Federal Court turns down Petronas bid to challenge Sarawak

PUTRAJAYA: The Federal Court has dismissed Petroliam Nasional Bhd’s (Petronas) application to commence proceedings to determine that the national oil company is the sole authority of all upstream oil and gas activities in the country, including Sarawak.

Chief Judge of Malaya Tan Sri Ahmad Maarop had on Friday morning rejected Petronas’ application of leave to commence proceeding on the matter in the Federal Court. 

Petronas had last month filed an application to seek a declaration from the Federal Court on matters pertaining to the Petroleum Development Act 1974 (PDA) and its position with regard to the regulatory controls of upstream activities in Sarawak. 

This came in the wake of Sarawak setting up its own oil and gas company, Petros, as the regulator of oil and gas activities in the state based on Sarawak Oil Mining Ordinance (OMO). 

Petronas is seeking a declaration that the OMO was repealed by the PDA and hence Petros is not valid.

Petronas is seeking a declaration that the PDA was duly enacted by Parliament and stated that Petronas is the exclusive regulatory authority for the upstream industry throughout Malaysia, including in Sarawak.
 

Source: https://www.thestar.com.my/business/business-news/2018/06/22/federal-court-turns-down-petronas-bid-to-challenge-sarawak/

Sabah granted observer status in Petronas vs Sarawak case

PETALING JAYA: The Sabah government will be participating as an observer in the legal proceeding between Petroliam Nasional Bhd (Petronas) and the Sarawak government, which will be held on June 21.

In a letter dated June 11, the Federal Court granted the Sabah Attorney General’s (AG) application to attend the hearing as a “watching brief”.

A watching brief functions as an observer in a proceeding in which one was not directly or immediately concerned. Sabah AG Dayangku Fazidah Hatun Pg Bagul submitted the application to the Federal Court on June 5 to attend the hearing as a watching brief, stating that any decision from the case would have an impact on the state.

Last week, Petronas challenged the Sarawak government by taking legal action in seeking a declaration that the national oil company is the sole governing authority for upstream oil and gas (O&G) activities in Malaysia for both onshore and offshore.

The case by Petronas, which was filed on June 4, said the national oil company was seeking the declaration that the Petroleum Development Act 1974 (PDA) supersedes the Sarawak Oil Mining Ordinance 1958 (OMO) , the law the state has used as its basis for setting up its own O&G company Petros (Petroleum Sarawak Bhd) as the sole authority for O&G activities in Sarawak.

On Monday, Sabah Chief Minister Datuk Seri Mohd Shafie Apdal said he had asked the state AG to monitor the legal case by Petronas against the Sarawak government as it would have an implication on the state.

Petronas filed another document on June 8 to seek a court order to preserve the status quo until the legal case was resolved.

The court hearing to seek leave was postponed to June 21 from June 12.

Following that, the Sarawak government issued a statement to express its “deep disappointment” with the decision by the Federal Court to postpone a hearing over the state’s rights on its O&G resources.

The state government said it would consider all other options to protect and enforce its constitutional rights.

“The state government would not allow Petronas to disrespect and disregard our rights to regulate the upstream activities under our laws such as the OMO and the Land Code,” it said.

Source: https://www.thestar.com.my/business/business-news/2018/06/13/sabah-granted-observer-status-in-petronas-vs-sarawak-case/

Sarawak govt ‘disappointed’ with decision to postpone hearing

KUCHING: The Sarawak government has expressed its “deep disappointment” with the decision by the Federal Court to postpone a hearing over the state rights on its oil and gas resources to June 21.

In a statement yesterday, the state government said it will consider all other options to protect and enforce its constitutional rights in this matter,

“The state government would not allow Petroliam Nasional Bhd (Petronas) to disrespect and disregard our rights to regulate the upstream activities under our laws such as the Oil Mining Ordinance and the Land Code,” it said.

Over the past year, Sarawak has embarked on several initiatives that would see Petroleum Sarawak Bhd (Petros) come into force from July.

