Petronas, Petros give courts a miss, sit down to discuss Sarawak oil & gas activities

KUALA LUMPUR: After initially opting for a resolution at the courts, Petroliam Nasional Bhd (Petronas) and the Sarawak state government have now taken to the negotiation table as the national oil company holds active discussions with Petroleum Sarawak Bhd (Petros) to come up with a working arrangement that is acceptable for all parties in relation to oil and gas (O&G) activities in Sarawak.
Asked if Petronas will be looking at other legal avenues following the Federal Court's dismissal of its application for leave to commence legal proceedings against the Sarawak state government, Petronas president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin said that national oil company is engaging with Petros and hopes to find resolutions that way.
Petronas and Petros have until the end of next year to firm up arrangements, which include matters such as licensing.
On increasing the royalty payment to oil-producing states to 20% from 5% now, Wan Zulkiflee said discussions on this have been between the state and federal governments.
"We are leaving the discussions to the federal and state governments. We will be guided by the outcome of those discussions. Of course we will provide input, implications of decisions or scenarios but we are not involved in the discussions," he told reporters in conjunction with the announcement of the group's first-half financial results on Thursday.
"However, for Sarawak, we are in active discussions with Petros, (as) that is the nominated entity by the Sarawak state government (to come up with a) working arrangement," he explained.
The Sarawak state government has been regulating oil and gas activities in the state since July 1. It has given oil and gas players to operate their business as usual until the end of 2019, while working to comply with the state's new laws on the O&G sector.
Wan Zulkiflee said for production sharing contracts, the agreements were made with Petronas and will remain that way.
Besides Sarawak, Petronas has not engaged in discussions with any other oil-producing state.