KUALA LUMPUR, March 15 — A former senior Treasury official has warned against questioning Petronas’ control over oil and gas resources in Sarawak, as negotiations between the national oil company and Petroleum Sarawak Berhad (Petros) remain at an impasse.
Nik Azmi Nik Daud said to Free Malaysia Today (FMT) that both Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Tan Sri Abang Johari Openg have reaffirmed the Petroleum Development Act 1974 (PDA) as the definitive legal framework governing the industry.
Speaking in the Dewan Rakyat on February 17, Anwar assured that Petronas’ existing international and domestic contracts would remain intact, even as Petros assumes the role of gas aggregator.
However, a source within the Sarawak government told FMT that the state remains firm in its demand that all domestic gas consumers purchase exclusively from Petros.
“Such an arrangement is bound to disrupt existing commercial agreements Petronas has with end users in the state,” the source was quoted as saying.
Nik Azmi dismissed doubts over the PDA’s legitimacy, asserting that federal laws take precedence over state legislation in cases of conflict.
“Full control of oil and gas is with Petronas, as enshrined in the constitution via the PDA,” he told FMT.
“Bickering by half-baked minds doesn’t change that. Sarawakian representatives and everybody should look to history and stop spreading misinformation that could harm relations among Malaysians.”
The PDA grants Petronas ownership and authority over all upstream and downstream oil and gas activities in Malaysia.
Nik Azmi recalled that before the Act was enacted, Malaysia had no claim to its oil and gas resources, as colonial powers had granted rights to foreign companies indefinitely.
“Even our first prime minister Tunku Abdul Rahman failed to get them back despite securing Malaya’s independence from British rule,” he was quoted as saying.
On March 3, the Sarawak United People’s Party criticised the state’s DAP chapter for questioning the PDA’s applicability to Sarawak after previously recognising its validity.
Sarawak’s legal counsel JC Fong had earlier accused the federal government under former prime minister Razak Hussein of drafting the PDA in secrecy.
“Those who say Sarawak was never consulted on the PDA should check their facts,” Nik Azmi added.
He pointed out that the PDA’s drafting and passage, led by Tan Sri Tengku Razaleigh Hamzah, had strong backing from Sarawak’s then chief minister, Tun Abdul Rahman Yakub.
Nik Azmi Nik Daud says Petronas’ authority over Malaysia’s oil and gas resources is enshrined in law and should not be questioned.
He added that Tun Abdul Taib Mahmud, a Sarawakian and then primary industries minister, had earlier introduced the Hydrocarbon Bill to Parliament, which was rejected.
“Rahman Yakub then together with Tengku Razaleigh suggested that Petronas take over oil distribution (which falls within the aggregator role), during the parliamentary debate, to benefit everybody,” he was quoted as saying.
Nik Azmi stressed that the PDA could not have been passed without the states signing a vesting order transferring jurisdiction to Petronas permanently.
He cited a Straits Times report from July 29, 1976 and noted that at the PDA’s enforcement ceremony in August 1976, Sarawak’s then-state secretary Bujang Nor signed the vesting deed, witnessed by Razak Hussein and other officials.
He also rejected claims that Sarawakian MPs were excluded from the PDA’s passing.
“The PDA could not be passed without the states approving it with a two-thirds majority in their own DUNs (state legislative assemblies).”
“Tengku Razaleigh advised all state leaderships not to table any motion to their respective legislative bodies unless confident that it would get a two-thirds majority. Rahman Yakub got the approval of the Sarawak DUN for the PDA,” he was quoted as saying.
He added that Sarawak had agreed to the 5 per cent cash payment formula offered to all states with oil and gas resources.
Addressing Sarawak’s gas aggregator role, Nik Azmi clarified that the PDA allows the prime minister to delegate downstream responsibilities to third parties.
However, he cautioned that aggregators must maintain and upgrade infrastructure, warning that Petronas would not intervene in case of failure.
“Sarawak and even other states can apply, but they must prove they can manage it. Petronas won’t bail them out if they fail,” he said.
He added that shifting capital expenditure responsibilities to Petros would reduce Petronas’s financial burden, enabling it to focus on high-yield projects.
While Petronas retains upstream authority, he noted that states can participate through joint development agreements.
“The process is open — if they qualify, they can bid,” he said.
Nik Azmi urged all parties to stay grounded in facts.
“The legal framework is clear. There’s no room for baseless theories,” he said.
