Oil royalties for Sabah and Sarawak: Dead on arrival

May 21, 2020

Dateline 2020-04-25, FMT:

Brent crude oil prices dipping below US$30 and US oil prices turning negative for the first time in history is bad news for Sabah and Sarawak, which are dependent on oil royalties as a major source of revenue.

Analysts predict the depressed oil price will continue in the short and middle term as demand continues to fall. Oil producers like Petronas facing a glut market are riding in uncharted deep waters as Covid-19 batters the world oil markets.

For Sabah, petroleum royalty remains the highest contributor to the state coffers. For 2020, the total projected revenue from oil is RM1.7 billion. Oil royalty accounts for 40.55% of the state revenue. This estimate is based on royalty payment received from Petronas in 2019 amounting to RM1,703.5 million, the highest amount received since the Petroleum Development Act 1974 was passed.

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China And Malaysia Clash In Highly Disputed South China Sea

May 18, 2020

Dateline 2020-04-17, Oil Price:

Tensions are rising in the disputed South China Sea, where a Chinese survey vessel has been tagging an exploration ship which Malaysia’s state oil firm Petronas is operating in the area, security sources in the region told Reuters on Friday.

The long-running dispute in the South China Sea involves territorial claims by China as well as Vietnam, the Philippines, Taiwan, Brunei, and Malaysia. China has territorial claims to about 90 percent of the South China Sea, which has put it at odds with its neighbors.

The Chinese research and survey vessel Haiyang Dizhi 8 was close to Malaysian waters, and at one point on Friday, the Chinese ship was flanked by Chinese ships of the coast guard and maritime militia, according to Reuters’ sources. The Haiyang Dizhi 8 ship was close to the West Capella exploration vessel operated by Petronas.

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Malaysia’s Petronas warns of project delays, aims to keep local capex

May 15, 2020

Dateline 2020-04-14, Yahoo:

Malaysian state energy giant Petronas said the risks of delays to some of its projects were rising due to prolonged coronavirus-related lockdowns around the world.

Petronas, which operates in more than 20 countries including Brazil and the United States, said in an email that it would try to maintain its domestic spending for this year.

The company forecast 2020 domestic capital expenditure of 26 billion ringgit ($6 billion) to 28 billion ringgit, higher than last year.

“The ongoing global spread of the COVID-19 outbreak and collapse in oil prices continue to impact financial markets as well as many economies and industries around the world,” Petronas said in an emailed statement on Monday.

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Petronas mulling appeal on right to sales tax

May 9, 2020

Lawyer are essential services.

Dateline 2020-03-18, FMT:

Petronas is still considering whether to appeal against last week’s High Court ruling that Sabah and Sarawak have the right under the Federal Constitution to impose sales tax on petroleum products.

“We have 30 days from March 13 to file a notice of appeal to the Court of Appeal,” said lawyer Malik Imtiaz Sarwar who represents the national oil and gas company.

Last week, judge Azahari Kamal Ramli, who is based in Kuching, dismissed Petronas’ judicial review application to declare the Sarawak state sales tax null and void.

Petronas had claimed that some parts of the state’s Sales Tax Ordinance 1998, which require the national oil company to pay the 5% sales tax on petroleum products to Sarawak, were unconstitutional.

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Petronas takes workplace action amid Covid-19 pandemic

May 4, 2020

Out of date, but hey.

Dateline 2020-03-16, Upstream Online:

Malaysia’s national oil company Petronas has put in place special working arrangements for its thousands of employees as a precautionary measure to minimise the risk of the deadly Covid-19 virus.

With immediate effect, Petronas is “strongly encouraging” employees who can work from home, to do so where possible. No timeframe was given for this measure.

“For employees who are required to be physically present in the office or at our operations, Petronas is taking the necessary steps to ensure their health and safety while at the workplace,” the company said on Sunday without giving details.

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High Court rules Sabah, Sarawak can impose sales tax on petroleum products

April 30, 2020

Dateline 2020-03-13, FMT:

The High Court today ruled that Sabah and Sarawak have the right under the Federal Constitution to impose sales tax on petroleum products.

High Court Judge Azahari Kamal Ramli dismissed the leave application for judicial review by Petronas to declare the Sarawak state sales tax null and void.

Petronas had claimed that some parts of the state’s Sales Tax Ordinance 1998, which require the national oil company to pay the 5% sales tax on petroleum products to Sarawak, were unconstitutional.

The company’s lawyer Malik Imtiaz Sarwar argued that the notice of assessment issued by the Sarawak government to Petronas seeking payment of the tax on petroleum products was therefore invalid.

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Direct hit seen for oil and gas companies

April 24, 2020

“May force”? Please…

Dateline 2020-03-10, The Star:

The negative sentiment on oil prices, stemming from the Covid-19 outbreak and Opec+’s failure to cut oil production, is expected to cause a direct fundamental impact on domestic oil and gas companies, just as some of these companies are starting to see an improvement in their earnings.

UOB Kay Hian said that the combination of Covid-19 and Opec+’s failure may force Petronas to take action, potentially reducing activities if the national oil and gas company’s cash flow in the first half of the year is severely impacted.

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Petronas fails again to recuse judge in sales tax dispute

April 21, 2020

Dateline 2020-03-06, FMT:

Petronas has failed again in its move to disqualify Judicial Commissioner (JC) Christopher Chin from hearing Sarawak’s suit for unpaid state sales tax amounting to RM1.3 billion.

A three-member Court of Appeal bench chaired by Badariah Sahamid said the prime minister had no influence in the elevation of JCs to become High Court judges under the Judicial Appointments Commission (JAC) Act.

Notwithstanding the provisions in the Federal Constitution, Badariah said, the prime minister was required under the law to uphold the independence of the judiciary.

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Petronas sees a bearish 2020

April 16, 2020

Dateline 2020-02-27, The Edge:

Petroliam Nasional Bhd (Petronas) has hinted at a bearish outlook for 2020. The short-term headwind from the Covid-19 outbreak added pressure to the current low energy prices and weak demand.

Petronas is experiencing weaker demand in the current quarter, due to the slowdown in China, the epicentre of the Covid-19 virus, said Petronas president and group chief executive officer (CEO) Tan Sri Wan Zulkiflee Wan Ariffin.

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Petronas earmarks higher domestic capex for this year

April 15, 2020

Ah, 20/20 hindsight:

Dateline 2020-02-26, Malay Mail:

Petroliam Nasional Bhd (Petronas) is maintaining its annual capital expenditure (capex) at RM50 billion for 2020, but domestic capex will increase by more than 10 per cent to between RM26 billion and RM28 billion.

President and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said the higher capex allocated for domestic operations would be spent predominantly on upstream activities.

“There are a few projects. Some are ongoing. A lot of projects that we have already started, we need to continue.

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