SARAWAK and Petronas have yet to agree on the national oil company’s new position in the state after amendments to a state law in July stripped the company of its regulatory powers within the state.

Chief Minister Abang Johari Openg said there was “already a formula” between Petronas and the state under Sarawak’s Oil Mining Ordinance (OMO) but the national oil firm remained hesitant on matters involving commercial arrangements.

Awang Johari said Economic Affairs Minister Mohamed Azmin Ali would order Petronas to continue discussions with Sarawak.

The rights to Sarawak’s carbon resources and revenue derived from it has been a thorny issue in state-federal relations in recent years.

In July, Sarawak moved to strip Petronas’ regulatory powers by amending its 60-year-old OMO “to bring the ordinance in line with current practices and operation in upstream sector of the oil and gas industry”.

The amendment also strengthens the state’s regulatory control over exploration and prospecting for petroleum and mining on land in the state.

Petronas’ position prior to July was dictated by the Petroleum Development Act 1974, which gave them monopoly over all oil and gas resources in the country.

Sarawak had said the 1974 act was illegal in Sarawak as it had never been ratified by the state assembly.

Ratification was deemed mandatory as the law violated the Malaysia Agreement 1963 and infringed on the state’s rights, the state government had held.

Deputy Chief Minister Awang Tengah Ali Hasan, in tabling the amendment, had said Petronas and all oil and gas companies operating in Sarawak must comply with the OMO and other state laws, particularly the Land Code.

Awang Tengah had also said the state government was prepared “to engage constructively with Petronas to establish a regulatory framework for the exploration, prospecting and mining for oil and gas in the state”.

Regulatory powers are now enforced by the state-owned oil and gas exploration firm Petroleum Sarawak Bhd (Petros), formed in March last year. – January 3, 2019.