Sarawak Petronas Agreement

The Sarawak Petronas Agreement: What You Need to Know

In 2019, the Malaysian state of Sarawak signed an agreement with Petronas, the national oil and gas company, that resolved a long-standing dispute over issues related to oil and gas rights. The Sarawak government had been seeking greater control over the state`s resources, and the agreement was seen as a significant step forward in clarifying those rights. In this article, we`ll take a closer look at the Sarawak Petronas Agreement and what it means for the future of the state`s oil and gas industry.


Sarawak is one of two Malaysian states located on the island of Borneo, and it is home to a significant portion of the country`s oil and gas reserves. Since the 1970s, Petronas has been the primary player in the industry, controlling the exploration and production of these resources. However, the Sarawak government has long argued that it has the right to assert greater control over the state`s resources and has been seeking to renegotiate its relationship with Petronas.

The Sarawak government`s position has been based on a 2018 amendment to the Petroleum Development Act of 1974, which gave the state more authority over oil and gas activities within its borders. While Petronas initially contested the legality of the amendment, it ultimately agreed to work with the Sarawak government to resolve the dispute.

The Agreement

The Sarawak Petronas Agreement, signed in March 2019, sets out the terms of a new partnership between the oil company and the state government. The agreement recognizes Sarawak`s right to regulate oil and gas activities within its borders and acknowledges that the state has the power to issue licenses and permits for exploration, production, and related activities. Petronas, in turn, retains the right to operate existing petroleum facilities and to continue its exploration and production activities under certain conditions.

Additionally, the agreement establishes a commercial framework for the sharing of revenue generated from oil and gas activities in Sarawak. The state will receive a greater share of the revenue than it did previously, although the specific percentage has not been disclosed. The agreement also includes a commitment from Petronas to invest in the development of Sarawak`s oil and gas industry, which could bring additional economic benefits to the state.

Impact on the Industry

The Sarawak Petronas Agreement has been hailed as a significant step forward in clarifying the rights of the state and the oil company and in providing a framework for future cooperation. The agreement provides greater certainty for investors and improves the prospects for the development of Sarawak`s oil and gas industry.

At the same time, the agreement is likely to lead to some changes in the way that Petronas operates in Sarawak. The company will need to work more closely with the state government and may face greater scrutiny from regulators. Additionally, the agreement may encourage other states in Malaysia to seek greater control over their resources, which could have implications for the entire industry.


The Sarawak Petronas Agreement represents a significant milestone in the ongoing relationship between the state government and the national oil company. The agreement clarifies the rights and responsibilities of each party and provides a framework for future cooperation. While the agreement is likely to lead to some changes in the industry, it is also likely to encourage further investment and development in Sarawak`s oil and gas sector. Overall, the agreement is a positive development for the state and the industry as a whole.