Friday, 12 March 2010

Understanding the Oil Royalty issue

Understanding the Oil Royalty issue


Raja Petra Kamarudin

Kelantan is not entitled to claim oil royalty outside its territorial waters because the Emergency (Essential Powers) Ordinance 1969 is still enforced, said a law practitioner.

Datuk Mohd Hafarizam Harun said provision No.7 of the Ordinance stipulated that the state’s boundary which is the state’s land mass and its territorial waters stretched three nautical miles measured from the low-tide water mark.

However, two oil wells disputed by the Kelantan state government are located outside the ‘area’.

“To my knowledge, the Emergency (Essential Powers) Ordinance 1969 is still in force and has not been abolished by the government. In fact, there are Ordinances formulated at that time, such as ESCAR (Essential (Security Cases) Regulations 1975), which are still in force,” he said when contacted by BERNAMA, here today.



Hafarizam Harun is a lawyer. I am not. So certainly Hafarizam Harun’s interpretation of the law must be more accurate than mine. Or so the common perception would be that. Nevertheless, I am of the ‘unqualified’ opinion that Hafarizam Harun did not take into account many other factors in his assumption.

Hafarizam Harun said that the oil wells are outside Kelantan’s three nautical mile territorial waters. They are in fact 150 nautical miles from the Kelantan coast. Therefore, argues Hafarizam Harun, Kelantan is not entitled to any Oil Royalty.

One-time Chief Minister of Sarawak Rahman Yakub in turn argued that Sabah and Sarawak are entitled to the Oil Royalty, but not Kelantan (and he was silent on whether Terengganu too is not entitled to the oil Royalty just like Kelantan) because Queen Elizabeth had declared in 1954 that the East Malaysian state’s territorial waters extended beyond the three-nautical-mile limit.

What both Hafarizam Harun and Rahman Yakub failed to take into consideration were the United Nations Convention on the Law of the Sea on what constitutes Territorial Waters and the international agreement on the Exclusive Economic Zone of each country.

Malaysia’s Territorial Waters is 12 nautical miles from its coast while its Exclusive Economic Zone is 200 nautical miles, as is so for all countries. This overrides what Queen Elizabeth ruled in 1954, before Malaya gained independence in 1957 and the creation of Malaysia in 1963. In 1954, Sabah and Sarawak were British Colonies. That has since changed. Can Malaysia argue that detention without trial (a 1960 law) is illegal because the Queen said so in 1954? Since Merdeka in 1957 Malaysia has introduced many new laws that replaced the pre-Merdeka laws.

We must remember that when Malaya was created there was an agreement that certain matters are federal matters while certain matters are state matters. Resources are state matters. That is why the states decide on matters such as land, timber, water, tin, gold, and what have you. In that sense, oil and gas are state matters since these are also resources.

If oil and gas are not included as state matters and if the federal government can automatically take over all the oil and gas in the state, why then the need to introduce the Petroleum Development Act in 1974? The federal government can just take all the oil and gas in the various states without introducing a new law allowing them to do so.

But no, the federal government had to introduce the Petroleum Development Act in 1974 because oil and gas belong to the states. And as long as it is within 200 nautical miles from the coast then the federal government can’t touch it. It is the property of the states.

Basically, the Petroleum Development Act of 1974 was aimed at making it legal for the federal government to take over the oil and gas that actually belonged to the states. If not it would be illegal for the federal government to do so. But they also provided for the states to be paid 5% of whatever the federal government took from them.

Then they made all the states sign an agreement with Petronas. The Petroleum Development Act alone was not good enough. The states could still refuse to allow the federal government to take its oil and gas. So they forced all the states to sign an agreement with Petronas, which they did although reluctantly.

In 1976, Petronas signed a Supplementary Agreement with all the states. This Supplementary Agreement made it clear that the 5% that Petronas paid the states was to be called Royalty and that payments would be made in cash, twice a year, in March and September.

All this was not mentioned in the Bernama report above.

What the Queen did in 1954 is no longer relevant. Other things have since happened in 1957, 1963, 1973, 1974, 1976, 1982 and 1997. These are the new arrangements. Since then the Territorial Waters have been extended to 12 nautical miles. The Exclusive Economic Zone has been extended to 200 nautical miles. The federal government took over the oil and gas, which rightfully belonged to the states, through an Act of Parliament. Petronas signed two agreements with all the states in 1974 and 1976. And this means the oil and gas, which is 150 nautical miles offshore, and which therefore belongs to the states, was taken over by the federal government, and the states are entitled to a 5% payment twice a year that is to be called Royalty.

