Thursday 28 Mar 2024
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PUTRAJAYA (June 21): The Federal Court will deliver its decision on whether to grant Petroliam Nasional Bhd (Petronas) its application for leave to commence proceedings against the Sarawak state government tomorrow.

After hearing arguments from both parties today, chief judge of the High Court of Malaya Tan Sri Wira Ahmad Haji Maarop said the court proceeding was adjourned until 9:30am on June 22, 2018.

The hearing was supposed to be done on June 12 this year but it was postponed as the Federal Government's Attorney General's (AG) Chamber decided to participate and required more time to look into the case.

Today, legal counsel Datuk Malik Imtiaz Sarwar, who represents Petronas, notified the Federal Court that the Federal Government's AG will be on watching brief for now.

Petronas is challenging the Sarawak government's claim to regulatory authority in the upstream oil and gas (O&G) sector.

The key issue is whether the extraction and exploration of petroleum resources require mining leases from the state government. While Sarawak had repeatedly said it has regulatory authority over such activities, Petronas is now asserting it does not need such approvals from the state to undertake upstream O&G activities in Sarawak.

Petronas also said the legal action is to seek a declaration from the apex court that the Petroleum Development Act 1974 (PDA) is the law applicable for the nation's petroleum industry. The company is also seeking a declaration that it is the exclusive owner of petroleum resources in the country as well as the only regulator of upstream activities nationwide, including in Sarawak.

After the hearing today, legal counsel Datuk JC Fong, who represents the Sarawak Government, said this case is not about challenging the constitutional power of Parliament in making or changing the law in Sarawak's upstream O&G activities.

"This issue is not within the power of Federal Court to decide, it is a matter of judicial interpretation by the High Court. Secondly, the Oil Mining Ordinance 1958 (OMO) is a law passed by the state before Malaysia Day. After Malaysia Day, that ordinance remains good law and applies only to Sarawak.

"Thirdly, OMO is not about oil and oilfields, it is about regulating the exploration, exploitation and mining of petroleum on land in Sarawak, and the OMO covers all these activities on shore or continental shell. In this case we are of the view that Petronas has to comply with state laws, particularly the OMO and Sarawak Land Code," he said.

Meanwhile, Malik Imtiaz told reporters that the case does involve legislative power.

"The dispute is whether the subject matter pertains to legislative power or not, our view is it does, because what Sarawak is saying is that the OMO is valid law which the state is entitled to enforce. We are saying the power to control and regulate upstream activities is something (that) fall within the purview of Parliament exclusively, if that is right, the state has no power to enforce OMO, because the state power depends on legislative power, that is our argument," he said

Malik Imtiaz also said the matter cannot be taken to the High Court because his understanding is that interpretation of the Constitution for purposes like this is something within the Federal Court's jurisdiction.

"The other issue is whether we have applied for sufficient declaratory orders, what we asked for was an order that Parliament has the exclusive competence to enact laws on upstream activities, and consequentially we say that PDA is a valid law, because of that and consequentially PDA gives power to regulate throughout the country regardless of offshore or onshore, accordingly, because of Malaysia Act, OMO would have become Federal law, and since PDA was passed, OMO has been repealed impliedly," he said.

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