As expected, Anwar had to interjects Petronas-Petros negotiations

After years of protracted wranglings and even bickering, Petronas and Petros have finally reached the final lap.

Prime Minister Datuk Seri Anwar Ibrahim announced last week that the two oil and gas entities have concluded negotiations except for a few issues that need to be ironed out and finetuned.

What would those issues be?

Ironing out legal frameworks, business details

The recent announcement by Anwar that negotiations between Petroleum Sarawak Berhad or Petros and Petroliam Nasional Berhad or Petronas have concluded, save for a few "fine-tunings," marks a potential inflection point not just for Sarawak, but for the entire framework of Malaysia’s resource governance. 

These "fine-tunings" are not mere technicalities—they are the DNA of a new era.

"The fine tunings likely include the revenue-sharing mechanisms that will decide who gets what slice of the pie, operational frameworks that redefine how Petros and Petronas co-exist, and legal harmonization efforts to ensure that the Petroleum Development Act of 1974 and Sarawak’s Oil Mining Ordinance of 1958 don’t trip over each other in the courts or the field. 

At stake is the future of how Malaysia manages its natural wealth—whether it will remain centralized or devolve into a patchwork of state-controlled arrangements," Samirul Ariff Othman told DagangNews.

Petros needs to allay the environmentalists?

Industry observers say one the fine tunings might involve studies on how Petros role as the new gas aggregator in Sarawak will impact the environment.

"I suspect Petros has to carry out Environmental Impacts Assessments or EIAs all over again.

Sarawak has to undertake EIAs all over again so that it will not impact the environment, fishermen, coastline, marine life and others," an oil and gas consultant who does not want to be identified told DagangNews.

He added these could be the nagging issues which Petros has to sort out if it does not want any environmental groups or non-governmental organisations holding protests at its doorstep.

RELATED ARTICLE: Petronas-Petros negotiation may have broken down, Putrajaya to intervene?

Redefining the nautical miles?

Industry observers said Petronas and Petros might have to go back to the drawing board to determine the offshore distance which belongs to Petronas and which radius in nautical miles to Petros.

"Under the Petroleum Development Act, any natural resources within the radius of 200 nautical miles from the coastline belongs to Petronas.

Now that Petros is in the picture, there could be a redelineation of boundaries which could be tabled in Parliament," an oil and gas engineer told DagangNews.

However, details remain sketchy and the issue might not even reach the lawmakers.

Opening the Pandora Box

The Petronas-Petros saga could be a pre-cursor to other oil and gas rich states other than Sarawak.

This isn’t just a Sarawak story. It’s a Pandora’s box or in this case boxes.

If Sarawak successfully negotiates greater control over its oil and gas, what’s stopping Sabah, Kelantan, or Terengganu from knocking on Putrajaya’s door with similar demands? The floodgates will burst wide open.

After all, in a federal system, precedent is as contagious as a new strain of political ambition. 

These states could argue for their share of autonomy, citing Sarawak’s newfound powers as an example.

This could up end the entire balance of power between the federal government and resource-rich states, challenging the very foundation of Malaysia’s centralized resource management system.

Petronas - stuck between a rock and hard place

And then there’s Petronas, Malaysia’s corporate crown jewel, which suddenly finds itself in a delicate dance between compromise and relevance. 

Revenue losses are almost inevitable, of which some analysts estimate at RM20 billion a year.

Sarawak’s push for autonomy means the state keeps a larger share of the profits, which could dent Petronas’ bottom line and by extension, the federal government’s coffers.

Domestically, Petronas risks being seen as having ceded ground, a loss of prestige that could ripple through its image as a national symbol of unity and strength.

"Internationally, questions may arise about its ability to maintain control over its sprawling operations and political challenges. 

But here’s the twist: this could also burnish Petronas’ image as a pragmatic and cooperative entity if it manages this transition well.

After all, sharing power and wealth could be the ultimate 21st-century play for a legacy institution seeking relevance in a fracturing world," said Samirul who is also Universiti Teknologi Petronas adjunct lecturer.

Will other oil rich states follow suit?

The broader implications are seismic. 

Sarawak’s autonomy has planted a flag on the frontier of decentralization. 

Whether this is a one-off concession or the start of a domino effect depends on how the federal government handles the fallout. 

"What is clear, however, is that Malaysia is entering a new chapter where the control of its resources will be as much about law and economics as it is about identity, autonomy, and power. 

The question isn’t just whether Petros and Petronas can collaborate—it’s whether the entire system can adapt to a world where power isn’t just centralized, but shared," said Samirul who is also international consultant at Global Asia Consultant.

Anwar has got nothing to lose

Whichever way, Anwar has got nothing lose.

It is in his political interest to work together with Sarawak and subsequently Sabah to stay in power.

To ensure his political survival, he has to ramp up support in Sarawak and Sabah so that he continues to control Putrajaya.

Sarawak becoming a regional player

It is important to note that Sarawak is slowly but surely asserting itself as a regional power.

It is more pertinent now that Indonesia's new capital city Nusantara will be built just south of the state in Kalimantan.

Sarawak would want to be a dominant economic power in the region and to be among the big boys now that it is so close to Indonesia's new administration capital.

"To build economic clout, Sarawak has to build up its portfolio which includes oil and gas and that is why it is fighting tooth and nail with Putrajaya for its right," said an oil and gas consultant who used to work for several international oil majors.

Does Petros has enough expertise?

The oil and gas industry are a specialised industry and it took Petronas decades to become the global powerhouse that it is today.

Does Petros possess the adequate experience and expertise to delve in the industry?

"It is not enough for Sarawak's oil and gas experts to sit on the board of some oil and gas majors.

Do they have the expertise and capability to manage Sarawak's the oil reserves and gas industry and supply liquefied natural gas to international buyers and power up gas-fired turbines at power stations?

Sitting on the board of oil and gas firms do not make you an expert in the black oil industry.

Is Petros up to the job? Will the Sarawak state's sole oil and gas aggregator live up to expectations? We will know very soon. - DagangNews.com