As I said, I am no lawyer and it would be foolish of me to rebut the opinion of a lawyer. But then this lawyer failed to take into consideration many other factors in his opinion. So that does not make him a very good lawyer if a non-lawyer like me can shoot his opinion full of holes.

Read also: Ku Li: PDA supercedes all pre-Merdeka oil contracts


Exclusive Economic Zone

A maritime zone adjacent to the territorial sea that may not extend beyond 200 nautical miles from the baselines from which the breadth of the territorial sea is measured. Within the exclusive economic zone (EEZ), the coastal state has sovereign rights for the purpose of exploring, exploiting, conserving, and managing natural resources, both living and nonliving, of the seabed, subsoil, and the subjacent waters and, with regard to other activities, for the economic exploitation and exploration of the zone (e.g., the production of energy from the water, currents, and winds). Within the EEZ, the coastal state has jurisdiction with regard to establishing and using artificial islands, installations, and structures having economic purposes as well as for marine scientific research and the protection and preservation of the marine environment. Other states may, however, exercise traditional high seas freedoms of navigation, overflight, and related freedoms, such as conducting military exercises in the EEZ. Also called EEZ.


Exclusive Economic Zone

Under the law of the sea, an Exclusive Economic Zone (EEZ) is a seazone over which a state has special rights over the exploration and use of marine resources. It stretches from the seaward edge of the state's territorial sea out to 200 nautical miles from its coast. In casual use, the term may include the territorial sea and even the continental shelf beyond the 200-mile limit.

Generally a state's EEZ extends to a distance of 200 nautical miles (370 km) out from its coastal baseline. The exception to this rule occurs when EEZs would overlap; that is, state coastal baselines are less than 400 nautical miles (740 km) apart. When an overlap occurs, it is up to the states to delineate the actual boundary. Generally, any point within an overlapping area defaults to the most proximate state.

A state's Exclusive Economic Zone starts at the seaward edge of its territorial sea and extends outward to a distance 200 nautical miles (370 km) from the baseline. Thus, the EEZ includes the contiguous zone. States also have rights to the seabed of the continental shelf up to 350 nautical miles (650 km) from the coastal baseline, where this extends beyond the EEZ, but this does not form part of their EEZ.


United Nations Convention on the Law of the Sea

The United Nations Convention on the Law of the Sea (UNCLOS), also called the Law of the Sea Convention or the Law of the Sea treaty, is the international agreement that resulted from the third United Nations Conference on the Law of the Sea (UNCLOS III), which took place from 1973 through 1982. The Law of the Sea Convention defines the rights and responsibilities of nations in their use of the world's oceans, establishing guidelines for businesses, the environment, and the management of marine natural resources. The Convention, concluded in 1982, replaced four 1958 treaties. UNCLOS came into force in 1994, a year after Guyana became the 60th state to sign the treaty. To date, 158 countries and the European Community have joined in the Convention. However, it is now regarded as a codification of the customary international law on the issue.

While the Secretary General of the United Nations receives instruments of ratification and accession and the UN provides support for meetings of states party to the Convention, the UN has no direct operational role in the implementation of the Convention. There is, however, a role played by organizations such as the International Maritime Organization, the International Whaling Commission, and the International Seabed Authority (the latter being established by the UN Convention).


Territorial waters

Territorial waters, or a territorial sea, as defined by the 1982 United Nations Convention on the Law of the Sea, is a belt of coastal waters extending at most twelve nautical miles from the baseline (usually the mean low-water mark) of a coastal state. The territorial sea is regarded as the sovereign territory of the state, although foreign ships (both military and civilian) are allowed innocent passage through it; this sovereignty also extends to the airspace over and seabed below.

The term "territorial waters" is also sometimes used informally to describe any area of water over which a state has jurisdiction, including internal waters, the contiguous zone, the exclusive economic zone and potentially the continental shelf.

You're Job is to be an UMNO Lackey in BN, Gerakan!!

Butt out, Selangor Umno tells Gerakan

SHAH ALAM: Selangor Umno has, in not so many words, told Gerakan to mind its own business on the possibility of maverick MP Zulkifili Noordin joining Umno.

Selangor Umno liaison chief Abdul Shukur Idrus said it was Umno’s prerogative to accept or reject applications from individuals wishing to join the party.

“If there is an application from an individual, it will be processed according to procedure. The supreme council will decide on its worth,” he said in a response to the Gerakan's urging yesterday that Umno reject Zulkifli.

