PUTRAJAYA, June 22 — Sarawak will provide oil-and-gas companies a “grace period” to obtain permits for upstream petroleum activities there even as the state government starts taking over regulatory control next month, the state’s top legal official said.
Sarawak Attorney-General Datuk Talat Mahmood Abdul Rahman also gave his assurance that these companies will be allowed to continue operating in the interim.
“July 1 is the date where we want to ensure the laws are being implemented.
“Obviously in our engagement with the stakeholders before, we have indicated that we will give a grace period or interim period up until the end of 2019.
“And this was clearly told to everybody there, so they do not need to worry that their operations will be disrupted, that’s not our intention,” he told reporters after a Federal Court decision here.
Confirming that national oil firm Petronas must be licensed by the Sarawak state government, he said companies in the industry could possibly be given “interim” licences but said it would be for the appropriate ministry to decide.
He said the Sarawak state government holds the regulatory powers and said it could delegate its powers where appropriate to government departments or government agencies.
“Petros, probably will be one of these bodies which will be delegated with some of the powers of regulation,” he said, referring to the months-old company Petroleum Sarawak Berhad (Petros).
“Anything that we do will not interfere with current arrangements, we are not going to make it more difficult for the investors, that is one thing that we can assure,” he added.
Sarawak in March launched its own oil company named Petroleum Sarawak Berhad (Petros), which is set to fully take over regulation and licencing of oil and gas activities in the state from July 1.
This is part of Sarawak’s efforts to seek the restoration of Sarawak’s rights under the Malaysia Agreement 1963, including the devolution of powers from the federal government.
Petronas is currently the national oil regulator, but was told by the Sarawak state government in an April 13 letter that the company will need to comply with the Sarawak Oil Mining Ordinance (OMO) 1958 and obtain licences and leases under this law by July 1.
The Sarawak government had also said in the letter that Petronas’ upstream oil and gas activities in the state will be considered illegal and subject to action, if the company fails to obtain such permits.
On June 4, Petronas had filed its court challenge, seeking various court declarations, including that the Petroleum Development Act (PDA) 1974 had impliedly repealed the Sarawak Oil Mining Ordinance (OMO) 1958.
Petronas also wanted the court to declare that it has the exclusive regulatory authority” over upstream activities ― including exploration, exploitation, winning and obtaining of onshore and offshore petroleum ― throughout Malaysia.
Sarawak argues that OMO ― which it will rely on to start regulating and issuing licences for Sarawak’s upstream oil and gas activities including by Petronas starting from next month ― is still a valid state law. This substantial issue has not been heard by the courts.
Earlier today, the Federal Court denied Petronas leave to start its legal challenge against the Sarawak state government, ruling that the case could be heard in the High Court instead.
It is unclear if Petronas will attempt any new court challenges to assert that it is the only company that can regulate oil and gas activities in Malaysia, as the company’s lawyer Datuk Malik Imtiaz Sarwar said he would have to seek his client’s instructions on its next steps.
