Petronas will pay 5pct to Terengganu if oil extracted there

Petroliam Nasional Bhd (Petronas) will only make a cash payment of five percent to the Terengganu government if petroleum is discovered and extracted within the state.

According to Minister in the Prime Minister’s Department (Law and Institutional Reform) Azalina Othman Said, this is based on an agreement between Petronas and Terengganu.

She said the agreement was signed on March 22, 1975, per section 4 of the Petroleum Development Act (PDA).

The PDA’s provisions, she said, should be read alongside the Territorial Sea Act 2012 [Act 750] (TSA), which defines the state’s territorial sea up to three nautical miles from the low tide line.

“Therefore, if no petroleum is found and obtained within Terengganu’s territorial sea boundary of up to three nautical miles, Petronas is not obligated to make any cash payment based on the PDA and the related agreement.

“The question of whether the TSA affects the application of the PDA or any of the instruments and agreements made under it is irrelevant,” Azalina (above) said in a written answer published on the Parliament’s website yesterday.

Ahmad Samsuri Mokhtar

She was responding to a query from Ahmad Samsuri Mokhtar (PN-Kemaman) regarding the extent to which TSA has repealed or may repeal Act 144, the deed granting rights, powers, freedoms, and privileges regarding the 1975 agreement, and an additional agreement between Petronas and Terengganu in 1987, concerning petroleum royalties.

She asserted that the federal government consistently provides development allocations to all states, including Terengganu.

Referring to a media statement by the Prime Minister’s Office about Terengganu’s rejection of TSA on April 27, 2024, she said the federal government’s stance is that TSA, enacted by Parliament under the Federal Constitution, remains applicable throughout Malaysia, including Terengganu, unless overturned by the courts.

- Bernama