Embrace the spirit of Petroleum Development Act

September 2, 2012

Dateline 2012-08-15:

ONE of the topics that have dominated media space in recent days has been the oil royalty issue. Putrajaya has pledged to look into a mechanism that will ensure fair distribution of oil and gas revenue to producer states in Peninsular Malaysia. A special committee will be set up to carry out a comprehensive study, taking into account all aspects of the claims, and will make appropriate recommendations to the federal government.

The committee will be chaired by former chief justice Tun Abdul Hamid Mohamad and members will comprise legal experts from within and outside the country as well as representatives from the Terengganu, Kelantan and Pahang governments, according to reports.

With few details for now, one wonders why the committee’s scope covers only the eastern states of Peninsular Malaysia and not also the oil-producing states of Sabah and Sarawak. If that is the case — covering only Terengganu, Kelantan and Pahang — then would the original agreement that paved the way for cash payments for oil and gas discovered in the states, which was governed by the 1974 Petroleum Development Act (PDA), be more relevant?

Nik Aziz to seek audience with Kelantan Sultan over oil revenue

August 21, 2012

Is Lawit really in Kelantanase waters?

Dateline 2012-08-06:

Menteri Besar Kelantan Datuk Nik Aziz Nik Mat said he will be seeking an audience with the Sultan of Kelantan to get the Sultan’s consent on the state government’s choice to represent Kelantan in the Special Committee on Petroleum Revenue which was announced by Prime Minister Datuk Seri Najib Tun Razak today.

He said the Kelantan government had yet to make a decision as to who would be picked for the committee.

Petronas awards 3 North Malay Basin gas fields to Hess Corp

July 18, 2012

Isn’t this really outdated. How do I get onto this gravy boat?

Dateline 2012-06-21:

State oil firm Petronas signed three production sharing contracts with the exploration arm of U.S. firm Hess Corp on Thursday, kicking off a $5.2 billion gas project off Malaysia’s east coast.

The North Malay Basin project, comprising nine gas fields about 300 km (186 miles) off the east coast of peninsular Malaysia, is aimed at securing new gas supplies for Petronas as it faces a supply crunch.

Kelantan claims RM800m per annum oil royalty

August 2, 2010

Taken from the Malaysian Insider, dateline 2010-08-30:

The Kelantan state government claims PETRONAS owes the state RM800 million per annum from the Kelantan-Thailand offshore area since 2005.

The Kelantan government filed a suit today at the High Court here against the oil giant for breaching the Petroleum Development Act (PDA) 1974 by failing to pay the state oil royalties.

“The worth of condensate (gas liquid) comes to about US$8.5 billion per annum from the joint development offshore area with Thailand,” said state executive councillor Datuk Husam Musa.

“Five per cent of that belongs to Malaysia, which is RM1.7 billion. Half of that belongs to Kelantan which is RM800 million. Petronas owes Kelantan RM800 million per annum since 2005,” he added.

The Kelantan state government said today that Petronas owes the state oil royalties from at least four offshore areas from which oil has been extracted from. These are Kelantan, Kelantan-Thailand, Kelantan-Vietnam and Kelantan-Terengganu.

From Bernama – Oil Royalty, Kelantan Not Eligible Because Of Emergency Ordinance

March 17, 2010

Taken from Bernama, dateline 2010-03-11:

KUALA LUMPUR, March 11 (Bernama) — Kelantan is not entitled to claim oil royalty outside its territorial waters because the Emergency (Essential Powers) Ordinance 1969 is still enforced, said a law practitioner.

Datuk Mohd Hafarizam Harun said provision No.7 of the Ordinance stipulated that the state’s boundary which is the state’s land mass and its territorial waters stretched three nautical miles measured from the low-tide water mark.

However, two oil wells disputed by the Kelantan state government are located outside the ‘area’.

“To my knowledge, the Emergency (Essential Powers) Ordinance 1969 is still in force and has not been abolished by the government. In fact, there are Ordinances formulated at that time, such as ESCAR (Essential (Security Cases) Regulations 1975), which are still in force,” he said when contacted by BERNAMA, here Thursday.

He was commenting on the statement by former Sarawak chief minister Tun Abdul Rahman Yakub, who supported the stand of the Federal Government that the State Government was not entitled to claim the oil royalty unless it could prove that the state’s territorial waters exceeded three nautical miles.

And here’s more fuel to the fire.

From the New Straits Times – Kelantan to get RM20M in March

January 28, 2010

Taken from the New Straits Times, dateline 2010-01-27:

KOTA BAHARU: Kelantan will receive RM20 million as compassionate fund due under an oil and gas production arrangement in March.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said the decision was made after discussions with the national oil corporation, Petronas, recently.

“It involves revenue from oil and gas production in the South Earth Platform, Block PM301, close to Kelantan waters. The RM20 million is five per cent of the total revenue from the block since May 2008,” he told reporters after opening a forum on the compassionate fund, here last night.

More than 5,000 people attended the forum.

Mustapa, who is also chairman of the Kelantan Umno Liaison Committee, said the Kelantan government”s claim for RM11 billion in oil royalty was extreme as the oil production was not that high.

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From the Star – Govt to Pay Royalty to Kelantan

November 15, 2009

From the Star, dateline 2009-11-10:

A Kelantan state executive councilor said the Federal Government was obliged to pay cash to petroleum producing states and not just in the form of a compassionate fund (wang ehsan).

Datuk Husam Musa said this was according to Clause 4 of the Petroleum Development Act (PDA) 1975.

Royalty Kelantan

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