Petronas pursues ventures despite arbitral friction

Despite a brewing dispute on proprietary rights over Sabah that resulted in a recent $2 billion seizure of its assets in Luxembourg, Malaysian state-owned oil company Petronas in collaboration with the Philippine National Oil Co. is holding offshore drilling operations in different parts of the country including Mindoro, a top energy official reported.

The heirs of the Sultanate early this month seized two Luxembourg-based units of Petronas to enforce a $14.9-billion award of a French arbitration court.

Malaysia, which described the arbitral ruling as “baseless,” has said it will defend its legal position, adding that the Petronas units have divested their assets.
Lawyers of the heirs said the Petronas units were now under the control of bailiffs in Luxembourg, pending any appeal by against the seizure.

PNOC president and chief executive officer Pedro Aquino Jr. reported to President Ferdinand “Bongbong” Marcos Jr. and Energy Secretary Raphael Lotilla that the search for oil continues as the oil agency tied up with partners from China, Vietnam, and Malaysia for joint ventures.

“Ongoing is the joint partnership with Petronas of Malaysia for Offshore Mindoro SC 47, and necessary fieldwork for the Ragay Gulf Project,” he said.

Lotilla said collaborative efforts produced the Joint Marine Seismic Undertaking with China National Offshore Oil Corporation and Vietnam Oil and Gas Corporation (PetroVietnam) in 2005, to assess petroleum resource potential areas in the South China Sea.

A former energy official said Petronas has held initial discussions with the Philippine National Oil Company to invest in a planned $2-billion liquefied natural gas hub in the Philippines.

A French arbitration court in February ordered Malaysia to pay $14.9 billion to the descendants of the last Sultan of Sulu but Malaysia said the Paris Court of Appeal had stayed the ruling after finding that enforcing the award could infringe on the country’s sovereignty.

Law minister Wan Junaidi Tuanku Jaafar said the stay would prevent the award from being enforced as Malaysia works to set aside the ruling. Malaysia had not previously participated in the arbitration.

Lawyers for the Sultanate, however, said the February ruling remains legally enforceable outside France through the New York Convention, a U.N. treaty on international arbitration recognized in 170 countries.

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