Petronas and Sarawak solves legal tussle, reaches agreement on state’s O&G asset management

In a joint statement issued by Petronas and the Sarawak State Government, both parties have reached an agreement to the management of the state’s oil and gas assets as well as the sales tax on petroleum products.

Petronas has also retracted its appeal against the Sarawak High Court’s decision in regards to the judicial review request dated March 13. It has also agreed to pay in full the petroleum product sales tax imposed by Sarawak for the year 2019.

The sales tax amounted to RM 2 billion which is 5 percent of the products sales value.

The state has also dropped all claims in the civil case it had against Petronas the payment of petroleum products sales tax.

Sarawak has also announced it would gradually decrease the 5 percent sales tax rate imposed on the oil firm. This comes after the state had imposed a 5 percent tax on the Petronas’ petroleum product.

Petronas in return had refused to pay the tax, citing reasons that the imposed tax was unconstitutional, resulting in a state government’s legal action against the company.

While the ongoing tussle has reached an amicable agreement, all agreements between the Sarawak government and Petronas under the Petroleum Development Act 1974 are still valid and in force.

“Petronas will work closely with the Sarawak State Government to continuously development the oil and gas industry in the state,” Petronas said in a statement.

The oil and gas company has also stated that the engagement between both parties will see a more active participation by the State in the investment opportunities in the industry, based on commercial terms.



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