IT is a known fact that one of the main reasons why Sarawak had no choice but to join the federation of Malaysia in 1963 was due to threats from the communist’s insurgency as well as Indonesia’s aggression leading to the confrontation that lasted until 1965.

The other reason was that, both Malaya and Singapore then were already way ahead in terms of development compared to Sarawak, which was then under-developed, and poverty was rampant. As such, Sarawak was keen to be part of the much larger, safer and richer entity.

Fast forward, even after more than half a century in the federation, Sarawak continued to lag in terms of physical development, especially in terms of infrastructure such as roads, bridges. The primary reason was not that Sarawak is poor because its people are lazy as claimed by some veteran politicians in Malaya but rather because, its vast natural resources such as oil and gas, have been tapped and its massive returns were channelled to the federal government with only 5 per cent reverted to Sarawak.

Since the Petroleum Development Act 1974 (PDA 74) was enforced, it has been reported that Sarawak has contributed some RM1 trillion to the national coffer, and in return, a mere 5 per cent, which is equivalent to RM50 billion, was given back to Sarawak in the past 50 years. This translates to only about RM1 billion a year against RM20 billion for Putrajaya.

Recently, Senator Robert Lau revealed that Sarawak accounted for 60 per cent of natural gas produced in Malaysia. And out of this, 94 per cent is used by Petronas to convert to liquefied natural gas (LNG) and exported.

And Lau also made a bombshell revelation that all the gas produced offshore of Malaya are retained for use in Malayan states to support their industries and sold for power generation by independent power producers at subsidized rates.

And in vast contrast, Sarawak has only been allocated with a mere 6 per cent of its natural gas for its local industries and power generation with price determined by Petronas. And Petronas would then tell investors who wish to invest in Sarawak that there is no supply of gas left for them.

This shocking revelation made by Lau only goes to show that Petronas has not been honest to assist the Sarawak Government to develop the region which is almost as big as the whole of Malaya. This massive mismatch in terms of financial benefits to Sarawak has stunted its physical development causing it to lag in almost every sector of the economy. Thus, causing Sarawak to continue to be listed as one of the poorest regions in the country.

Then a twist of fate turned the tide in Sarawak’s favour when the late Pehin Sri Adenan Satem, whom Sarawakians fondly called Ton Nan, was appointed as Chief Minister in 2014. With his strong legal background, he managed to stir up the patriotic feelings among Sarawakians to fight for better deals for Sarawak under the Malaysia Agreement 1963 (MA 63), which specially focuses on its O & G, immigration autonomy and its labour needs.

Although Tok Nan was in power for only three years, it was enough to chart the way forward for his successor Datuk Patinggi (Dr) Abang Haji Abdul Rahman Zohari Tun Abang Haji Openg to draw a bold new policy to overhaul and to modernise Sarawak’s economy. 

With the dawn of a new era under the stewardship of Abang Zohari since 2017, Sarawak has embarked on the Post-Covid Development Strategy (PCDS) 2030, which is a bold and revolutionary policy in order to achieve a developed status by 2030. And since taking office, he has managed to develop Sarawak by leaps and bounds. And, an estimated RM40 billion has been spent to modernise Sarawak, including sourcing for new sources of energy such as green economy and green technology which focuses on hydrogen.

And one of Sarawak’s major revenues since 2019 has been from its 5 per cent State Sales Tax (SST) imposed on oil and gas; plantations and smelting companies operating in Sarawak. It has been reported that since the introduction of SST, it has yielded RM18.6 billion to the State coffer. And with Sarawak-owned petroleum company, Petros being given the role as the sole aggregator of O & G sector in Sarawak, it is projected that Sarawak can earn a staggering between RM30-RM40 billion annually.

To further consolidating Sarawak’s O & G resources, both the Sarawak Government and Petronas have agreed that by July this year, Petronas, (which has been operating in Sarawak for the past 50 year) has been given three months to comply with the new ruling that it would cease to be the sole aggregator of O & G in Sarawak and the role would be transferred over to Petros.

As agreed earlier on by both parties that by October 31, it would have ceased its role as the sole aggregator of O & G in Sarawak. However, is has rescind on its earlier decision and decided to further negotiate with the Sarawak Government on the matter, and, without any new deadline being set. This has caused discontentment and among Sarawak’s top leadership. 

During the last DUN Sitting, Minister of Utility and Telecommunications Dato’ Sri Julaihi Narawi chided Petronas to accept the fact that that the sole aggregator for O & G in Sarawak has been given to Petros, and that fact has been finalised and non-negotiable, as the law was based on the Oil Mining Ordinance (OMO) 1958 and Gas Distribution Ordinance 2016 

To further underlined Sarawak’s seriousness to enforce its own law governing the O & G, many legal minds including prominent lawyer Dato Shankar Ram Asnani and Gabungan Parti Sarawak (GPS) chief whip and Satok Assemblyman Dato Ibrahim Baki, pointed out that Sarawak’s legal rights over its O & G reigns supreme over the PDA 1974, as OMO 1958 was never repealed under the MA 63,and was made part of the Federal Constitution, which is being placed under the State List of the Ninth Schedule, giving Sarawak the autonomy over its O & G industry. Under MA63, Sarawak’s autonomy also includes immigration and its labour needs.

