KUALA LUMPUR: The partnership between Sarawak's state government and Petroliam Nasional Bhd is more than just a venture in oil and gas - it represents a transformative play for energy security, equitable growth and the future of Malaysia.
This partnership is like a carefully choreographed dance, where each step shows how Malaysia is changing the way it manages its resources and power.
"The partnership between the Sarawak state government and Petronas is undoubtedly crucial for ensuring the stability and growth of the oil and gas ecosystem.
"However, the dynamics of this relationship must evolve to reflect Sarawak's aspirations for greater control over its resources," policy consultancy firm Agyl and Partners managing partner and consultant Wan Agyl Wan Hassan told Business Times.
Over the past decade, Sarawak leveraged its abundant natural wealth to rewrite the script of resource management.
With Petroleum Sarawak Bhd (Petros) leading the charge, Sarawak is reshaping how resources are managed and shared.
Rewriting Resource Governance
Economist Samirul Ariff Othman said this strategic realignment is not just about control; it is about ensuring consistent energy supply, equitable revenue distribution, and the recalibration of how Malaysia shares resources.
"Oil and gas ecosystems are delicate creatures, nurtured not just by who owns what but by how partnerships align expertise, environmental stewardship, and operational efficiency.
"Petronas, Malaysia's corporate pride, has decades of global experience, while Petros represents the bold ambitions of a rising state power. The question is whether these entities can tango without stepping on each other's toes," Samirul said.
Meanwhile, Wan Agyl said the partnership between Petronas and Petros is crucial to balance the federal-state interest.
He added that a cooperative relationship is essential for maintaining the smooth operation of Sarawak's oil and gas sector.
"Let's be honest - Sarawak's journey toward greater control over its resources hasn't been smooth. There's always the risk of federal overreach. A strong, transparent partnership with Petronas can help mitigate these risks, ensuring Sarawak's interests are front and centre," he said.
Strategic Partnerships For Growth
The relationship between both parties has always been healthy for decades.
Notable collaboration between Petronas and Petros particularly has led to groundbreaking initiatives such as the recent storage site agreement signed with a Japanese consortium.
This project, finalised in February 2024, supports Sarawak's ambition to become a hub for sustainable energy storage, attracting global investment and expertise.
Additionally, Petronas and Petros have signed key agreements to expand the usage of natural gas within Sarawak.
Among the key partnerships include the recent heads of agreement that focused on expanding the usage of natural gas within Sarawak. It includes the supply of 60 million standard cubic feet per day of gas starting by 2026 to the proposed 400 megawatts of combined cycle gas turbine power station in Miri.
Further reinforcing their commitment to a sustainable future, both parties have also signed a joint collaboration agreement to establish a carbon capture and storage ecosystem in Sarawak.
Through these strategic partnerships, it showed that Petros and Petronas are playing a pivotal role in shaping Sarawak's energy landscape.
Balancing Autonomy With Expertise
Samirul noted that while Sarawak is seeking greater control, it still requires the expertise and global experience Petronas offers. This dynamic partnership must align ambitions and operations to avoid pitfalls like supply inconsistencies or environmental backlash.
With Indonesia's new capital Nusantara rising nearby, the stakes are even higher.
He believes if Sarawak and Petronas get this collaboration right, they can set a precedent for decentralisation that fuels growth, unity and resilience.
"Sarawak wants more control, but it also needs the deep reservoirs of knowledge and networks Petronas brings to the table. Together, they have the potential to power not just turbines but the narrative of a state moving toward regional leadership especially with Indonesia's Nusantara looming nearby," he said.
"Fail to sync, and the ecosystem could falter, risking supply inconsistencies and environmental backlash.
"Get it right, and Sarawak and Petronas could offer Malaysia a masterclass in decentralisation that fuels both growth and unity in an age demanding shared power and shared responsibility," he stressed.
The Need For Regulatory Clarity
Introducing too many new rules in Sarawak's energy sector could slow down progress. The energy sector works best when the rules are clear and consistent.
Wan Agyl said overregulation can be just as damaging as no regulation at all. Marginal or deepwater projects, which are already high-cost, could become unviable if the burden becomes too great.
He said Sarawak must tread carefully, ensuring policies attract, not deter, the right kind of investment.
"Investors need certainty. Any new regulations must be clear, consistent, and predictable. Sudden changes or overly burdensome requirements could make Sarawak less appealing, especially when neighbouring regions like Indonesia and Brunei are also competing for investments," he said.
For Sarawak to leverage its natural resources to spur economic growth and assert itself as a regional player, it must proceed cautiously.
Samirul noted that too much red tape or regulatory unpredictability could deter investors who thrive on long-term stability.
"Investors today are eyeing global energy markets with a sharper lens, assessing not only profit margins but also political risk and environmental compliance.
"Sarawak, with Petros as its spearhead, needs to strike a delicate balance: asserting its autonomy while ensuring that the regulatory environment remains investor-friendly.
"If the state tips the scales too far toward restrictive policies, it risks undermining the very momentum it needs to build its energy ecosystem.
"The real challenge for Sarawak isn't just about introducing new regulations - it's about ensuring those regulations inspire confidence, not caution, in an increasingly competitive global energy market," he added.