Petronas asked to bare all records on oil, gas extraction
We need to review and seek a proper legal declaration of our rights. Sarawak should levy the rate of royalty by way of output at ex-rigs or ex-fields, like we do for every unit of water used at the hydrodams like the ones at Batang Ai and Murum, pay the Sarawak government royalties at one sen per unit (kwh generated).
KUCHING: Parti Pesaka Bumiputera Bersatu ( PBB) information chief Dato Idris Buang wants a review on all the records of oil and gas mining done in Sarawak, particularly its total output, in the state’s effort to claim back what is reasonably Sarawak’s.
In this regard, the Sarawak government needs to ask for the account of Petroliam Nasional Berhad ( Petronas), said the Muara Tuang assemblyman when reacting to Pakatan Harapan (PH) federal government reneging on its election manifesto by giving out only 20 per cent of profit from oil and gas extracted in Sarawak instead of the 20 per cent royalty on their production.
“We need to ask for their accounts since the day they started extracting our resources. We have the right to audit and the right of tracing all the accounts on production output. This is an equitable right and legal right as owner of our soil, our land and the resources that are embedded with it,” he said.
“Let’s see how much they owe us. I believe it would be in several trillions of Malaysian Ringgit,” he said.
“What Prime Minister Tun Dr Mahathir Mohamad and his PH government are doing now to Sarawak ( giving royalty based on 20 per cent of Petronas’ profit) is not proper and is still not constitutional,” Idris added.
“We need to review and seek a proper legal declaration of our rights. Sarawak should levy the rate of royalty by way of output at ex-rigs or ex- fields, like we do for every unit of water used at the hydrodams like the ones at Batang Ai and Murum, pay the Sarawak government royalties at one sen per unit (kwh generated),” he said.
“Petronas should pay royalty at RM x rate per barrel or gas at RM x per thermal unit. This is what royalty is supposed to be,” he stressed.
He emphasised that the PH government and Petronas could not simply tell Sarawak government what it should be getting without its terms at all.
“As the absolute owner of our resources we should be the one imposing the rate of royalty and
Dato Idris Buang, PBB information chief
terms of licences that they must have before doing the oil and gas businesses on our territory. Over and above all these (royalty, tax, levies and surcharges) which the state may impose, the state may own part of the equity of the licensee company which is totally a different issue if the state decides to participate in equity.”
He pointed out that royalty and equity participation are two separate things - royalty comes with the absolute right to impose terms while equity participation is optional.
“How we want to fix the rate of royalty may depend - but not necessarily - on how much equity we want to participate - this is a point for negotiation. We need to be advised by our own experts - not theirs ( PH and Petronas) as to how much we want to stomach the risks of the business,” Idris asserted.
“What the PH government and Petronas had done upon us is purely undue duress or utter subjugation - in that we were cornered to a point where we had no choice at all but to just accept what was forced down our throats. Our life in the 60s and 70s then were by and large very poor, with poverty almost everywhere, schools not in good shape mostly, lacking modern facilities and so on,” he said.
“We were exposed to communist terrorism and insurgency and hence the Emergency Ordinances purportedly made to facilitate the military and navy operations on our territory (not for Petronas lah). The Petroleum Development Act 1974 came into existence under a big camouf lage of emergency and security exigency,” he pointed out.
Meanwhile, Sarawak Democratic Action Party ( DAP) Youth secretary Dr Kelvin Yii said the concerns and frustrations felt by the people of Sarawak including himself was understandable with the recent announcement by Economic Affairs Minister Datuk Seri Mohamed Azmin Ali that the 20 per cent oil royalty needs to be based on net profit rather than gross production.
“This was based on the question that was put up by few members of Parliament including myself, but in my question, I went further to ask about the devolution of education and healthcare autonomy to Sarawak which was also answered by the minister,” Dr Yii said.
He said he still held strong to the principle stated in DAP manifesto where 20 per cent royalty based on gross or a value equivalent was promised.
“That is why we will pursue greater clarification on the matter especially on the definition of such profit- sharing and most importantly the formula that is being used. We will crunch out the numbers and be transparent in the mechanism so that the distribution of our wealth can be fair and just,” he said.
However, Azmin, when further questioned, said there would be further discussions with the relevant state governments whether it will be 20 per cent of net profit or gross value, Dr Yii said.
Thus, the discussion is ongoing, and Sarawak DAP will keep pushing for state rights and find a reasonable ground on it, he added.
“In the context of Sarawak, the ‘New Deal’ that is part of our manifesto specific for Sarawak clearly mentions about the 20 per cent oil royalty, 50 per cent tax returns to Sarawak, and autonomy in Education and Healthcare.
“The essence of the extra revenues from the 20 per cent royalty which is estimated at RM6 billion according to oil prices last year, and an estimate of RM3.5 billion of 50 per cent taxes collected in Sarawak, is meant for us to run the two critical departments which an estimate of running those two departments is about RM7 to RM8 billion based on budget and current allocations.
“We do take note of the concerns by the oil and gas industry and I have personally spoken to some. We were informed that the cost itself ranges from 60 per cent to 70 per cent which today (yesterday) the minister (Azmin) has confirmed by saying that ‘From this value per barrel, 70 per cent from the gross production of oil and gas is actually the cost of recovery that is borne by Petronas’.
“Thus, the industry is unable to give 20 per cent of royalty to remain viable, however in the case of Sarawak, if the state government decides to take responsibility on the education and healthcare matters, the federal government has pledged to ‘ top up’ to a ‘value equivalent’ of the 20 per cent oil royalty so that we can run those two critical departments,” Dr Yii said.
“So, the onus is back to the state government on whether they want to take responsibility on these two critical departments. The extra revenue from 20 per cent and 50 per cent is not to fill up the pockets of the state but it is to determine the future of the state through these two critical departments. Thus as Tun Dr Minister has answered on the question I put forth, there will be further negotiations with the state government on the matter especially with regards to the devolution of powers.
“On top of that, the Special Cabinet Committee for MA63 ( Malaysia Agreement 1963) will also look into such matters including the rights of Sabah and Sarawak to natural resources including oil and gas and reviewing different legislations in view of MA63,” Dr Yii said.