Petros assurance rings hollow amid challenge to Petronas, says Zaid

Former law minister Datuk Zaid Ibrahim (left) says Sarawak premier Abang Johari Openg’s (right) assurance that Petros will not undermine Petronas rings hollow while the state oil company seeks a bigger role in the gas business and Sarawak continues to question the federal legal framework governing petroleum.— Picture composite via Facebook

By Malay Mail

First Published: Sunday, 04 Oct 2026 4:02 PM MYT

KUALA LUMPUR, Oct 4 — Former law minister Datuk Zaid Ibrahim says Sarawak premier Abang Johari Openg’s assurance that Petros will not undermine Petronas rings hollow while the state oil company seeks a bigger role in the gas business and Sarawak continues to question the federal legal framework governing petroleum.

Writing on Facebook, Zaid said the central issue was Petros’s desire to take over the gas aggregator role currently performed by Petronas in Sarawak.

That role is integral to the gas value chain, he said, and cannot be transferred without affecting Petronas’s commercial position. He estimated Petronas’s Sarawak gas business at about RM10 billion annually.

Zaid said the impact was already visible in the confusion created by competing claims over payments. He pointed to the Shell dispute, saying roughly RM80 million a month had been withheld while the parties disputed who should be paid.

Abang Johari had said earlier that Petros’s expansion was not designed to displace Petronas. He said Sarawak would continue to work with Petronas while developing its ability to process gas locally and move into higher-value downstream activities.

His comments followed Petros’s joint development agreement with Norwegian company Höegh Evi for a Kuching LNG regasification terminal, which is expected to be operational by 2029. Sarawak is also exploring small-scale LNG facilities and carbon capture, utilisation and storage projects.

Zaid said those ambitions need not be incompatible with Sarawak’s development, but the order of discussion mattered. The state must first recognise Petronas’s rights over Malaysia’s oil and gas under the Petroleum Development Act 1974, he said.

He noted that Sarawak was challenging the application of the PDA and other federal petroleum laws in the state. That, he said, was a challenge to the legal foundation of Petronas, rather than a routine negotiation over commercial participation.

Once the legal position is accepted, Zaid said, the parties can negotiate a role for Petros that addresses Sarawak’s circumstances without dismantling key functions of the national oil company.

He warned that the consequences would extend beyond Sarawak if other producing states pursued similar claims. Petronas would lose the scale that supports its national role, including its ability to invest and contribute to federal revenue, he said.