Latest news with #DistributionofGasOrdinance
Borneo Post
11-06-2025
- Business
- Borneo Post
Petros vs Petronas: Failure to comply with DGO constitutes ‘unconscionable conduct', court told
Fong (right) exits the courtroom after the proceedings. KUCHING (July 11): The Distribution of Gas Ordinance (DGO) 2016 is a written law passed by the Sarawak Legislature and is therefore a written law in force in Malaysia, the High Court here was told today. State Legal Counsel Dato Sri JC Fong said Petroliam Nasional Berhad's (Petronas) failure to comply with the DGO and continuing to supply gas without a licence issued under the DGO, and then preventing other licensed gas suppliers or producers from selling gas to Petroleum Sarawak Berhad (Petros) as the state's gas aggregator, constitutes 'unconscionable conduct' on the part of national oil firm. In his submission to the court in the lawsuit brought by Petros against Petronas, Fong, appearing for the Sarawak government, said Petros is invoking the court's inherent jurisdiction to declare that the demand by Petronas on a bank guarantee issued by Maybank Islamic Berhad is 'unconscionable, unlawful, null and void'. He said all parties, including the federal and Sarawak governments, have agreed that 'unconscionability' is a ground to restrain a beneficiary of a bank guarantee or performance bond from making a call on a bank guarantee or performance bond. 'In this case, the underlying contract is the Sarawak Gas Sales Agreement (SGSA) dated Dec 30, 2019. 'The bank guarantee was issued pursuant to this underlying contract to secure payment for gas supplied by Petronas to Petros. Petronas is the beneficiary of the bank guarantee. 'Petronas did not sign the SGSA because the PDA (Petroleum Development Act) 1974 guarantees the role of Petronas nationwide,' said Fong. He said Petronas entered into the SGSA because it had sold and transferred its business of supplying gas to customers in Bintulu and Miri to Petros, and is selling gas to Petros to enable the state-owned company to fulfil its obligations to its customers who were previously customers of Petronas. 'This SGSA has nothing to do with the PDA or the business of Petronas under the PDA, which had been sold and transferred to Petros. There is nothing in the SGSA which even suggests that Petronas entered into this SGSA in pursuance of the PDA. 'It was purely a commercial contract based on purely commercial consideration, but the mode of performance thereof must not contravene any written law in force in Malaysia.' Fong said for Petronas to consciously disobey, disregard, and disrespect the DGO amounts to a contravention of an important constitutional safeguard and an attempt to undermine the Sarawak government's executive authority under Article 80(2) of the Federal Constitution. 'This itself is clearly unconscionable conduct which this honourable court should not condone at all. 'Consequently, the calling upon the bank guarantee by Petronas, in these circumstances to obtain payment from Petros for gas supplied in contravention of the DGO and also in breach of Article 24.2 of the SGSA, is clearly unconscionable and unlawful,' he said. Article 24.2 of the SGSA stipulates that 'Nothing in this Agreement shall entitle the Parties (i.e. Petronas and Petros) to exercise the rights, privileges and powers conferred on it in a manner which would contravene any written law for the time being in force in Malaysia.' Petros is seeking a court order for the return of RM7.95 million paid to Petronas under the bank guarantee. The conflict began in October 2024 when Petronas called on the bank guarantee in response to a RM28.1 million demand from Petros related to gas supply. Petros then initiated legal proceedings against Petronas and sought an injunction to stop the disbursement of the funds. However, the injunction request became academic after Maybank Islamic Berhad released the payment to Petronas. Petronas was represented by counsels Datuk Dr Cyrus Das and Khoo Guan Huat, while Petros was represented by counsels Tan Sri Cecil Abraham, Sim Hui Chuang and Lim Lip Tze. The proceeding was heard before Judicial Commissioner Datuk Faridz Gohim Abdullah, who fixed Aug 25 and 26 for the next hearing. DGO Distribution of Gas Ordinance JC Fong Petronas Petros
Borneo Post
28-05-2025
- Business
- Borneo Post
Sarawak exempted from key PDA provisions under joint declaration, says Premier
Abang Johari said the joint declaration affirms the recognition of Sarawak's executive authority over the distribution of gas within its territory and removes any perceived regulatory uncertainty. – Sarawak Public Communications Unit photo KUCHING (May 28): Sarawak is exempted from certain provisions under the Petroleum Development Act 1974 (PDA 1974) following the signing of the joint declaration between the federal and Sarawak governments on May 21, 2025, said Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg. In his winding-up speech at the Sarawak Legislative Assembly sitting here today, Abang Johari said the joint declaration affirms the recognition of Sarawak's executive authority over the distribution of gas within its territory and removes any perceived regulatory uncertainty. 'This joint declaration reaffirms that Federal and State laws on distribution of gas shall be respected by all persons undertaking the distribution and supply of gas in Sarawak,' he said. Abang Johari also pointed out that Sarawak is not subject to certain requirements under the PDA 1974. 