Gerakan voiced concern over a statement by Deputy Prime Minister Tan Sri Muhyiddin Yassin that Umno's door "was always open to anyone wanting to become its members", including Zulkifli.

Gerakan vice-president Datuk Dr Teng Hock Nan urged Umno and the Barisan Nasional leadership not to accept Zulkifli, the MP for Kulim-Bandar Baharu, as a member.

He said Zulkifli was sacked by Party Keadilan Rakyat for his unwillingness to subscribe to multi-racialism.

"Accepting him into Umno and BN will not augur well for Barisan Nasional as a moderate and multi-racial coalition serving the interests of all Malaysians," Teng said in a statement.

Zulkifli was expelled from PKR last Saturday, and became an independent MP. He was also formerly a member of PAS, a partner in the three-party Pakatan Rakyat coalition, but PAS has closed its doors on his return.

Teng's statement marks the second time this week that Gerakan has broken ranks with Umno-BN. Also yesterday, its Youth wing in Kedah threw its support behind the reintroduction of local council elections, proposed by Penang's PR-led administration

Youth chief Tan Keng Liang said there were more benefits than setbacks to the suggestion, and urged the federal government to assist the PR in carrying out the local elections, such as by amending related legislation.

Keep an eye on Pharmaniaga «

Keep an eye on Pharmaniaga «

Low ratings on TV spells trouble for Najib

Low ratings on TV spells trouble for Najib

KUALA LUMPUR: Prime Minister Datuk Seri Najib Tun Razak may be quite happening with his Facebook skills, savvy walkabout campaigns and “People First, Performance Now” slogan, but his poor ratings on-air over TV3’s prime time programme Soal Jawab recently smacks of trouble.

According to research company AGB Neilsen, Najib’s appearance on the show recorded an all-time low of 270,000 viewers. A shocking revelation for any national premier.

Neilsen’s record showed that when his cousin, Home Minister Datuk Seri Hishammudin Hussein and maverick parliamentarian Kulim Bandar Baharu’s Zulkifili Noordin took to the same show, viewership soared hitting 487,000 and 438,000 respectively.

Respectable figures, according to sources at TV3 because prime time slots, which are between 10pm and 11pm, usually draw 1.5 to 2 million viewers.

PAS deputy president Datuk Mahfuz Omar said the fact that “people switched off or changed channels” at the time just showed that Najib was losing his credibility and charisma within the party and outside.

“It just shows the rakyat don’t want to hear his rhetoric anymore. Not watching Najib on air is like a protest against his leadership. But what’s surprising is that his own Umno members, said to be over two million, didn’t catch it.

“If this trend continues, it will lead to yet another ‘grand design’ to overthrow Najib, the way they did to Pak Lah (former Prime Minister Tun Abdullah Ahmad Badawi) after his popularity dipped sharply," said Mahfuz.

Meanwhile, Sungai Petani parliamentarian Datuk Johari Abdul said the programme did not deal with the issue of Najib’s credibility or his scandal-ridden tenure.

“The rakyat want answers and they are not getting it. They have lost faith in him as a prime minister because todate, he has not come clean on several issues and criminal allegations. We are not accusing him of murdering Altanthuya, but until now he has not denied it and this gives the impression that he is trying to hide the crime," he said.

According to Johari, Najib’s credibility is at an all-time low because of his link to several scandals, including the submarine purchase and missing jet engines.

Nonetheless, his expensive PR machinery will continue to exploit Umno-BN’s extensive reach over the local mainstream media and position him as the people’s champion.

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Indira gets custody of daughter from Muslim husband

Indira gets custody of daughter from Muslim husband


By Clara Chooi

KUALA LUMPUR, March 11 — After a long drawn out and bitter battle in the courts, kindergarten teacher M. Indira Gandhi was finally granted custody of her 22-month-old daughter Prasana Diksa at the Ipoh High Court today.

High Court Justice Wan Afrah Wan Ibrahim made the decision in chambers this morning and issued an order for Indira’s Muslim-convert husband to hand over Prasana immediately.

Indira’s husband, now known as Mohd Ridzuan Abdullah, did not hand over the child immediately however as he had not brought her to the court for today’s decision.

Instead, he left the court immediately with the Perak Religious Department officials.

According to the officials, Mohd Ridzuan would not be able to return Prasana to his wife immediately as the toddler was presently in Kelantan.

