Amending PDA to reclaim ownership petroleum rights

IN an apparent reaction to my Analysis entitled ‘Reclaiming the state’s oil and gas rights’ published in The Borneo Post on March 10, Pakatan Harapan state chief and Bandar Kuching MP Chong Chieng Jen proposed in Parliament on March 13 what he called a “small amendment” to Section 2 of the Petroleum Development Act, 1974 (PDA).

The amendment he proposed was to add two words ‘excluding Sarawak’, after word ‘Malaysia’ in line 2 of that Section. According to Chong, with his amendment, the vesting of ownership rights over oil and gas under Section 2 on Petronas would not apply to Sarawak. His explanation is that if his amendment is approved by Parliament, Sarawak would have ownership of the oil and gas found onshore and offshore of Sarawak. Fallacy of the amendment Let us analyse critically Chong’s proposed amendment.

Firstly, by his actions, Chong has conceded that without his amendment, Section 2 (which came into effect on Oct 1, 1974), ownership of the oil and gas in Sarawak had been vested in Petronas. It is a matter of public record there was a Vesting Order prescribed in the Schedule to PDA signed by the then Chief Minister. PH and Chong by ‘fighting’ for 20 per cent oil royalty, had already admitted that Petronas has the ownership rights to the oil and gas, otherwise, there is no logical basis for asking Petronas to pay royalty at all.

So what is the legal effect of Chong’s much touted amendment? Nothing. Absolutely no effect. It is not made retrospective. This means it only applies from the date after the amendment is passed by Parliament. The vesting of ownership of oil and gas on Petronas had already materialised on Oct 1, 1974 or when the vesting order was signed in 1975. Chong’s amendment cannot be applied to impair or take away vested or accrued rights of Petronas. In other words, the amendments cannot restore ownership rights to Sarawak as wrongly claimed by Chong. It is a fallacy for him, or anyone else, to think otherwise.

Secondly, assuming Chong’s intention was his amendment would divest Petronas of its ownership rights to oil and gas in Sarawak, such a law amounts to expropriation of property vested in Petronas. An expropriatory law must meet the standard stipulated in Article 13 of the Federal Constitution, that is, it must have provision for payment of compensation otherwise that is unconstitutional.

If Chong’s amendment has the effect of divesting Petronas of its accrued rights to property without compensation, he is asking Parliament to pass an unconstitutional amendment. He must learn his constitutional law from the Chief Minister, who had rightly pointed out that any law passed by Parliament which is inconsistent with the Constitution is declared by Article 4 to be unconstitutional. Political gimmick Therefore, to the mind of many Sarawakians, Chong’s ploy of amending Section 2 of the PDA is a real political gimmick as the amendment neither has the legal effect of restoring ownership rights over oil and gas, which have already been vested in Petronas since 1974 or 1975, to Sarawak nor nullifying the vesting of oil and gas rights in Petronas. Besides, even if his amendment was intended to divest Petronas of its property ownership rights, without compensation, that amendment is unconstitutional.

To the eternal credit of the 25 Sarawak BN members of parliament, none of them has been hoodwinked to support this meaningless or unconstitutional amendment. It is also an irrelevant amendment in the context of enforcing the state’s mining rights over petroleum (and gas) in accordance with the provisions of Oil Mining Ordinance and pursuant to constitutional powers provided under Item 2(c) of The State List in the Ninth Schedule of the Federal Constitution.

Focusing on the PDA at this point in time is like flogging a dead horse! Role of opposition What is needed for a functional democracy in Sarawak is a constructive opposition – an opposition that offers ideas for the betterment of the state and its people and make the executive accountable for its decisions and polices. It has to support the government of the day for actions and policies which are beneficial to the state.

In this case, the Chief Minister has announced a measure which is clearly designed, as an initial step, towards asserting control over the mining of petroleum and the distribution of gas in Sarawak. His visionary model deserves support as by all calculations the CM’s approach will yield greater monetary rewards to the state than the archaic and constitutionally unattainable claim of 20 per cent oil royalty.

This is the first step in the difficult process of unwinding what had been done during the period of the 1969 Proclamation of Emergency, when the federal government wielded control over our state’s petroleum resources by extending the Continental Shelf Act, 1966 and Petroleum Mining Act, 1966 to Sarawak. This extension lapsed when the Proclamation of Emergency was annulled by Parliament in 2011. The state now wants to reinforce the Oil Mining Ordinance. Such a move should be supported by all loyal Sarawakians including the opposition.

Any credible political opposition would explain to the electorate how promises in its manifesto can be possibly delivered. In this case, how its promise of 20 per cent oil royalty can be fulfilled when only 10 per cent of such royalty is assigned by Item 3 of Part V in the Ninth Schedule of the Federal Constitution. This burning question, raised by me in my previous analysis, the Opposition failed to answer. Instead, PH’s state chief pursued a meaningless and futile exercise of amending the PDA, which could not divest Petronas of its vested right of ownership over oil and gas in Sarawak. Verdict In this instance, the opposition has been exposed for lack of vision on how to have oil and gas ownership restored to the state. Chong’s kneejerk reaction to move a small, but useless, amendment to Section 2 of PDA is a manifestation he has been cleverly outmanoeuvred by a politically astute Chief Minister.

Now is the time for all Sarawakians to rally behind the Chief Minister in his noble mission to reclaim oil and gas rights for Sarawak and to open up greater opportunities for more Sarawak companies and Sarawakians to participate in a meaningful manner in the oil and gas industry in the state.