Sarawak’s energy feud with Petronas gives Malaysia’s Anwar a legal headache

A constitutional battle for control over Malaysian Borneo’s energy wealth has moved to the country’s highest court, delivering a fresh test of whether Prime Minister Anwar Ibrahim can hold together a ruling coalition of disparate interests.The state of Sarawak, whose governing coalition is a key ally in Anwar’s federal unity government, announced on Monday it had filed a petition in the Federal Court challenging the constitutional validity of three federal petroleum laws that provide the legal foundation for Petronas’ decades-long domination of Malaysia’s oil and gas sector.The filing deepens a stand-off between the government-controlled energy company and the resource-rich state on Borneo island over offshore petroleum, raising questions about whether a political settlement brokered last year has already unravelled.Sarawak holds more than 60 per cent of Malaysia’s natural gas and sits at the heart of the country’s energy plans. Petronas, meanwhile, is a cornerstone of federal revenues.This is a fight not only over money, but also state sovereignty and the constitutional bargains that have held Malaysia together since 1963, when Malaya, Sabah, Sarawak and – briefly – Singapore formed the federation under that year’s Malaysia Agreement.Petros vs PetronasThe three statutes Sarawak has in its sights – the Petroleum Development Act 1974, the Continental Shelf Act 1966 and the Petroleum Mining Act 1966 – form the federal legal framework under which Petronas has long claimed ultimate authority over the country’s petroleum resources, including those off Sarawak’s northwest coast.