Sarawak holds 60% of Malaysia’s gas but retains only 6% for domestic use, with 94% exported. — Photo from 123rf
OIL and gas analyst Jamil A Ghani has warned that Sarawak’s demand for Petros to replace PETRONAS as the sole gas aggregator carries risks that could reverberate across Malaysia’s energy system.
“Though technical, the aggregator’s role is powerful,” he explained. “It buys gas from upstream producers and resells it to downstream users.
“This effectively shapes whether gas fuels Sarawak’s industries or is exported abroad as liquefied natural gas (LNG).”
At the heart of the dispute
“Sarawak has called for Petros to replace PETRONAS as sole gas aggregator,” Jamil said.
“Such an arrangement would technically allow Petros to buy gas cheaply upstream and sell it downstream at higher margins, which may cause PETRONAS to lose a lot of money, especially when they have to honour long-term export commitments.”
He noted that this was understandably difficult for PETRONAS to accommodate. “The concern is that if control were transferred, PETRONAS may lose the ability to manage the system end-to-end.”
Jamil who is also the founding fellow of the Futures Office, stressed that this did not mean Petros would deliberately create supply issues.
“Sarawak already holds stakes in Malaysia LNG ventures, which ties its interests to PETRONAS.
“Even so, the risk lies in the uncertainty that comes with changes to a system that has long been valued for its predictability.”
Sarawak’s perspective
For Sarawak, the logic is straightforward. Jamil pointed out that 60% of Malaysia’s gas lies off the state’s shores, but only a small share is retained for local use.
“About 94% is exported as LNG, leaving only 6% for domestic consumption,” he said.
“Without a say in aggregation, Sarawak leaders fear this imbalance will continue, and ambitions for downstream industry will remain constrained.”
Sarawak’s view of the “sole aggregator” role extends to both domestic use and LNG exports. But Jamil cautioned that practical realities intervene.
“While Petros may play a greater role in domestic allocations, PETRONAS must continue to manage export obligations to Japan, Korea, Taiwan and China,” he said.
“If gas were reallocated domestically without proven demand centres or offtake agreements, it could leave supply stranded or jeopardise export cargoes.
“Such outcomes would harm Malaysia’s reputation as a reliable long-term supplier — trust that has taken decades to build.”
Towards compromise
In recognition of Sarawak’s aspirations, Putrajaya and PETRONAS have agreed to channel 1.2 billion cubic feet of gas per day for the state’s use — almost triple the previous 450 million.
“This level of allocation would support Sarawak’s development plans, so long as demand centres and contracts are in place,” Jamil said.
“The rationale is commercial: supplying gas without formal agreements on volume, pricing, and liability would expose the company to legal and financial risks, undermining governance standards.”
The stakes ahead
Ultimately, Jamil said, the issue is about reconciling autonomy with national responsibility.
“For Sarawak, this represents autonomy and fairer returns from resources long exported through federal channels.
“For Putrajaya, it concerns national fiscal stability and preserving Malaysia’s most important company.”
He suggested that joint approaches to aggregation could help Sarawak realise its industrial ambitions, while ensuring PETRONAS remains strong enough to anchor the nation’s economy and international contracts.
“With careful sequencing of supply and clear legal frameworks, what now looks like a standoff could be turned into a sustainable arrangement,” Jamil said.
“Handled wisely, Malaysia can build a future where state aspirations and national stability complement one another, rather than clash.”
This article was previously published by Utusan Malaysia.
