TODAY’S news reported that Putatan MP Datuk Dr. Marcus Mojigoh boasted his expertise on exclusive economic zone. Based on his simplistic view, Malaysia would have lost Sipadan and Ligitan islands to Indonesia and Layang Layang Island to Vietnam or China or the Philippines.
In contrast, his UPKO boss Tan Sri Bernard Dompok saw it fit to leave this to the Prime Minister to explain. Earlier, the Sabah Chief Minister, Datuk Musa Aman, has simply brushed aside the public’s anger over the loss of 3 million acres of maritime territory in oil blocks L and M. He did not even bother to explain.
The facts remains that, on 16 Jan. 2003, Murphy Oil Corporation of the United States of America announced that its wholly-owned subsidiary company Murphy Sabah Oil Co. Ltd. has been awarded two new Production Sharing Contracts (PSC) covering Blocks L and M, offshore Malaysia.
Murphy Oil has 60% interest in Block L and 70% in Block M. Petronas Carigali Sdn. Bhd. holds the remaining 40% and 30% respectively. Each block covers 1.5 million acres. The total is therefore 3 million acres. The awarding authority was Petroleum Nasional Berhad (Petronas).
Pursuant to the Petroleum Development Act 1974, the “entire ownership in, and exclusive rights, powers, liberties and privileges of exploring, exploiting, winning and obtaining petroleum whether onshore or inshore of Malaysia” has been vested in Petronas. (Refer to Section 2 of the Act and the “Grants of Rights, Powers, Liberties and Privileges in respect of Petroleum” dated 26 March 1975 signed by the then Prime Minister Tun Haji Abdul Razak Bin Datuk Hussein on behalf of the Government of Malaysia).
On 14 June 1976, the State Government of Sabah, represented by the then Chief Minister Datuk Harris Mohd. Salleh and witnessed by then assistant minister Datuk Joseph Pairin Kitingan, signed the petroleum agreement with Petronas surrendering the ownership and rights, powers, liberties and privileges in petroleum in Sabah to Petronas in return for 5% royalties of the petroleum.
Petronas is subject to the control and direction of the Prime Minister “who may from time to time issue such direction as he may deem fit” (Section 3 (2) of the Act). This is the Petronas, vested with the powers and authority of Parliament by virtue of the Petroleum Development Act 1974 and the Prime Minister, over offshore petroleum development in Malaysia, that awarded the 3 million acres in Block L and M to Murphy Sabah Oil Co. Ltd. on or before 16 Jan. 2003.
Petronas and the Prime Minister at the time (Tun Dr. Mahathir Mohamed) have seen it fit, proper and legal to award the said maritime territory to Murphy Oil, an American company. All these point to the fact that, in the legal opinion of Petronas and the federal government at the time, Malaysia has sovereign rights over the maritime territory contained in Blocks L and M.
The Deputy Prime Minister at the time was Tun Abdullah Ahmad Badawi. This is against the back drop of Malaysia having won the Sipadan/Ligitan case at the International Court of Justice the month before (December 2002).
Murphy Oil Corporation has two other subsidiaries in Malaysia, namely – Murphy Sarawak Oil Co. Ltd., and Murphy Peninsular Malaysia Oil Co. Ltd. for the respective geographical regions. The subsidiary company used to operate Blocks L and M is the one for Sabah, not the one for Sarawak or Peninsular Malaysia. We have to assume that the Americans and Petronas know where Sabah is.
The Chief Minister admitted (news 5 May 2010) that the Sabah State Cabinet was briefed TWICE. If Blocks L and M have nothing to do with Sabah, then there is no need to take up the precious time of the Cabinet. The fact that there were TWO briefings suggests that there was a need for follow up, updating and issues that require the Cabinet’s attention. If not, then why would a Cabinet that sees no need to renegotiate the 5% royalty petroleum agreement with the Federal Government, busy itself with maritime territories that are outside Sabah? What was the briefing about and did the Cabinet give its consent?
Similarly, ex-Prime Minister Tun Abdullah Badawi covered himself by saying that his Exchange of Letters with the Sultan of Brunei was approved by his Federal Cabinet in February 2009. Did our Sabahan Ministers in the Federal Cabinet agree to the surrender of Blocks L and M to Brunei?
