Court decides today whether Petronas can proceed with legal challenge against Sarawak

Petronas vice-president of LNG marketing and trading Ahmad Adly Alias said Petronas remained committed to delivering reliable supply of LNG through its integrated operations that allow for both long-term and short-term solutions for its customers

PUTRAJAYA: Petroliam National Berhad (Petronas) will know today if it can commence proceedings in the Federal Court against the Sarawak government pertaining to the regulatory authority over upstream oil and gas activities in Sarawak.

Chief Judge of Malaya Tan Sri Ahmad Maarop is set the date to deliver the decision on whether to allow Petronas’ application for leave to commence the proceedings after he had heard submissions from lawyer Datuk Malik Imtiaz Sarwar, who represented Petronas, and Datuk JC Fong, who appeared for the Sarawak government.

“This court (Federal Court) will give its decision (this) morning at 9.30am,” he said.

Ahmad said the court would deal with Petronas’ stay application tomorrow depending on the court’s decision whether to grant leave to the national oil company to commence its legal challenge against the Sarawak government.

Petronas is seeking a stay order in respect of the Sarawak government’s commencement to regulate upstream activities in the state under the Sarawak Oil Mining Ordinance 1958 (OMO) beginning July 1 this year.

Petronas was required to comply with the OMO and must have the requisite licences or leases by July 1 this year, failing which the upstream activities carried out by Petronas would be illegal and appropriate action would be taken.

Petronas had filed an application for leave to commence proceedings under Article 4 (4) of the Federal Constitution, seeking a declaration that the Petroleum Development Act 1974 (PDA) applied with regard to the regulatory control of upstream activities in Sarawak.

The company is also seeking a declaration that the OMO was impliedly repealed by the PDA.

Petronas is seeking a declaration that the PDA was duly enacted by Parliament and stated that Petronas is the exclusive regulatory authority for the upstream industry throughout Malaysia, including in Sarawak.

In today’s proceedings, the court heard arguments from both Petronas and the Sarawak government with regard to Petronas’ legal standing to file the application for leave to commence proceedings in the Federal Court to determine the matters raised by the company.

Malik Imtiaz argued that Petronas had rightly brought the matter to the Federal Court as it intended to seek the court’s declaration that the Sarawak government was not entitled to exercise powers to regulate the exploration and exploitation of oil (upstream activities) pursuant to the OMO.

He said the intended proceedings would focus on the question of the power to enact laws concerning the authority to regulate upstream activities.

Malik Imtiaz said Parliament was exclusively vested with the legislative competence and power to enact laws pertaining to oil and oilfields.

Fong argued that Petronas should file the matter at the Kuching High Court as the declarations sought by the company were not a challenge to the authority of Parliament to make laws under the Federal Constitution but that the PDA was duly enacted by Parliament.

He said the Federal Court did not have the jurisdiction to grant leave to Petronas to commence proceedings against the Sarawak government for declarations.

Fong said Parliament did not have the exclusive legislative authority or competence to legislate on upstream activities, adding that its legislative authority was subject to the rights of the Sarawak state legislature to pass laws on permits and licences for prospecting for mines, mining leases and certificates.

“The OMO is a law where the Sarawak state legislature has the legislative authority which regulates the granting of oil prospecting licences, oil exploration licences and oil mining leases,” he said. — Bernama

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