An official letter from Sarawak Attorney General (AG) Datuk Talat Mahmood Abdul Rashid to Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin on April 13 stated that from July 1, the state government would regulate the downstream and upstream O&G industry in accordance to state laws.

On June 4, Petronas filed a suit seeking a declaration from the Federal Court that it is the exclusive owner of petroleum resources in the country, as well as the only regulator of upstream activities nationwide, including in Sarawak.

Meanwhile, the Sabah government is set to intervene in the Petronas suit seeking a declaration that it is the exclusive owner of the country’s petroleum resources.

Chief Minister Datuk Seri Mohd Shafie Apdal said that he had asked the state AG to monitor the suit against the Sarawak government that would have implications on Sabah.

Source: https://www.thestar.com.my/business/business-news/2018/06/12/sarawak-govt-disappointed-with-decision-to-postpone-hearing/

Sarawak govt ‘disappointed’ with decision by Federal Court to postpone hearing on Petronas case

KUCHING: The Sarawak government has expressed its “deep disappointment” with the decision by Federal Court to postpone to June 21 a hearing over the state rights on its oil and gas resources.

In a statement yesterday, the state government said it will consider all other options to protect and enforce its constitutional rights in this matter, 

On June 4, Petroliam Nasional Bhd (Petronas) filed a suit seeking a declaration from the Federal Court that it is the exclusive owner of petroleum resources in the country, as well as the only regulator of upstream activities nationwide, including in Sarawak.

The case was supposed to be heard on Monday, June 11.

“It is surprising that Petronas who made the application and sought an urgent hearing has no objection to the postponement of hearing of the case,” it said.

The postponement, according to the statement, was granted without according the Sarawak Attorney General legal team the courtesy of being heard on the state government’s objection.   

“The state government would not allow Petronas to disrespect and disregard our rights to regulate the upstream activities under our laws such as the Oil Mining Ordinance and the Land Code,” it said.

Over the past year, Sarawak has embarked on several initiatives that would see Petroleum Sarawak Bhd (Petros) come into force from July.

An official letter from Sarawak Attorney General (AG) Datuk Talat Mahmood Abdul Rashid to Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin on April 13 stated that from July 1, the state government would regulate the downstream and upstream O&G industry in accordance to state laws.

Source: https://www.thestar.com.my/business/business-news/2018/06/11/sarawak-govt-disappointed-with-decision/

Petronas warned of July 1 being the cut-off date

EVERYBODY knows that national oil company Petroliam Nasional Bhd (Petronas) has been losing its clout in Sarawak in the last few years. It came to light in 2016 when Sarawak issued a moratorium on all new applications for work permits for staff outside the state, including Petronas.

It was reported that the state government’s decision was prompted by complaints from Petronas officers from Sarawak whose services were terminated or retrenched because of the downturn in the oil price.

In April last year, Sarawak announced the setting up of Petroleum Sarawak Bhd (Petros), a company that would enable Sarawak to actively participate in oil and gas (O&G) extraction activities in the state.

Petronas since then has said that it has had a series of discussions with the state, but there is not much progress.

In the last one year, Sarawak has embarked on several initiatives that would see Petros come into force from July this year.

The grim reminder came in an official letter from Sarawak Attorney General (AG) Datuk Talat Mahmood Abdul Rashid to Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin on June 13.

The letter stated that starting from July 1, the state government would regulate the downstream and upstream O&G industry in accordance to state laws, including the Oil Mining Ordinance 1958 (OMO), the Land Code of Sarawak and the Gas Distribution Ordinance 2016.

The letter stated that Petronas has to comply with the state laws for the exploration, prospecting and mining of petroleum including natural gas, and the distribution of gas within the state.

“Any such activities and the use or occupation of state land, both onshore and offshore, carried out without the required licences or leases issued under the state laws after July 1 would be deemed illegal and appropriate action would be taken,” the letter stated.

Petronas was told to liaise “immediately” with the Sarawak state-owned oil exploration company Petros to discuss arrangements on the exploration and prospect of mining petroleum and natural gas in the state.

