KUALA LUMPUR: Petronas Carigali Sdn Bhd's legal dispute with Sarawak goverment may have cascading effects on partners, contractors and companies dependent on Petroliam Nasional Bhd-operated infrastructure or feedstock there, said analysts.

They named Petronas Gas Bhd, Petronas Chemicals Group Bhd, Hibiscus Petroleum Bhd, Dialog Group Bhd and Sapura Energy Bhd as among those that may be affected.

Sarawak's utility and telecommunications ministry had on May 1 issued a letter of demand to Petronas Carigali over alleged unauthorised operations at the Miri Crude Oil Terminal (MCOT).

The allegation is based on non-compliance with Section 7(e) of the Distribution of Gas Ordinance (DGO) 2016, which regulates construction and operation of gas infrastructure in Sarawak.

Petronas on Friday confirmed receiving the notices.

The national oil company, however, said its upstream arm Petronas Carigali is operating in accordance with the Petroleum Development Act 1974 (PDA 1974).

The Act provides statutory authority for the company to carry out petroleum-related operations nationwide, subject to legal compliance.

"While we respect the aspirations of the state of Sarawak, Petronas also has a duty to uphold the PDA 1974 and safeguard national interests," it said in a statement.

Petronas said it remains committed to constructive engagement and will continue working closely with both the federal and Sarawak state governments.

This includes collaboration with Sarawak's state-owned oil and gas firm, Petroleum Sarawak Bhd (Petros), to explore future arrangements that ensure regulatory clarity and operational continuity.

"We are also committed to ensuring that the rights and interests of all parties, including end-consumers and investors, are addressed accordingly," it said.

Political economic and international relations analyst Samirul Ariff Othman said uncertainty over infrastructure ownership, licensing and compliance in Sarawak will ripple across the industry.

"Publicly listed companies involved in gas infrastructure, liquefied natural gas (LNG) and upstream activities in Sarawak will need to monitor the situation closely," he told the Business Times.

BMI senior oil and gas analyst San Naing exopect the uncertainty will have a freezing effect on new investments in Sarawak, at least in the near term.

Naing said Shell and ConocoPhilips, which operate large-scale projects in Sarawak are likely to be affected by the legal dispute.

"ConocoPhilips has reportedly divested from one of the offshore deepwater projects recently. PTT Exploration and Production Public Co Ltd (PTTEP) has already postponed the final investment decision for investment in the Lang Lebah gas project.

"It remains uncertain PTTEP's operator of the Lang Lebah natural gas and carbon capture and storage (CCS) project will materialise soon. Further delays to the project will adversely affect LNG production ambitions by PTTEP and Petronas," Naing added.

According to Samirul, the potential ramifications for Petronas are significant.

Sarawak holds over 60 per cent of Malaysia's total gas reserves and 40 per cent of its oil, including vital fields in the Central Luconia and Bintulu offshore basins.

He said these provide feedstock to the Bintulu LNG Complex - a key export revenue generator - and to domestic industrial gas users.

"Disruptions to gas licensing or terminal access, as is possible with MCOT, could delay LNG exports, raise compliance costs, and reduce overall revenue certainty," Samirul added.

Meanwhile, Naing expects Petronas's strategic priorities and investment plans to focus more on resources in the shallow waters of Peninsular Malaysia and Sabah.

"Petronas is still able to manage oil and gas blocks in Sabah, but this may change in the future if the Sabah state government follows Sarawak's lead," he said.

"Moving forward, maintaining an amicable relationship with the Sabah government remains critical for Petronas in managing the hydrocarbon resources there," he added.

In a separate statement, Bersatu's youth wing Armada dismissed the Sarawak government's claim that Petronas Carigali is operating illegally at MCOT.

Armada called the accusation baseless and inconsistent with existing laws.

It said the PDA 1974 act clearly grants Petronas exclusive rights to regulate all petroleum-related activities across Malaysia.

"Based on this legal foundation, Petronas does not require any licence or permit from the Sarawak government to conduct its petroleum operations in the state," it said.

Armad reminded the public that in 1976, the Sarawak government had signed a formal agreement with the federal government, transferring ownership and control of its petroleum resources to Petronas.

"Any claims that Petronas is operating illegally in Sarawak are clearly unfounded and contradict legal facts," it added.