The Petroleum Development Act (PDA) 1974 cannot supersede the relevant laws in Sarawak, especially the Oil Mining Ordinance (OMO) 1958, a senator said in disputing a statement by a federal minister.
Ahmad Ibrahim said Sarawak had been producing oil and gas since the discovery of oil in Miri in 1910, some 53 years before Malaysia was formed, the Sarawak Public Communications Unit reported.
Ahmad said Sarawak had developed the industry under the state’s own laws way before the PDA was enacted.
Apart from the PDA, he said, the other relevant laws were the Distribution of Gas Ordinance (DGO) 2016, the Sarawak Land Code, and the State Sales Tax regime.
He said Section 73 of the Malaysia Act 1963 preserved all state laws in force before Malaysia was formed, which included the OMO.
Moreover, the ordinance, following its amendment in 2018, granted the state full authority over petroleum licensing onshore and on its continental shelf.
“The PDA (only) applies fully in states that do not have their own petroleum laws like the OMO, and therefore, in those states, Petronas is the sole aggregator of oil and gas,” he was quoted as saying.
On Tuesday, law and institutional reform minister Azalina Othman Said said the national oil company’s rights on oil and gas resources in Sarawak remained protected under the PDA.
In a written parliamentary reply, Azalina said the PDA would remain in force, in accordance with existing legal provisions.
“Petronas is vested with the ownership of petroleum, and the rights, powers, freedoms, and exclusive privileges to explore, exploit, obtain, and acquire petroleum, whether onshore or offshore Malaysia, as provided for under the Act,” she was quoted as saying.
Ahmad said that under the DGO, Sarawak has exclusive authority to license and regulate domestic gas distribution, with state-owned Petroleum Sarawak Bhd (Petros) having been formally recognised by the federal government as the sole gas aggregator for Sarawak’s domestic market, excluding liquefied natural gas.
As for the State Sales Tax, he said, a 2020 High Court ruling upheld Sarawak’s right to impose such a tax on petroleum products, noting that Petronas withdrew its appeal and settled the dues.
On Feb 5, Azalina said Sarawak had accepted that the PDA, not the state ordinances, dictated the operation of Malaysia’s petroleum sector.
She said Sarawak’s concession was among key matters agreed upon by Prime Minister Anwar Ibrahim and Sarawak premier Abang Johari Openg during a meeting on Jan 7.
On Feb 7, Anwar said the federal and Sarawak governments had agreed to Petronas and its subsidiaries retaining all existing contractual obligations, domestic and international.
However, to fulfil Sarawak’s aspirations in the oil and gas sector, it was agreed that the DGO will come into force on March 1, he said.
“The DGO will be read together with the PDA, and therefore Petros will act as Sarawak’s aggregator,” he had said.
Anwar said this after Abang Johari reiterated the state’s contention that it had regulatory authority over oil and gas activities within its territory.
