Expand special grant to break federal-S’wak O&G impasse

Malaysia's Prime Minister Anwar Ibrahim has called for Petronas and Petros to collaborate in resolving their dispute. However, it is clear that the federal-Sarawak oil and gas impasse is not as simple as it once seemed. While broad principles have been agreed upon, commercial terms, operating authority, and pending court cases indicate that the impasse remains unresolved. Therefore, Putrajaya and Kuching should not attempt to resolve every issue solely through the two companies.

An interim special grant of RM1.5 billion offers a promising solution: expanding it into a larger, permanent, and transparent direct-payment formula for Sarawak. This formula could address Sarawak's legitimate demand for a better return without getting entangled in the complex commercial ecosystem of Petronas. Anwar announced the grant during Malaysia Day celebrations, agreeing in principle to Sarawak's proposal for a formula linked to 5% to 10% of federal revenue.

A clear formula would give Sarawak certainty about what to expect, Putrajaya what it must provide, and both sides how and when the arrangement is reviewed. The payment could fluctuate with national revenue, making Sarawak a partner in Malaysia's fiscal success while ensuring Petronas remains financially and operationally strong. The Hormuz crisis demonstrates the importance of energy security, and Petronas plays a vital role in maintaining Malaysia's reliability as an energy supplier.

Sarawak's pursuit of a fairer return and a stronger role in development is understandable, but the desired outcome goes beyond cash. A figure of RM10 billion has been mentioned, along with a potential gas-aggregator role for Petros. However, expanding Petros's role could weaken the integrated chain that supports its investment capacity, LNG obligations, and national responsibilities. Malaysia should resolve the revenue-sharing issue without dismantling the company that carries these responsibilities.

The principle is simple: grant Sarawak participation without creating overlapping authority that leaves businesses uncertain about payments, rules, or investment protection. An expanded direct-payment formula will not eliminate legal questions but should prevent them from becoming a corporate negotiation point. This approach would provide Sarawak with a steadier return, allow Petros to develop, and give Putrajaya a credible answer to MA63 expectations.

By addressing the most politically charged issue—how much Sarawak receives—outside of corporate negotiations, Malaysia can ensure a more reliable energy system and avoid the uncertainties that led to disputes like the Shell MDS case.