Two Luxembourg subsidiaries of Malaysian state oil company Petronas have been seized by the descendants of a late sultan, lawyers said, in a dramatic escalation of a $15 billion legal dispute connected to an agreement signed 144 years ago, reported the Financial Times.
Representatives of the heirs of the last Muslim sultan of Sulu, who claimed to hold land in what is now the oil and gas rich Malaysian state of Sabah, said bailiffs in Luxembourg seized the holding companies on behalf of their clients on Monday, the publication reported Tuesday.
The Luxembourg-registered subsidiaries, Petronas Azerbaijan (Shah Deniz) and Petronas South Caucasus, managed the state-owned energy company’s gas interests in Azerbaijan and could be worth more than $2 billion, said the FT.
The move is part of legal efforts started in 2017 by the Sulu heirs to win compensation over land in Sabah that they said their ancestor leased to a British trading company in 1878, before the discovery of vast natural resources in the area.
On Tuesday Petronas confirmed that its “two subsidiaries mentioned in the report have been served with ‘Saisie-arret’ on 11 July 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,” the Malaysian national oil company (NOC) said in a statement.
In February, Petronas’s Luxembourg holding companies liquidated a 15.5% share in Azerbaijan’s Shah Deniz offshore gas field, previously valued at $2.3 billion.
“Petronas views the actions taken against it as baseless and is working vigorously to defend its legal position on this matter,” added the NOC.
In March, an arbitrator in France ruled that Malaysia, which inherited the obligations of the lease agreement upon securing independence from Britain, must pay the descendants $14.9 billion.