the three-page letter ended. Petronas, in essence, disagreed with Sarawak’s contention that the