Former minister Khairy Jamaluddin says legal certainty should take priority over political considerations in the ongoing dispute between Petronas and the Sarawak government over oil and gas regulatory powers.
Speaking on the Keluar Sekejap podcast, Khairy said the disagreement, which centres on the Petroleum Development Act 1974 (PDA) and Sarawak’s Distribution of Gas Ordinance 2016 (DGO), should ultimately be resolved by the courts to provide clarity for the industry.
Khairy said Petronas was justified in seeking judicial review, as the national oil company needed to determine whether it was governed solely by federal law or was also required to comply with Sarawak’s state legislation.
“It should be decided by the courts because it will provide clearer guidance for the industry. At the moment, many investment plans cannot move forward because the issue remains unresolved.
“It will also answer the more fundamental question of law and jurisdiction,” he said during a discussion with podcast co-host Shahril Hamdan and Multimedia University law lecturer Hafiz Hassan.
Hafiz agreed, saying the key issue before the courts is whether Sarawak’s Distribution of Gas Ordinance falls within the state’s legislative powers or whether matters relating to petroleum and gas regulation are exclusively under federal jurisdiction.
“Petronas has done the right thing. They need to go to court. They need clarity,” he said.
Hafiz explained that the dispute would require the courts to examine the legislative powers set out under the Federal Constitution, including the Federal List, State List and the supplementary legislative lists applicable to Sabah and Sarawak.
He noted that while Sarawak retained certain additional powers under the Malaysia Agreement 1963 (MA63), the state also operates within Malaysia’s constitutional framework, which divides legislative authority between the federal and state governments.
According to Hafiz, the court must determine whether the DGO, which governs gas distribution licences, pipeline construction and operations, and safety standards in Sarawak, is consistent with the constitutional division of powers.
He added that the court’s ruling could become a significant legal precedent defining the limits of federal and state authority over natural resources.
In March, the Federal Court granted Petronas leave to challenge the constitutionality of several Sarawak ordinances governing oil and gas matters.
Petronas argues that amendments to the ordinances passed by the Sarawak Legislative Assembly contravene the Ninth Schedule of the Federal Constitution.
The company’s lawyer, Cyrus Das, contended that matters involving treaties, trade, mineral resource development, and the production and distribution of power and energy fall under federal jurisdiction and therefore can only be legislated by Parliament.
