Oil Mining Ordinance amendment passed

KUCHING: The Oil Mining (Amendment) Bill 2018 passed by the Sarawak State Assembly yesterday, among others, was to update several provisions in Oil Mining Ordinance or OMO in short, and to bring the ordinance in line with current practices and operation in upstream sector of the oil and gas Industry.

In tabling it, Sarawak Deputy Chief Minister Datuk Amar Awang Tengah Ali Hasan said, with the amendment, the state would be able to strengthen its regulatory control over the exploration and prospecting for petroleum and mining on land in the state.

He said when parliament passed the continental Shelf Act 1996 and Petroleum Mining Act 1966 to regulate mining petroleum in continental shelf, these acts were not extended to Sarawak.

“These acts were made applicable to Sarawak after the 1969 Proclamation of Emergency when in the exercise of emergency powers under article 150 of the Federal Constitution, the Yang di-Pertuan Agong promulgated the Emergency (Essential Powers) Ordinance No 10, to extend the said Acts to Sarawak and Sabah,” he told the Sarawak State Legislative Assembly sitting here.

However he pointed out that the Oil Mining Ordinance 1958 was never repealed by the said Emergency Ordinance which ceased to have effect in 2012 as the Article 150 (7) of the Federal Constitution provides that all laws passed during the emergency shall cease to have effect six months after the proclamation of emergency was annulled by Parliament.

He said therefore as from 2012, the OMO remains the only law that regulates the exploration, prospecting and mining of petroleum on land in Sarawak, both onshore and offshore.

“I must state categorically that having regards to section 8 of the Petroleum Development Act 1974, Petronas is not exempted from complying with OMO or Land Code when Petronas or its contractors undertake exploration, prospecting and mining for petroleum in Sarawak,” he said.

Awang Tengah said the purpose of regulating the upstream activities of Petronas and its contractors was to ensure that their upstream activities comply with the state laws, that was enforced to ensure that the exploitation of state’s valuable resources was carried out in the manner that served the best interests of the state and its people.

He said Petronas as a national oil company when operating in Sarawak must comply by the state laws, particularly in the OMO and the Land Code, and the state government was prepared to engage constructively with Petronas to establish a regulatory framework for the exploration, prospecting and mining for oil and gas in the state.

He said Sarawak is the main producer of natural gas and exporters of liquefied natural gas (LNG) in Malaysia, whereby based on the Statistics Department, the volume of LNG exported from Sarawak was 27 million metric tons with a total gross value of RM41.1 billion for 2017.

Awang Tengah said the issue of oil and gas ownership found on Sarawak’s shore and offshore would be addressed in the context of the state’s exercise of regulatory control over the upstream activities of exploring, prospecting and mining of oil and gas.

“And the consequence of such a regulatory control would be to have a much fairer and more equitable monetary returns from the exploitation of Sarawak’s hydro-carbon resources and much greater participation by Sarawakians and Sarawak companies in the oil and gas industry in the state,” he said.

He said the proposed amendment includes the provision of new sections, among others that stipulates a licence or lease shall not be assigned or transferred without prior written approval of the Majlis Mesyuarat Kerajaan Negeri, restriction on award of contract by licensee or lessee, and to provide the state with the power to issue licenses and lease, and also offences and penalties.

“I would like to reassure investors that the state will continue to work with Petronas to ensure that their interests are protected,” he added.