Questions of federalism centered on oil and gas arise amid political upheaval in Malaysia.
Petronas, the national oil company, on June 4 sought a court declaration that it is the country’s only owner of hydrocarbon resources and regulator of upstream work.
Its action responds to a simmering effort by the government of Sarawak to gain permanent sovereignty over all its natural resources.
Sarawak, one of two Malaysian states on the island of Borneo, is important for offshore exploration and development and the large LNG complex at Bintulu.
The state’s claim of sovereignty raises stakes in a long-running royalty dispute.
Petronas’s court appeal followed the May 9 election defeat of the Barisan Nasional (BN) coalition, which had held power since a contested election in 1969, 6 years after the federation formed.
Political reverberations will make one state’s claim to resource sovereignty compete for attention.
The incoming Pakatan Harapan (PH) coalition quickly launched a campaign against corruption, an issue on which it heavily campaigned. It also faces pressure to fulfill a campaign promise by repealing an unpopular tax.
Holding the government together to accomplish all this might prove difficult.
The new prime minister, PH Chairman Mahathir Mohamad, served in the office in 1981-2003 and split from the BN in 2014 over corruption. Turning 93 next month, he’s seen by some as a stand-in for Anwar Ibrahim, the PH leader newly out of prison and technically excluded from elections for 5 years.
A promised royal pardon might not survive tension among political parties in the PH coalition.
From outside Malaysia, knowing how these intrigues will affect the Petronas-Sarawak conflict is impossible.
The state claims jurisdiction granted by the founding Malaysia Agreement of 1963 and authority under a 1958 mining law to establish its own company, Petroleum Sarawak Bhd. (Petros). Petronas claims primacy under the Petroleum Development Act of 1974.
Meanwhile, a hearing in the Petronas case has been rescheduled to June 22 from June 12, and a prompt, neat resolution seems very unlikely.
(From the subscription area of www.ogj.com, posted June 15, 2018; author’s email: [email protected])