Tuesday, November 24

Necessary amendments on the Territorial Sea, EEZ and Continental Shelf of Sarawak and Sabah

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WHY did the federal government want to reduce the 12 nautical miles of the Territorial Seas of Sarawak and Sabah to 3 nautical miles even though protected by 7FCs, 7PMs and UNCLOS 1982?

The federal government wanted desperately the O&G, minerals and fisheries even from 3 to 12 nautical miles, not satisfied with the 200 nautical miles of erroneous imposition of its purported rights of the Exclusive Economic Zones (“EEZ”) under the federal imperium which has only sovereignty between nations, administrative control and duty to protect the Territorial Seas of the Coastal Borneo States of Sabah and Sarawak (“CSOSS”). On grounds of national interest, even knowing the void and illegal PDA1974 and similar status for the vesting instrument and Oil Agreement dated 27th March 1975, PM Tun Razak still needed and wanted the sole licensing rights and 80 per cent of the O&G of Sarawak and Sabah to fulfil his vision of the Rostov-take-off of Malaysia’s economy, to transform the rustic Peninsula Malaysia to a modern Third World Country and the financial obligations of MA1963 for the Borneo States by Petronas. But unfortunately, it was at the expense of the Borneo States, as explained in Part III already with oil rocketed 3 folds due to OPEC and projected 18 folds later.

The Territorial Sea, EEZ and the Continental Shelf of the CSOSS have to be redefined, incorporated or amended similar to some countries with international boundaries in the FC, as shown in the map attached with different and delineated colours. The CSOSS would have a definite meaning under the International Conventions, eg under the United Nations Convention on the Laws of the Sea 1982, (UNCLOS).

Articles 1 and 2 of the FC with the EEZ Act 1984, Fisheries Act 1985 passed right after UNCLOS 1982 and Territorial Sea Act 2012 (“TSA 2012”) must be amended together. (A) Territorial Sea

So, the Territorial Seas of the CSOSS have to be defined and incorporated in the new Article 2 A(I) of the Federal Constitution (“FC”), if thought fit, as follows :

“The breath of the territorial sea of the CSOSS shall be to a limit not exceeding 12 nautical miles, measured from baselines determined in accordance with Article 3 Section 2 Part II of the United Nations Convention on the law of the Sea 1982, III ratified by Malaysia and entered into force on 14th November, 1996.” (“UNCLOS 1982”).

Thus, the Territorial Sea Act 2012 (“TSA 2012”) shall be amended by incorporating the new Article I(3), if thought fit, to read as follows :

“I(3) This Act shall not be applicable to the Coastal Borneo States of Sabah and Sarawak.” TSA2012 was in breach of that Article 3 of UNCLOS 1982, Sarawak Land Code 1958, Sabah Land Ordinance and Sarawak Oil Mining Ordinance 1958 now the OM(A)O 2018 amended under Article 162(2) of the FC, 7FCs, 7PMs and UNCLOS 1982. The 3 nautical miles of territorial sea is applicable only to the states of Malaya.

Under international law, the federal government of Malaysia with imperium has the sovereign right and equally the duty between nations to control the navigation and to protect the safety and security, environmental control and export of O&G under Item 8(j) of the Federal List I, subject to Item 2(c) in the State List of Sarawak and Sabah with the exclusive dominions and rights to issue PSCs or licences under their respective oil and gas stretching from onland to 350 nautical miles offshore in their respective continental shelf reinforced by Items 2(a) on land and 2(d) with no compulsory acquisition by the federal government, fortified by Articles 76(4) and 95(d) of the FCs.

But the federal imperium which cannot be superimposed on the protective municipal laws of the CSOSS does not confer any right on the O&G and minerals within that 9 nautical mile nor the 12 nautical miles from the baselines of Sabah and Sarawak nor within their 200 nautical miles of their respective EEZ nor within their respective continental shelf of 360 nautical miles which would cover their respective Territorial Seas of 12 nautical meters miles, the contiguous zone and 200 nautical miles of EEZ already.

The dominions of CSOSS are further safeguarded by the 7FCs and 7PMs while Article 13 of the FC on compulsory acquisition of O&G would only be applicable to the states of Malaya.

Act 354 must be repealed. The original Article I of the FC can only be restored or amended by amending Article 4 of the Malaysia Bill first by the legislative councils of the Borneo States under the second-tier of entrenched FC’s provisions, explained in Part I(A), except on Article 1(2)(b) it shall be “Sabah and Sarawak, the Borneo States or Territories.” On Article 1(2)(c), Singapore must be deleted. To restore only Article 1 is inadequate and incomplete. Still, the Borneo States cannot be equal partners with or of the federal government. Please see Part V.

(B) O&G under the respective continental shelf of Sabah and Sarawak are under their dominions

A new Article 2A(2) of the FC on the continental shelf, if thought fit, shall be incorporated to prevent confusion on the dominions of the CSOSS on their O&G within their 350 nautical miles while the federal imperium only has the supervisory and administrative control under Item 8(j) mentioned above, but no powers to acquire rights, to license and own the oil and gas before and after Malaysia Day. PDA1974 is still unconstitutional, void and has illegally usurped and breached the 7PMs and 7FCs of the CSOSS and UNCLOS 1982.

