Petronas says can still pursue legal action against Sarawak

Boo Su-Lyn
Petronas’ lawsuit arose after Sarawak informed Petronas in an April 13 letter that the state government would start regulating from July 1 upstream oil and gas activities in Sarawak under OMO. — Reuters pic

KUALA LUMPUR, June 22 — Petronas said today that its application for leave to sue the Sarawak state government for control over oil-and-gas exploration in the state was rejected by the Federal Court only on technical grounds.

The national oil giant said the Federal Court did not endorse the merits of the Sarawak state government’s legal position on regulating upstream petroleum activity under the Sarawak Oil Mining Ordinance (OMO) 1958.

“The Federal Court’s decision today does not in any way impair Petronas’ ability to further pursue its legal actions, with the intent to seek clarity on its rights and position under the PDA 1974,” Petronas said in a statement, referring to the Petroleum Development Act, a federal law.

“The Federal Court also noted the concession by the government of Sarawak that the Petroleum Development Act 1974 (PDA 1974) was validly enacted.

“This reinforces Petronas’ view that only Parliament can legislate on matters relating to upstream petroleum industry including regulatory powers throughout Malaysia, both onshore and offshore by virtue of the PDA 1974,” Petronas claimed.

The apex court ruled earlier today that the case should have been brought before the High Court instead.

The Federal Court’s decision is only on whether Petronas can commence its lawsuit there, and does not decide on substantial matters such as whether Petronas has exclusive powers to regulate petroleum activities in Malaysia or if Sarawak has such regulatory powers in the state.

Petronas’ lawsuit arose after Sarawak informed Petronas in an April 13 letter that the state government would start regulating from July 1 upstream oil and gas activities in Sarawak under OMO.

The letter also notified Petronas that it would have to comply with OMO and apply for licences or leases after July 1 to avoid its upstream activities from being deemed illegal and action taken against them.

Petronas’ position is that that the PDA, which created the national oil company and vested ownership and exclusive regulatory authority over Malaysia’s oil and gas in it, effectively invalidated the pre-Malaysia OMO.