Oil & gas not in MA63, say analysts

Free Malaysia Today

3 days ago

Despite a broad agreement reached by Prime Minister Anwar Ibrahim and Sarawak Premier Abang Johari Openg, Petronas is still negotiating the commercial terms of Petros's appointment as gas aggregator in Sarawak.
PETALING JAYA : The Malaysia Agreement 1963 (MA63) does not explicitly grant Sarawak autonomy over oil and gas (O&G) resources, but the state has valid grievances over the inequitable distribution of their benefits, according to analysts.
Political analyst James Chin, of University of Tasmania, said Sabahans and Sarawakians feel they may have got the 'raw end of the deal', because it was widely understood that both states would experience rapid economic growth upon joining the Federation of Malaysia.
'While O&G aren't explicitly mentioned in MA63, the frustration arises because these states have not truly benefited from their resources,' Chin told FMT, pointing to the wealth of O&G resources available off the Bornean coast.
'Sabahans and Sarawakians believe their state authorities were bypassed. Their chief ministers signed away resource control without consulting their cabinets or legislatures, exceeding their constitutional powers,' he claimed.
James Chin.
This, said Chin, has fuelled resentment, with many East Malaysians saying their respective states have lost significant economic opportunities while their counterparts in the peninsula have benefitted at their expense.
'Dispute extends beyond O&G'
Sunway University's Shakila Yacob offered a different perspective on the Petroleum Development Act (PDA), which has been a source of tension between the federal government and Sarawak.
She said parliamentary records suggest that Sarawak's then-chief minister Abdul Rahman Ya'kub likely had the backing of the state's legislative assembly when consenting to the legislation.
'I found no recorded objections from Sarawak MPs regarding the Act,' she told FMT.
Shakila Yacob.
'I understand that all states provided their consent except for Perak and Sabah, which initially declined to sign the PDA,' she said, referencing interviews with Petronas's founding chairman Tengku Razaleigh Hamzah and research verified by US archival documents.
'Eventually, a change of government in Sabah, and the Perak chief minister relenting, led to their agreement,' she added.
Equitable federalism?
Shakila noted, however, that East Malaysia's discontent goes beyond O&G-related concerns.
She highlighted ongoing grievances over the federal government's alleged failure to fulfil its obligations under the MA63, particularly the payment of special grants intended to support economic development in Sarawak and Sabah.
East Malaysian grievances must be addressed to foster a more sustainable federal system, said Shakila.
She also pointed to Sarawak's recent calls for autonomy in sectors such as health, education and environmental policy as a reflection of broader dissatisfaction with federal arrangements.
'This highlights deeper tensions within Malaysia's federal system.
'If not managed carefully, Sarawak's push could set a precedent, prompting other states to question power distribution, potentially straining national unity in today's volatile world,' said Shakila.
She said it was necessary to balance state aspirations with national cohesion to address the matter holistically.
Shakila had previously told FMT there were broader economic and security concerns that also need to be considered.
Petronas and Petroleum Sarawak Berhad (Petros) are still hammering out the legal and commercial terms pertaining to a new aggregator arrangement for Sarawak.
Although Prime Minister Anwar Ibrahim announced that he had reached a broad agreement with Sarawak premier Abang Johari Openg on the matter, negotiations have been complicated by Kuching's insistence on terms which may impact Petronas adversely.
Industry expert Jamil Ghani previously told FMT that Petronas may be concerned about the impact Sarawak's demands may have on its multi-year international and domestic contractual commitments.
He also said there may be potential repercussions on the corporation's bottom line, its ability to pay the federal government dividends, the nation's energy security and on the O&G industry as a whole.
According to Jamil, more than 90% of the nation's 3,000 O&G services and equipment companies depend on Petronas to survive.