‘Amend Petronas, Terengganu oil deal’
KUALA LUMPUR: The agreement between Petronas and Terengganu, which was inked in 1975, must be amended if the 20 per cent royalty payment to oil-producing states is based on the profit obtained from the state.
Kuala Terengganu member of parliament Ahmad Amzad Hashim said the agreement, signed under Section 4 of the Petroleum Act 1974, needed to be updated if the latest formula of payment was adopted.
He said the state government should be involved in Petronas’ administration following the government’s decision.
“I thank the prime minister for clarifying the payment formula when he answered a question on royalty payment to oil-producing states, like Terengganu, Kelantan, Sabah and Sarawak.
“However, there is confusion after it was announced that the royalty payment will be based on the profit.”
“Normally, in such an arrangement, the payment is not considered as royalty, but profit sharing,” he said.
Amzad said in the agreement between Petronas and Terengganu, it was clear that payment to the state was based on percentage of (oil) output.
In Kuching, Chief Minister Datuk Patinggi Abang Johari Abang Openg was quoted by Bernama as saying that the provision of royalty and profits based on oil production were two different things.
“We will get an explanation (from the Federal Government) because royalty and profits are not the same.”