Sarawak to assume full authority over oil and gas by July?

KUCHING - Sarawak is to assume full regulatory authority over the upstream and downstream aspects of the oil and gas industry in the state by July this year as part of the devolution of powers from the federal government.

This was announced here tonight by Sarawak Chief Minister Abang Johari Tun Openg when he launched Petroleum Sarawak Berhad (Petros).

He said Sarawak would exploit its natural resources of oil and gas as provided for constitutionally under the State List in the Ninth Schedule of the Federal Constitution.

The devolution of powers was in keeping with the agreement by Prime Minister Najib Razak to return to Sarawak the powers provided for in the Malaysia Agreement 1963 (MA63) that had been inadvertently eroded over the years, he said.

Abang Johari said the formation of Petros and the exercising of the constitutional rights under item 2(c) of the State List and 8(j) of the Federal List, as provided in the Ninth Schedule of the Federal Constitution, were the outcomes of the discussions on the devolution of powers between the state and federal governments.

Abang Johari thanked the prime minister for agreeing to give back the powers that had been inadvertently eroded over the years, saying that the launch of Petros tonight was a clear testimony that substantial progress had been achieved in the ongoing discussions on devolution of powers.

Therefore, he said, by July this year, Sarawak would assume full regulatory authority over the upstream and downstream aspects of the oil and gas industry in the state.

“All persons and companies involved in the oil and gas industries in Sarawak must henceforth have the necessary licences, permits, leases and approvals required under either the Oil Mining Ordinance or the Gas Distribution Ordinance.

“In other words, they are required to regularise their operations and activities to comply with all state laws, including those relating to the use and occupation of land,” Abang Johari said.

Colonial government

He gave the assurance that the enforcement of the state laws would not jeopardise the interests or investments of Petronas, the national oil corporation, and other companies already involved in the oil and gas industry in Sarawak, whether upstream or downstream, but, their business and operational activities must be aligned with Sarawak laws and regulations.

In his speech, the chief minister explained that in 1952, the Sarawak colonial government issued an oil mining lease, in the form of a deed, to Sarawak Oilfields Limited with the liberties, right and privileges to explore and mine all “the petroleum lying or within under or throughout the territory comprising the Colony of Sarawak, including lands beneath all territorial waters”.

“In 1954, the Queen in Council passed the Sarawak (Alteration of Boundaries) Order to extend the boundaries of Sarawak to include the seabed and its subsoil which lies beneath the high seas, contiguous to the territorial waters of Sarawak.

“In 1958, the Council Negeri passed the Oil Mining Ordinance to ‘make better provision in the law relating to oil mining in Sarawak and its continental shelf and therefore before Malaysia Day (Sept 16, 1963), Sarawak already owned all the petroleum resources both onshore and offshore, in the continental shelf, and had complete control over the grant of prospecting, exploration and mining rights within the boundaries of Sarawak which, by virtue of Article 2 of the Federal Constitution, cannot be altered without the approval of Sarawak, to be expressed by a law passed by the state legislature’.

“On Malaysia Day, the state had the constitutional right to issue prospecting licences, mining leases under Item 2(c) of the State List in the Ninth Schedule of the Federal Constitution which provides that ‘land, including permits and licences for prospecting for mines; mining leases and certificates’ are under the legislative authority of the state and, therefore, by virtue of Article 80 within the executive authority of the state government of Sarawak.”

Abang Johari said the federal government’s right under Item 8(j) of Federal List in the Ninth Schedule was subject to Item 2(c) of the State List, meaning that the federal government’s authority on oil and oilfields and the development of mineral resources was subject to the state’s right to grant mining rights for oil and natural gas within Sarawak.

“All laws passed by Parliament must not be inconsistent with the Federal Constitution.

“Article 4 declares that the Federal Constitution is the supreme law of the federation.

“The Sarawak Oil Mining Ordinance was never repealed by any emergency laws promulgated when the 1969 Proclamation of Emergency was in force,” he said.

The 1969 Proclamation of Emergency was annulled in 2011, he said, adding that Sarawak was constitutionally entitled to enforce the Oil Mining Ordinance and assert its constitutional authority over the right to mine oil and gas in Sarawak.

He said the government-incorporated Petros would spearhead the state’s participation in the oil and gas sectors that were considered of strategic importance to the overall socio-economic development objectives of Sarawak.

The chief minister said Petros would be granted the right to mine oil and natural gas in the state and it would be an important player in the upstream oil and gas industry.

The licence was handed to Petros chairman Hamid Bugo at the ceremony tonight.