After High Court defeat over bank guarantee, Petros mulls legal options

KUCHING (Feb 25): The High Court’s decision today does not affect Petroleum Sarawak Berhad (Petros) in pursuing further legal action to clarify its rights under the Distribution of Gas Ordinance 2016 (DGO 2016).

In a statement issued hours after the proceedings, Petros said it would carefully review the written judgment and consider the appropriate legal steps in accordance with the law.

Petros noted that the case decided today concerned what it described as the “unconscionable call” of a bank guarantee under the Sarawak Gas Sale Agreement (GSA), and that the High Court’s ruling was based solely on technical grounds relating to the guarantee.

The Kuching High Court, Petros stressed, did not make any determination on the legality of the Sarawak GSA itself, nor did it rule on the constitutional arguments concerning the DGO 2016.

Petros, the plaintiff in the case, had faced Petronas, the national oil company, as the respondent.

High Court Judge Faridz Gohim Abdullah ruled that Petronas’ demand for a RM7.95 million bank guarantee from Petros was valid, noting that Petros had failed to prove the call was unconscionable or unlawful.

On constitutional issues, he explained that these matters fell outside the scope of Petros’ originating summons.

Faridz said questions concerning the constitutionality of the two laws — the Petroleum Development Act 1974 (a federal law) and the Distribution of Gas Ordinance 2016 (a Sarawak law) — should be determined by the Federal Court.

On Jan 12, Petronas filed a motion in Putrajaya seeking the Federal Court’s determination on the legal position applicable to its operations in Sarawak to ensure compliance with relevant laws and good governance practices.

The Federal Court in Kuala Lumpur then fixed March 16, to decide whether Petronas should be granted leave to seek clarity on the regulatory framework governing its operations in Sarawak.

The Sarawak government has also filed a petition in the Federal Court seeking a determination on the constitutional validity and continued applicability of several federal petroleum laws to the state.

Deputy Minister in the Premier’s Department (Law, MA63 and State-Federal Relations) Datuk Sharifah Hasidah Sayeed Aman Ghazali said the petition was filed to determine the constitutional validity and continued applicability of the Petroleum Development Act 1974, Continental Shelf Act 1966, and Petroleum Mining Act 1966 to Sarawak.