KUALA LUMPUR (Feb 23): The Sarawak state government has filed a petition in the Federal Court to determine the constitutional validity and ongoing applicability of three key federal laws that govern the exploration, production and management of petroleum resources in Malaysia.
The three laws named in the petition are the Petroleum Development Act 1974 (PDA), the Continental Shelf Act 1966, and the Petroleum Mining Act 1966.
In a statement issued by the Office of the Premier of Sarawak, the state government said the federal laws infringe upon and restrict Sarawak's rights over its natural resources, particularly oil and gas, located in the seabed of the Continental Shelf.
The sovereign rights to petroleum resources within Sarawak's boundaries “were vested on Malaysia Day by the British government, in Sarawak and not in the Federation or federal government”, as provided for under the Malaysia Agreement 1963 and its annexed instruments, the state government said.
The state also pointed to Item 2(c) of the Ninth Schedule of the Federal Constitution, which vests legislative authority in the Sarawak State Legislative Assembly to regulate the exercise of such petroleum rights through mining leases, certificates and prospecting licences.
According to the state government, both the Continental Shelf Act 1966 and the Petroleum Mining Act 1966 were originally applicable only to the states of Malaya, and were extended to Sarawak during the post-1969 Emergency period.
The Emergency was annulled in December 2011, and the state maintains that the two laws should “no longer apply to Sarawak” by June 2012 under Article 150(7) of the Federal Constitution.
The petition follows Petroliam Nasional Bhd's (PETRONAS) own application filed on Jan 10 seeking leave from the Federal Court to obtain a judicial determination on the legal position of its petroleum operations in Sarawak, amid uncertainty arising from conflicting federal and state laws.
The national oil company’s originating motion seeks to clarify the interaction between the PDA and Sarawak’s Distribution of Gas Ordinance 2016 (DGO), following prolonged disputes with state-owned Petroleum Sarawak Bhd (Petros) over regulatory oversight, licensing and gas supply arrangements.
PETRONAS, in its Jan 12 statement, said the referral “is not intended to challenge Sarawak’s development aspirations or hinder the role of Petros in the state’s energy sector”.
Instead, it said the move aims to ensure the company continues to operate in full compliance with applicable laws and sound governance practices. It also urged all parties to allow the judicial process to take its course.
The Federal Court has fixed March 16 to hear the leave application, following case management on Jan 30.
In Monday’s statement, the Sarawak state government said it will object to PETRONAS’ application, arguing that the national oil company’s move “does not fall within the Federal Court's exclusive original jurisdiction” under Article 128(1)(a) of the Constitution.
"Therefore, [the] Sarawak government is constrained to also seek the determination of the Federal Court under Articles 4(3) and 128(1) of the Federal Constitution as to the validity of the said federal acts in so far as to their application to Sarawak," it said.
“The determination of these constitutional issues will also provide clarity on the regulatory framework for the oil and gas industry in Sarawak, especially to investors in the upstream and downstream businesses,” the state government added.
Despite initiating legal action, Sarawak said it remains open to negotiations with Putrajaya.
“Notwithstanding the filing of the petition, the Sarawak government remains committed to continuing constructive discussions with the federal government to reach an amicable resolution of these issues that would strengthen national unity, promote more sustainable use of our oil and gas resources, and enable Sarawak to contribute significantly towards Malaysia's prosperity and economic growth,” it said.
The long-running jurisdictional dispute has intensified since Petros was appointed sole gas aggregator in Sarawak in 2024.
This was despite the May 2025 joint declaration by Prime Minister Datuk Seri Anwar Ibrahim and Sarawak Premier Tan Sri Abang Johari Tun Openg recognising both the PDA and the DGO.
Several related matters remain before the courts, including Petros’ bid to recover RM7.95 million related to a bank guarantee recalled by PETRONAS, for which the Kuching High Court has deferred its decision to Feb 25.