KUCHING: Sarawak’s oil and gas industry has been governed by its own laws long before the Petroleum Development Act (PDA) 1974 came into existence, and those laws remain in force today, said Senator Dato’ Ahmad Ibrahim.
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He stressed that the PDA 1974 cannot override state legislation, particularly the Oil Mining Ordinance (OMO) 1958, the Distribution of Gas Ordinance (DGO) 2016, the Sarawak Land Code, and the State Sales Tax regime.
“Sarawak has been producing oil and gas since the discovery in Miri in 1910, which is 53 years before Malaysia was formed. The industry was developed under Sarawak’s own legal framework, not under the PDA 1974,” he said in a statement yesterday.
According to Dato’ Ahmad, Section 73 of the Malaysia Act 1963 preserved all state laws in force before Malaysia’s formation, including the OMO 1958, which was amended in 2018 to grant Sarawak full authority over petroleum licensing onshore and on its continental shelf.
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He explained that the PDA 1974 applies fully only in states without their own petroleum laws. “In those states, PETRONAS is the sole aggregator of oil and gas. But in Sarawak, OMO 1958 gives the state full control in this area,” he noted.
Dato’ Ahmad further stated that under the DGO 2016, Sarawak has exclusive authority to license and regulate domestic gas distribution. The Federal Government has formally recognised PETROS as the sole gas aggregator for the domestic market, excluding liquefied natural gas (LNG).
“LNG is excluded because it is an international export commodity regulated under the PDA 1974, tied to long-term contracts between PETRONAS and overseas buyers,” he said. The 2020 Commercial Settlement Agreement retained LNG under PETRONAS to ensure market stability and uphold export commitments, while giving Sarawak full control over domestic gas.
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On the State Sales Tax (SST), Dato’ Ahmad highlighted that the High Court’s decision on 13 March 2020 upheld Sarawak’s right to impose the tax on petroleum products. PETRONAS withdrew its appeal and settled its dues, further reinforcing Sarawak’s legal standing.
He criticised recent televised remarks on Sarawak’s oil and gas jurisdiction as being one-sided and ignoring long-standing state laws. “Ignorance of the law is no excuse, especially for a Member of Parliament. To the MP for Pasir Gudang, before politicising hearsay, learn the legal facts. Sarawak’s constitutional, historical, and legal position is not subject to political convenience,” he said.
Earlier, BERNAMA reported that Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said stated in a written reply that the PDA 1974 remains in force and vests PETRONAS with ownership and exclusive rights to exploit petroleum nationwide, both onshore and offshore. She was responding to Pasir Gudang MP Hassan Abdul Karim, who had asked about the Federal Government’s commitment to defending Act 144 in light of claims by Sarawak and PETROS. — UKAS EDITION
