MPRC to engage Sarawak, Petros on new O&G ruling

However, there seems to be a lack of clarity on how industry players are to move forward

by MARK RAO / TMR file pix

Malaysia Petroleum Resources Corp (MPRC) will collaborate with the Sarawak state government on the latter’s move to assume control of its oil and gas (O&G) rights from Petroliam Nasional Bhd (Petronas).

MPRC stated it would also engage with the relevant parties including Petroleum Sarawak Bhd (Petros) on how local O&G service and equipment players are to proceed once the takeover move and new rulings come into effect on July 1 this year.

“We will update industry players once there is further clarity on the regulatory structure and how local O&G serviceandequipmentcompanies could be impacted by the changes,” MPRC stated in its response to a query by The Malaysian Reserve (TMR) on the latest status of the move by the Sarawak state government.

Following prospective amendments to the Oil Mining Ordinance 1958 and Gas

Distribution Ordinance 2016, companies involved in Sarawak’s O&G industry will be required to obtain the necessary licences and leases from the state government.

This will see regulatory power over the state’s upstream and downstream O&G activities shift from the hand of national energy company Petronas to the stateowned Petros in Sarawak.

The amendments are to be tabled in the next Sarawak legislative assembly and have to be passed before the new regulatory framework can be implemented.

Petronas will not be exempted from the rulings, alongside other exploration and production companies.

“MPRC takes note of the recent announcement on Petros by the Sarawak state.

“We will collaborate with the state government, Petros and all stakeholders for the advancement of the local O&G service

and equipment industry guided by the vision to promote Malaysia as the top Asia-Pacific O&G service and equipment hub,” MPRC’s statement read.

Recent reports stated that Petros is expected to enter into miningandproductionsharing agreements with Petronas and other major industry players.

Petros was also said to be granted a state licence to distribute gas from Petronas’ processing separation plant at Tanjung Kidurong in Bintulu, Sarawak.

MPRC was formed in 2011 as an agency under the Prime Minister’s Department to oversee the welfare of the 4,144 Petronas-licensed O&G service and equipment companies operating in the country today.

“Alongside this development, we wish to call upon industry players to remain focused on raising their capabilities to attain global competitiveness.

“This will be crucial in ensuring readiness for new opportunities outside Malaysia as global upstream capital expenditure gradually recovers and the domestic market evolves to become more liberalised,” MPRC added in the statement.

TalkswithallO&Gindustry stakeholders are expected to begin next month on the laws and regulations to be abided by under the amendments.

However, there seems to be a lack of clarity on how industry players are to move forward at the moment.

According to a report published by TMR last month, industry players have not received direction from either Petronas and Petros on how to proceed under the new arrangement.

The report stated that while pre-existing O&G arrangements are expected to remain in place, there is uncertainty on how future projects and developments are to be impacted.