Sarawak-Petronas oil dispute: Visionary leadership needed to achieve ‘win-win’ solution (VIDEO)

KUALA LUMPUR, Dec 10 — Only visionary leadership can resolve the ongoing dispute between Sarawak and Petronas over the right to oil and gas (O&G) resources in and around the state, Tan Sri Tengku Razaleigh Hamzah said.

For over the past year, Sarawak has been pushing for a deal with Petronas that would make Petroleum Sarawak Berhad (Petros) the sole gas aggregator in the state, according to a report published today in Free Malaysia Today.

Last week, Sarawak Premier Tan Sri Abang Johari Openg refuted claims that his state was acting greedily, saying that it was simply exercising its “constitutional right” to distribute gas which belongs to the state.

Previously, he had said that Sarawak was prepared to fight any party that “disrespects” its “rights” in court.

Despite this, there are signs that both sides were willing to come to a compromise.

Last month, Prime Minister Datuk Seri Anwar Ibrahim expressed he was open to negotiations based on trust, understanding, and mutual respect.

“(Malaysia has) a federal system. We navigate, we negotiate, but we draw the line (if the need arises),” Anwar told FMT when he was speaking about federal-state relations.

Deputy Prime Minister Datuk Seri Fadillah Yusof, a Sarawakian, said he hoped that a mutually beneficial outcome would be reached, one that benefits both the state and the nation.

“What we want to achieve is a ‘win-win’ arrangement for both the state and the federal government,” he said.

Tengku Razaleigh argued that a win-win federal-state partnership, grounded in integrity and a commitment to equitable wealth distribution among all Malaysians, existed when Malaysia’s oil and gas industry first came into being in 1974.

He said that every state has benefited from public goods like healthcare, education, and national defence, and today’s leaders must recapture this spirit and reaffirm their commitment to these principles.

The Petroleum Development Act 1974 (PDA) grants Petronas the exclusive right to all onshore and offshore petroleum resources throughout the country, including Sarawak.

Petronas has exercised this right unchallenged for the last 50 years.

In recent years, however, Sarawak has taken various steps to assert its claim to these resources, including passing the Distribution of Gas Ordinance (DGO) in 2016 and establishing Petros the following year.

Sarawak argues that its entitlement to O&G resources is based on two pieces of legislation: the Sarawak (Alteration of Boundaries) Order in Council 1954, which extended the state’s boundaries to include the continental shelf off its shores, and the Oil and Mining Ordinance 1958 (OMO), which pre-dates the PDA and grants the state rights to all O&G resources within those boundaries.

While legal experts have challenged these claims, Sarawak has remained adamant in seeking that Petros take control over the buying, selling, price-fixing, supply, and distribution of natural gas in the state.

Sarawak’s motivations are clear: it wants to generate more revenue and ensure that 30 per cent of gas is available for domestic use by 2030, up from the current 5 per cent. The state also claims that it has not received its fair share of the benefits, accusing the federal government of favouring Peninsular Malaysia.

Tengku Razaleigh called on both federal and state leaders to rise above the dispute and emulate the foresight of their predecessors in the 1970s, who put the current structure in place.

He highlighted that the federal government, under then Prime Minister Tun Abdul Razak Hussein, negotiated with states for the nationalisation of O&G resources and the creation of Petronas. Sarawak’s chief minister at the time, Tun Abdul Rahman Ya’kub, played a key role in these negotiations, which were conducted in good faith and with a shared interest in prioritising national needs.