Kuala Lumpur: The Malaysia Agreement 1963 (MA63) does not govern oil and gas resources in Sarawak, but is a foundational document that sets out the terms for the formation of Malaysia, including specific rights and autonomy for Sarawak and Sabah, Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said said.
In a written parliamentary reply, Azalina said: “However, MA63 does not contain provisions relating to the ownership, management or regulation of oil and gas resources, nor does it define the roles of petroleum entities such as Petroliam Nasional Bhd (Petronas) or Petroleum Sarawak Bhd (Petros)”.
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Azalina was responding to a question from Datuk Ali anak Biju (PN-Saratok), who sought clarification on the Federal Government’s position on Sarawak’s territorial sea claims and how MA63 negotiations address overlapping authority between Petros and Petronas.
Petronas and Petros have been at loggerheads over oversight of gas assets in Sarawak, which holds more than 40pc of Malaysia’s gas reserves.
At the centre of the ongoing dispute is Petros’ claim to rights as the sole gas aggregator under state law, namely the Distribution of Gas Ordinance (DGO), while Petronas maintains that its rights under the Federal Petroleum Development Act 1974 (PDA) override state legislation.
Sarawak has always maintained that its rights over oil and gas are guaranteed under MA63 and the Federal Constitution, under its own state laws, which were never repealed after Sarawak and Sabah joined Malaya to form Malaysia.
While Putrajaya maintains that Petronas has the management of oil and gas rights under the PDA, Sarawak argues that the Act was passed during the emergency period without consent; therefore, its state laws, especially the Oil Mining Ordinance (OMO 1958) take precedence.
Further, the 2021 amendments to the Federal Constitution, which recognise MA63, have provided a stronger legal foundation for Sarawak to demand the return of its powers over its own resources.
MA63 is a pivotal document outlining the terms under which Sabah and Sarawak merged with the Federation of Malaya and Singapore in 1963 to form the Federation of Malaysia.
The Report of the Inter-Governmental Committee spells out the caveats and safeguards that have been the source of the provisions in the MA63, giving the states a level of autonomy that sets them apart from other states in Malaysia.
MA63 has long been a contentious issue between the Federal Government and the governments of Sabah and Sarawak, especially with matters pertaining to the two states’ autonomy and privileges.
To help solve the impasse, Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Tan Sri Abang Johari Tun Openg signed a joint declaration in May last year recognising both the PDA and the DGO, but negotiations between Petronas and Petros have since reached a deadlock, with no breakthrough to date.
This led Petronas earlier this month to file a case at the Federal Court seeking a determination on the legal position of its operations in Sarawak, naming the Federal Government and the Sarawak State Government as respondents.
Several lawmakers from Gabungan Parti Sarawak (GPS) have voiced dissatisfaction and called on the Federal Government — as Petronas’ shareholder — to clarify whether the legal action was taken at Putrajaya’s instruction.
Azalina said as the dispute is now before the courts, the Federal Government respects the independence of the judiciary and will abide by the court’s decision.
She reiterated that Petronas is vested with full ownership of petroleum resources under the PDA, as well as exclusive rights, powers and privileges to explore, exploit, obtain and produce petroleum both onshore and offshore in Malaysia.
Azalina added that while ownership and management rights over petroleum remain with Petronas, a Commercial Settlement Agreement (CSA) signed between Petronas and the Sarawak Government on Dec 7, 2020, provides for strategic cooperation between Petronas and Petros.
The agreement covers activities across the upstream and downstream segments of the oil and gas sector, and was designed to facilitate greater participation by Petros in the oil and gas value chain, she said.
