Petronas seeks clarity over partnership with Sarawak’s new oil firm Petros

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The Malaysian state of Sarawak, which set up its own oil and gas extraction company last month in an unprecedented challenge for the country’s quasi-oil monopoly firm Petronas, has left it vague how the future cooperation with Malaysia’s government-owned oil giant will look like.

The new company, Petroleum Sarawak Berhad, or Petros, has been officially launched “to enable Sarawak to actively participate in the extraction of oil and gas in Sarawak,” while the state is pursuing to collect a 20-per-cent royalty from Petronas instead of the current five per cent for the latter’s activities in Sarawak.

Petros has been one of the first initiatives of Sarawak’s new chief minister Amar Abang Johari Openg, who took office on January 13, 2017. According to him, Petros has “the same status as Petronas in the exploration of oil and gas resources in the state.”

He added that Petros will be an investor and cooperate with Petronas, particularly in upstream activities and a new pipeline, but did not provide more details. Newly appointed board members of Petros are experienced industry managers from Petronas and from Shell, he said, while a headhunt for a CEO and other key management positions has been started.

However, Petronas president and group CEO Wan Zulkiflee bin Wan Ariffin said it was still unclear how the new oil and firm in Sarawak will impact the activities of Petronas, which has long operated in Sarawak and garnered the bulk of its Malaysian revenue from gas fields there.

He said that he welcomed any involvement by state government entities in the oil and gas business, but this had to be within the regulations of the country’s Petroleum Development Act (PDA).

“Under the PDA, Petronas is the custodian and manager of the oil and gas resources in Malaysia,” he said at a press conference on Petronas’ mid-year results recently.

The Petronas CEO added that a partnership with Petros could be similar to other Petronas partnerships, either as service providers or as a partner under a production sharing contract, and that discussions with the state government in Kuching were ongoing.

Observers say that the launch of Sarawak’s own oil company was a result of growing dissatisfaction in both the Sarawak and Sabah governments over low oil royalties from Kuala Lumpur-headquartered Petronas, as well as little say in Petronas’ business decisions and hiring strategy in both states.

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Reading Time: 2 minutes

The Malaysian state of Sarawak, which set up its own oil and gas extraction company last month in an unprecedented challenge for the country’s quasi-oil monopoly firm Petronas, has left it vague how the future cooperation with Malaysia’s government-owned oil giant will look like.

Reading Time: 2 minutes

The Malaysian state of Sarawak, which set up its own oil and gas extraction company last month in an unprecedented challenge for the country’s quasi-oil monopoly firm Petronas, has left it vague how the future cooperation with Malaysia’s government-owned oil giant will look like.

The new company, Petroleum Sarawak Berhad, or Petros, has been officially launched “to enable Sarawak to actively participate in the extraction of oil and gas in Sarawak,” while the state is pursuing to collect a 20-per-cent royalty from Petronas instead of the current five per cent for the latter’s activities in Sarawak.

Petros has been one of the first initiatives of Sarawak’s new chief minister Amar Abang Johari Openg, who took office on January 13, 2017. According to him, Petros has “the same status as Petronas in the exploration of oil and gas resources in the state.”

He added that Petros will be an investor and cooperate with Petronas, particularly in upstream activities and a new pipeline, but did not provide more details. Newly appointed board members of Petros are experienced industry managers from Petronas and from Shell, he said, while a headhunt for a CEO and other key management positions has been started.

However, Petronas president and group CEO Wan Zulkiflee bin Wan Ariffin said it was still unclear how the new oil and firm in Sarawak will impact the activities of Petronas, which has long operated in Sarawak and garnered the bulk of its Malaysian revenue from gas fields there.

He said that he welcomed any involvement by state government entities in the oil and gas business, but this had to be within the regulations of the country’s Petroleum Development Act (PDA).

“Under the PDA, Petronas is the custodian and manager of the oil and gas resources in Malaysia,” he said at a press conference on Petronas’ mid-year results recently.

The Petronas CEO added that a partnership with Petros could be similar to other Petronas partnerships, either as service providers or as a partner under a production sharing contract, and that discussions with the state government in Kuching were ongoing.

Observers say that the launch of Sarawak’s own oil company was a result of growing dissatisfaction in both the Sarawak and Sabah governments over low oil royalties from Kuala Lumpur-headquartered Petronas, as well as little say in Petronas’ business decisions and hiring strategy in both states.

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