Should Sabah Ask for a Share of Petronas? The Argument and the Facts

What is the argument?

Debate about Sabah's oil and gas usually centres on percentages of revenue: the 5% cash payment, calls to raise it to 20%, and the separate 40% special grant case. The alternative some in Sabah put forward is to seek ownership: a stake in Petronas itself, so the state would share in its profits and have a say in how it is run, rather than negotiating payments from outside.

This page sets out the facts needed to weigh that idea, and the main arguments on both sides. It is not a recommendation.

Who owns and controls Petronas?

• Created by law in 1974. Petronas was set up under the Petroleum Development Act 1974. Section 3(2) says it "shall be subject to the control and direction of the Prime Minister".
• Owned by the federal government. The federal government is its sole shareholder. The Prime Minister is not its chairman; Petronas has its own board and chairman.
• A global company. Petronas is ranked 242nd in the 2026 Fortune Global 500, with revenue of US$62.2 billion.
• Dividends go to the federal government. Petronas said it would pay a RM20 billion dividend in 2026, down from RM32 billion in 2025, after its 2025 profit after tax fell to RM45.4 billion.

What does Sabah get from oil and gas today?

Sources: Finance Minister II in the Dewan Rakyat, 11 November 2025 (Malay Mail); Sabah Finance Minister Masidi Manjun, 16 April 2025 (The Star); Chief Minister's statement, 17 July 2025.

These project stakes came through a Commercial Collaboration Agreement that Sabah and Petronas signed on 7 December 2021. In August 2026 Chief Minister Hajiji Noor said Sabah had reached agreement with Petronas for a 40% stake in a floating LNG facility in the state, with signing expected within months. Stakes like these are in individual projects, not in Petronas as a company. For more on the LNG plans, see Sabah's gas and the LNG plans.

Status as of September 2026: we have not found a report that the 40% floating LNG agreement has been signed.

Has anyone proposed this before?

• December 2019: Prime Minister Mahathir Mohamad suggested the federal government could consider selling stakes in Petronas to the states where its oil and gas fields are. Sabah DAP secretary Chan Foong Hin objected to Sabah paying for it, saying "It is not right to raise funds for the federal government by way of selling Petronas shares to the state government", and argued any shares should be transferred for a token sum.
• December 2020: former Chief Minister Shafie Apdal urged the Sabah government to keep pursuing shareholding equity in Petronas instead of the 20% oil royalty, saying this had been agreed by the federal government under Mahathir.

Neither led to Sabah owning any part of Petronas.

What are the arguments against?

• Dividends go to the federal government. The RM20 billion Petronas plans to pay in 2026 goes to the federal government, its sole shareholder.
• Revenue is not all profit. The Finance Ministry told Parliament in November 2025 that about 80% of petroleum revenue goes to production costs, with 5% each to the federal and state governments and roughly 10% shared between Petronas and investors after tax.
• Paying for it. Under the 2019 suggestion, states would have bought their stakes. Sabah DAP objected to Sabah paying, saying the oil and gas fields already belong to the state.
• Other routes exist. Sabah has already raised revenue through its own sales tax and project stakes. Sarawak has taken a similar route through its own companies and taxes, and parts of its dispute with Petronas are still in court.

How one Sabah lawyer puts the case

This section is opinion, not fact. A Kota Kinabalu lawyer we spoke to argues that Sabah should ask for about a third of Petronas rather than keep negotiating royalty percentages.

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