Oil royalty fight puts BN in a fix over Terengganu payments

(The Malaysian Insider) KUALA LUMPUR, Feb 22 — The Barisan Nasional federal government yesterday argued why states in the Malay peninsula are not entitled to oil royalty, but was silent about its decision to resume paying the 5 per cent cash payment direct to oil-rich Terengganu.

The Information, Communication and Culture Ministry took out full page advertisements in Malay weeklies listing eight questions and answers to rebut Tengku Razaleigh Hamzah’s argument that Kelantan and all other states are entitled to the 5 per cent oil royalty under the Petroleum Development Act 1974.

The federal government’s main argument is that oil and gas are extracted from waters that are beyond the three-nautical mile limit prescribed as territorial waters under Malaysia’s Emergency Ordinance (Essential Powers) No 7 1969.

However, Petronas had been paying Terengganu the 5 per cent oil royalty since offshore production began in 1978 but stopped after PAS captured the state in the 1999 general elections. It promised to resume twice-yearly direct payments from March 2009 after the earlier payments were converted to compassionate payments disbursed by federal agencies.

“Kelantan or any other states in the peninsula are not entitled as the oil and gas wells in the peninsula are located outside the three nautical miles limit. Therefore, anything obtained beyond the three nautical mile limit belongs to the Federal Government,” said the ministry advertisement.

Read more at: Oil royalty fight puts BN in a fix over Terengganu payments