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/

Abang Johari welcomes another ‘Chinese tsunami’

KUCHING: A “Chinese tsunami” supporting the ruling Barisan Nasional government in Sarawak in GE14 will strengthen the state’s pursuit to reclaim its rights and will demand Putrajaya’s attention.

Chief Minister Datuk Patinggi Abang Johari Tun Openg (pic) said there are big plans to spur development and economic growth in the state, and strong support from all Sarawakians – especially the Chinese community – is needed.

Sarawak Barisan won 25 out of the 31 parliamentary seats in the state in GE13, but Abang Johari is targeting at least 28 constituencies in GE14.

This would involve wresting Chinese-majority seats it lost such as Stampin, Bandar Kuching, Sarikei, Sibu and Lanang and Miri.

“We must have stronger representation in Parliament to fight for Sarawak rights,” Abang Johari said at the Sejiwa Senada programme at Batu Kawah here on Saturday.

The programme in Kuching is the fifth leg of the event after Miri, Saratok, Meradong and Sibuti. Next week, the Sejiwa Senada programme will be held in Lubok Antu. 

Sejiwa Senada is a free programme will give the public the opportunity to get services, information, and advice from government agencies, government-linked companies, NGOs and the private sector.

 
Abang Johari’s administration has lined up an agenda to transform the state economy. The state has embarked on building high-speed Internet facilities across the state as well as the Pan Borneo Highway project.

“Our new development approach is to embrace technology in all sectors, including agriculture.

He said modern farming methods would strengthen the rural economy, and create a diversity of agricultural products aimed at the global market,” he said.

Abang Johari also said that with the setting-up of Petroleum Sarawak Bhd (Petros), oil and gas royalties would be safeguarded working alongside Petronas.

He said that the additional revenue could support development of other projects such as a RM11bil LRT system across Kuching-Samaahan-Serian divisions, as well as a water grid project throughout the state.

“I promise to source more funds for Sarawak and we will assert our rights under MA63 (Malaysia Agreement 1963).

“We have to look into the future if we want to become a developed state by 2030,” Abang Johari said.

Abang Johari also mentioned plans to set up Sarawak’s very own television station in the future.

Source: https://www.thestar.com.my/news/nation/2018/05/05/abang-johari-welcomes-another-chinese-tsunami/

Sarawak spells out rules on O&G ops and activities

State to assume full regulatory authority by July

KUCHING: Sarawak will assume full regulatory authority over the upstream and downstream operations and activities of the oil and gas (O&G) industry by July this year.

Chief Minister Datuk Patinggi Abang Johari Tun Openg 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.

“In other words, their operations and activities are required to comply with all state laws, including those related to the use and occupation of land,” he added when launching state-owned Petroleum Sarawak Bhd (Petros) here on Tuesday night.

However, Abang Johari said the enforcement of state laws would not jeopardise the interests or investments of national oil company Petroliam Nasional Bhd (Petronas) and other companies already involved in the state’s O&G industry.

Sarawak has got back control over the exploitation of O&G resources, one of the key issues and part of the ongoing broader talks on the devolution of power between the state and federal governments.

He said Prime Minister Datuk Seri Najib Tun Razak agreed to return to Sarawak power that had been inadventently eroded over the years.

“Sarawak has the constitutional rights to issue prospecting licences and mining leases under Item 2(c) of the State List in the Federal Constitution’s Ninth Schedule.

“The federal government’s rights to develop mineral resources under Item 8(j) of the Federal List in the Ninth Schedule is subject to Item 2(c) of the State List.”

According to Abang Johari, the Sarawak Oil Mining Ordinance 1958 was never repealed by emergency laws when the 1969 Proclamation of Emergency was in force and annulled in 2011.

He said the state cabinet had approved a bill to amend the Sarawak Oil Mining Ordinance 1958 to update the provisions and provide for better enforcement in the next session of the state legislative assembly in July.

The Gas Distribution Ordinance 2016 will come into force on July 1 this year.

