Page 12 - AsianOil Week 19

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SOUTH ASIA AsianOil
The refiner said it had resumed making pet- rochemical intermediates such as high-density polyethylene (HDPE) and polypropylene at its Panipat complex. IOC expects demand for these grades to increase over the course of the month and has brought the facility’s naphtha cracker as well as mono-ethylene-glycol (MEG) unit back online in preparation.
The cracker was set to operate above its design capacity in March, but had been forced shut down a few units owing to a polymer prod- uct stock build-up. IOC added that it had also
experienced logistical issues in the wake of the lockdown.
The Paradip complex is set to resume operations at its polypropylene plant within the week, while other polymer units were also being readied to come online by the end of May.
While national demand for gasoline, die- sel and jet fuel plummeted, the company said there had been a surge in demand for liquefied petroleum gas (LPG), prompting it to increase production.™
SOUTHEAST ASIA
Petronas, Sarawak settle oil and gas dispute
POLICY
MALAYSIAN national oil company (NOC) Pet- ronas and the Sarawak State government have settled their dispute over oil and gas rights as well as a multi-million dollar unpaid tax bill.
Petronas said on May 8 that the two sides had agreed to drop their legal battle in return for the company paying a MYR2bn ($462.2mn) out- standing state sales tax (SST) bill on petroleum product sales in the state. The local government, meanwhile, has agreed to recognise the compa- ny’s complete authority over Malaysia’s entire upstream segment.
Sarawak, and to a lesser degree Sabah, has been seeking greater control of its oil and gas resources in recent years – claiming that the Petroleum Development Act 1974 (PDA 1974) does not apply to Sarawak’s fields, as the state leg- islative assembly had not endorsed it.
While Sarawak introduced its petroleum product sales tax in January 2019, Petronas failed to respond to a notice of assessment the govern- ment issued in September 2019, and Sarawak authorities then took the company to court in November 2019.
Petronas sought a judicial review of the assessment, which the High Court granted on December 10, 2019. Petronas’ case was dis- missed on March 13, however, with the court declaring that the state government was well within its rights to impose the SST on the com- pany’s sales.
The two sides have also agreed that Petro- nas’ tax obligations to the state will be reduced
pending future negotiations. Moreover, Sar- awak has agreed to respect all of the agreements between the two sides reached under PDA 1974.
The state company said: “Similarly, Petronas is still recognised as a national oil company with full authority over regulating the entire devel- opment of the country’s oil and gas industry, in accordance with the federal constitution.”
This is a significant concession, given that Sarawak formed the Petros oil company in March 2018 to regulate its upstream projects while also amending the Oil Mining Ordi- nance 1958 (OMO) in July 2018 to enshrine that all developers must secure licences and leases from Petros.
The move has displeased some of the state’s lawmakers, who have complained over the lack of complete transparency surrounding the terms of the agreement.
Free Malaysia Today quoted Batu Lintang assemblyman See Chee How on May 11 as saying the agreed reduction SST would have “detrimental and dire financial consequences for the state”.
How railed against the state’s recognition of Petronas’ full ownership and control over the country’s upstream, saying the conces- sions contravened the “desires, demands, decisions and resolutions of this august House, and of Sarawakians”.
Bukit Assek assemblywoman Irene Chang described the settlement as “shock- ing beyond words”.™
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w w w . N E W S B A S E . c o m Week 19 14•May•2020