The letter also stated that the state government would be holding a dialogue session with all persons or companies involved in upstream and downstream O&G activities in Sarawak.

Petronas responded on May 22, more than a month after the issuance of the letter from the Sarawak AG and two weeks into the formation of a new government at the federal level under Pakatan Harapan.

Petronas issued a lengthy letter stating that the company disagreed with the state on its authority over the exploration and mining activities of O&G resources.

“Petronas is not required to apply for any such licences or leases from the state under the OMO … there is no requirement for Petronas to liase with Petros. In all instances, Petronas fully reserves its rights in respect of the foregoing,” the three-page letter ended.

Petronas, in essence, disagreed with Sarawak’s contention that the state was not covered by the Petroleum Development Act 1974 (PDA).

In outlining details, Petronas said that the PDA had vested in it exclusive powers to regulate upstream O&G activities throughout Malaysia and that no other body had such powers.

“The OMO was superceded by the PDA, which by necessary implication repealed the OMO,” the letter said.

It also said that the Sarawak government had entered into an arrangement, in March 1975, vesting in Petronas the ownership of petroleum resources both offshore and onshore in return for agreed cash to the state government.

Petronas also wrote that the OMO was a pre-Malaysia Day law and that under the Malaysia Act 1963, the OMO is to be treated as a federal law since the ordinance pre-dates the formation of Malaysia.

This means that from then on, the Sarawak government could no longer consider itself the authority under the ordinance, Petronas stated.

Since the letter was issued, there were no major developments until June 4, when Petronas filed a case seeking a declaration from the Federal Court that it is the exclusive owner of petroleum resources in the country, as well as the only regulator of upstream activities nationwide, including in Sarawak.

It is worth noting that Sarawak has also issued a handbook on “The Regulatory and Basic Procedures of the Oil & Gas Industry in Sarawak”.

The handbook says that the O&G industry in Sarawak will be experiencing regulatory adjustment in consequence of the state reclaiming its constitutional authority to regulate the mining and production of petrochemicals, as well as the distribution of gas in Sarawak.

It says that the aim of the handbook is to give industry players clear and comprehensive guidance to help them understand and apply all relevant state legislations when operating in Sarawak.

“The state government will exercise its regulatory powers in a manner that would not jeopardise the interest and investment of those who have already been operating in Sarawak,” the handbook states.

The role of Petros is also laid out in the handbook, including to assist the state government to issue exploration, prospecting and mining licences.

It points out that Petros is to be a major revenue contributor to the Sarawak state through active participation as a major player in the exploitation and utilisation of petrochemicals in Sarawak.

There has been growing dissatisfaction in the Sabah and Sarawak governments over the years on oil royalties, despite the fact that the bulk of Petronas’ hydrocarbons are derived from the two states.

Things between Sarawak and Petronas started to heat up last year when Sarawak chief minister Datuk Patinggi Abang Johari Tun Openg announced the formation of Petros.

Wan Zulkiflee then responded that he welcomed any involvement by state government entities in the O&G business, but it has to be within the PDA.

He said that under the PDA, Petronas is the custodian and manager of the O&G resources in Malaysia.

Related story:

The Petronas-Sarawak oil intrigue

Source: https://www.thestar.com.my/business/business-news/2018/06/09/petronas-warned-of-july-1-being-the-cutoff-date/

The Petronas-Sarawak oil intrigue

Change in political landscape paves way for a decision on who has control over oil and gas resources once and for all

SIX DAYS after former prime minister Datuk Seri Najib Tun Razak announced the dissolution of Parliament, Petroliam Nasional Bhd (Petronas) received a letter from the Attorney General (AG) of Sarawak, which it knew it had to act on.

The letter effectively aimed to relieve Petronas as the undisputed guardian of oil and gas (O&G) resources in Malaysia and its powers to be shared with the state government-owned Petroleum Sarawak Bhd (Petros).

Officials familiar with the matter say the biggest fear for Petronas was that its role as the authority for any O&G exploration works would be compromised not because of inadequate laws, but the weak political strength of the federal government.

