Sunday, May 9, 2010

KELANTAN OIL "ROYALTY" CLAIM, what does the law say???

Dear friends,

It came across my mind so suddenlyto write something on Oil Royalty claim by the state of Kelantan which is a "sexy" and hot issue playing in the socity nowadays.

I believe all of us are well aware about the existence of Petroleum Development Act 1974 (hereinafter referred as PDA).

Under PDA, all states inclusive of the state of Kelantan carry the same status. All states which have duly put down their signatures in entering agreement with PETRONAS around the year of 1975 or 1976 would get paid of cash amounting to 5% from the value of the petroleum discovered in the respectful states.

Ladies & gentlemen,

1) In fact, we must take note that "Royalty" is not seen in the entire PDA. What was stated in the PDA is clear enough to refer the 5% payment from the revenue of the oil and gas as "cash payment" (Bayaran Tunai). I'd re-emphasize the wording of "Royalty" is not being used in the PDA.

2) Now comes the interesting topic, what qualifies the state government to be afforded 5% cash payment???

In accordance with the agreement entered into force between PETRONAS and state government in 1975/ 1976, the oil-rich discovery must be within 3 nautical miles (5.6KM) of the territorial sea from the mainland of the state.

3) In the event Kelantan state governmnt files a claim of "royalty", is it admissible?

Relating to admissibility of the claim, I'd now address whether Kelantan or other state governments are justified to claim the aforesaid "royalty". I respond Kelantan state or any of other states in Peninsular Malaysia has no standing to claim any single cent after having taken into account all of the oil blocks which operates and produces in Peninsular for time being are located beyond the restricted 3 nautical miles (5.6KM) of the territorial sea. Therefore, these disputing states especially Kelate couldn't request for Oil Royalty unless and until the House amends the Petroleum Development Act 1974.

4) PLease dont make comparison with Sabah and Sarawak ok...

Prior to 1974, before the Petroleum Development Act is legislated, the existing Sabah and Sarawak upon that time have been accorded right towards Oil Royalty claim which such right was justified under the COntinental Shelf Act 1966. And this right is recognised as part of their "hak istimewa" upon joining Peninsular which then formed Malaysia in 1963.

I'm not saying Kelantan has no right at all la, what i want to convey is the problem/ hindrance with the claim of Oil Royalty is with our current Petroleum Development Act 1974.

Pendek kate, should the state governments want to claim the oil royalty; PDA 1974 must be amended lo...

Best regards,

No comments:

Post a Comment