[UPDATED] Petronas: our two subsidiaries already divested assets in Azerbaijan

KUALA LUMPUR – National oil and gas company Petronas says its two subsidiaries registered in Luxembourg which were served with seizure orders have already divested their assets in Azerbaijan.

Referring to the Financial Times’ report titled “Petronas subsidiaries seized as lawyers press US$15 billion claim on Malaysia”, the company also confirmed that its two subsidiaries mentioned in the article have been served with “saisie-arret” on July 11, 2022.

“Petronas wishes to clarify that these subsidiaries, Petronas Azerbaijan (Shah Deniz) S.à r.l. and Petronas South Caucasus S.à r.l., have previously divested its entire assets in the Republic of Azerbaijan and the proceeds from the exercise have been duly repatriated,” it said in a statement.

“Petronas views the actions taken against it as baseless and is working vigorously to defend its legal position on this matter.”

The two subsidiaries were seized by the authorities there as part of the award obtained by the heirs of the now-defunct Sulu sultanate in a French arbitration tribunal in March.

According to the Financial Times, lawyers representing the Sulu claimants said Luxembourg bailiffs had seized the two subsidiaries last Monday.

The companies managed Petronas’ interests in Azerbaijan and were reportedly worth US$2 billion (RM8.87 billion).

The seizure is part of the award issued by a French arbitration court totalling US$14.9 billion to the heirs of the defunct Sulu sultanate.

This final award was based on the supposed violation of the 1878 agreement between Sultan Jamal Al Amam, Baron de Overbeck, and the British North Borneo Company’s Alfred Dent.

London-based lawyer Elizabeth Mason, who represents the claimants, said her client’s demand is based on a written contract that Malaysia is obliged to fulfil.

Both counsels have indicated that they would pursue more state assets if a resolution was not reached.

Speaking to the news publication was also prominent arbitration lawyer, Colin Ong, who said the case had proceeded in an unusual manner as there was no set precedent based on the 1958 New York Convention on international arbitration, of which Malaysia is a signatory.

“It is very unusual... (it involves) an agreement predating the formation of a country,” said Ong.

In the March ruling, Malaysia was given three months to pay the award or risk paying interest as well.

In the same month, Putrajaya filed an application to nullify the final award.

The Foreign Ministry and Attorney-General’s Chambers (AGC) had also issued a statement saying the Malaysian government does not recognise the claim.

Attorney-general Tan Sri Idrus Harun meanwhile said the AGC was “looking into the matter”.

“We’re looking into it,” Idrus was reported as saying to the New Straits Times. – The Vibes, July 12, 2022