“But the change in the political landscape after May 9, where the shift in power moved to Pakatan Harapan, gave fresh hope that Petronas has an even chance to allow the courts to determine who is the guardian of all O&G resources in the country.

“The state based its case around the Sarawak Oil Mining Ordinance (OMO), while Petronas is anchoring its case on the Petroleum Development Act 1974 (PDA). Under Pakatan, the mantra is to follow the rule of law, which is good for all parties,” says the official.

On April 13, the letter from the Sarawak AG stated that Petronas would deal with Petros on all matters pertaining to the extraction of O&G resources effective July 1.

It officially positioned Petros as the sole authority to issue licences and permits on all upstream O&G activities carried out in the state.

Hence, Petronas, its sub-contractors and partners in the production-sharing contract ventures are to work with Petros in the extraction of O&G resources in the state with the most amount of reserves in Malaysia.

“When the letter came, Petronas was expecting the worst because over the past five years, it had lost many battles to the Sarawak state government. This was largely because the federal government was weak and did not provide Petronas with ‘air cover’ when it came to matters dealing with Sarawak,” says an official close to the matter.

To the international O&G world, the letter from Sarawak effectively was a blow to the standing of Petronas as the sole authority of O&G resources in the country.

The national oil company faces the daunting prospects of explaining to oil majors such as Shell, Murphy Oil, Mubadala Oil & Gas, Total and Nippon Oil that they have to go through one more layer – Petros – for any type of work they are going to undertake in O&G ventures in Sarawak.

In the past few years, Petronas president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin never hid the fact that the company was getting uncomfortable with the situation in Sarawak. He had the view that the practice in most countries was for a single body to be the sole authority for O&G resources.

In this respect, Petronas has always anchored on the PDA that came into effect in 1974, vesting it as the sole authority for all upstream O&G activities in the country. This involves exploration works and entering into contracts with international partners to mine O&G fields, whether onshore or offshore Malaysia.

In return, the states of Sarawak, Sabah and Terengganu, which have O&G resources, receive royalties amounting to 5% from Petronas.

The absolute amount received by these states depends on the quantum of O&G resources extracted from the state. For instance, between 1978 and March 2000, Terengganu received RM7.13bil in royalties. Global oil prices averaged US$20 per barrel then.

In a legal suit between Terengganu and the federal government, it was disclosed that the latter had offered to pay the state RM1.67bil for the period from March 2000 to 2009, while the state wanted RM2.79bil. The matter was settled out of court.

GE14 a turning point?

Petronas vice-president and group general counsel Maliki Kamal Mohd Yasin wrote back to the Sarawak AG stating that it disagreed with the assertion of the state requiring it to get licences and permission from Petros to embark on any work starting from July 1.

It is learnt that Maliki’s argument was anchored on the PDA that vested all rights to upstream O&G resource activities to Petronas.

Maliki’s letter was sent on May 22, just two weeks after Malaysia saw a turning point in its political landscape.

Sarawak, which was the king maker in the previous administration under the Barisan Nasional with 25 seats in Parliament led by Najib, no longer held that precious position. Sarawak’s Barisan won only 19 seats in the 14th general election (GE14) and is facing a different federal government in the form of Pakatan.

The new federal government does not need to depend on Sabah and Sarawak to control Parliament.

The Pakatan coalition, led by Prime Minister Tun Dr Mahathir Mohamad, has more than 112 Parliamentary seats in Peninsular Malaysia and does not have to depend on allies from Sabah and Sarawak to form the government.

The political shift is viewed as something that works in favour of Petronas.

Whether by sheer coincidence or design, in the first week of June, Petronas filed a suit seeking a declaration that it is the sole governing authority for upstream O&G activities in Malaysia for onshore and offshore fields.

Petronas also wants the courts to declare that the PDA supercedes the Sarawak OMO, the law that the state has used as its basis for setting up Petros as the sole authority for O&G activities in Sarawak.

It is not hard to fathom why Petronas wants a decision in determining who controls the O&G resources in Sarawak as soon as possible.

