Malaysia’s largest state, Sarawak, reclaims gas assets in autonomy bid

Malaysia’s biggest state, Sarawak, is set to take control of its natural gas assets from federal government-run companies, as its campaign for economic autonomy bears fruit in the Southeast Asian country’s fragile political landscape.

The Borneo island state’s oil firm, Petroleum Sarawak Bhd., last week signed its first gas sale agreements. It is effectively starting a takeover of the gas distribution network in Sarawak that’s controlled by Malaysian oil giant Petroliam Nasional Bhd.

Petronas, which answers only to the prime minister, is asking for more time before it cedes full control. It wants to finalise gas supply agreements with Sarawak first to keep its liquefied natural gas complex running in the state – one of the biggest in the world at 30 million metric tons a year.

“We said we respect their concern because we have equity in the LNG plants,” Sarawak Premier Abang Johari Openg was cited as saying by the News Straits Times newspaper this week. “The discussions must be finalised by October 1, otherwise, we will go ahead with the arrangement.”

The state has long demanded for higher oil and gas royalties from Petronas, the custodian of Malaysia’s energy reserves, only to be rebuffed or given small increments at best. The renewed push for autonomy began after the November 2022 elections, since Prime Minister Anwar Ibrahim now depends on the backing of Abang Johari and the Sarawak-based parties he leads to keep a government coalition intact.

The Prime Minister’s Office and the Sarawak Premier’s Office didn’t respond to requests for comment.

Petronas, whose sole shareholder is the federal government, now has to make concessions. It will soon cede control of the gas distribution network in Sarawak for the first time in its