Who Owns Malaysian Oil?

Oil demand may be set to peak by the late 2030s, but that doesn't make it any less of a hot commodity. In Malaysia, national oil company Petroliam Nasional (Petronas) is pulling out all stops to claim exclusive ownership over every drop, including resources in Sarawak state.

Earlier this month, Petronas revealed it had filed a Federal Court application seeking an official declaration of ownership under the Petroleum Development Act 1974 (PDA). It backed the application with a claim that Federal Court determination will "help provide clarity on its rights and position under the PDA".

Petronas seeks Sarawak goldmine

The application sparked nationwide controversy, as Sarawak was recently granted complete mining rights over its territory. This was followed up with the formation of Petros, a state-owned oil and gas exploration firm created to help Sarawak earn its own revenues as opposed to relying on funding from Petronas, which currently operates 60 oil and gas fields in the state.

While Petronas maintained it has Sarawak's best interests at heart, the application was seen by many as a blatant cash grab.

"Petronas remains committed to support Sarawak's aspiration to participate in the oil and gas industry in the state, for as long as it is within the framework of the PDA," it said.

Sarawak safeguards oil reserves

As of now Petros has managed to retain control of its reserves, with Malaysia's top court turning down the Petronas application on June 21. The rejection represents a major win for the oil-rich state, which would lose out on big revenues if the country's national oil company was to claim ownership. On the contrary, Petronas will now have to seek permission from Sarawak's government to be involved in any future oil and gas activities.

“Any law passed by Parliament such as the PDA cannot override the rights enshrined in the Malaysia Agreement, which is an international agreement, and the Sarawak Constitution," asserts senior lawyer Robert Lau Hui Yew. “This is about Sarawak’s rights over its own territories and resour­ces."

From climate change to political corruption, Malaysia's oil and gas industry isn't short on headlines. For a closer look at the complex challenges faced by oil-producing nations across the globe don't miss 'Preparing for change: Positioning the Refining Industry to Tackle the IMO’s New Sulphur Regulations'.