Starting from July 1, the function of Petros as the sole issuing authority for all licences and approvals for O&G activities in the state is to kick off. Petronas would be deemed illegal if it operates in Sarawak without getting the approval from Petros.

The suit, which is to be heard on July 12, will consequentially determine if the Sarawak state assembly has any standing to preside on matters regarding the upstream activities of the O&G industry.

However, when it comes to matters pertaining to Petros, the state Pakatan and Barisan parties seem to have a similar stance.

Towards this end, Sarawak Parti Keadilan Rakyat vice-chairman See Chee How has already stated that the state cannot afford to lose the case against Petronas.

However, the federal government has already stated that it would manage the country based on the rule of law. On this score, Dr Mahathir has already said that the Petronas case is something that the company has taken up and that it would abide by the decision of the court.

Landmark case

The case between Petronas and Sarawak will be an interesting landmark because it sets the stage for other states such as Sabah and Terengganu to set up their own version of “Petros”. In fact, Sabah already has a similar set-up but it is not active.

As for Terengganu, the state government will directly get oil royalties from Petronas after 18 years. And ironically, it is coming from the same Prime Minister who had stopped payments to the state after it fell into the hands of PAS in 1999.

After Barisan lost Terengganu to PAS in the November 1999 GE, Dr Mahathir channelled the payments to a federal government-owned entity. The payments stopped in March 2000.

Payments were made through a federal government entity and was known as Wang Ehsan. It continued until 2009 when Barisan regained the state.

The utilisation of funds between 2004 and 2008 was said to be one of the reasons that led to the ouster of Datuk Seri Idris Jusoh as Mentri Besar of Terengganu. He was replaced with Datuk Seri Ahmad Said after the 2008 GE.

During Ahmad Said’s tenure, one of the proposals for the utilisation of the funds in a supposedly transparent manner led to the birth of 1Malaysia Development Bhd or 1MDB – the fund that is subject to a massive investigation at domestic and international levels.

Since 1974, when the PDA came into effect, Petronas has been managing the resources. It has a monopoly and is the sole authority to go to for any investor wanting to get a piece of the action. Unlike some other state-owned petroleum companies such as Pertamina of Indonesia, Petronas has been handling the contracts well.

However, after 44 years, the states, especially Sarawak and Terengganu, have established many companies and employed people with vast experience in managing O&G resources. It is only natural that they would want a bigger role to play.

However, under the Pakatan government, Sabah and Sarawak are to get 20% of the royalties instead of 5%. That itself is a lot of money to handle – running into billions. As we have seen in Terengganu, the handling of the royalty money from Petronas itself is a full-time job.

Although the current case only involves Petronas and Sarawak, the implications are wide-ranging.

The courts will decide once and for all who controls the O&G resources. This decision will come in an environment where nobody has any room to cast doubts if there were hidden hands behind any court judgements.

A decision either way will have a major impact on the O&G industry in the country.

 

 

 

Related story:

Petronas warned of July 1 being the cut-off date

Source: https://www.thestar.com.my/business/business-news/2018/06/09/the-petronassarawak-oil-intrigue/

Sabah politicians to intervene in Petronas suit

SABAH politicians are eager to intervene in Petronas’ suit to lay exclusive claim on the country’s petroleum resources and to be the regulator of the upstream industry.

Sabah, a petroleum-rich state, stands to lose its rights if the national oil company wins in its suit, said Sabah Star president Jeffrey Kitingan.

He said that while Petronas was relying on the Petroleum Development Act 1974 as the point of its argument, this law was in fact “unconstitutional”.

“The act goes against the federal constitution, which accords the rights of natural resources to the respective states.

“If the state government does not act, Sabah stands to lose all its rights on the oil if Petronas wins its suit,” he said during the Double Six Commemoration in Sembulan, Kota Kinabalu, today.

Petronas earlier this week filed an application before the Federal Court seeking a declaration that it is the exclusive owner of petroleum resources in Malaysia, including in Sarawak.

It is also seeking the apex court’s declaration that it is the regulator for the upstream industry throughout the country.