The purported vesting instrument based on the void and illegal PDA1974 by YAB Tun Rahman on 27th April 1975, Sarawak’s Oil Agreement of the same date have been demonstrated to be void and illegal under the void Section 2(2) of PDA1974 with the Schedule used for the purported vested instrument annexed. There was also a fraudulent misrepresentation or concealment that would allow also recission of that vesting instrument. Tun Razak implored Tun Rahman to execute the purported vested instrument only to show to Tun Mustapha and Tun Fuad to convince them to amend Section 48 of the Sabah Land Ordinance from 99 years to perpetuity to be the same as Section 13(1)(a) of the Sarawak Land Code and no more. Both leaders of Sabah had refused to do so, as amplified in Part VI.

So, the new Article 2A(2) on the continental shelf of the CSOSS shall be incorporated, if thought fit, as follows :

“The continental shelf of the Coastal Borneo States of Sabah and Sarawak comprises the seabed and subsoil of the submarine areas that extend beyond their territorial seas throughout the natural prolongation of their respective land territories to the outer edge of the continental margin, or to a distance of 200 nautical miles from the baselines from which the breadth of the territorial sea is measured where the outer edge of the continental margin does not extend up to that distance. The fixed points comprising the line of the outer limits of the continental shelf on the seabed, either shall not exceed 350 nautical miles from the baselines from which the breadth of the territorial sea is measured or shall not exceed 100 nautical miles from the 2,500 metre isobaths which is a line connecting the depth of 2,500 metres, as defined in Article 76 of the United Nations Convention on the Law of Sea 1982.”

(C) Exclusive Economic Zone Act 1984 (Act 311) (“EEZA 1984”)

The 200 nautical miles of EEZ belongs to Sarawak and Sabah. Is that correct?

Yes. The EEZs of Sabah and Sarawak including their exclusive dominions and rights to issue licences on their oil and gas under Articles 4 and 5 of EEZ Act 1984 shall be amended and incorporated as the new Article 2A(3), if thought fit, as follows :

“The Exclusive Economic Zones of the Coastal Borneo States of Sabah and Sarawak are areas of 200 nautical miles from the baselines beyond and adjacent to their respective territorial seas of the contiguous zone, subject to the specific legal regime established in Part V of the United Nations Convention on the Law of the Sea 1982 under which the rights and jurisdiction of these Coastal Borneo States are governed by the relevant provisions of the said convention.”

As the EEZ Act 1984 was deliberately passed after UNCLOS 1982, therefore the federal government would have to amend it with the following proviso in Article I(1) of the EEZ Act 1984, if thought fit, as follows :

“This Act may be cited as the Exclusive Economic Zone Act 1984 and shall apply only to the exclusive economic zone and continental shelf in the states of Malaya, but not to the Coastal Borneo States of Sabah and Sarawak.”

A new Article I(2) of the PDA1974 shall be inserted similarly, already done in Part II.

Article I(2) of EEZ Act 1984 needs to be deleted with reference to the repealed Continental Shelf Act 1966 in 2011.

The map showing the EEZ areas with 200 nautical miles of the Coastal Borneo States of Sabah and Sarawak should be corrected in the EEZ map attached to the Fisheries Report of the federal government, namely the EEZ is respectively “of” not “off” Sabah and Sarawak, as shown in the map attached.

(D) Fisheries Act 1985 (AC 317)

Should Fisheries Act 1985 be amended? Yes, because they belong to the CSOSS. In line with the amendment and returning the rights on fisheries in the 200 nautical miles of EEZ of the CSOSS under Part V of the UNCLOS 1982 which was passed after MA1963, so the new definition needs to be incorporated in Article 1(1) of the Fisheries Act (FA 1985), if thought fit, to read as follows:

“This Act may be cited as the Fisheries Act 1985 and shall only be applicable to the fisheries in the Economic Exclusive Zone of the states of Malaya but not to the Exclusive Economic Zones of the Coastal Borneo States of Sabah and Sarawak.” That should be amended along with the restoration, revision and reformation of MA1963 overdue since 1973.

Besides, Item 9(d) of the Federal List I should be amended, if thought fit, to read as follows:

“Maritime, fishing and fisheries, including turtles shall not be applicable to the Coastal Borneo States of Sabah and Sarawak.”

Non-Negotiable Rights

What are the four non-negotiable rights of Sarawak under MA1963 stated by the Sarawak’s Chief Minister?

They are namely as follows:

Immigration, autonomy, “land” resources under Sarawak Land Code including oil, gas, minerals and fisheries and protection of misconceived territorial sea of the 12 nautical miles which was unconstitutionally reduced by federal imperium to 3 nautical miles under the Emergency Legislations No 7, 10, 11, Act 354, EEZ Act 1984 and TSA2012 related to the Territorial Sea and the untouchable dominion of the O&G of Sarawak from onland to its 350 nautical miles of continental shelf protected by the 7FCs, 7PMs and UNCLOS 1982. These were amplified in my previous articles of 21, 22 and 23 September 2018.

