THE tussle over whether Kelantan should be paid oil royalty is yet another example of politicians’ partisan childishness in their public discussion of issues. Instead of laying out the facts and law objectively and comprehensively, our politicians seem more focused on outdoing each other, leaving the public in a haze of rhetoric and factional discourse.
There are the arguments against Kelantan, such as:
“Kelantan isn’t entitled to oil royalties because the oil is drilled ‘suprastate‘, outside state boundaries.”
“Kelantan is only entitled to oil found within three nautical miles from its shores.”
“Kelantan can’t claim for oil in the exclusive economic zone because it is not a country.”
And then there are the arguments for Kelantan:
“The offshore oil belongs to Kelantan because this was agreed in 1974 by Tun Abdul Razak Hussein, Malaysia’s second prime minister.”
“Kelantan is entitled to royalties from all the oil drilled by Malaysia off its shores just as Terengganu, Sabah and Sarawak are.”
The arguments on both sides go on and on. But amid all the political bickering, pertinent questions remain unanswered. What exactly are Malaysia’s international maritime borders for oil exploration? Are states entitled to royalty for oil found up to the limits of those borders? What law provides for this? What are the maritime borders between each state? What law delineates those borders?
Maritime law 101
Malaysia’s territorial waters were clearly defined when it signed the United Nations Convention on the Law of the Sea (Unclos) in 1982. Territorial waters extend 12 miles from a nation’s shore, and the nation has full sovereignty in these waters over matters such as immigration and customs.
Beyond a nation’s territorial waters lies its exclusive economic zone (EEZ), which extends for 200 nautical miles. A country has exclusive rights to the resources found within this area, including oil.
Territorial waters (Pic by historicair / Wiki commons)
It appears that when Malaysia signed Unclos in 1982, no concurrent law was passed to determine each state’s maritime borders within the new treaty definition. There is also no statute laying out clearly whether the resources in the EEZ are federal or state.
Kelantan and all other Malaysian states surrendered their oil exploration rights onshore and offshore to Petronas in 1974 in exchange for royalty payments. The Petroleum Development Act (PDA) is clear on that point. However, the problem arises because the legal definition for what “offshore” means to Malaysia changed when Unclos came into force. This prompted the filing of Opposition Leader Datuk Seri Anwar Ibrahim’s 1 Dec 2009 private member’s bill to clarify what offshore means.
Before 1982, what constituted territorial waters differed from country to country. Some claimed three nautical miles, others 12, and a few 200. Since Unclos, this has been fixed at 12 nautical miles.
Nazri Aziz It is therefore misleading for Prime Minister Datuk Seri Najib Razak and Minister in the Prime Minister’s Department Datuk Seri Nazri Aziz to apply a 1969 Emergency Ordinance on Kelantan’s situation today. The ordinance stated that territorial waters only applied to three nautical miles from the state’s shore. However, territorial waters were still a nebulous concept at that time. The ordinance also named specific acts to which the three-mile definition of territorial waters would apply. Obviously, none of those acts was the PDA, which did not exist at that time.
It is also spurious of Nazri to say that the EEZ only applies to countries, and therefore Kelantan cannot make any claims. Unclos only binds Malaysia in relation to other countries. This is why it signed a Joint Development Agreement with Thailand in relation to parts of Malaysia’s EEZ off Kelantan’s shores which overlap with Thailand’s EEZ.
Unclos, however, doesn’t deny a state’s internal claim for resources extracted from its land. The fact that Kelantan is not a country doesn’t stop Malaysia from legislating that the EEZ is within state land or otherwise. Other federal nations such as the United States, Canada and Australia have legislated or signed agreements to regulate these issues. The US federal government has in fact sued several of its states over the federal-state maritime border.
To resolve the Kelantan oil royalty issue, the federal and state governments need to map out where the borders fall in relation to federal and state land offshore. This needs to be achieved through open discussion and an objective examination and consideration of history and the applicable law.
Unless there are legitimate explanations to justify any differential treatment, any agreement on the division of federal-state land offshore should be applied uniformly across all states.
(Pic by Dawn Allwyn / sxc.hu)If the EEZ is not state land as claimed by some politicians, then Petronas should stop paying royalties to Terengganu, Sabah and Sarawak unnecessarily for oil drilled in this area. If this seems unfair, then the federal and state governments need to sit down together, hammer out an agreement and pass the relevant laws to clarify each state’s maritime borders.
Politicians cannot just spew out a few laws and figures to the public and expect them to be satisfied and go away. This is not a neighbourhood playground dispute between children. This involves billions of petro-ringgit and the fair distribution of the nation’s resources. There needs to be reasoned and sound arguments based on facts and law, explained objectively and tactfully for the public to understand. Is that too much to ask? At the moment, it seems that it is.
Ding Jo-Ann knows a lot more about maritime law now than she did in previous weeks.
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