Sarawak strengthens grip over O&G under GPS leadership

KUCHING (July 22): Sarawak, under the leadership of Gabungan Parti Sarawak (GPS), has successfully reclaimed sovereign control over its oil and gas resources.

Kota Sentosa assemblyman Wilfred Yap said this was achieved through the enforcement of the Oil Mining Ordinance 1958 (OMO) and the Distribution of Gas Ordinance 2016 (DGO), which reaffirm the state’s constitutional rights under the Malaysia Agreement 1963 (MA63).

“Sarawak has compelled the federal government and Petronas to acknowledge our right to impose the Petroleum Sales Tax, bringing back billions to the state instead of allowing our wealth to be siphoned off,” said Yap, who is Sarawak United People’s Party (SUPP) Kota Sentosa branch chairman.

He added that the establishment of Petroleum Sarawak Berhad (Petros) and its appointment as the sole aggregator of oil and gas further reinforces that Sarawak alone decides how its resources are managed.

“This is not a concession from Putrajaya, but an inherent right that can no longer be denied.”

Yap urged Sarawakians to take pride in GPS’ efforts, especially in securing the five per cent sales tax on petroleum products and restoring full enforcement of the OMO, which places licensing and control of oil and gas development solely under Sarawak’s jurisdiction.

On May 21 this year, a joint declaration by Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Datuk Patinggi Tan Sri Abang Johari Tun Openg stated that while Petronas would continue its roles under the Petroleum Development Act 1974 (PDA), Petros would be recognised as the gas aggregator for Sarawak.

Federal and state laws governing gas distribution in Sarawak will coexist and be upheld by all involved.

The declaration also emphasised that all parties will work together to finalise a framework that reflects Sarawak’s aspirations and benefits the nation.

In his ministerial winding-up speech at the State Legislative Assembly (DUN) on May 26 this year, Minister of Utility and Telecommunication Sarawak Dato Sri Julaihi Narawi said Petronas might apply for exemption from licensing requirements for activities or projects that would not conflict with Petros’ role as Sarawak’s sole gas aggregator.

Such applications would be considered in accordance with the law, provided they do not involve the supply, sale, retail, or distribution of gas – sectors under Petros’ jurisdiction.

Julaihi stressed that all agreements involving the supply and sale of natural gas in Sarawak must align with Petros’ role as outlined in the joint declaration.

He also reminded that parties involved in gas distribution and supply must obtain a licence under Section 7 of the DGO 2016.

Failure to comply constitutes an offence under Section 20 (criminal case) or Section 21A (civil claim) of the Ordinance, which carries penalties including fines, imprisonment, or both.

Sarawak State Legal Counsel Dato JC Fong said under the MA63, the Constitution of Malaysia was adopted with amendments to safeguard the rights and interests of Sabah and Sarawak.

He explained that, following these amendments, the issuance of prospecting licences and mining leases falls under state jurisdiction as provided by Item 2(c) of the State List.

Although the federal government holds authority over the development of minerals and oilfields, this is subject to state-issued leases under Item 2(c).

“There is no dispute that Sarawak has legislative and executive authority over gas distribution. Since the federal Gas Supply Act 1993 (GSA93) does not apply to Sarawak, and Sarawak is exempt from Sections 6(1) and (3) of the PDA, the only law governing gas supply in the state is the DGO,” he said.

Fong added that Petronas must comply with the DGO and recognise Petros as the sole aggregator appointed under the Ordinance.

Presently, 94 per cent of gas produced in Sarawak is exported – mainly to Japan and Korea in the form of liquefied natural gas (LNG) – to boost their industries.

However, Fong said this could not continue at the expense of Sarawak’s long-term development.

The state government has therefore developed a ‘Sarawak Roadmap’ to use its gas resources for economic development and green energy production.

Senator Dato Ahmad Ibrahim said the appointment of Petros as Sarawak’s sole gas aggregator marks a turning point in the state’s long-standing efforts to reclaim its rights, but stressed that the journey began much earlier.

“Petros’ role is crucial, but it is just one of many wins. This is no longer a ‘David vs Goliath’ battle – it is about constitutional justice, economic sovereignty, and securing Sarawak’s energy future,” said Ahmad, who is vice-president of the Council of Malaysian Senators and a Parti Pesaka Bumiputera Bersatu (PBB) supreme council member.

He said Sarawak’s achievements over the past decade reflect a multi-tiered success, encompassing legislation, litigation, institutional empowerment, and commercial breakthrough.

While the aggregator role represents a major commercial milestone, Ahmad said it was made possible only through the state’s solid legal foundation, strengthened over the years by consistent efforts from the Sarawak government.

“This success stands on the pillars of the Sarawak Land Code, DGO 2016, Article 95D of the Constitution, and the unwavering commitment of our state leadership,” he said.

Ahmad also cited Article 95D, which provides for the exclusion of Sabah and Sarawak from the application of certain federal laws concerning land and local government.

“With Petros now controlling gas aggregation, Sarawak can secure its domestic gas supply, support industrial transformation via reliable energy pricing, develop new sectors such as hydrogen, ammonia, and clean energy, and reclaim economic value for its people,” he added.

“The Federal Constitution is clear – laws affecting our land and resources require our consent. We never gave that away. What we are seeing today is Sarawak enforcing its rightful place in the Federation.

“This is not just about oil and gas. This is about respecting the Federation as it was meant to be formed in 1963.”

Sarawak significantly contributed to federal coffers through its rich oil and gas resources since 1976, with all natural gas converted to LNG for export to Japan, Korea, and Taiwan – earning substantial foreign exchange for the Malaysian government.

The imposition of States Sales Tax (SST) on petroleum products reflects the Sarawak government’s fiduciary duty to secure a fairer share of these revenues for its people.

At current production levels and global prices, Sarawak’s oil and gas industry generates around RM40 billion annually.

The SST is expected to yield additional RM3 billion additional revenues for the state.