Court Orders Shell Mds To Pay Petronas Over Rm500 Million For Gas Supplies

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Shell MDS (Malaysia) Sdn Bhd was today ordered to make payment for gas supplies to Petroliam Nasional Bhd (Petronas), estimated to exceed RM500 million. FILE PICPUTRAJAYA: Shell MDS (Malaysia) Sdn Bhd was today ordered to make payment for gas supplies to Petroliam Nasional Bhd (Petronas), estimated to exceed RM500 million.
The Court of Appeal allowed the national oil company's application to set aside a High Court interim injunction, which had required Petronas to continue supplying gas to Shell MDS at its Bintulu, Sarawak facility without receiving any payment to date.
​​​​​Shell MDS had withheld payment due to two invoices — one from Petronas and another from Petroleum Sarawak Bhd (Petros) — amid concerns over the possibility of double payment while the jurisdictional issue between Petronas and Petros is being resolved.
A three-member Court of Appeal bench chaired by Datuk Azimah Omar unanimously allowed Petronas' appeal to set aside the injunction and ordered that the amount be paid within 14 days, covering payments due since August last year.
The court also lifted the mandatory injunction that had compelled Petronas to continue supplying gas without receiving payment, as well as two other injunctions relating to a bank guarantee.
Shell MDS had sought to restrain Petronas from making claims on the guarantee, receiving or utilising its proceeds, and had applied for the return of sums already obtained.
The panel further directed that the total amount payable be calculated up to Oct 5, and the funds be deposited the following day.
The payments involved relate to gas supplies worth RM80 million per month since August last year.
Also on the panel were Datuk Wong Kian Kheong and Datuk Ismail Brahim.
Petronas was represented by lawyers Datuk Cyrus V. Das, Khoo Guan Huat and Datuk Azian Mohd Aziz, while Shell MDS was represented by Christopher Leong and Janet Chai Pei Ying.
Lawyers Logan Sabapathy and Foo Joon Liang appeared for Petros as interveners.
In an earlier Court of Appeal hearing, Cyrus argued that Petronas had suffered losses of more than RM80 million a month due to Shell MDS withholding payments, which had been kept in Shell MDS's accounts pursuant to the Kuala Lumpur High Court's order in January.
Shell MDS had applied for the injunction, which was granted by High Court judicial commissioner Arziah Mohamed Apandi, to suspend payments to Petronas and Petros while ensuring continued gas supply.
In her ruling, Arziah held that Shell MDS faced the risk and threat of disruption to its gas supply under two competing gas sales agreements (GSAs), with financial implications since monthly payments were estimated at between RM70 million and RM100 million.
She noted that Shell MDS had sought to ease the situation by offering to park the payments in an interest-bearing account pending resolution. However, Petronas had moved to enforce the bank guarantee.
The injunction was granted on the basis of Shell MDS being bound by two separate gas supply agreements, one with Petronas (signed on July 17, 2020) and another with Petros (signed on Aug 16, 2024).
The court said the injunction preserved the status quo of all parties pending the substantive decision, while ensuring Shell MDS could continue its operations without prejudicing the ultimate rights of Petronas or Petros, as would be determined by the court. - NST

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