Testing time for Malaysia's Petronas and Sarawak

First up, this weekend's update on the Petronas vs. Sarawak oil rights dispute:

Testing time for Petronas

THE Sarawak government is expected to enforce the Oil and Mining Ordinance 1958 (OMO 1958) tomorrow after Petroliam Nasional Bhd (Petronas) was denied leave to commence legal proceedings to seek a declaration on the Petroleum Development Act 1974 (PDA) being the law applicable for the petroleum industry in Malaysia.

Petronas is seeking a declaration that it is the exclusive owner of the petroleum resources and the sole regulator for the upstream industry in Malaysia while the state government is seeking to regulate the oil and gas (O&G) industry based on its laws — OMO 1958, the Land Code of Sarawak and the Gas Distribution Ordinance 2016.

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I've commented a bit about this Petronas vs. Sarawak oil & gas rights dispute before, here on the Oil Price forum:

Malaysia's Petronas vs. Sarawak Court Case - Will It End Up In London Courts?

And have a running commentary about it over on LinkedIn (where I have a large number of Malaysian connections).

Hey Petronas, Royalties are *not* the same as Profits

Petronas Infographics Regarding Oil & Gas Dispute with Sarawak, which were Submitted to Bernama

This dispute seems to be getting increasingly contentious.  Both sides seem to be trying to kill each other off, the exact opposite of a "win-win" solution.

A couple days ago I was interviewed by local Malaysian media regarding my views about this Petronas / Sarawak dispute.  I'll post a link once it's online.

/ Side note, tomorrow I'll be flying to Jakarta for the Gas Indonesia Exhibition, which is at the Jakarta Convention Center.  I'll be happy to chew the fat with anyone from the Oil Price forum who will be attending the exhibition.

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Thanks, Tom.  Who'd have thought an explanation of the differences between royalties and profits would be necessary?  Well, me for one.  He-he. 

Good to know you are just down over the southern border from me.  I do make it down to KL once in a blue moon and it would most certainly be nice to sit down to a steak and seafood dinner to talk about our interests whilst our wives discuss topics more akin to natural neighbors.  I recall that there are ample supplies of both great steak and excellent seafood in Malaysia.  In a previous life, I spent a honeymoon in Penang and was introduced to Lobster Thermidor (I'm straight and the chef was a man, but I wanted to kiss him nonetheless :) .  Lobster Thermidor on Penang, OMG!  Well, at least the seafood should still be there, but you haven't told us how any of the tariffs might affect your steak supply from the U.S.

Good luck at the exhibition, and stay safe!

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Thanks Dan, I wasn't aware that you were in SE Asia.  Yes, Penang is a foodie paradise, but I live in a suburb near KL.  Food is great here too.  Lots of fresh seafood available, and I haven't heard anything about how U.S. tariffs might affect goods here in Malaysia.  

The change of ruling government (first time in 60 years) has caused some shockwaves in Malaysia, and Petronas is a bit off kilter now in this escalating dispute over federal vs. state oil rights.  Sarawak is now an "opposition" state to the new federal ruling coalition government, so the blood-feud politics really messes up any rational thinking about oil & gas rights.

And the dispute between royalties and profits continues to escalate. 

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5 minutes ago, Tom Kirkman said:

Thanks Dan, I wasn't aware that you were in SE Asia.  Yes, Penang is a foodie paradise, but I live in a suburb near KL.  Food is great here too.  Lots of fresh seafood available, and I haven't heard anything about how U.S. tariffs might affect goods here in Malaysia.  

The change of ruling government (first time in 60 years) has caused some shockwaves in Malaysia, and Petronas is a bit off kilter now in this escalating dispute over federal vs. state oil rights.  Sarawak is now an "opposition" state to the new federal ruling coalition government, so the blood-feud politics really messes up any rational thinking about oil & gas rights.

And the dispute between royalties and profits continues to escalate. 

Yes, I've been watching with interest the political developments in Malaysia, but most of what I've read has been about the 1MDB fund and the rampant stealing that is alleged there.  Since I live in Thailand and we have our fair share of, er, sharing of the kitty, I thought that that was all the government change was about, the various kitty sharing.  Your information about the oil business down there sheds quite a new light on the situation for me.  Thanks for that.

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Heh heh it would not be wise for me to say too much about the, ahem, alleged 1MDB looting and alleged  kleptocracy claims.  At least until there are public perp walks in orange jump suits.

One reason this oil & gas rights issue is escalating rather than resolving is that Petronas is controlled by the federal government / Prime Minister

The new Federal government is PH and headed by Dr. Mahathir.

Sarawak is an opposition state and is apparently being egged on by BN, the losing government coalition that lost the elections a couple months ago, and is headed by Najib (of 1MDB infamy).

The political parties PH and BN seem to want to engage in a political death match, using Petronas and Sarawak as proxies.  Kinda like Hatfields vs. McCoys.  Saudi Arabia vs. Iran.  Irrational politics.

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8 minutes ago, Tom Kirkman said:

Heh heh it would not be wise for me to say too much about the, ahem, alleged 1MDB looting and alleged  kleptocracy claims.  At least until there are public perp walks in orange jump suits.

One reason this oil & gas rights issue is escalating rather than resolving is that Petronas is controlled by the federal government / Prime Minister

The new Federal government is PH and headed by Dr. Mahathir.

Sarawak is an opposition state and is apparently being egged on by BN, the losing government coalition that lost the elections a couple months ago, and is headed by Najib (of 1MDB infamy).

The political parties PH and BN seem to want to engage in a political death match, using Petronas and Sarawak as proxies.  Kinda like Hatfields vs. McCoys.  Saudi Arabia vs. Iran.  Irrational politics.

Oh my, that sounds much more dangerous than I had thought.  I mean for the Malaysian people and their way of life dangerous.  Those are not small matters at all.  I have colleagues in Malaysia and I think they are by and large wonderful people, tolerant to diversity of peoples and belief systems to a larger degree than many others.  If I'm not mistaken, I believe civil wars and economic collapses happen from events similar to those mentioned.  Let's hope they get it sorted out.  Look after yourself, my friend.

 

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3 hours ago, Dan Warnick said:

Let's hope they get it sorted out. 

Happily, I spoke too soon above.  A compromise seems to be happening:

Sarawak's 5% gross value oil royalties stay together with 20% oil profit, MPs told

But note that certain parties (i.e. the political party that lost the recent election) will probably still try to derail this compromise.

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