Petroleum Sarawak Berhad (also known as PETROS) is a state-owned oil and gas exploration firm established and wholly owned by the Government of Sarawak.
Background Sarawak's and Sabah's oil and gas rights were lost to the Federal Government after the 13 May Incident. When the Federal Government made a Proclamation of Emergency in response to the unrest, it unilaterally limited the territorial waters of the Borneo states to three nautical miles. The ownership of the remaining territorial waters were transferred to the Federal Government. In 1974, the Federal Government transferred its territorial waters ownership to Petroliam Nasional Berhad (PETRONAS) through the enactment of the Petroleum Development Act 1974. The then chief minister of Sarawak, Abdul Rahman Ya'kub was one of the signatories of this agreement. Among others, the act allowed PETRONAS to regulate the oil and gas industry in Malaysia, and explore mineral resources in both the states. Petronas also gained control over the oil and gas reserves in Sarawak. The revenues from oil and gas will be divided among oil-producing states (5 percent), federal government (5 percent), producer company (41 percent), and Petronas (49 percent). In 2011, the 1969 Proclamation of Emergency (along with the 1966 & 1977 Proclamations of Emergency) proclamation was lifted which nullified Emergency Ordinances and measures authorised by these proclamations, including the three nautical miles limitation. The Territorial Sea Act 2012 was introduced to limit the territorial waters to three nautical miles limit through an Act of Parliament. Zainnal Ajamain, a political analyst, claimed that the payment of oil royalty to Sarawak is limited to 10 percent according to the Federal Constitution. However, it was argued that the article stipulated in the Federal Constitution only deals with the eligibility of the state of charging duty exports if the state oil royalty is less than 10 percent. In 2008, the federal government of Malaysia announced that it had no plans of revising oil royalty rates for Sabah and Sarawak. In 2012, chief minister of Sarawak Abdul Taib Mahmud started a private negotiation with federal government regarding the Sarawak oil royalty. In 2014, Sarawak State Legislative Assembly passed a motion to ask for 20% oil royalty from the federal government. Since then, subsequent chief ministers of Sarawak had been trying to gain more autonomy for oil and gas rights in Sarawak. In May 2015, Petronas agreed to supply cheaper natural gas to Sarawak Energy for power generation. In December 2015, Sarawak state assembly passed another motion that rejects the 2012 Territorial Sea Act; because according to Article 2 of the Constitution of Malaysia, the federal government of Malaysia has no rights to change the state boundaries without the consent of the respective state governments. In August 2016, following a retrenchment exercise by Petronas on Sarawakian workers, the Sarawak chief minister Adenan Satem had threatened to freeze the work permits of non-Sarawakians Petronas workers in the state. However, soon after that, the issue was resolved after Petronas agreed to offer more jobs for the Sarawak people. As of May 2017, Sarawak was still negotiating with Petronas for an increase in oil and petroleum royalty to 20%.
… excerpt ends here. Continue reading the full article.

