Sarawak Premier Abang Johari insists on state’s rights in oil and gas management despite federal control.

In a heated and ongoing dispute, Sarawak Premier Abang Johari Openg has reiterated the state’s demand for greater control over its oil and gas resources, challenging the federal government’s exclusive authority through Petronas. The clash between Sarawak and Malaysia’s national oil giant Petronas has resurfaced as the state pushes back against Putrajaya’s stance, which maintains that Petronas will remain the sole custodian of Malaysia’s hydrocarbon reserves under the Petroleum Development Act (PDA) 1974.

This debate has far-reaching implications for Malaysia’s energy sector, investor confidence, and regional politics, particularly as Sarawak contributes nearly 90% of the nation’s LNG exports and holds about 60% of its gas reserves.

Sarawak’s pursuit of greater autonomy over its natural resources has been a long-standing issue. While the Petroleum Development Act 1974 grants Petronas exclusive rights to explore and exploit petroleum across Malaysia, Sarawak has continuously fought for its share of control, citing its significant contribution to the country’s oil and gas industry.

The formation of Petroleum Sarawak Berhad (Petros) in 2017 was a bold move by Sarawak to assert its role in managing its resources. However, recent developments, particularly Putrajaya’s decision to exclude liquefied natural gas (LNG) from Petros’s jurisdiction, have fueled further discontent.

The Roots of the Dispute

The Petroleum Development Act (PDA) 1974, enacted under then-Prime Minister Tun Abdul Razak, centralized Malaysia’s petroleum resources under Petronas, ensuring federal control over oil and gas exploration, production, and distribution. Sarawak, a resource-rich state, has long contested this centralization, arguing that state rights and economic interests have been sidelined.

Premier Abang Johari Openg’s administration has been vocal in demanding that Petros, the state-owned oil and gas company, play a larger role in managing Sarawak’s resources. This demand gained traction in 2024 when Prime Minister Anwar Ibrahim acknowledged Petros as Sarawak’s gas aggregator during a meeting on January 7, but with a significant caveat—LNG operations would remain under Petronas’s control.

The Legal and Political Battleground

The legal framework governing Malaysia’s oil and gas sector is intricate and contentious. Under the PDA 1974, all petroleum resources in Malaysia are vested in Petronas, which reports directly to the Prime Minister. Sarawak, however, has its own Distribution of Gas Ordinance 2016, which empowers Petros to regulate gas distribution within the state.

This legal dichotomy has led to prolonged negotiations and, at times, legal confrontations between Sarawak and the federal government. Minister Azalina Othman Said’s recent parliamentary statement that Petros’s role excludes LNG has been perceived as a setback for Sarawak, prompting Abang Johari to seek intervention from Deputy Prime Minister Fadillah Yusof to address the issue at the federal level.

Economic Stakes and National Implications

Sarawak’s demand for greater control is not merely about legal jurisdiction—it is also about economic benefits. With 60% of Malaysia’s gas reserves and nearly 90% of its LNG exports coming from Sarawak, the state’s contribution to the national economy is undeniable.

Abang Johari’s insistence that Sarawak must have a say in resource distribution stems from the state’s belief that its economic contributions should translate into greater financial returns and decision-making power. The exclusion of LNG from Petros’s control limits Sarawak’s potential revenue streams and investment opportunities, leading to tensions between Kuching and Putrajaya.

The Role of Petros and Future Prospects

Petros’s establishment was a strategic move to challenge Petronas’s monopoly, particularly in Sarawak’s territorial waters. Appointed as the state’s sole gas aggregator under the Distribution of Gas Ordinance 2016, Petros’s role is to procure, distribute, and manage gas resources within Sarawak.

Since July 2024, Petronas and Petros have been engaged in negotiations to define their respective roles. While an agreement was reached that allows Petros to manage gas distribution (excluding LNG), the state continues to push for greater autonomy, arguing that local resources should benefit local communities first and foremost.

The Petronas-Sarawak dispute extends beyond Malaysia’s borders. With Sarawak’s LNG exports playing a crucial role in Southeast Asia’s energy market, any disruption in production or distribution could impact regional energy supplies.

For Singapore, which relies heavily on Malaysian gas imports, the ongoing dispute poses potential risks to energy stability. Investors, too, are watching closely, as uncertainties in resource governance could affect investment decisions in Malaysia’s oil and gas sector.

The resolution of this dispute is critical not only for Malaysia’s energy sector but also for regional economic stability, particularly as Southeast Asia aims to balance energy security with sustainable development.

A Balancing Act of Power and Resources

Sarawak’s insistence on having a say in its oil and gas resources is a poignant reminder of the tensions between state and federal powers in Malaysia’s resource-rich regions.

While Petronas’s role as the national custodian of petroleum resources is enshrined in law, the economic significance of Sarawak’s contributions cannot be ignored. The ongoing negotiations between Petronas, Petros, and the federal government highlight the delicate balance that must be struck to ensure fair resource distribution, economic growth, and political stability.

For international stakeholders, particularly in energy-dependent nations like Singapore, the outcome of this dispute could shape future energy policies, investment strategies, and regional energy collaborations.

As Sarawak continues its fight for autonomy, the Malaysian government faces the daunting task of upholding national unity while addressing the legitimate economic aspirations of its states. The Petronas-Petros saga is far from over, and its resolution will undoubtedly leave a lasting impact on Malaysia’s energy landscape and its regional partnerships.

Sources: CNA (2025), Free Malaysia Today (2025)

Keywords: Sarawak, Petronas, Oil And Gas, Natural Resources, Malaysia, Resource Control, State Rights, Energy Sector, LNG, Petroleum Development Act