Legal clarity must prevail over politics in Petronas-Sarawak row, says KJ

 The former minister says the issue should be resolved through the courts to provide certainty for the oil and gas industry.

Keluar Sekejap co-hosts Khairy Jamaluddin (centre) and Shahril Hamdan (right) discuss the dispute between Petronas and Sarawak with Multimedia University law lecturer Hafiz Hassan during today’s episode of the podcast.

PETALING JAYA:

Legal clarity must take precedence over political considerations in the dispute between Petronas and Sarawak over the state’s oil and gas regulatory powers, says former minister Khairy Jamaluddin.

Speaking on his Keluar Sekejap podcast, Khairy said the issue, which involves the federal Petroleum Development Act 1974 (PDA) and Sarawak’s Distribution of Gas Ordinance 2016 (DGO), should ultimately be resolved through the courts to provide certainty for the industry.

Khairy said Petronas’s decision to seek judicial review over the matter was understandable as the national oil and gas company required clarity on whether it was only subject to federal law or also required to comply with Sarawak’s state legislation.“It should be decided by the courts as it will give the industry clearer guidance. Right now, a lot of investment planning can’t proceed because this remains unresolved.

“It will also answer a more fundamental question – the question of law and of jurisdiction,” he said during a discussion with podcast co-host Shahril Hamdan and Multimedia University law lecturer Hafiz Hassan.

Hafiz agreed, stating that the core issue before the courts was whether Sarawak’s DGO fell within the state’s legislative powers or matters involving petroleum and gas regulation came under federal jurisdiction.

“Petronas has done the right thing. They need to go to court. They need clarity,” said Hafiz.

Sarawak’s oil mining law vs Federal Constitution

Hafiz said the dispute would require an examination of the Federal Constitution’s legislative lists, including the federal list, state list and supplementary lists applicable to Sabah and Sarawak.

He said while Sarawak had retained certain additional powers under the Malaysia Agreement 1963 (MA63), the state had also agreed to become part of Malaysia’s constitutional framework, which includes the division of powers between the federal and state governments.

Hafiz said the courts would have to determine whether the DGO, which regulates gas distribution licensing, pipeline construction and operations, and safety standards in Sarawak, was consistent with the constitutional allocation of powers.

He said the court’s eventual decision would be significant as it could establish a precedent on the limits of federal and state powers in relation to natural resources.

In March, the Federal Court granted Petronas leave to pursue its challenge on the constitutionality of several Sarawak ordinances governing oil and gas matters in the Bornean state.

Petronas contends that amendments to several ordinances passed by the Sarawak state assembly violated provisions under the Ninth Schedule of the Federal Constitution.

The company’s lawyer, Cyrus Das, argued that the amendments, which touched on treaties, trade, development of mineral resources, as well as production and distribution of power and energy, could only be passed by the Dewan Rakyat. - FMT