KUALA LUMPUR, July 24 — Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said clarified today that Petroliam Nasional Bhd (Petronas) will only pay a cash royalty of five percent to the Terengganu state government if petroleum is discovered and extracted within its territorial waters.
Azalina referenced an agreement dating back to March 22, 1975, between Petronas and Terengganu under the Petroleum Development Act (PDA), which stipulates this payment. She emphasized that according to the PDA and the Territorial Sea Act 2012 (Act 750), which defines state territorial waters up to three nautical miles, Petronas is obliged to make this payment only if petroleum operations occur within this defined boundary.
Responding to queries in Parliament, Azalina affirmed that the Federal Government continues to allocate development funds to all states, including Terengganu, despite recent controversies over the applicability of Act 750 in the state. She reiterated the federal stance that Act 750 remains enforceable nationwide unless overturned by judicial review, as outlined in statements by the Prime Minister’s Office regarding Terengganu’s opposition to Act 750 earlier this year.