'Federal laws like the Gas Supply Act 1993 do not apply to Sarawak and Sarawak is exempted from the requirements imposed by Section 6(1) and (3) of the Petroleum Development Act 1974 to obtain the permission of the Prime Minister to undertake distribution of gas business in Sarawak,' he said. The Premier extended his appreciation to Prime Minister Dato' Seri Anwar Ibrahim for his leadership and commitment in resolving issues between Petros and Petronas, saying the joint declaration reflected the federal government's recognition of Sarawak's aspirations. 'For the record in this august House, I wish to quote the joint declaration,' said Abang Johari, before reading the full text, which among others confirms the appointment of Petros as the gas aggregator in Sarawak effective March 1, 2025. Under the declaration, Petros' appointment under Section 7A of the Distribution of Gas Ordinance (DGO) 2016 is to be respected by all parties undertaking the business of gas marketing, distribution, and supply in the state. The document also states that Petros and Petronas will cooperate on projects to meet Sarawak's domestic gas needs, including implementing the 1.2 billion standard cubic feet per day (Bscf/d) plan under the Sarawak Gas Roadmap and exploring green energy, hydrogen, and power generation initiatives. 'All discussions on collaborations must be subject to technical and commercial viability. For the purpose of future projects in the State of Sarawak involving international partners, Petronas shall cooperate with Petros,' the declaration read. Abang Johari said with Sarawak's legislative and executive authority over gas distribution confirmed, the state government will ensure regulatory clarity and stability to support industry growth. 'Sarawak will implement plans to increase gas production within its territory, sustainable utilisation of gas by industries, and for the production of clean energy,' he said, adding that this would provide investment opportunities in upstream, midstream and downstream activities. He said these initiatives include the development of carbon capture and storage (CCS) sites to tap into Sarawak's potential gas reserves off its western coast and to support the planned Kuching Low Carbon Gas Hub. 'All these projects will increase the GDP for Sarawak by RM120 billion and create 185,000 high-income jobs,' he said. He also reiterated that Petros, as the state's gas aggregator and resource manager, will play a central role in expanding gas infrastructure, ensuring adequate supply for industrial and domestic use, and developing CCS sites aligned with the state's energy agenda. abang johari DUN joint declaration oil and gas PDA
Borneo Post
28-05-2025
- Business
- Borneo Post
Sarawak gears up to be Asean aerospace hub, plans industrial park
Awang Tengah said the development of Aerospace Industrial Park will support high-value aerospace manufacturing, aircraft maintenance, repair and overhaul, and sustainable aviation fuel research. – Bernama file photo KUCHING (May 28): Sarawak is gearing up to become a competitive aerospace hub in the Asean region with plans to establish an Aerospace Industrial Park. Deputy Premier Datuk Amar Awang Tengah Ali Hasan said the development of this industrial park will support high-value aerospace manufacturing, aircraft maintenance, repair and overhaul, and sustainable aviation fuel research. 'We are partnering with Airbus to expand the aerospace industry, create high-value job opportunities and attract foreign investment,' he said in is ministerial winding-up speech at the State Legislative Assembly (DUN) Sitting today. Awang Tengah, who is International Trade, Industry and Investment Minister, said the global aerospace industry is projected to broaden in 2025, accelerated by technological advancements, sustainability initiatives and increasing air demand. 'As industry continues to evolve, Sarawak is actively developing our aerospace capabilities, focusing on aviation, space technology and satellite launch potential.' He said the newly established Sarawak Aerospace Advisory Council will spearhead aerospace industry development by enhancing education, workforce training and forging global partnerships to drive future investment and accelerate industry growth. 'With a strong emphasis on talent development, Sarawak has launched the Aerospace Academy at the Centre of Technology Excellence Sarawak (Centexs) Lundu and i-CATS University College's Faculty of Aerospace Engineering, equipping future professionals with hands-on expertise and globally recognised qualifications,' he added. On another matter, Awang Tengah said Sarawak is emerging as a regional leader in Southeast Asia's hydrogen economy, leveraging strategic investment opportunities through the Sarawak Green hydrogen hub in Bintulu and the upcoming hub in Kuching. 'These integrated facilities operate on a 'plug-and-play' model, enabling multiple investors to co-locate hydrogen projects without requiring standalone infrastructure. 'This approach optimises efficiency, reduces costs and accelerates hydrogen deployment, attracting global investors to Sarawak's hydrogen ecosystem.' He said SEDC Energy and clean energy solutions provider Gentari continue to advance the Sarawak Green Hydrogen Hub, with plans for a joint venture company to develop centralised investor facilities. 'The hub is currently in its Scope Development and Engineering phase. Meanwhile, flagship projects H2ornbill and H2biscus are progressing toward Front-End-Engineering-Design completion by year-end. 'Malaysia and Japan have also reaffirmed their commitment to hydrogen collaboration, solidifying Sarawak's leadership,' he said. He said the Distribution of Gas Ordinance was amended in November 2024 to ensure safe, responsible and structured development of hydrogen activities. 'This milestone legislation, which came into force in March 2025, reinforces investor confidence and ensures the sustainable growth of Sarawak's hydrogen economy,' said Awang Tengah. aerospace hub Aerospace Industrial Park Awang Tengah Ali Hasan lead
