The Sarawak administration has submitted a petition to Malaysia’s Federal Court aiming to invalidate several federal statutes which, it contends, wrongly assign authority over the state’s petroleum assets to the national oil corporation instead of Sarawak itself. Dated March 1, the petition focuses on three core legal disputes:
1. A declaration that, according to the Federal Constitution, the ownership and oversight of petroleum located within Sarawak’s land and internal waters belong to the Sarawak state government, rather than to Petronas or the federal authorities.
2. A contestation of central clauses in the Petroleum Development Act 1974 (PDA), notably Section 4(2A) – added in 1978 – which conveyed “all rights, privileges and benefits” in petroleum to Petronas. Sarawak maintains that these federal legislative grants intrude upon matters exclusively reserved for the state list under the Constitution.
3. A plea to set aside subordinate regulations and federal authorisations—such as those under the Petroleum (Safety Measures) Act 1984 and various licensing powers—on the basis that they exceed federal legislative authority when enforced in Sarawak.
In the petition, the state asserts that prior to 1974, Sarawak oversaw and regulated upstream petroleum operations within its borders. It highlights that the Malaysia Agreement 1963 and later constitutional revisions safeguarded Sabah and Sarawak’s rights and self-governance regarding land and natural resources. The Sarawak government further argues that the 1978 PDA amendments were passed without the necessary approval from the Sultans or state assemblies, and that the federal executive surpassed its powers in reallocating resource rights.
Should the Federal Court rule in its favor, Sarawak could regain regulatory authority over exploration, production and safety protocols within its jurisdiction. This would also alter revenue-sharing arrangements, as licensing fees and royalties would be remitted directly to the state instead of via Petronas and federal accounts. Analysts observe that the outcome could significantly impact Malaysia’s fiscal federalism and the power equilibrium between Kuala Lumpur and the Borneo states.
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