For the practical, legal and political solutions on grounds of national interests and service, if I may suggest, or our YAB Chief Minster would have considered this approach to overcome a more political than a legal impasse to resolve the real issues at hand with a degree of Sarawak’s magnanimity.

i. The federal government will have to honour their PH’s assurances under Article VIII of MA1963 to be implemented outside the constitution, not as mere political manifesto on the “20 per cent affordable royalty or equivalent state sale tax” on O&G and their by-products now and over the next few years under Item 7 Part V 10th Schedule expounded in my article of 11/11/18, Part I.

That would include the special grants due since the one payment of RM16 million (Escalation) in 1973. Hopefully, subsections (5) and (6) of Section 112D will not have to be triggered between the needs of Sarawak under MA1963 and the health of the Federal Treasury, requiring a final binding decision of an independent assessor.

ii. The federal government would have to honour and accept the dominions of the CSOSS on their O&G, minerals since the repeals of the Continental Shelf Act 1966, Petroleum Mining Act, Emergency Ordinance (No 7, 10, 11) and now on stipulating that the PDA1974, EEZ Act 1984, Fisheries Act 1985 and TSA2012 would not be applicable to the CSOSS.

iii. The reason for the additional 5 per cent oral and unofficial royalty for the development grant assured under Article VIII of MA1963 by Tun Razak was for Sarawak aborting the declaratory judgment on PDA1974 in the Privy Council, London as the quid pro quo, amplified in my article of Part III of 13th November 2018. That 5 per cent was paid out of the 10 per cent cash payment under Article 4 of PDA1974. That is enforceable also under Article 3(a) of the Vienna Convention on the Law of Treaties apart from the Customary International Law. Sarawak should have received double the royalty up to date. Only some small part payments of that unofficial 5 per cent royalty traceable have been made by the federal government out of the 10 per cent cash payment.

But because of the huge national debt of less than Rm1 trillion, this unofficial 5 per cent additional development grant/royalty shall be hugely discounted for federal’s benefit and replaced by new terms in this Settlement Agreement, namely after 20 per cent royalty state sale tax being imposed and received by Sarawak, 2.5 per cent more of the same state sale tax shall be imposed 3 years thereafter, with another 2.5 per cent after another 3 years later, totalling 25 per cent.

Twelve years from the receipts of payments of 20 per cent royalty or equivalent Sarawak shall only impose another 5 per cent, totalling 30 per cent of royalty or state sale tax with the final 5 per cent totalling 35 per cent for Sarawak 5 years thereafter before the O&G run dry earlier than expected with recovery of only 29 per cent for oil and 40 per cent for gas (boe) unknown to the public for reserves from P1 to P3.

iv.On the other hand, the Sarawak government/Petros shall irrevocably assign to the federal government the balance of all the revenues from the share profit of O&G or split barrels thereof from Sarawak/Petros to be accepted by the federal government and Petronas as the sole regulator and right to issue PSCs and other licences under 2(c) of the Ninth Schedule with the result that the federal and Petronas will still have 50 per cent to 55 per cent of the revenues from the 22 per cent tax with deductions, Petronas’s profits and the balance of the share profit or split barrels of O&G. Naturally, the federal government will need to fulfil the financial obligations overdue under MA1963 and restore autonomy too for CSOSS.

v. Petronas should assign all the carried interests between 10 per cent to 25 per cent in all, not many, the older generations of PSCs to Petros plus 2 per cent state equity cash flow as well in each of the PSC to Petros/Sarawak government. Petronas’s subsidiaries, Cari Karli and Vestigo Petroluem would be good partners and contractors, apart from local qualified companies with professional expertise, experience and capital, working transparently at all levels to prevent leakages and wastages.

So ultimately, the federal and Petronas will still be guaranteed to receive 50 per cent to 55 per cent of the revenues, while Petros will receive only 35 per cent royalty when amended or state sale tax equivalent in the legal and political settlement with a win-win formula. The final details can be ironed out. vi.No doubt, Petronas would also have to undertake to furnish all the financial accounts related to Sarawak’s operations, geological reserves, logging data with 3D interpretations, status of each PSC and expiring dates, sums and parts, all sales of O&G in real times and all data from the Data Room and setting up digital monitoring devices with CCTV on the pumps, AIS of the FPSO and others to prevent leakages and confirm the correct production records or sales in real times between Petronas and Petros and the contractors for DUN. Even the top management of Petronas similar to other “Seven Sisters” is never certain on all the offshore activities by remote control at present. Transparency encourages efficiency and corporate governance, always with room for refinements. “Oil” is always a greasy business, according to Jonathan Black.

We hope the present federal government under Tun Mahathir would be fair-minded, with a far-sighted vision to accomplish these legal and political settlements of the Sarawak and Sabah’s O&G and to restore, revise and reform MA1963 as his last momentous parting legacy to be remembered for generations in the annals of our Malaysian, Sarawak and Sabah history.