And Ibrahim has been made busy to counter the allegations of many critics and detractors to Sarawak’s right over its O & G resources. Ibrahim’s latest war of words was against former Law Minister Datuk Former Law Minister Datuk Zaid Ibrahim, who has characterized Sarawak’s claim that its boundaries were extended before Malaysia Day by the Sarawak (Alteration of Boundaries) Order in Council, 1954, which Ibrahim described as a “misunderstanding of maritime law”.

In a very technical legal terms, Ibrahim stressed that Zaid’s contention was that the two concepts of “exploitability” (of petroleum resources) and “the geological concepts of a state’s territorial limit” cannot be conflated.

Ibrahim pointed out that Zaid’s arguments were flawed because in Malaysia, the federal Constitution is supreme. It lays down who has the legislative authority over “exploitation” of resources like petroleum and these resources are part of land. Hence under Item 2 of the List (State List) in the Ninth Schedule of the federal Constitution the State has legislative (and hence executive) authority over “land”. 

“Such legislative authority includes under Item 2(c) the issuance of prospecting licences, mining leases and certificates. Item 8(j) of the List I (federal list) in the Ninth Schedule is expressly subject to Item 2(c) of the State List. The Federation may have the power of the development of natural resources, oil and oil fields but subject to Item 2(c) in the State List. 

“All States, including Sarawak, have the right to regulate petroleum mining or development of oil fields on land in the State, and the federal powers to develop petroleum resources is subject to item 2(c) of the State List, that is subject to prospecting licences, mining leases and certificates, issued by the State. Bearing in mind, the Constitution, and not Parliament, is supreme, on what constitutional basis did Parliament pass the Petroleum Mining Act, 1966 to authorize a federal “Petroleum Authority” to issue mining leases.

Ibrahim said further said, “Perhaps, Datuk Zaid can enlighten every Malaysian, under what provision of the federal Constitution, is Parliament empowered to pass a law to vest all petroleum found onshore and offshore Sarawak in Petronas. Unless these pertinent questions are answered convincingly, Sarawakians have every reason to feel aggrieved that have been deprived of their rights to exploit the petroleum resources found onshore and offshore Sarawak through laws which Parliament did not have the constitutional authority to enact.

Ibrahim explained that on the geological territorial limits of Sarawak, no one can dispute that the 1954 Order in Council extended the boundaries of Sarawak to include the seabed and subsoils forming the Continental Shelf contiguous to the territory waters.

“This extended submerged area was “Crown land” which on Malaysia Day was vested by the British Monarch in Sarawak by one of the constitutional instruments annexed to the Malaysia Agreement by Article III thereof. These extended submerged area in the Continental Shelf were never vested by the British Crown in the Federation or in the Federal Government.

“Malaysia’s claim to sovereignty over the Continental Shelf under the United Nations Laws of the Sea (UNCLOS) 1982, does not affect the rights and authorities of Sarawak or the territory of Sarawak. This is clearly stated in the definition of “continental shelf” in the Continental Shelf Act, 1966, as amended in 200,” Ibrahim said.

Ibrahim reiterated that what Sarawakians would like to have is an amicable and fair resolution of their legitimate claim to fair and equitable share of the petroleum resources, more natural gas for local industries and greater right to participation in the upstream and downstream oil and gas businesses. Sarawak’s contributions and sacrifices towards the national economic well-being should not be overlooked. 

“Finally, and more importantly. Sarawakians want all the laws that safeguard the territory of Sarawak and its rights to petroleum resources and downstream oil and gas industry respected and duly complied with by all parties operating in Sarawak,” added Ibrahim.   

Sarawak’s stance on its O & G resources has been unwavering. This was evident when Minister of Tourism, Creative Industry and Performing Arts Dato’ Sri Abdul Karim Rahman Hamzah said in his Winding-Up Speech that, not only Petronas must abide by the State law on O & G, but also, he reminded the national oil corporation to abide with Sarawak’s autonomy on immigration where he warned that Sarawak will no longer tolerate whoever comes to Sarawak to work with merely using their social visa permits, even for a few days.

Lest Petronas forgets, an incident happened back in 2016, when Tok Nan threatened not to issue work permits to non-Sarawakian senior personnel of Petronas, including directors, if the oil giant disagreed with Sarawak’s policy on local participation in the O & G industry.

Sarawak’s stance on is O & G is final and non-negotiable as mentioned by the Premier when he delivered his speech in Gedong recently, that he was willing and ready to face Petronas in court should it continued to drag its feet.

It is hoped that both Putrajaya and Petronas must respect Sarawak’s laws that governs its resources, its immigration and its labour needs to ensure that it will be able to catch up with the more advanced states in West Malaysia. After all, Sarawak as partner in the formation of Malaysia, is not asking for the moons and the stars but merely for its fair share of the deal as a legitimate partner under MA 63.-Game Changer