Musa’s dilemma: Ownership or royalty

Will he make Sabahans grateful and happy or will he please his Putrajaya masters?

COMMENT

Why the preference for royalty payment and not ownership of the oil and gas in Sabah’s territorial waters?

I have repeatedly pointed out that as of May 24, 2012, six months after Najib Tun Razak lifted the emergency, the ownership of Sabah’s territorial waters had reverted back to the state.

It is therefore ridiculous for Chief Minister Musa Aman to talk about oil royalty when all oil and gas found within our territorial waters belongs to us.

It is doubly ridiculous for Musa to talk about owning shares in Petronas.

Perhaps he has been wrongly advised.

If Musa’s advisors had understood the Petroleum Development Act 1974 (PDA74) then they would have informed him that the PDA74 is simply a “red herring” because it is an Act which creates a special purpose vehicle (SPV) called Petronas.

All the Malaysia territorial waters which was forcefully taken from the Borneo states using the Continental Shelf Act 1966, the Petroleum Licensing Act 1966 and the Emergency (Essential Powers) Ordinance No.7 1969 has been given to Petronas.

In all these Acts, Petronas cannot sell oil and gas – this honor is given to the option holders.

Translated, this means that Petronas is a holding company and not a trading company.

Whatever profits depends on the option holders and not Petronas.

The federal government does not have the right to transfer the ownership to Petronas.

Musa still in denial

The issue, as such, is not about the amount that Petronas is investing in Sabah.

It is about ownership and Sabah’s rights to our territorial waters which is protected by the North Borneo (Alteration of Boundaries) Order in Council 1954.

The RM18 billion Sabah oil and gas terminal means nothing to Sabah and its people.

The terminal is just to separate the gas from the crude oil recovered from our offshore fields.

The gas is piped to Bintulu and the crude petroleum is sent to Labuan for export.

Is Musa aware that the oil and gas sector contributes less than 3% employment?

It is no secret that high risk ventures like oil and gas require heavy investment but the returns are also very substantial.

Most of the money does not come from Petronas; the money comes from their petroleum sharing contractors who are taking all the risks, not Petronas.

After 10 years as the CM, Musa must still be in denial if he thinks the federal government is going to give what is due to Sabah and Sarawak.

He should stop being Kuala Lumpur’s apologist and a Putrajaya mouthpiece.

Musa must make the choice of a lifetime.

To choose ownership means he will get the gratitude of the people in Sabah but he has to expect the wrath of his superiors from Putrajaya.

To choose royalty means Musa must expect wrath and curses from Sabahans, but he may get a pat on the back from Putrajaya and his Chief Minister seat may be secure until the PRU14.

Whichever he choose, he will face big problems.

He may as well play out this game at the State Legislative Assembly and wash his hands of all the problems.

Zainnal Ajamain has held several senior positions in the civil service and government think tanks. He has worked as a lecturer, researcher, stockbroker and has published several papers in international media journals. He helped organise the United Borneo Front (UBF) grouping and remains active in politics.