CAN THE DIFFERENT LAWS CO-EXIST?
Sarawak, which has long pushed for greater control over its hydrocarbon resources, has been locked in months of hardball negotiations with the Malaysian government and Petronas over the national oil giant’s monopoly over the country’s oil and gas reserves as enshrined under the PDA.
Sarawak, which insists that the PDA does not apply to it, has passed laws to govern its oil and gas sector and in February last year appointed Petros as the sole gas aggregator for the state, a move that directly challenged the authority long held by Petronas.
The eastern state holds about 60 per cent of Malaysia’s gas reserves and contributes almost 90 per cent of Malaysia’s LNG exports.
Both parties have tried to reach a compromise in talks that began sometime in April last year, but talks have broken down twice, with Petronas suspending all negotiations in December, according to executives from the national oil corporation.
Senior Malaysian government officials who spoke to CNA on condition of anonymity said the latest confusion stems from efforts by the Anwar administration to push Petronas and the Sarawak government into reaching a compromise.
“The real problem here is that talks have broken down between the parties and that is why Petronas and Sarawak can’t make any statements,” said one senior government official close to the situation.
Petronas officials, who also spoke anonymously, said the situation had become untenable in recent months after the Sarawak government began enforcing licensing requirements for private oil and gas companies operating in the state.
“The enactments of laws by the state (Sarawak) government have complicated the situation,” said the government official, adding that it has “caused a lot of uncertainty among international investors”.
“What went through Petronas in the state (under the PDA) before, now must go through Petros and that is making things difficult not only for us (Petronas) but also the foreign independent contractors.”
Sarawak’s Distribution of Gas Ordinance 2016 stipulates that any party carrying out gas distribution activities in the state should apply for a licence.
But in her written parliamentary reply, Azalina said that based on the agreement between Anwar and Abang Johari, Petronas and its subsidiaries are not required to obtain a licence or comply with additional procedures to conduct petroleum operations in Sarawak beyond what is outlined in Act 144, which is the PDA 1974.
There are even some who doubt the different sets of laws governing Petronas and Petros can co-exist.
Zaid Ibrahim, a prominent Malaysia lawyer and a former minister overseeing legal affairs, told CNA that Anwar’s remarks in mid-January over a compromise reached are misplaced.
“There can’t be two sets of laws, such as the PDA and the Sarawak Distribution of Gas Ordinance, because it will only lead to more conflict, and foreign investors want certainty,” he said.
Zaid believes that a new approach is needed.
“The best will be to have a holding pattern with Petronas operating as before and both parties turning to the courts to settle the issue,” he said.
