On August 17th, Petronas will celebrate its 50th birthday. The global oil and gas giant was founded in Malaysia in 1974, less than twenty years after the country secured independence. Now, it has emerged as one of the “new seven sisters,” a group of energy firms trailblazing the industry from outside of the OECD.
Petronas’ origins reflect Malaysia’s ongoing resistance to the surviving tendrils of colonial influence. Its early days were plagued by pushback from Western incumbents including ExxonMobil and Shell. They tried to claim control of Malaysia’s natural resources, which Petronas had been established to manage.
Skipping ahead to today, Petronas operates in over 100 countries, is the fifth largest exporter of liquefied natural gas and the largest integrated petrochemical producer in Southeast Asia. It has taken the energy sector by storm, and it has no plans to slow down upon turning 50.
Looking ahead, Petronas has committed to reaching net zero carbon emissions by 2050. Already, the company has spent over $130 million on the research and development of environmental solutions, with a further $120 million invested into technology startups.
It has reduced its greenhouse gas emissions by 1.8 million tonnes of CO2 equivalent over the course of 2023, while establishing a network of over 570 charging points for electric vehicles and 195 laboratories for future solutions. Its Gentari subsidiary has rapidly become one of Southeast Asia’s fastest-growing clean energy firms with its focus on renewable resources, hydrogen, electric vehicles and other innovative technologies.
But Petronas’ strides to align itself with the global energy transition appear to have threatened its competitors in other countries. Now, the company is at grave risk of being thrust back into the days of colonial meddling.
Among its various areas of operation, Petronas maintains an active presence in the oil-rich Sabah region in Northern Borneo. Sabah has been part of Malaysia since the country first formed, at the decision of its indigenous people. But sovereignty of the territory has long been contested by the self-declared heirs of a defunct Sultanate that once ruled the Sulu islands of the Philippines. Citing little more than a skewed interpretation of a colonial-era agreement, the Sulu plaintiffs claim that Sabah and its resources are rightfully theirs – although, historians say, the Sulu had no real sovereignty over the region at the time the agreement was concluded.
Despite questionable legal grounds, the case has been dragged in and out of courts across Europe. Former colonisers, including the UK, Spain, France and the Netherlands, have weighed in on a matter that should have been dismissed from the start.
Particularly disastrous was Spain’s appointment of Gonzalo Stampa to arbitrate the case against the wishes of the other party to the proceedings, Malaysia. When the court in question realised its mistake, it revoked Stampa’s appointment and ordered him to cease dealing with the case.
In an act of “deliberate noncompliance” that would later earn him his own criminal conviction for contempt of the court, Stampa transferred the case to Paris and ordered the Malaysian Government to pay the Sulus an inordinate sum of $15 billion – derived as a percentage of the oil and gas revenues from Sabah.
When the Paris Court of Appeal granted a stay on Stampa’s order, they simply transplanted the case once again. Eventually, the Sulus brought their case to a Court in Luxembourg. In an act that can only be described as colonial theft, the bailiffs in Luxembourg issued orders for Petronas’ assets to be seized as ‘compensation’, despite Petronas having never even been a party to the case or Stampa’s award.
Petronas continues to fight for justice, and has recently in subpoenaing the Sulu’s third-party financiers for evidence of suspected corruption. But its assets remain frozen by Luxembourg, and Philippines’ Government has caught the scent of blood. Having previously , the Philippines has now filed its own submission to the United Nations in a bid to extend its formal territorial borders and take control of Sabah.
History has shown us how colonial interests can impede a country’s development. We are seeing the same pattern repeating once more.
In the late 1970s, Petronas had to resist Western competitors’ attempts to maintain a hold over Malaysian resources. Now, it is facing a similar fight against a complex web of powerful, international actors.
This time, the stakes are even higher. The global energy transition is a categorical imperative without which our planet will face increasing catastrophe.
Petronas has emerged as a leader in the energy sector and the main driving force of the net zero strategy in Malaysia. The $15 billion sum being unduly demanded by the Sulus is almost triple the cost of Malaysia’s energy transition plan.
The Sulu plaintiffs would not have made it so far without the backing of high-profile lawyers, American and British investors, and a network of sympathetic courts across Europe.
As Petronas continues into its next 50 years, we can only hope that it will be freed from these colonial shackles to lead Malaysia and other emerging economies into a better and brighter future.
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