The hearing will be on June 12 in at the court in Putrajaya.

The move comes as Sarawak prepares to assume full regulatory authority over upstream and downstream aspects of the oil and gas industry in the state from next month through Petroleum Sarawak Bhd (Petros), a state-owned oil and gas exploration firm formed last year and officially launched in March.

Jeffrey said Gabungan Sabah aims to raise funds to engage lawyers to challenge Petronas’ bid.

He said that the state’s citizens, as stakeholders of Sabah’s natural resources, could take action if the state government did not.

Sabah Progressive Party president Yong Teck Lee said a team of lawyers were already working on building a case against Petronas. – June 6, 2018.

Source: https://www.themalaysianinsight.com/s/52969

Tussle for O&G resources

Petronas and Sarawak at loggerheads over control of petroleum rights

PETALING JAYA: In a move seen as a challenge to Sarawak’s claim over petroleum ownership, Petroliam Nasional Bhd (Petronas) has gone to court to declare that, under the Petroleum Development Act 1974 (PDA), it is the exclusive owner of oil and gas resources in Malaysia.

The national oil corporation on Monday announced that it had filed an application before the Federal Court seeking for a declaration on the PDA being the law applicable for the petroleum industry in the country.

Meanwhile, in a related development, the Sarawak state Government said it will defend its rights in court. (see story in Page 2)

The application by Petronas stated that the national oil company was the exclusive owner of the petroleum resources as well as the regulator for the upstream industry throughout Malaysia, including in Sarawak.

“Petronas believes that the determination by the Federal Court would help provide clarity on its rights and position under the PDA,” the group said in a statement.

“Petronas remains committed to support Sarawak’s aspiration to participate in the oil and gas (O&G) industry in the state, for as long as it is within the framework of the PDA,” it added.

The move by Petronas came just a month before the Sarawak government is expected to assume full regulatory authority over the upstream and downstream operations and activities of the O&G industry in the state by July this year.

Sarawak established its own O&G company, Petroleum Sarawak Bhd (Petros), last year. At the launch of the company in March this year, Sarawak Chief Minister Datuk Patinggi Abang Johari Tun Openg said Petros would spearhead the state’s participation in the strategic O&G industry to boost state development, adding that Petros would be granted the rights to mine O&G in the state.

Abang Johari recently also said all companies or persons involved in the O&G industry must henceforth have the necessary licences, leases and approvals required either under the Sarawak Oil Mining Ordinance 1958 or Sarawak Gas Distribution Ordinance 2016.

Sarawak, as well as Sabah, had long been seeking for their O&G royalties be increased to 20%.

Both states currently receive royalties of around 5% from Petronas for O&G revenues.

However, Abang Johari recently lamented that the state government’s request to Petronas for an increase in oil royalty to 20% had proved to be difficult to secure.

“That is why the state government started petroleum company Petros to develop our oil resources using our own means,” Abang Johari said.

“By having our own petroleum company, we will chart our own development agenda,” he added.

Prior to winning the 14th general election last month, Pakatan Harapan had pledged to give O&G-producing states a “reasonable sum” for royalties if it took over the federal government. Under this election manifesto, O&G royalties to Sabah and Sarawak would be raised to 20%.

Meanwhile, in September last year, Petronas president and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said while he welcomed any involvement by state government entities in the O&G business, all activities must comply with the PDA.

“We have a strong relationship with the Sarawak government, as such, we welcome its participation in the O&G industry. But we also have regulations in place, of which under the PDA, Petronas is the custodian and manager of the O&G resources in Malaysia,” he said.

Wan Zulkiflee noted that the partnership with Petros could be similar to other Petronas partnerships, either as service providers or as a partner under the production sharing contract.

When asked about the potential partnership between Petronas and Petros, Wan Zulkiflee said: “Discussions are ongoing with the Sarawak government.”

