The full speech of Satok assemblyman and GPS chief whip, Datuk Ibrahim Baki, on the Sarawak’s continental shelf issue during his debate on the Supply (2025) Bill, 2024 today.
CONTINENTAL SHELF
“Nowadays, all sorts of articles are coming out about Sarawak. Among them are so-called marine lawyers, former law ministers, and so on. They were quiet before. To our detractors, I would like to specifically highlight our continental shelf.”
The Sarawak (Alteration of Boundaries) Order in Council 1954 was made by the then-British Monarch, Queen Elizabeth II, pursuant to the Colonial Boundaries Act 1895.
By that Order, the boundaries of Sarawak were extended to include the area of the continental shelf being the seabed and its subsoil which lies beneath the high seas contiguous to the territorial waters of Sarawak.
Although the limit of the continental shelf was not specifically stated in the Order, what constitutes the continental shelf is clearly stated to be “the seabed and its subsoil which lies beneath the high seas contiguous to the territorial waters of Sarawak”.
MINING LEASE ISSUED OVER CONTINENTAL SHELF
In 1952, the then Sarawak Government issued a mining lease to Sarawak Oilfields Limited (SOL), a wholly owned subsidiary of Royal Dutch Shell. After the 1954 Order in Council, by a Deed made on the 13th May 1956, the mining area in the said Mining Lease was extended to cover the continental shelf, giving SOL the right to exploit and mine petroleum lying or being within the area of the continental shelf.
Therefore, since 1956, Sarawak had exercised rights over the exploitation and mining of petroleum in the area of the continental shelf which is within the extended boundaries of Sarawak.
In 1958, the Sarawak Legislature, then known as the Council Negri, passed the Oil Mining Ordinance, 1958 (Cap. 85) (“Oil Mining Ordinance”) to regulate oil mining in Sarawak, including the continental shelf. The Sarawak Land Code 1958 defines “State land” to include the foreshore and bed of the sea within the boundaries of Sarawak as extended by the Sarawak (Alteration of Boundaries) Order in Council, 1954.
LIMITS OF CONTINENTAL SHELF AND TERRITORY OF SARAWAK
As to the limit of Sarawak’s continental shelf, the Geneva Convention on the Continental Shelf 1958 stipulates the term “continental shelf” is used as referring (a) to the seabed and subsoil of the submarine areas adjacent to the coast but outside the area of the territorial sea, to a depth of 200 metres or, beyond that limit, to where the depth of the superjacent waters admits of the exploitation of the natural resources of the said areas; (b) to the seabed and subsoil of similar submarine areas adjacent to the coasts of islands.
In the premises, the territory of Sarawak includes the continental shelf beyond its territorial waters up to a depth of 200 metres or beyond that limit to where the depth of the superjacent waters allows for exploitation of the natural resources in the seabed and subsoil.
To the so-called marine lawyer, there is no issue with the continental shelf not being properly defined in the said Order in Council, 1954, because the Geneva Convention on the Continental Shelf had made clear what constitutes the “continental shelf” of a State.
The territory of Sarawak was the territory immediately before Malaysia Day as provided by Article 1(3) of the Federal Constitution and includes the continental shelf outside the territorial sea as defined by the Geneva Convention of the Continental Shelf 1958.
On these well-documented historical facts, that part of the continental shelf which is within the extended boundaries of Sarawak is part of Sarawak territory and Sarawak had before Malaysia Day exercised rights to or over the petroleum resources found in the continental shelf by including the area of the continental shelf within its boundary in a mining lease issued to SOL.
LEGISLATIVE AUTHORITY OVER THE ISSUANCE OF MINING LEASES
Under the Federal Constitution, mining leases and certificates are the legislative authority of the State by virtue of Item 2(c) in the State List (List II) of the Ninth Schedule of the Federal Constitution. Therefore, Sarawak has the legislative and executive authority over the issuance of mining leases and certificates to regulate oil mining, including on the continental shelf. Item 8(j) of List I Federal List in the
Ninth Schedule reads as follows:
“8. Trade, commerce and industry, including — (j) subject to item 2(c) in the State List: Development of mineral resources; mines, mining, minerals and mineral ores; oils and oilfields; purchase, sale, import and export of minerals and mineral ores; petroleum products; regulation of labour and safety in mines and oilfields;
Therefore, the federal legislative power over the development of mines, mining, oil and oilfields can only be exercised subject to item 2(c) of the State List, in other words, subject to the State powers to issue prospecting licences, mining leases and certificates for the development or mines, mining, oils and oilfields under the mining Ordinance.
The Oil Mining Ordinance, 1958 which provides for the powers for the issuance of prospecting licenses, mining leases and certificates to regulate oil mining onshore and offshore Sarawak continues to be valid as a state law by reason of section 73 of the Malaysia Act 1963.
Therefore, the development of mines, mining, oils and oilfields would have to be subject to prospecting licences, mining leases, and certificates issued under the Oil Mining Ordinance.
