A tussle over O&G rights that neither side can afford to lose
ON Tuesday (June 12) the Sarawak government and PETROLIAM Nasional Bhd (Petronas) will be engaged in a Federal court case that neither side could afford to lose.
Petronas formally lodged a suit in the Federal Court last Monday seeking confirmation that it is the exclusive owner of petroleum resources in the country, including in Sarawak.
While the hearing appears to be a case between Petronas and the Sarawak government as one of the parties, in reality it is a fight between the federal government and Sarawak and states with O&G resources.
It is a response from Petronas to the Sarawak government’s recent declarations that Sarawak’s upstream and downstream oil and gas (O&G) segments would be regulated in accordance to Sarawak laws such as the Oil Mining Ordinance (OMO) 1958, the Gas Distribution Ordinance (DGO) 2016, and the Sarawak Land Code by July 1.
If the Sarawak government were allowed to do that it would deprive the federal government of one of its biggest sources of revenue and seriously hamper its administration and development plans.
Hence it not unreasonable to conclude the suit was initiated with a tacit approval of the Pakatan Harapan (PH) federal government as under the Petroleum Development Act (PDA) 1974, Petronas is answerable to the Prime Minister.
When asked for his view on the matter, Prime Minister Tun Dr Mahathir Mohamad with his years of experience side stepped the question by saying, “I will leave it to Petronas whether they can succeed or not in the court action they have taken.”
For Sarawak whatever the court decides would be watershed decision as if it were to be in favour of Petronas, Sarawakians would have to be content with pittance of five per cent royalty from its O&G resources.
Sarawakians and their future generations will grieve even more over the folly of their past leaders for surrendering their petroleum resources to the federal government so cheaply through the Petroleum Development Act 1974.
Needless to say victory will be the greatest cause for celebration for the people and would even greatly boost the chances of the Sarawak government retaining power in the next election.
However, it appears that the Sarawak government was blindsided by the Petronas suit as although State Secretary Tan Sri Datuk Amar Mohamad Morshidi Abdul Ghani is a member of the Petronas board, the decision to file the suit was never tabled during the national oil corporation’s board meetings.
“There was no paper tabled in the board on the matter. I don’t have any further comment as it is now a court matter. That’s my response,” Morshidi said in a message when responding to Pujut assemblyman Dr Ting Tiong Choon’s accusations that as a board member he would have known about the suit.
With just a week’s notice to face the case it appears that Sarawak government would be hard pressed to assemble a team of lawyers to put up a good fight against Petronas.
However, Sarawakians have been assured that their government has been well prepared to face the battle for sometime as it realised that it would eventually have to bring its case to Federal Court to settle the ownership of petroleum resources in the nation.
It was just a matter of which party initiate the suit first and Petronas beat the Sarawak government to the punch.
It is also reassuring that the Advocates Association of Sarawak is offering to assist the Sarawak government pro bono on the case.
That, lawyers volunteering to do so come from both sides of the political divide also demonstrates the unity of Sarawakians on this issue that is so close to our hearts.
Should things go south, perhaps the Sarawak government may have to prepare to go to the International Court of Justice to secure Sarawak’s rights.
There are only some 70 days left for the PH federal government to begin work on restoring Malaysia Agreement 1963 (MA63) rights to Sabah and Sarawak.
According to PH’s election manifesto, the coalition promised to help implement the concept of federalism for the three territories of Malaysia and to help provide the rights of Sabah and Sarawak to acquire revenue from their natural resources such as oil and gas.
At present, the O&G industry’s contribution to Sarawak’s gross domestic product (GDP) is 40 per cent.
The industry provides an estimated 17,000 job opportunities to Sarawakians.
Sarawak’s oil reserves of 200 million barrels are estimated to constitute 29 per cent of Malaysia’s entire reserves, while its gas reserves are around 10 trillion cubic feet or 54 per cent of the country’s entire gas reserves.
There was no paper tabled in the board on the matter. I don’t have any further comment as it is now a court matter.
— Tan Sri Datuk Amar Mohamad Morshidi Abdul Ghani, State Secretary