Indira’s lead counsel M. Kulasegaran told reporters outside the courtroom later that the judge had made the decision as it was in the family’s best interest for Prasana to return to her mother and be together with her other two siblings, Karan Dinish, 11, and Tevi Darsiny, 12.

“Also, the judge said that Mohd Ridzuan does not even have a steady job,” he said.

Kulasegaran added he hoped Mohd Ridzuan would abide by the court’s order and return the child immediately.

“The court has also allowed him visitation rights at once a week,” added Kulasegaran.

Prior to the decision, Kulasegaran said that the counsels from the Perak Religious Department had objected to Justice Wan Afrah presiding over the case as the matter should be referred to the Syariah Court.

“However, the court decided that it had the jurisdiction to hear the matter as Indira is a non Muslim. Furthermore, being a non-Muslim, Indira cannot go to the Syariah Court,” he said. Meanwhile, in a separate court, Indira’s application to seek leave for judicial review to quash the conversion of her three children to become Muslims was postponed to April 3.

Outside the court, a teary-eyed Indira told reporters that she was relieved with the decision and happy that she would finally get to be reunited with her youngest daughter again.

“It has been very difficult for me all this time. I cannot wait to see her again, I hope she will be returned to me as soon as possible,” she said.

Indira has been embroiled in a fierce custody battle for her children with her husband since early last year. She has also been trying to ensure that her children, who were converted to Muslims without her knowledge by her husband, remained as Hindus.

Ku Li: Malaysia has become ‘like the Malayan Union’

Ku Li: Malaysia has become ‘like the Malayan Union’

By Debra Chong

KUALA LUMPUR, March 11 — Maverick Umno man Tengku Razaleigh Hamzah today (picture) likened present-day Malaysia to the highly unpopular Malayan Union idea forwarded by British colonialists in 1946, noting the way the Barisan Nasional (BN) government is running the country.

The Kelantan prince added that a review of the arrangements between the federal and state governments was greatly needed to restore each state’s “constitutional rights” which had been stripped away over the years.

“Putrajaya behaves as if we are a unitary state and not a federation,” the longest-serving federal lawmaker said at a public forum highlighting Federal-State relations organised by the Bar Council here today.

“Ironically we have become in practice the Malayan Union which an earlier generation resisted and defeated,” Razaleigh added, noting that the federal government had usurped the state’s powers and controlled with an iron-fist the state’s resources and even its right to decide how religion should be practiced.

“This is unconstitutional and must be resisted with just as much vigour as we resisted the Malayan Union. Malaysia is not viable in the long run as a unitary state,” the Gua Musang MP stressed to the organic crowd which turned up — it numbered between 50 and 70 at most — but which included ambassadors from Canada and Belgium.

Razaleigh noted that the balance of power between the federation and the states had been upset and was now tilted in favour of the central government and “concentrated in the hands of the Prime Minister”.

He said a review was greatly needed right the imbalance and suggested it could be done either by a vote in each state’s legislative assembly or through the Conference of Rulers.

Razaleigh who was responsible for setting up the national oil company, Petroliam Nasional Berhad (Petronas), had earlier attacked the Barisan Nasional-led federal government for its persistent denial against paying oil “royalty” to Kelantan.

He noted the denials have been splashed in newspapers and repeated by government officials must be looked as seriously because “the Federal government’s authority over these resources, as in all other things, is an authority derived from the original sovereignty of the states.”

Ex-top cop Ramli acquitted of graft

Ex-top cop Ramli acquitted of graft

KUALA LUMPUR, March 12 — Suspended police Commissoner Datuk Ramli Yusoff has been acquitted of three corruption charges by the Sessions Court here.

Judge M Gunalan ruled today that the prosecution had failed to prove a prima facie case against Ramli, who was the Commercial Crimes Investigations Department (CCID) chief when he was charged and suspended from service in 2007.

He was charged with failing to declare ownership of 20,000 Telekom Malaysia Berhad shares, 154,000 Permaju Industries Berhad shares and interest in two office properties worth RM1,032,840.

Ramli, 56, was alleged to have committed the offences at the office of the then Anti-Corruption Agency’s deputy public prosecutor in Putrajaya on Sept 17, 2007.

The CCID supremo had also been charged separately in the Kota Kinabalu Sessions court for allegedly using police aircraft to view two pieces of property in which his real estate company had an interest.

That case, too, ended in an acquittal for Ramli when, on July 27 of last year, Sessions Court Judge Supang Lian said: “The prosecution failed to prove a prima facie case and the accused deserves to be acquitted and discharged.’’