Tangau who is acting president of Upko and Sabah deputy chief minister, said the need for mutual agreement was clearly stated under Article 4 of the Petroleum Development Act.

He saw no need to amend the mechanism of payment set out in the PDA as suggested by Economic Affairs Minister Mohamed Azmin Ali yesterday. The PDA already provided for a 5% royalty, currently paid to the state government, based on gross revenue.

However, he said any review of the PDA should be comprehensive and deal with more than the payment mechanism, such as provisions to make Petronas report to Parliament. “This relates to the issue of transparency of Petronas’ dividends. Upko will continue to press for this,” he said.

In the Dewan Rakyat yesterday, Azmin had stated in reply to Tangau that Putrajaya would only implement its promise to pay 20% royalty after amendments are made to the PDA.

Tangau said the review should also include the role of the state, as Petronas had attempted to claim ownership of all oil resources in the country, a move he described as a mistake. State laws were clear that Petronas must seek permission from the state government to extract their resources.

He said the Sabah state government wanted discussions on oil and gas issues based on the principles of the Malaysia Agreement 1963.

“Expectations are high that Sabah should get more oil revenue from the government because it contributes 40% of national oil production in the country, but at the moment, Sabah still has the highest number of people in poverty,” he said.

“Oil royalty cannot be seen in isolation but must be part of MA63 and this is clearly stipulated in the agreement,” he said.

He added that the matter must be resolved within the next five years, as it directly affects the revenue of the state. “We cannot wait,” he said.

20% oil royalty on profit, so wait for amendments to law, says Putrajaya