The Proclamation of Emergency 1969 was annulled by both Houses of Parliament in December 2011. Therefore, by virtue of Article 150(7) of the Federal Constitution, the Emergency Ordinance No. 10 lapsed in June 2012. Thus, the Continental Shelf Act and the Petroleum Mining Act cease to apply to Sarawak as of June 2012. With that, it means that OMO 1958 is reborn, effective June 2012.
When the Emergency (Essential Powers) Ordinance No. 10 was promulgated pursuant to the Proclamation of Emergency 1969, the Oil Mining Ordinance was not repealed although the Continental Shelf Act 1966 and the Petroleum Mining Act 1966 were extended to Sarawak.
During this period of emergency, the federal government requested the State Government to assign the Mining Lease issued to SOL in 1952 to the federal government, by a Deed of Assignment dated 18th March 1971 (“the Deed”). In the recital to the Deed of Assignment, the rights of the State to issue the mining lease and that the mining area included continental shelf were acknowledged by Parties to that Deed which include the federal government.
SARAWAK RIGHTS UNAFFECTED BY MALAYSIA’S CLAIM TO CONTINENTAL SHELF
In Malaysia, the continental shelf is defined by the Continental Shelf (Amendment) Act 2009 as follows:
“continental shelf” means the sea-bed and subsoil of the submarine areas that extend beyond the territorial sea –
(a) throughout the natural prolongation of the land territory of Malaysia to the outer edge of the continental margin as determined in accordance with section 2B; or
(b) to a distance of two hundred nautical miles from the baselines from which the breadth of the territorial sea is measured in accordance with the Baselines of Maritime Zones Act 2006 [Act 660] where the outer edge of the continental margin does not extend up to that distance, but shall not affect the territory of the States or the limits of the territorial waters of the States and the rights and powers of the State Authorities therein.”.
Therefore, the rights of Sarawak to regulate petroleum mining in the continental shelf which had been exercised even before Malaysia Day are not affected or prejudiced by Malaysia’s claim to sovereignty over the continental shelf under the United Nations Law of the Sea (UNCLOS) 1982. Sarawak will continue to exercise its constitutional authority under item 2(c) of the State List to regulate petroleum mining in the continental shelf by the issuing of exploration licences and mining leases or certificates pursued by its Oil Mining Ordinance.
Although Section 2 of the Petroleum Development Act 1974 (“PDA”) purports to vest petroleum in PETRONAS vide a vesting Order prescribed in the First Schedule thereto, the PDA did not repeal the Oil Mining Ordinance and did not exempt PETRONAS from complying with constitutionally valid state law.
The only law that PETRONAS is exempted from complying with is the Petroleum Mining Act 1966 (See Section 8 of the PDA, 1974).
If Parliament had intended PETRONAS to be exempted from any other laws, whether State or Federal, in regard to its upstream businesses or activities, Parliament would have spelt out such exemption in the PDA. Therefore, the PDA and the Sarawak Oil Mining Ordinance must coexist and both legislations must be complied with.
Sarawak is not making unreasonable or baseless claims about the oil and gas resources in the seabed and subsoil of the continental shelf. Sarawak expects all parties undertaking the prospecting, exploration and mining of petroleum both onshore and offshore Sarawak to respect its laws and the Federal Constitution which confers on Sarawak the right to issue prospecting licences, mining leases and certificates for mining of petroleum both onshore and in the continental shelf.
The Oil Mining Ordinance is a legislation which is within the legislative competence of the Sarawak legislature to enact. This Ordinance remains valid and in force and has not been repealed. Whoever operates in Sarawak must comply with all relevant state laws such as the Oil Mining Ordinance and the Distribution of Gas Ordinance, 2016 (Cap. 72).
At the same time, I would like to also comment on an article written by a former law minister, my friend, Zaid Ibrahim quoting the Batu Puteh ruling and said it will affect our claims relating to our rights over the continental shelf.
While he is entitled to his opinion, our position is very clear. That is Sarawak’s rights over the continental shelf is not a dispute between two sovereign states and therefore, the principles of international laws cannot apply.
This issue relating to whether state rights are affected by Malaysia’s claim to sovereignty under international law over the continental shelf should be decided based on domestic laws including the Federal Constitution.
In any event, Sarawak never relinquished her rights over the seabed and the subsoil that make up the continental shelf. These areas are state land and the state even has declared a marine park over some of the regions offshore Sarawak.
SARAWAK’S SIGNIFICANT CONTRIBUTIONS
The right of the Sarawak government to see that its laws are complied with should not be questioned by any quarters. There must not be encroachment on Sarawak’s rights and legislative authorities expressly enshrined in the Federal Constitution.
Sarawak has contributed enormously to the national economic well-being as far as the oil and gas sector is concerned since the coming into force of the PDA.
Those who said that Sarawak does not want to honour the cash payment agreement dated 27th March 1975, disrespect Sarawak’s enormous contribution to the national economic well-being and are an insult to the people of Sarawak.