Source: https://www.thestar.com.my/business/business-news/2018/06/05/tussle-for-og-resources/

Petronas’ suit a desperate act to hang on to Sarawak oil rights, says activist

PETRONAS’ legal action seeking the Federal Court’s declaration on the Petroleum Development Act 1974 (PDA) shows how desperate it is to hang on to the state’s oil and gas resources, one of Sarawak’s more vocal political and rights activists Lina Soo said.

“They must have known that they don’t have control over our oil and gas, so they try to get the Federal Court to shut us up,” Soo, who is also the president of the State Reform Party Sarawak (Star) political party said in reaction to the national oil company asking the apex court to declare that it is the exclusive owner of petroleum resources in Malaysia, including Sarawak, and that it is the regulator for the upstream industry throughout the country.

Soo said Petronas’ legal action reflected Prime Minister Dr Mahathir Mohamad’s long-standing position (when he was prime minister from 1981 to 2003) not to accede to Sarawak and Sabah’s demand for a greater share of its oil and gas resources.

“They just want to avoid paying the 20% oil royalty (Pakatan Harapan promised in its election manifesto) and they will try every means not to pay.”

Soo said Sarawakians should not be surprised if the new PH government would use the RM1 trillion debt as an excuse not to increase the royalty.

The two Borneo territories currently are only getting 5%.

In March, Sarawak Chief Minister Abang Johari Openg said the PDA and the equally controversial law, the Territorial Sea Act 2012 (TSA), are not relevant in Sarawak.

He said since both were federal laws and for any federal law to be implemented in the state, the legislative assembly has to ratify them.

Neither the PDA nor the TSA were ever ratified by the assembly.

“Any law that is ultra vires the constitution under Article 4 of the federal constitution is void,” he said.

Sarawak has also warned all companies in the state’s oil and gas industry and companies intending to do prospecting and mining work to have the necessary licences, permits, leases and approvals required under either the Oil Mining Ordinance or the Gas Distribution Ordinance from July 1.

The state’s newly formed oil company, Petros, will from July 1 also assume full regulatory authority over the upstream and downstream aspects of the oil and gas industry in the state from Petronas.

The state government has yet to react to the Petronas action and the state government spokesman, Assistant Minister in the Chief Minister’s Office Abdullah Saidol, said the chief minister will issue a statement on this matter “soon”. – June 4, 2018.

Source: https://www.themalaysianinsight.com/s/52409

In challenge to Sarawak, Petronas wants court to declare it owns all national oil resources

NATIONAL oil company Petronas is asking the Federal Court to declare that it is the exclusive owner of petroleum resources in Malaysia, including in Sarawak.

It is also seeking the apex court’s declaration that it is the regulator for the upstream industry throughout the country.

In a statement, the company said it filed an application before the Federal Court today seeking these declarations based on the Petroleum Development Act 1974 (PDA).

“Petronas believes that the determination of the Federal Court would help provide clarity on its rights and position under the PDA.

“Petronas remains committed to supporting Sarawak’s aspiration to participate in the oil and gas industry in the state for as long as it is within the framework of the PDA,” the statement issued by Petronas’ group strategic communications said.

This move comes as Sarawak prepares to assume full regulatory authority over upstream and downstream aspects of the oil and gas industry in the state from next month.

In March this year, Chief Minister Abang Johari Openg said that Sarawak had regained all the rights to prospect, mine and develop oil and gas in the state, meaning that oil companies, including Petronas, wishing to operate in the state would have to secure a prospecting licence from the state government.

Sarawak Pakatan Harapan leaders, however, disagreed with Abang Johari, saying the state could not reclaim such rights until the PDA and other relevant federal laws were amended.

Petroleum Sarawak Bhd (Petros), a state-owned oil and gas exploration firm, was formed last year and officially launched in March. Abang Johari had said that Petros would not be a partner of Petronas and would instead have the “same status” as the national oil company.

The issue of Sarawak’s rights to its oil resources has long been a contentious one, with the state demanding more than the 5% oil and gas royalty it receives from the federal government each year.

The PH election manifesto for GE14 promised to increase the royalty to 20%. – June 4, 2018.

Source: https://www.themalaysianinsight.com/s/52330

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