Sarawak strengthens oil and gas control with passing of OMO

  • Debates in the Sarawak state assembly on 10 Jul 18 were dominated by the legal conflict between the federally legislated Petroleum Development Act 1974 and the state’s Oil Mining Ordinance over the ownership to oil and gas in the state, as the 60-year-old ordinance was tabled for amendment on 10 Jul 18.
  • The debate became a little testy when Kota Sentosa assemblyman Chong Chieng Jen pointed to Section 2(1) of the PDA on ownership.
  • The section states that the “entire ownership in, and the exclusive rights, powers, liberties and privileges of exploring, exploiting, winning, and obtaining petroleum whether onshore or offshore of Malaysia shall be vested in a corporation to be incorporated under the Companies Act 1965 or under the law relating to incorporation of companies”.
  • Chong, a lawyer by training, told fellow lawmakers that the key word in the law was “exclusive rights”. The state Pakatan Harapan chief, who declared he supported the amendment to the OMO Bill, said however the amendment was tantamount to passing a “syok sendiri (indulgent) piece of legislation”.
  • “At the end of the day, if the federal law is not consistent with the state law, the federal law will prevail.” It sparked a flurry from both PH assemblymen and Gabungan Parti Sarawak backbenchers who disagreed with his legal view.
  • Irene Chang, the PH assemblyman for Bukit Assek, said it was incautious to push through a state bill inconsistent with federal acts without getting a court declaration that the federal acts have no application in Sarawak.
  • Abdul Karim Hamzah, the minister of tourism, arts, culture, youth and sports said there was no conflict.
  • Karim, also a lawyer, took the line of the Deputy Chief Minister Awang Tengah Ali Hassan, who tabled the bill, that the ordinance was never repealed by any laws and the PDA, like all laws proclaimed during the emergency in 1969, was no longer valid.
  • Awang Tengah said when Parliament passed the Continental Shelf Act 1966 and the Petroleum Mining Act 1966 to regulate mining of petroleum in the continental shelf that these acts were initially not extended to Sarawak.
  • He said those two acts were only “made applicable” to Sarawak after the 1969 Proclamation of Emergency, when in the exercise of emergency powers under Article 150 of the federal constitution.
  • The Yang di-Pertuan Agong, who promulgated the Emergency (Essential Powers) Ordinance No 10, had extended the two laws to Sarawak and Sabah.
  • Awang Tengah said, however, the OMO was never repealed by the emergency ordinance which ceased to have effect in 2012, as Article 150(7) of the federal constitution provided that all laws passed during the emergency should cease to have effect six months after the proclamation of emergency was annulled by Parliament.
  • “Therefore, as from 2012, the OMO remains the only law that regulates the exploration, prospecting and mining of petroleum on land in Sarawak, both onshore and offshore.” The bill was eventually passed.

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