The Sabah government has the power to review its oil royalty contract with Petronas, according to United Borneo Front (UBF) chief Jeffrey Kitingan.
He said that the state government could also decide how much money it should get from the federal government-owned Petronas for the oil and gas derived from the state.
“The state government has immense power to review its contract with Petronas. The Petroleum Development Act (PDA) 1974 which effectively vests all petroleum throughout this country in one company forever, is itself amendable.
“Whether the PDA 1974 is unconstitutional… and an unconscionable Act of Parliament is something that the people of Borneo should keep in mind.”
He was speaking to a group of people at UBF’s “Borneo Tea Party” hosted by UBF supporter, Andrew Joseph Tuining, in Ganang, Kepayan, near here over the weekend.
The state signed away its oil rights to Petronas in 1976, two years after the PDA and days after the tragic deaths of chief minister Fuad Stephens and many members of his Cabinet in a plane crash in Kota Kinabalu. Today, Sabah has become the poorest in the country despite its massive mineral riches.
Under the PDA 1974, Petronas is granted exclusive rights in perpetuity to explore, exploit, win and obtain petroleum onshore and offshore in Malaysia and its rights, liberties, powers and privileges are irrevocable, said Jeffrey.
In return for this, he explained, the Act states that Petronas shall make cash payments to the federal government and relevant state governments where oil is derived, as may be agreed between the relevant parties.
According to Jeffrey, people are afraid to bring up this issue because the business is substantial, running into billions of dollars every year, and is effectively shared between Petronas and its foreign partners like Royal Dutch Shell Plc.
Review Sabah’s share
Jeffrey said that the shareholders of Royal Dutch Shell, incorporated in the UK in 2002, include some of the most powerful personalities, companies and countries in the world such as Britain, Singapore, Kuwait, Saudi Arabia and Norway.
“In December 2009, Petronas and Royal Dutch Shell signed a deal to develop Iraq’s oilfield of Majnoon, with 60% going to Royal Dutch Shell and 40% to Petronas.
“Whatever is derived from Sabah’s oilfields are peanuts compared to what Petronas is getting overseas with its foreign partners. So, why can’t they (Petronas) be reasonable and review that measly 5% that was agreed upon in 1976?” he asked.
He said that an Act of Parliament can be amended just as the Federal Constitution can be amended and as such, Sabah should go back to the negotiation tables, in accordance with Section 4 of the PDA 1974, to review how much cash payments Sabah should receive from Petronas.
“If the World Bank states that Sabah is the poorest state in Malaysia, then judging from the international activities of government-owned Petronas, Sabah has clearly been short-changed and taken for a ride by both the federal people in Malaya and the powerful people behind those foreign-owned giant oil companies overseas.
“Shell’s interest in Borneo’s oil reserves is not new. It has been given the right to explore oil in this area since the early 1900s. So it is hardly surprising that it would continue to have vested interests in our petroleum with Petronas.
“Nobody is going to fight this issue with internationally powerful people in this business, knowing it would be an exercise in futility.
“We merely want Petronas to review our share because it is clearly making more than its fair share outside Sabah. Petronas should not be selfish to Sabahans on what should rightfully be ours,” Jeffrey said.
Borneo Agenda
UBF co-founders Nilakrisna James and Zainal Ajamain also spoke at the Tea Party talks on the political history of Malaysia, the cabotage policy, state resources and the laws which legitimise unfair economic policies.
Ever since its inception on Dec 16, 2010, the UBF founders have been criss-crossing the state giving talks on the Borneo Agenda which calls for empowerment and more freedom to Sabah and Sarawak.
This weekend, Jeffrey will visit remote Entilibon in Telupid, in the centre of Sabah, to deliver similar talks.
The core demands of the agenda are:
- Establish a compliance mechanism for the Malaysia Agreement 1963, especially Article VIII (8);
- Fairer revenue sharing formula and representation at the federal level;
- Restore Sabah and Sarawak’s status as equal partners in the federation;
- Protect native rights as enshrined in Article 153 of the Malaysian Constitution;
- Abolish the cabotage policy;
- close the economic and digital gap; and
- Resolve the problem of illegal immigrants and fake MyKads in Sabah.