Malaysia's top court allows Petronas to challenge Sarawak laws amid rights row

KUALA LUMPUR: Malaysia's highest court on Monday (Mar 16) allowed national energy firm Petronas to pursue a legal bid to challenge ​several laws passed by the state of Sarawak, amid ‌a protracted dispute over gas distribution rights.

Sarawak, on Borneo island, is home to more than 60 per cent of Malaysia's gas reserves and has long ​sought greater control over its natural resources.

In recent years, ​it has passed laws and appointed its own firm ⁠Petros to procure, distribute, supply and sell all natural gas ​in the state, putting it in conflict with Petronas, or Petroliam ​Nasional Berhad, which is wholly owned by the federal government.

After two years of stalled talks, Petronas in January filed a motion at the Federal Court ​seeking clarity on the legal and regulatory framework governing its ​operations in Sarawak. 

Sarawak filed a competing claim last month, challenging three federal ‌laws ⁠governing petroleum.

On Monday, the court allowed Petronas to pursue its legal bid, with the company given 21 days to commence proceedings.

Petronas lawyer Cyrus Das alleged that Sarawak’s state legislature had exceeded ​its lawmaking powers ​and repeatedly relied ⁠on a colonial-era law to extend its territorial reach or jurisdiction.

The state laws had also ​breached federal rights on oil exploration in the ​state, Das ⁠said.

"We are challenging it on the grounds that there was no competency in the Sarawak legislature to pass those laws," Das ⁠told reporters ​after the court hearing.

Sarawak's legal team ​objected to Petronas’ challenge, saying that enacting laws on gas distribution was within ​the state's legislative rights.