Petronas is treading carefully.
In its official responses to the media, including CNA, the national oil corporation said that it is in close talks with both the Sarawak government and Mr Anwar’s administration to achieve a “mutual resolution” to the state gas distribution situation.
It stressed that “all parties need to understand and acknowledge each other’s constraints”.
POLITICAL CHUTZPAH, BUT “BE CAREFUL NOT TO OVERREACH”
The political chutzpah displayed by Mr Abang Johari, Sarawak’s chief minister or premier as he is referred to in the state, spotlights how the balance of power in Malaysia has been upended following the May 2018 general election that has since led to four changes in government.
The fractured political landscape in Peninsular Malaysia has turned Sarawak and neighbouring Sabah, which are collectively referred to as the Borneo bloc, into serious crutches for Mr Anwar’s unity government.
That, in turn, has emboldened the ruling political entities in the two states to impose demands on Kuala Lumpur to meet provisions established in a charter when both states joined then-Malaya to create the Federation of Malaysia in 1963, which at the time included Singapore. The island state became independent in 1965.
Of the two Borneo bloc states, Sarawak has been more aggressive in its dealings with Kuala Lumpur because of the political cohesiveness of the state government led by Mr Abang Johari.
The demands by Petros join a list of other demands by Sarawak.
Last month, Sarawak signed a memorandum of understanding with the Armed Forces Fund Board (LTAT), which manages the pension fund for certain members of the armed forces, to explore potential cooperation and sharing of information. Mr Abang Johari said it is securing necessary approvals to take a bigger stake in domestic financial institution Affin Bank, of which LTAT is the largest shareholder.
Two weeks ago, Sarawak also retook control of Bintulu Port, a previously federal government-controlled port in the state.
But it is the control over the oil and gas resources that is drawing close scrutiny.
According to the federal government, Sarawak’s probable and proven reserves of petroleum represent 60.87 per cent of Malaysia’s total, while Sabah’s make up around 18.8 per cent.
Sarawak is insisting that oil and gas resources in its territory must be regulated under a colonial-era Oil Mining Ordinance 1958, which stipulates that oil and gas resources found within 200 nautical miles of its waters belong to the state.
The state government wants the six new oil and gas fields discovered in the Balingian province of the continental shelf and the West Luconia area to be developed jointly with Petronas to ensure that the state receives more than the annual 5 per cent royalties that it currently enjoys.
Senior government officials and political operatives in Mr Anwar’s inner circle acknowledge that the demands by Sarawak and Petros could trigger a snowball effect and prompt other states to make greater demands on the federal government, which is already struggling with serious budgetary constraints because of a national debt burden of about RM1.22 trillion.
Several political and economic watchers in Malaysia say the stakes are also high for Mr Abang Johari, a seasoned politician who is regarded as a strong and able administrator.
“Abang Johari is in a strong position but he needs to be careful not to overreach (when dealing with the federal government),” said Mr Manu Bhaskaran, chief strategist at Centennial Asia Advisors.
“The gas distribution issue needs to be settled where it is a win for both sides, and I hope that the demand for full control by Sarawak is just an opening gambit in the ongoing negotiation.”
