THE Court of Appeal has ordered Shell MDS (Malaysia) Sdn Bhd to pay Petroliam Nasional Bhd (PETRONAS) more than RM500 million in outstanding gas supply charges, after setting aside a temporary High Court injunction that had allowed Shell to receive gas without payment since August 2024.
The decision followed a unanimous ruling by a three-judge panel, chaired by Datuk Azimah Omar, which allowed Petronas’s appeal to overturn the injunction and ordered Shell MDS to pay the owed amount within 14 days.
The legal row stems from a payment dispute triggered by the issuance of two separate invoices — one from PETRONAS and another from Petroleum Sarawak Bhd (PETROS) — prompting Shell MDS to withhold payment out of concern it could be charged twice for the same supply.
“The Court of Appeal has now instructed that the payment, which has been withheld since August last year, must be made and calculated up to 5 October 2025,” the court said. The sum is to be deposited by the following day.
Petronas also successfully quashed a second and third injunction, which had sought to block it from making claims on bank guarantees, or receiving and using proceeds from them.
Shell MDS had previously obtained the injunctions through the High Court in January, arguing that it faced operational risks and financial exposure of RM70 to RM100 million monthly due to competing gas supply agreements with both Petronas and PETROS.
The High Court had ruled in favour of Shell MDS, allowing it to temporarily withhold payments while continuing to receive gas at its Bintulu facility, under what was described as an interim arrangement pending resolution of the jurisdictional conflict between federal oil company Petronas and state-owned PETROS.
The High Court’s Judicial Commissioner, Arziah Mohamed Apandi, noted that Shell MDS had attempted to mitigate the impasse by proposing to set aside the disputed payments in an interest-bearing account, but Petronas had proceeded to enforce the bank guarantees.
At the heart of the dispute are two conflicting Gas Sales Agreements (GSA): one signed between Shell MDS and Petronas in July 2020, and a subsequent agreement with PETROS in August 2024.
During earlier Court of Appeal proceedings, Petronas’s legal team, led by Datuk Cyrus V Das, Khoo Guan Huat and Datuk Azian Mohd Aziz, revealed that Petronas had been suffering losses of more than RM80 million per month due to non-payment by Shell MDS.
Shell MDS was represented by Christopher Leong and Janet Chai Pei Ying, while PETROS was represented as an intervener by Logan Sabapathy and Foo Joon Liang.
The Court of Appeal stressed that the dispute over jurisdiction and contractual obligations remains unresolved, but Shell MDS is no longer legally entitled to withhold payment while awaiting clarity.
Sitting alongside Datuk Azimah on the panel were Justices Datuk Wong Kian Kheong and Datuk Ismail Brahim. - September 23, 2025
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