State govt to brief O&G industry players mid-May on new oil and gas laws

Abang Johari (centre) speaks at a press conference while Bintulu Port Authority chairman Hadzari Abang (left) looks on.

KUCHING, April 19: The state government through its Oil and Gas Unit will be holding a meeting in mid-May to engage with all oil and gas industry players operating in Sarawak, including Petronas, to brief them and to explain the state’s Oil Mining Ordinance (OMO), Gas Distribution Ordinance (GDO) and the Land Code and Natural Resources and Environment Ordinance (NREO).

Chief Minister Datuk Patinggi Abang Johari Tun Openg said this is to ensure that the implementation of the new policies by the state government to exercise its rights over its oil and gas resources would be done in an orderly manner under the constitution.

Speaking at a press conference after the agreement signing ceremony between Bintulu Port Authority and Bintulu Supply Base Sdn Bhd at a leading hotel here this morning, he said the engagement meeting would explain among others how to comply with the OMO, GDO, Land Code and NREO.

Abang Johari said the meeting would also brief industry players on the penalties and consequences of non-compliance, and provide information on compliance via the issuance of a handbook to them as well as arrangements to be made to sell publications on relevant statutes and regulations.

“To sum up, by July this year, the state will assume full regulatory authority over the upstream and downstream aspects of the oil and gas industry in Sarawak.

“All persons and companies involved in the industries in Sarawak must henceforth, have the necessary licences, permits, leases and approvals required under either the OMO or the GDO. 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.

“Please rest assured that the enforcement of our state laws will not jeopardize the interests or investments of Petronas 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 our laws and regulations,” he said.

Earlier in his speech during the ceremony, Abang Johari explained that forthcoming amendments to the OMO 1958 to be tabled in the coming State Legislative Assembly (DUN) session would require all oil and gas industry players in Sarawak to comply with OMO including Petronas.

He said Section 2 read with Section 6, and Section 8 of Petroleum Development Act 1974 (PDA) confirmed that all industry players must comply with OMO and other state laws including the Land Code of Sarawak with regard to land use and occupation in the state.

“I have noted that under Section 8 of the PDA, only the Petroleum Mining Act 1966, except Section 14 thereof, is not applicable to Petronas.

“Section 14 of the Petroleum Mining Act 1966, which no longer applies to Sarawak, requires Petronas to seek permission to use and occupy land needed for its activities.

“Accordingly, Petronas not being exempted by the PDA, from compliance with the Land Code of Sarawak, must have licences or leases to use and occupy land, including land in the continental shelf, for the production of oil and gas, in accordance with the Land Code,” he explained.

Abang Johari further elaborated that under the Item 2(c) of List II of State List, Ninth Schedule in the Federal Constitution, Sarawak has the constitutional authority to issue exploration and prospecting licences and mining leases for petroleum, including natural gas, both onshore and offshore, within the boundaries of the state.

He said the state government had decided to issue mining leases to Petroleum Sarawak Bhd (Petros), thus vesting of mining rights unto Petros who would work out fair and equitable arrangements with Petronas and other companies relating to the mining of oil and gas from the areas covered by the mining leases.

Abang Johari speaking at the agreement signing ceremony between Bintulu Port Authority and Bintulu Supply Base Sdn Bhd.

“In regulating the upstream oil and gas production, Petronas must only deal with Petros to produce or extract oil and gas from beneath land within the state’s boundaries.

”Petros under direction from the state government will then enter into Mining and Production Sharing Agreements with Petronas and other major industry players,” said Abang Johari.

“For Petros to work alongside with Petronas, certain statutory powers conferred by OMO to the State Minerals Management Authority (SMMA) or the minister, will be delegated via statutory instrument to Petros,” he added.

On the GDO, Abang Johari said all persons and companies undertaking the distribution of gas, including the establishment of gas processing or separation or regasification plants and pipelines would be required to obtain a licence to be issued under the GDO which has been passed pursuant to legislative powers conferred on the State by the Borneo States (Legislative Powers) Order 1963 made by the Yang Di-Pertuan Agong under Article 95C of the Federal Constitution.

He said with the introduction of the GDO, the state would like to see more local companies getting involved or investing in this important sector of the state’s economy.

He pointed out that by regulating the distribution of gas under the GDO, the state would be expected to secure more gas necessary to expand its electricity generation capacity and accelerate industrial growth in Sarawak.

“The state government wants to put an end to the present scenario whereby Sarawak has abundant gas for export to countries like Japan and Korea, but not enough gas for its own domestic use or to propel its industrialization agenda.

“The Gas Distribution (License) Regulations 2018 would set out the procedures for applying for licences and fees payable by licensees.

“For instance, the distribution of gas to any customer, intermediate and end-user, in the state from any gas processing plant in Sarawak both onshore and offshore by way of pipelines would require a licence,” stressed Abang Johari.

He said Petros would be granted licences by the state to distribute gas from the Petronas processing separation plant at Tanjung Kidurong, Bintulu.

In this instance, he added, the principle agreement between the state government and Petronas for supply of gas for power and non-power sector could be assigned by the state government to Petros. — DayakDaily