PUTRAJAYA: The Federal Court has denied leave to Petronas to commence a legal challenge against the Sarawak government over the national oil company’s right to regulate the state’s oil and gas upstream activities.
Chief Judge of Malaya Justice Ahmad Maarop ruled that the declaratory relief sought by Petronas did not come under Article 4 (4) and Article 4 (3) of the Federal Constitution.
Bernama quoted Justice Ahmad as saying that the declaratory relief sought by Petronas was not within the exclusive jurisdiction of the Federal Court but came under the jurisdiction of the High Court.
He dismissed yesterday the Petronas application for leave to commence proceedings against the Sarawak government and ordered the national oil company to pay RM50,000 in costs to the state government.
Meanwhile, Petronas withdrew its application for a stay order in respect to the Sarawak government’s commencement to regulate upstream activities in the state under the Sarawak Oil Mining Ordinance 1958 (OMO) beginning July 1.
Petronas would be required to comply with the OMO and must have the requisite licences or leases by July 1, failing which the upstream activities carried out by Petronas would be illegal and appropriate action would be taken.
The stay application was heard before a Federal Court three-man bench comprising Justice Ahmad and Federal Court judges Justices Azahar Mohamed and Zaharah Ibrahim, after Justice Ahmad dismissed Petronas’ leave application.
The bench struck out the stay application following the withdrawal.
Petronas had filed an application on June 6 for leave to commence proceedings under Article 4 (4) of the Federal Constitution to seek a declaration that the Petroleum Development Act (PDA) applied in respect of the regulation of upstream activities in Sarawak.
It sought the court’s declaration that the PDA was duly enacted by Parliament, and it states that Petronas is the exclusive regulatory authority for the upstream industry throughout Malaysia, including in Sarawak.
The company had sought a declaration that the OMO was impliedly repealed by the PDA.
Petronas was represented by lawyer Datuk Malik Imtiaz Sarwar while Sarawak state legal counsel Datuk Seri J.C. Fong appeared for the state government.
In a statement later, Petronas said its leave application was declined based solely on technical ground.
“The Federal Court did not in any way determine or endorse the merits of the legal position taken by the Government of Sarawak to regulate upstream petroleum activity under its Oil Mining Ordinance 1958.”
It said the court also noted the concession by the Government of Sarawak that the PDA was validly enacted.
“This reinforces Petronas’ view that only Parliament can legislate on matters relating to upstream petroleum industry including regulatory powers throughout Malaysia, both onshore and offshore by virtue of the PDA.”
It said the court decision did not in any way impair Petronas’ ability to further pursue its legal actions, with the intent to seek clarity on its rights and position under the PDA.
In Kuching, the Chief Minister’s Office welcomed the Federal Court outcome, saying that the decision paved the way for the state government to enforce its state laws from July 1.
It said in a statement that Petroleum Sarawak Bhd (Petros) would be delegated with the powers to implement OMO.
Sarawak had announced in March that it would assume full regulatory authority over oil and gas activities in the state by July 1.
This would require all those involved in the oil and gas industry in Sarawak to obtain the necessary licences and permits.