Meanwhile, Abang Johari said Petros would spearhead Sarawak’s participation in the strategic O&G industry to boost state development. Petros will be granted the rights to mine O&G in the state.

He also announced the appointment of Saau Kakok, a Bidayuh, with 40 years experience in the O&G industry, as Petros’ chief executive officer.

“Petros is fortunate to gain from Kakok’s experience, talent and vision. I am confident that Kakok is the right person to lead Petros into the future,” Abang Johari said.

It was earlier reported that some 40 candidates were eyeing for the Petros CEO post.

Kakok, 64, joined New York City-based exploration and production company Hess Corp as vice-president of global new business development in 2011.

He has served as a director in Hess Malaysia and Thailand Ltd, Hess Oil & Gas Sdn Bhd and Hess (Indonesia-South Sesulu) Ltd.

Kakok was Shell EP International Ltd’s vice-president from 2007 to 2009.

Petros chairman Tan Sri Hamid Bugo said Kakok would take up his appointment next month.

Bugo said Petros planned to have all essential staff recruited and to commence operations by the end of the year.

Source: https://www.thestar.com.my/business/business-news/2018/03/08/sarawak-spells-out-rules-on-og-ops-and-activities/

Supply base to be built in Bintulu for O&G industry

KUCHING: Sarawak will have its own multi-million ringgit integrated supply base in Bintulu next year to serve the needs of oil and gas (O&G) industry.

Phase one of the supply base project, which is undertaken by Bintulu Supply Base Sdn Bhd (BSB), is expected to cost RM300mil. It will provide a 370m long wharf able to accommodate four offshore supply vessels at any one time.

The supply base is scheduled to be operational in the fourth quarter of 2019.

Bintulu Supply Base signed an agreement to lease land at the Second Inner Harbour, Bintulu Port for the project from Bintulu Port Holdings Bhd (BPHB) yesterday.

The signatories were Bintulu Supply Base chairman Ahmadi Yusoff and BPHB chairman Hadzari Abang. Chief Minister Datuk Patinggi Abang Johari Tun Openg witnessed the ceremony.

Bintulu Supply Base is a smart partnership between Yayasan Sarawak and state-owned private companies OBYU Holdings Sdn Bhd and Kris Sakti Petroleum Sdn Bhd. It is a strategic asset and infrastructure for the growth of the Sarawak O&G industry.

“The integrated supply base will provide a one-stop solution for the O&G industry, from exploration to development to production needs, including provision of facilities and services to support drilling operations.

“The integrated asset and facilities hold the key to ensure a cost effective and efficient solution to the O&G players,” according to Bintulu Supply Base.

The company said the development of the supply base would be carried out in phases, taking into consideration the specific requirement of the O&G industry.

“The phased development approach is based on market demand and the fit for purpose of the O&G players.

“The supply base will operate in compliance with the industry health, safety, security and environment standard,” it added.

Bintulu Supply Base said as the project is strategically located in relation to the offshore fields in the Sarawak Basin in close proximity to fields offshore Sarawak, this would enable cost efficiencies to be attained by the O&G players from cost savings due to the shorter travel time from offshore to onshore.

Ahmadi said the set-up of the supply base was in line with Petroliam Nasional Bhd’s (Petronas) initiatives to achieve cost efficiency and operational effectiveness especially for players in Sarawak.

Johari described the integrated supply base project as a significant development of Sarawak’s O&G inclusion strategy.

“It will provide a strong platform for a most effective and efficient logistical service to the upstream activities undertaken by O&G companies on the continental shell, off the coast of Sarawak where valuable petroleum and natural gas resources are located,” he said.

The chief minister said the Sarawak government had decided to issue mining leases to the newly set-up Petroleum Sarawak Bhd (Petros), thereby vesting the mining rights unto Petros.

He said Petros would work out fair and equitable arrangement with Petronas and other companies relating to the mining of O&G from the areas covered by the mining leases.

“In regulating the upstream O&G production, Petronas must only deal with Petros to produce and extract oil and gas from beneath land within the state’s boundaries.

