KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will only make a cash payment of five per cent to the Terengganu state government if petroleum is discovered and extracted within the state.
Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said stated that this is based on the cash payment agreement signed between Petronas and the Terengganu state government on March 22, 1975, in accordance with section 4 of the Petroleum Development Act (PDA).
She said the provisions of the PDA should be read alongside the Territorial Sea Act 2012 [Act 750] (TSA), which defines the state’s territorial sea up to three nautical miles from the low tide line.
“Therefore, if no petroleum is found and obtained within Terengganu’s territorial sea boundary of up to three nautical miles, Petronas is not obligated to make any cash payment based on the PDA and the related agreement.
“The question of whether the TSA affects the application of the PDA or any of the instruments and agreements made under it is irrelevant,“ she said in a written answer published on the Parliament’s website on Tuesday.
She responded to a query from Datuk Seri Ahmad Samsuri Mokhtar (PN-Kemaman) regarding the extent to which TSA 2012 has repealed or may repeal Act 144, the deed granting rights, powers, freedoms and privileges regarding Petroleum 1975, and the additional agreement between Petronas and the state of Terengganu in 1987, concerning petroleum royalties.
She asserted that the federal government consistently provides development allocations to all states, including Terengganu.
Referring to a media statement by the Prime Minister’s Office about Terengganu’s rejection of the TSA 2012 [Act 750] on April 27, 2024, she said the federal government’s stance is that Act 750, enacted by Parliament under the Federal Constitution, remains applicable throughout Malaysia, including Terengganu, unless overturned by the court.
