Alas, just when I thought the issue about Sarawak’s historical rights to our natural resources is settled – more or less – the debate over our rights to our resources, especially oil and gas, is once again coming to a head.
As Petronas mulls legal action to “safeguard” its monopoly over the country’s natural resources, Sarawak’s call for greater autonomy is loud and clear. This conflict between the state and the national oil company threatens to strain the relationship between Sarawak and Putrajaya, with potentially profound political, economic, and legal consequences.
Amid these challenges, I would like to make it clear that certain quarters should understand that my state’s rights are not a matter of negotiation – remember, these rights are deeply entrenched in both the law and history.
Sarawak’s position in Malaysia’s oil and gas industry is undeniable. We hold 60.87 per cent of the country’s petroleum reserves and are responsible for nearly 90 per cent of Malaysia’s liquefied natural gas (LNG) exports.
The state’s abundant natural resources have long been a pillar of Malaysia’s economy, fuelling both domestic consumption and lucrative international contracts with countries like Japan and South Korea, among others.
But sadly, despite Sarawak’s significant contributions to the national economy, the management and control of these resources have always been a contentious issue. Petronas has maintained monopolistic control over the country’s oil and gas reserves under the Petroleum Development Act 1974 (PDA 74) which effectively granted the national oil company ownership and exclusive rights to explore, develop, and extract petroleum resources across Malaysia, including Sarawak.
Our call for greater autonomy over our natural resources is not a new development, but rather a continuation of a long-standing struggle by our leaders. Lest certain quarters choose to conveniently ignore, allow me to remind them about our Oil Mining Ordinance (OMO) of 1958, a colonial-era law that predates Malaysia’s formation.
According to this ordinance, oil and gas resources within Sarawak’s boundaries belong to the state. Sarawak insists that the OMO remains in force, arguing that its sovereign rights over natural resources are constitutionally protected under the Malaysia Agreement 1963 (MA63).
MA63 is the foundational document upon which Sarawak, along with Sabah and Singapore, joined the Federation of Malaysia. It guarantees certain rights and autonomy for Sarawak, particularly in matters related to land, forests, and natural resources as our leaders, including Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg, have pointed out.
The Sarawak government has repeatedly referred to MA63 as the legal safeguard that upholds its control over its oil and gas resources. Without MA63, as many legal experts argue, there would have been no Federation of Malaysia.
Abang Johari and the Sarawak state government have pushed for the implementation of MA63, which they see as the key to securing the state’s rightful control over its resources.
In recent months, Sarawak’s demands have intensified, culminating in an ultimatum to Petronas to finalise an agreement by Oct 1, 2024, that would grant Sarawak complete supervision over oil and gas trading through its state-owned Petroleum Sarawak Berhad (Petros).
Petronas, however, as it appears, is not ready to relinquish its decades-old monopoly without a fight. Reports indicate that it is considering filing a court injunction to block Sarawak’s move and preserve its control over the country’s oil and gas reserves.
If Petronas proceeds with legal action, it could lead to a prolonged and costly court battle, one that could drag on for years and have significant ramifications for Malaysia’s oil and gas industry.
This potential legal conflict raises several important questions, not least of which is the validity of Petronas’ authority under the PDA 74. Many legal experts have argued that the PDA 74 was enacted without the constitutional approval of Sarawak and Sabah’s state assemblies, calling into question the law’s legitimacy.
Moreover, any attempt by Petronas to override Sarawak’s rights as enshrined in MA63 would likely be met with fierce resistance, both legally and politically.
The implications of this conflict extend far beyond the courtroom. As Parti Pesaka Bumiputera Bersatu Sarawak (PBB) information chief Datuk Idris Buang recently warned, a legal battle between Sarawak and Petronas could severely strain state-federal relationship.
Petronas should accept the fact that Sarawak plays a critical role in Malaysia’s unity government, and any fallout from this dispute could have political consequences at the national level.
Economically, the stakes are equally high too. As Abang Johari has pointed out, the state has a vested interest in ensuring the stability of its LNG contracts, particularly with key partners like Japan and South Korea. Any disruption to the supply of LNG could damage Sarawak’s reputation as a reliable supplier and have far-reaching consequences for Malaysia’s energy exports.
Furthermore, a prolonged legal battle could undermine investor confidence in Malaysia’s oil and gas sector. LNG buyers and upstream players have already expressed concerns about the potential for supply disruptions, and Petronas itself has acknowledged the need to provide assurances of stable and cost-competitive fuel supply.
With the emergence of the latest challenges, many have called for a more conciliatory approach. Former Minister of Legal Affairs Datuk Mohd Zaid Ibrahim, in a recent Facebook post, urged both Petronas and Sarawak to learn from the legal battles faced by durian farmers in Raub.
He argued that resorting to the courts is a “lazy way” to solve disputes, one that often prolongs tensions rather than resolving them. Instead, Zaid suggested that negotiations, carried out in good faith, are the only sensible way forward.
This view is shared by many in Sarawak, including Abang Johari, who has downplayed reports of an impasse in discussions with Petronas. He insists that talks between Petros and Petronas are still on track and that there are no issues between the two companies. However, with the Oct 1 deadline fast approaching, the window for reaching an amicable resolution is closing.
Sarawak’s quest for greater autonomy over its natural resources is not just about economics — it is about sovereignty, dignity, and respect for the agreements that form the foundation of the Malaysian Federation.
The state’s rights to its oil and gas resources are entrenched in law, history, and the spirit of MA63, and these rights must be upheld.
Having said that, a prolonged legal conflict with Petronas would serve no one’s interests. Both Sarawak and Putrajaya have much to gain from cooperation and mutual respect. The path forward must be one of negotiation, not confrontation.
Petronas and Petros must find common ground that respects Sarawak’s rights while ensuring the stability of Malaysia’s energy sector. Sarawakians, by nature, are a peaceful and accommodating lot. Just as a couple has to adopt a give-and-take approach to amicably manage a relationship, so should Petronas and Sarawak adopt a similar approach.
All Petronas needs to do is BE CARING AND LOVING towards us and we – Sarawak and Petros – will RECIPROCATE appropriately!
Don’t misunderstand us! We have always been a loyal and faithful member of the Malaysian Federation, and we will continue to play a crucial role in the country’s future. But that future must be built on a foundation of fairness, respect, and adherence to the promises made in MA63.
And only through dialogue and cooperation can Sarawak and Petronas find a solution that benefits both parties – and, ultimately, all Malaysians.
The views expressed here are those of the writer and do not necessarily represent the views of New Sarawak Tribune.