“Petros, under direction from the state government, will then enter into mining and production sharing agreements with Petronas and other major industry players,” he added.

Johari said the state government would also regulate gas distribution in Sarawak by July 1, this year with the enforcement of the Gas Distribution Ordinance, 2016.

“In regulating the distribution of gas ,the state expects to secure more gas necessary to expand its electricity generation capacity and accelerate industrial growth in Sarawak.

“The government wants to put an end to the present scenario whereby Sarawak has abundant gas for export to countries like Japan and South Korea but not enough gas for its own domestic use or to propel its industrialisation agenda.”

The chief minister said that under the Gas Distribution (Licence) Regulations 2018, the distribution of gas to any customers (intermediate and end-users) from any gas processing plant in Sarawak (both onshore and offshore) by way of pipeline would require a licence.

He said Petros would be granted a licence by the state to distribute gas from Petronas processing separation plant at Tanjung Kidurong, Bintulu.

By July 1, Sarawak would assume full regulatory authority over the upstream and downstream aspects of the O&G industry, he said.

The O&G unit of the Chief Minister’s Office will organise an engagement with Petronas and other industry players by the middle of next month to ensure an orderly implementation of the new policies related to the O&G industry.

Source: https://www.thestar.com.my/business/business-news/2018/04/20/supply-base-to-be-built-in-bintulu-for-og-industry/

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/

Serba Dinamik secures RM330mil Petronas job

KUCHING: Serba Dinamik Holdings Bhd has been awarded a contract to provide maintenance, construction and modification services to Petroliam Nasional Bhd’s (Petronas) onshore facilities in Bintulu and Miri, Sarawak.

The contract involves Package D (Bintulu-Sarawak Gas) and Package E (Miri-Sarawak Oil) onshore facilities in Miri Crude Oil Terminal and Asam Paya onshore facility as well as Bintulu integrated facilities.

Source: https://www.thestar.com.my/business/business-news/2019/03/22/serba-dinamik-secures-rm330mil-petronas-job/

Sarawak’s Brooke Dockyard wants more Petronas jobs

KUCHING: The Sarawak state government wants Petroliam Nasional Bhd (Petronas) to award more offshore fabrication contracts to Brooke Dockyard and Engineering Works Corp as it has tripled its fabrication capacity.

The 107-year-old state-owned corporation has raised its fabrication capacity by 16,500 tonnes to 25,000 tonnes per year with the new Demak Yard in the Demak Industrial Estate near here.

Source: https://www.thestar.com.my/business/business-news/2019/03/05/brooke-dockyard-wants-more-petronas-jobs/

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/

CEO: Petronas in ‘active discussion’ with Petros

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is currently in “active discussion” with the Sarawak state-owned oil and gas (O&G) company Petroleum Sarawak Bhd (Petros), according to Petronas group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin.

“We are currently discussing with Petros on the working arrangement over the O&G reserves in the state that is acceptable to both,” he told reporters after Petronas’ mid-year 2018 review.

In May, the national oil company 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.

However, the case was dismissed by the Federal Court to commence proceedings to determine Petronas as the sole authority of all upstream O&G activities in the country, including Sarawak.

Wan Zulkiflee pointed out that Sarawak was the only oil-producing state that Petronas is currently in discussions with, and that the group is not involved in any discussions related to state oil royalties.

“We leave that discussion to the federal government and the states. We are guided by the federal government, which is our shareholder,” he said.

He added that the grace period guided by the Sarawak state government on the working arrangement was until end of next year.

Wan Zulkiflee stressed that it is very important to ensure the long-term sustainability and implications of any changes in the local O&G industry. “At the end of the day, we need to ensure the competitiveness of the industry and continue to attract investments,” he said.

The situation between Petronas and Sarawak came in the wake of Sarawak setting up its own O&G company, Petros, as the regulator of O&G activities in the state based on the Sarawak Oil Mining Ordinance.

Source: https://www.thestar.com.my/business/business-news/2018/08/31/ceo-petronas-in-active-discussion-with-petros/

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/

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