Borneo Post
27-05-2025
- Business
- Borneo Post
SUPP: Joint declaration clears all doubts on Distribution of Gas Ordinance, Petros' status
Tiang (seated centre) during the press conference. – Ukas photo KUCHING (May 26): The recent joint declaration between the federal government and Sarawak government in reaching an understanding on matters involving Petroliam Nasional Bhd (Petronas) and Petroleum Sarawak Bhd (Petros) has cleared any doubts on Sarawak's Distribution of Gas Ordinance and Petros' status as the sole gas aggregator. The Sarawak United People's Party (SUPP) said the joint declaration has successfully solved the disputes over the governance of oil and gas distribution within Sarawak. 'Utility and Telecommunication Minister Dato Sri Julaihi Narawi had sent a very clear message in his ministerial winding-up speech at the State Legislative Assembly (DUN) Sitting yesterday, stating that with such a joint declaration, Petros' appointment as gas aggregator must be respected by everyone undertaking the business of gas distribution in Sarawak. 'All agreements and arrangements pertaining to the supply and sale of natural gas in Sarawak must align with Petros' role as gas aggregator,' SUPP vice president Datuk Michael Tiang told a press conference today. Describing the joint declaration as another milestone for Sarawak and its people, he said SUPP commended Prime Minister Datuk Seri Anwar Ibrahim and Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg for their wisdom and firm stand in reaching this understanding and agreement for the way forward. 'It is also pertinent to understand that all gas industry players including Petronas must respect and comply with Section 7 of the Distribution of Gas Ordinance, 2016 (DGO 2016), which is to apply for a licence as well as to comply with all Sarawak state laws when conduct their business of gas distribution in Sarawak,' he said. He criticised the Democratic Action Party (DAP) for attempting to politicise the issue, especially when both Anwar and Abang Johari have stood firm on the same ground. 'Needless to say, DAP showed absolutely no interest in the real facts and Sarawak's achievements. 'Instead, they resorted to accuse SUPP of being silent on Petros and Petronas matters to divert public attention from their bankruptcy of ideas,' added Tiang. joint declaration lead Michael Tiang Petronas Petros sole aggregator
Borneo Post
26-05-2025
- Business
- Borneo Post
Julaihi: Petronas can apply for licensing exemption for projects not in conflict with Petros' gas aggregator role
Julaihi delivers his winding up speech in the DUN. — Ukas photo KUCHING (May 26): Petroliam Nasional Berhad (Petronas) may apply for exemption from licensing requirements for activities or projects that do not conflict with the role of Petroleum Sarawak Berhad (Petros) as gas aggregator, said Datuk Julaihi Narawi. The Utility and Telecommunication Minister said such applications will be considered in accordance with the law, provided they do not involve the supply, sale, retail, or distribution of gas—sectors under the purview of Petros as sole aggregator. 'The Joint Declaration acknowledges Petros as the gas aggregator appointed by the Sarawak government in the exercise of its executive authority. 'Both the Prime Minister (Datuk Seri Anwar Ibrahim) and the Premier of Sarawak (Datuk Patinggi Tan Sri Abang Johari Tun Openg) have expressly stated that this appointment must be respected by all parties involved in the business of gas distribution in the state,' Julaihi said in his ministerial winding-up speech at the State Legislative Assembly (DUN) here today. Julaihi said all agreements and arrangements related to the supply and sale of natural gas in Sarawak must align with Petros' role as gas aggregator, as outlined in the Joint Declaration. He stressed that all industry players, including Petronas, must conduct their gas distribution activities in full compliance with the terms of the declaration. 'Therefore, all parties involved in activities related to the distribution and supply of gas are required to apply for a licence under Section 7 of the Distribution of Gas Ordinance, 2016 (DGO 2016). 'Failure to comply with this licensing requirement constitutes an offence under Section 20 (criminal case) or Section 21A (civil claim) of the Ordinance, which may result in a fine, imprisonment, or both,' said Julaihi. He stated that since the amendment to the DGO 2016 in 2023, his ministry has implemented several regulatory measures, including the issuance of 14 licences for upstream activities under Section 7(g), 537 licences for downstream industry players, and 10 non-compliance notices to five companies found operating without a licence under Section 7 of the Ordinance. Julaihi further expressed his confidence that the Joint Declaration will benefit Sarawak and serve national interests by strengthening investor confidence, particularly among international companies in the gas distribution sector.
