Petronas License - The basic rule
"An entity that wishes to provide goods/services to the upstream sector in the oil and gas industry in Malaysia must have a valid license. The upstream sector includes but is not limited to exploration, development and production of oil and gas"
The above, however, is not always applicable and there are exceptions. Furthermore, the License issue applies to the Upstream sector only. For Downstream, a Registration of the Seller with Petronas is sufficient and these two are not the same. In overview:
A valid Petronas License enables an entity to supply goods/services to both upstream and downstream sectors in the oil and gas industries in Malaysia. A valid Registration enables an entity to supply goods/services to Petronas Group of Companies in the downstream sector only.
Let's first focus on the Upstream case and whether a Petronas License is required. One of the first things to identify is who exactly your buyer is. The various scenarios are listed hereunder, with each a recommended approach a Seller can take.
Upstream - The buyer is Petronas, or a linked company
Petronas linked companies are either wholly or partly owned by the national oil company. This list includes the likes of Petronas Carigali Sdn Bhd, Petronas Dagangan Bhd (PetDag), Petronas Gas Bhd (PetGas), MISC Bhd and Malaysia Marine & Heavy Engineering Bhd (MMHE). So when any of these companies is the buyer of your product or service there's no way around it and a Petronas license is required.
If your company and the project you're pursuing happens to be in this category, it is important to start early with any application for a Petronas license or at the least verify whether you qualify. Most foreign companies, however, won't qualify unless they have a local office that ticks all the boxes. So in most cases, you have to consider working with a local party to satisfy the requirements. It is prudent to be careful in that selection considering the agreement, and payments from the end client, will flow through this party. We can help you find or select a suitable candidate based on your needs.
Upstream - The buyer is an Operator not linked Petronas
Many fields in Malaysia are operated by companies not part of the Petronas Group. Easy examples are Shell, PTTEP, ConocoPhillips, Repsol etc. Hence, at first glance one seems to be off the license hook. However, the license rule also applies if Petronas is a partner in the field and this is mostly the case in Malaysia.
Nevertheless, there is a possibility that the Operator obtained a dispensation from Petronas for the license requirement. If not, the same advice as above is applicable. We can assist in finding this out.
Upstream - The buyer itself supplies an operator and is not a Petronas Group company
Examples of buyers in this category are TechnipFMC, MDPC, Bumi Armada, Sabah International Petroleum, Deleum etc. These companies sell a product in which your product/service is included. This is where the license issue becomes less straightforward and exemptions are possible.
Another factor playing a role in this situation is whether your product or service has a local competitor. Note that the purpose of the Petronas license is/was to protect Malaysian businesses and give them a chance to compete for orders in their own backyard. Hence in the event there is no local competitor, your buyer could apply to Petronas for dispensation. There are several examples whereby such dispensation was granted.