KOTA KINABALU: The federal government says the Malaysia Agreement 1963 (MA63) does not contain any provisions on the ownership, management or regulation of oil and gas, and therefore does not govern disputes between Petronas and Petroleum Sarawak Bhd (Petros), according to Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said.
In a written parliamentary reply to Datuk Ali Biju (PN–Saratok), Azalina said MA63 is a founding document that sets out autonomy and safeguards for Sabah and Sarawak but is silent on petroleum matters, which are instead governed by the federal Petroleum Development Act 1974 (PDA).
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She reiterated that Petronas is vested with full ownership and exclusive rights over petroleum resources nationwide under the PDA, while cooperation with Sarawak is governed by a 2020 Commercial Settlement Agreement between Petronas and the Sarawak government.
The statement comes amid a legal dispute between Petronas and Petros over control of gas assets and Sarawak’s claim to act as the state’s sole gas aggregator under the Distribution of Gas Ordinance (DGO).
Negotiations have stalled, prompting Petronas to seek a Federal Court ruling on its legal position in Sarawak. The federal government says it will abide by the court’s decision.
Sabah Nominated Assemblyman Roger Chin rejected the claim that MA63 is irrelevant to oil and gas, arguing that MA63 must be read together with the Federal Constitution, which places land and natural resources under state jurisdiction.
He said petroleum lies beneath land, which has never been federal property, and that the PDA was enacted precisely because the federal government did not originally own those resources.
Chin added that Sarawak’s continued reliance on the Oil Mining Ordinance 1958 and later state gas laws reflects powers that were never lawfully removed, and that centralisation through later legislation does not override constitutional structure.
He also pointed to Sabah’s constitutionally guaranteed 40pc revenue entitlement, which required court action to enforce, as evidence that even express safeguards linked to MA63 are often resisted.
He argued that federal control over oil and gas rests on post-1963 political and legislative arrangements, not on MA63 or the original constitutional design, and called the current federal position selective compliance rather than constitutional interpretation.
