Deputy Prime Minister Fadillah Yusof Calls for Mutual Gain in Oil and Gas Dispute
The Ongoing Tug-of-War Over Rights to Oil and Gas Exploration Off the Sarawak Coast
Deputy Prime Minister Fadillah Yusof has called for the federal and Sarawak governments to work towards a mutually beneficial solution in the ongoing tug-of-war over rights to oil and gas exploration off the Sarawak coast. According to Fadillah, Sarawak claims the right to all resources found within its boundaries, including the continental shelf (the seabed and subsoil beyond territorial waters).
Sarawak’s Claim to Offshore Oil and Gas
As far as Sarawak is concerned, the continental shelf extends about 100 miles (160km) from the territorial border, Fadillah said. The state seeks "more empowerment" over its resources premised on "the spirit of the Malaysia Agreement 1963".
Petroleum Development Act 1974
Under the Petroleum Development Act 1974, Petronas is vested with full ownership and exclusive authority over the country’s entire onshore and offshore oil and gas resources.
Sarawak’s Right to Offshore Oil and Gas
Fadillah said Sarawak’s right to offshore oil and gas is premised on the state’s Oil and Mining Ordinance 1958, which the state claims was suspended after a national proclamation of emergency in 1969. During the emergency, only the federal government could introduce laws, so the ordinance could not be enforced. The state contends that the law was revived after the emergency was lifted in 2011, restoring Sarawak’s rights to all its oil and gas resources as claimed.
Distribution of Gas Ordinance 2016
The Sarawak state assembly has since also passed the Distribution of Gas Ordinance 2016, which provides for Sarawak to take over Petronas’s role as gas aggregator in the state. The ordinance will allow Sarawak’s state-owned oil company, Petros, to control all buying, selling, price-fixing, supply and distribution of liquid natural gas in the state.
Negotiations Between Petronas and Petros
Negotiations between Petronas and Petros are ongoing, with Fadillah hopeful that a commercial arrangement will see Petronas continuing with offshore exploration, and Petros taking over all onshore activities.
Mutual Gain
Sarawak’s move to transfer aggregator rights to Petros will undoubtedly boost the state’s oil and gas-related revenues. It would also allow Kuching to control its exports. Currently, 95% of LNG produced in the state is exported. However, the state wants to reserve up to 30% for local consumption under the Sarawak Gas Roadmap 2030.
Industry Observers’ Concerns
Industry observers, however, have warned against limited Petronas involvement in Sarawak, saying it will neither benefit Sarawak’s nor Malaysia’s O&G sector. Sarawak has been Malaysia’s O&G star performer, but a lot of that success is down to a strong Petronas presence in the state.
Conclusion
In conclusion, the ongoing dispute over oil and gas exploration off the Sarawak coast is a complex issue that requires a mutually beneficial solution. While Sarawak seeks more empowerment over its resources, it is crucial to ensure that both parties benefit from the arrangement.
Frequently Asked Questions
Q: What is the current situation regarding oil and gas exploration off the Sarawak coast?
A: The federal and Sarawak governments are engaged in a tug-of-war over rights to oil and gas exploration off the Sarawak coast.
Q: What is Sarawak’s claim to offshore oil and gas?
A: Sarawak claims the right to all resources found within its boundaries, including the continental shelf (the seabed and subsoil beyond territorial waters).
Q: What is the Petroleum Development Act 1974?
A: The act vests Petronas with full ownership and exclusive authority over the country’s entire onshore and offshore oil and gas resources.