Kelantan withdraws oil royalty suit against Petronas

KUALA LUMPUR: The suit brought by the Kelantan government against Petroliam Nasional Bhd (Petronas) for oil royalty claim nine years ago has finally been settled after the state government withdrew it.

The Kelantan government’s lawyer Aleeya Elyana Ahmad Mahreez told reporters this here yesterday after the matter came up for case management before High Court judge Justice Ahmad Bache in chambers; in the presence of federal counsel Siti Asmath Che Man, who acted for the Federal Government, a defendant in the case.

Aleeya Elyana said the decision not to go on with the suit against Petronas was made through a notice on May 13, but there were no instructions given on the state government’s suit against the Federal Government.

“The court set June 21 for further case management,” she said.

In July 2014, the Federal Court ruled that the suit should be remitted to the High Court for a legal decision, as per Rule 14A of the Rules of Court 2012.

In the ruling, a five-member panel of the Federal Court led by Justice Abdull Hamid Embong said there was no dispute of facts in the case which required the court to call witnesses to testify.

The Federal Court made the ruling after dismissing the Kelantan government’s appeal against the Court of Appeal’s decision on April 26, 2012, which upheld the High Court’s decision directing that the civil suit be decided on points of law.

However, the hearing of the legal issues in the High Court is yet to proceed.

On Aug 30, 2010, the Kelantan government as the plaintiff filed a lawsuit against Petronas as the sole defendant.

However, the Federal Government then succeeded in its intervenor application and was named second defendant in the suit.

In the statement of claim, the Kelantan government demanded that Petronas pay the outstanding and future cash payments for petroleum produced off the Kelantan coast, as set in their petroleum exploration agreement.

The Kelantan government had also sought costs and damages but did not specify the total amount from Petronas.

In the suit, the state government said the Kelantan Petroleum Agreement signed on May 9, 1975, clearly stated that Petronas should pay in cash 5% of oil revenue, either from exploration onshore or offshore.

It claimed that a clause in the agreement stated that payments should be made twice a year, on or before March 1, and one more on or before Sept 1.

On March 7, Economic Affairs Minister Datuk Seri Azmin Ali said the Federal Government would pay oil royalty to Kelantan after the proceedings of the withdrawal of the Kelantan government’s lawsuit against it and Petronas were settled.