Petronas needs state govt’s approval to operate in Sarawak, says CM

Sarawak Legislative Assembly Sitting, November 2017

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KUCHING, Nov 17:  Chief Minister Datuk Patinggi Abang Johari Tun Openg says before Petronas can operate in Sarawak , the company must obtain the necessary licences or leases.

He said while the Petroleum Development Act 1974 (PDA) gives Petronas the right to explore and mine for petroleum in Sarawak, the right to issuing mining leases are listed as part of the rights of Sarawak in the Federal Constitution.

“The power of the state to issue mining leases remains in the state list of the Federal Constitution. We must exert our mining rights.

“In exerting our mining rights, we are saying that even if the PDA has vested the rights to explore and export petroleum to Petronas by the federal government, it does not mean that Petronas has the right to simply enter into Sarawak territory.”

“Before Petronas can operate in Sarawak territory, Petronas must obtain the necessary licences or leases to operate within Sarawak’s territory,” said Abang Johari in his winding-up speech today at the State Legislative Assembly.

Meanwhile, while the Sarawak government has failed to get the petroleum royalty to be increased from 5 per cent to 20 per cent after three years of negotiations, it is building its presence in the oil and gas industry in Sarawak to increase revenue from the said industry.

Saying that there are more ways than one to skin a cat, Abang Johari said the state has to be more sophisticated to raise its stake in petroleum resources.

“I must admit that we have not succeeded in getting the 20 per cent (in petroleum royalty).

“The crash in (global) oil prices has created problems for government revenue as well as the viability of oil companies. Many oil companies have closed shop. At a time like this, trying to change the business model now is a very sensitive matter,” he said.

He explained that while increasing the petroleum royalty is an easy way to raise cash for Sarawak, the state had now ventured into the oil and gas industry with the setting up of Petroleum Sarawak Berhad (Petros).

With Petros, Abang Johari said that more Sarawakians would be involved in the petroleum business in Sarawak and increase the income of Sarawakians who work in the petroleum industry.

“We want to use our own gas to power the development of other industries in Sarawak as well. Oil and gas are depleting resources and we have to leverage on them to build other non-oil and gas industries as a means of diversifying our economy.”

He explained that the increase in royalty is also an attempt to raise the revenue of the Sarawak government and this could be also achieved by the state government taking a major stake in any of the petroleum operations in Sarawak, including on a production sharing contact (PSC) basis.

Nevertheless, he stressed that the state would not disrupt the normal business of the petroleum industry.

With regards to reclaiming back Sarawak’s rights under the Malaysia Agreement 1963 which had been eroded by the federal authorities, including the mining rights and rights to natural resources, Abang Johari said he would leave it to the high level special task force, which will be set up after a motion was passed in the State Legislative Assembly earlier this sitting. — DayakDaily