Sarawak premier says Petros has sole right to distribute gas in state

Key Concepts

• Patronus (Petros): State government-owned energy firm in Sarawak.
• Sole Right to Distribute Gas: Sarawak's assertion of exclusive authority over gas distribution within the state.
• Profit Sharing: Ongoing negotiations between Sarawak and Petronas regarding the division of profits from oil and gas activities.
• Greater Control/Autonomy: Sarawak's long-standing objective to increase its self-governance in the oil and gas sector.
• Gas Aggregator: The role Petros will play in managing and consolidating gas resources.
• Commercial Agreement: The framework governing the operational relationship between Petronas and Petros.
• Carry Interests: A form of investment where Petros participates as an investor alongside Petronas in exploration projects, sharing equity and potential returns.
• CCUS (Carbon Capture, Utilization, and Storage): A technology for managing carbon emissions, with potential exploration in Sarawak's offshore areas.
• Sarawak's Gas Reserves: Sarawak holds approximately 60% of Malaysia's total gas reserves.
• Malaysia's LNG Exports: Sarawak contributes around 90% of Malaysia's Liquefied Natural Gas (LNG) exports.

Sarawak's Exclusive Right to Gas Distribution and Petros's Role

Premier Abang Johari Oping has declared that Patronus (Petros), the state government-owned energy firm, possesses the sole right to distribute gas within Sarawak. This assertion is made even as the specifics of profit-sharing arrangements with Malaysia's national oil company, Petronas, are still under negotiation. Sarawak has historically advocated for greater control over its oil and gas sector as a means to achieve increased autonomy in its governance.

The Premier stated, "It has been resolved except for the detail for the detail." He further elaborated on the operational shift: "So what happened is uh educator function be taken over by SA through Petros based on our right guest distribution or this distribution actually was before Malaysia was formed and we have our own uh company owned 100% by the government. So we will do the function of gas aggregator." This signifies Petros taking over the gas distribution function, a right that predates the formation of Malaysia, and operating as a gas aggregator.

Commercial Agreement and Ongoing Negotiations

The relationship between Petronas and Petros is structured around a commercial agreement. Premier Abang Johari noted, "So the the two entities Petronas and Petros are working based on what we call commercial agreement and it is ongoing and uh it will be finalized soon." This agreement outlines the operational framework and is expected to be concluded shortly.

Future Exploration and Carry Interests

Despite the ongoing negotiations, Premier Abang Johari expressed enthusiasm for future exploration projects with Petronas, emphasizing a commercial basis for these ventures. Sarawak's significant contribution to Malaysia's energy sector is highlighted by its holding of approximately 60% of Malaysia's gas reserves and its contribution of around 90% to the country's LNG exports.

Regarding future exploration, the Premier mentioned, "You know, there is what we call uh another area to be explored and in in our agreement with Petronas, we have what we call uh carry interests." This concept of carry interests means that Petros will act as an investor, sharing equity in exploration processes alongside Petronas. "In other words, do we be the the investor plus Petronis Chargali plus Petros having equity in that uh exploration process and then uh once you strike gas or oil then the normal business operation takes off." This indicates a collaborative investment model where Petros participates financially in exploration, and if successful, both entities will engage in standard business operations.

New Exploration Areas and CCUS

The Premier also pointed to promising new findings, stating, "and uh we believe you know the new findings are more on our shoreline from Baram to towards offshore Vulu." Furthermore, he highlighted the potential for CCUS (Carbon Capture, Utilization, and Storage) in these offshore regions: "and our CCUS is also there. The carbon uh storage." This suggests a forward-looking approach that includes exploring new hydrocarbon resources and integrating advanced carbon management technologies.

Synthesis and Conclusion

Sarawak, through Premier Abang Johari Oping, is asserting its sovereign right to control gas distribution via its state-owned entity, Petros. This move is part of a broader agenda for greater autonomy in managing its substantial oil and gas resources, which form a critical component of Malaysia's energy exports. While profit-sharing details with Petronas are still being finalized, a commercial agreement is in place, and future exploration will involve a collaborative "carry interest" model where Petros acts as a co-investor. Promising new exploration sites have been identified offshore, and the potential for CCUS technology in these areas is also being considered, underscoring Sarawak's strategic approach to its energy future.