KEY POINTS
- Court orders Shell MDS to pay Petronas.
- Monthly arrears estimated at up to 80 million ringgit.
- Total liabilities could reach 1 billion ringgit.
Malaysia’s Court of Appeal has ordered Shell MDS (Malaysia) to resume its overdue monthly gas payments to state-owned Petroliam Nasional Bhd, better known as Petronas, overturning a High Court injunction that had shielded the company from making payments since August 2024.
Shell MDS told to settle arrears
The ruling, delivered on Monday, came from a three-judge panel that unanimously found no breach of contract on the part of Petronas. The court said the energy company continued supplying gas to Shell MDS throughout the dispute. The case has been closely watched given the scale of the arrears, which Petronas estimates at between 70 million and 80 million ringgit per month, with potential liabilities climbing to as much as 1 billion ringgit including interest.
The injunction had originally been granted after Shell MDS received competing invoices from Petronas and Sarawak’s state-owned aggregator, Petros. Shell argued that it was caught between conflicting claims and sought protection from making double payments while the issue was being resolved. The order also required Petronas to continue supplying gas to Shell MDS during the stand-off.
Petronas wins legal backing
In its decision, the appellate court lifted not only the payment injunction but also a separate order that had barred Petronas from drawing on Shell MDS’s bank guarantee. This clears the way for the national energy firm to access the guarantee and enforce collection.
The court further directed Shell MDS to pay Petronas all outstanding amounts due from August 2024 through October 5 this year, with payment required by October 6. Shell Malaysia said in a statement to Reuters that the company respects and will comply with the judgment.
Petronas, which had insisted it met all contractual obligations, has not immediately commented on the ruling. The court also instructed both Petronas and Petros to find a resolution to their dispute promptly, a move seen as critical for stability in Malaysia’s gas sector.
According to Reuters, Petronas was additionally awarded legal costs, with Shell MDS ordered to pay 50,000 ringgit and Petros 30,000 ringgit. The decision reinforces Petronas’s claim to payment and strengthens its standing as the country’s principal gas supplier at a time of heightened competition and overlapping state claims.
