CM: Sarawak firm on oil royalty, but open to discussion

Abang Johari (seated centre) fielding questions from the press.

KUCHING, July 24: Sarawak will neither compromise on its oil royalty nor settle for anything less than the five per cent it currently receives from gross production.

The state government is willing to discuss with Petronas to find a win-win situation for all parties, said Datuk Patinggi Abang Johari Tun Openg today.

The state would proceed to exercise its Oil Mining Ordinance and Gas Distribution Ordinance, and he expected the national oil giant to be cooperative once enforcement is carried out.

Previously, the state planned to enforce both ordinances on July 1, 2018, but it later decided to give a grace period for all affected parties to apply for permits.

The chief minister said the state was also waiting for official clarification from Putrajaya on its royalty entitlement. Prime Minister Tun Dr Mahathir Mohamad said at the Dewan Rakyat sitting recently that all oil-producing states in the country would receive 20 per cent royalty based on profit — not revenue — from their respective areas.


“We respect that the oil industry is being developed by Petronas, as the national oil corporation, as stated in the Petroleum Development Act (PDA). As oil is also found in our territorial waters, we must work together.

“We are not greedy. We just want to assert our rights. If someone wants to explore oil in our waters, then they should approach us and discuss properly,” Abang Johari told a press conference after opening the Land and Survey Innovation and Integrity Day celebration here.

The chief minister confirmed that Petronas had approached the state to find a win-win situation after its application to the Federal Court to seek a declaration that the Sarawak Mining Ordinance 1958 was already repealed implicitly by the PDA was rejected on June 22.

The Oil Mining Ordinance 1958 gives Sarawak full regulatory authority over all persons and companies involved in the operations of the oil and gas industry in the state.

Abang Johari said an unofficial meeting would take place with Terengganu Menteri Besar Dr Ahmad Samsuri Mokhtar to discuss the position of oil-producing states with regards to oil and gas ownership.

“When we talk about royalty, we talk about ownership of the property. In this regards, the decision should be made by the owner, as opposed to other parties.

“We are content with the five per cent as agreed before, but now we want it to be increased considering the value of money and market demand today. We can’t compromise our royalty because royalty is ownership by definition. Oil is our right,” Abang Johari emphasised.

He said oil royalty was not discussed during Tun Dr Mahathir’s recent visit to the state.

When asked about Pakatan Harapan’s GE14 manifesto to increase oil royalty to 20 per cent, Abang Johari said it was up to the federal government whether to fulfil or not fulfil their promises.

“Let the people assess. It is not for me to comment. Most importantly, we must continue to fight for Sarawak rights,” he added. — DayakDaily