On April 22, 2010, Murphy Oil announced to the New York Stock Exchange that their PSC to Blocks L and M have been terminated because “following the Exchange of Letters between Malaysia and the Sultanate of Brunei on March 16, 2009, the offshore areas designated as Blocks L and M are no longer a part of Malaysia”. Since this follows the Petronas letter of 7 April 2010 to Murphy Oil Corporation, it means that before the exchange of letters, the areas were still a part of Malaysia.
This announcement was picked up by The Edge, a Malaysian business paper, on 22 April 2010. The Brunei Times triumphantly reported this on April 23. This was an issue waiting to explode. Ex-Prime Minister Tun Dr. Mahathir Mohamed, who must have been irked by the loss of national territory and Petronas profits, at his blog lambasted another ex-PM, Tun Abdullah Badawi for this loss. Tun Dr. Mahathir’s anger is understandable because it was during his tenure as PM that Blocks L and M were awarded to Murphy Oil Corporation. He said that these blocks are Malaysian territory.
Tun Abdullah Badawi later (1 May 2010) defended the loss of the oil blocks by claiming that Petronas is given a 40-year commercial right to operate the same oil blocks but under Brunei sovereignty. Wisma Putra on 4 May 2010 exposes this sell out of maritime territory in return for Petronas’s commercial operations in Brunei.
Some questions that the government should answer are:
(i) Negotiations over territorial disputes in the South China Sea are alive and active. Where was the pressing need for Malaysia to surrender any territory to any country just three weeks before a change of Prime Minister?
(ii) The surrender of blocks L and M was kept a national secret until the Murphy Oil announcement on 22 April 2010 in the New York. Why did our government and Petronas keep this secret?
(iii) If the areas in blocks L and M were Brunei’s sovereign rights in the first place, the why did Malaysia award the blocks to Murphy Oil in 2003?
(iv) In March 2009, the then Prime Minister Tun Abdullah Badawi chose to announce only that Brunei has dropped the Limbang Claim but remained silent on the loss of Blocks L and M. If Brunei already owned Blocks L and M, then why was there a need for an Exchange of Letters between Tun Abdullah and the Sultan of Brunei? Has treason been committed?
(v) Why was the need for the Sabah Cabinet to be briefed twice? If the oil blocks do not belong to Malaysia in the first place, what was the need to brief the State Cabinet?
(vi) Kelantan and Trengganu are fiercely fighting for their rights to oil revenues. Trengganu, a BN-UMNO State, still has unfinished litigation with Petronas and the Federal Government over oil royalties. Why should Sabah, a BN fixed deposit state, choose instead to defend the blunder of losing territory and oil revenues? Tengku Razaleigh, a Kelantanese BN MP heads the Parliamentary caucus on oil royalties. Why are our Sabahan BN MPs, like Marcus, unwilling join the fight for Sabah?
As for sovereign rights, the Article IV of the Malaysia Agreement of 9 July 1963 transferred sovereignty over Sabah (then North Borneo) from London to Kuala Lumpur. Prior to 1963, Kuala Lumpur did not possess any territorial sovereign rights east of Johore. Malaysia as a nation then acquired all territories that came with Sabah by way of legal title or historic right or treaties or effective control.
The Sipidan/Ligitan islands case at the ICJ is clear on this point. By definition (Article 1 of the federal constitution) Malaysia’s territory consists of the territories of all the States of Malaysia as at 1963 (minus Singapore after 1965). Sabah, like other states, was not carved out of a larger country Malaysia. Instead, Sabah, together with other states, formed Malaysia.
International conventions, be it on continental shelf, Law of the Sea and the 200 nautical mile EEZ limit affecting Sabah do not nullify the historical fact that Malaysia acquired these maritime territories with the entry of Sabah into Malaysia. It is the duty of Malaysia to protect the sovereignty of these areas over which Sabah has an interests. For instance, would Sabah not have a say if the Malaysia government were to cede Labuan FT to a foreign country?
Sabah has lost enough. If the BN State Government fights for Sabah’s rights and interests, then the people will support the government. But if the government fails, the people will speak through the ballot boxes. Then, no quantity of money politics, phantom votes or coercion will be able to save this BN government.
By: DATUK YONG TECK LEE 
But Lim received a warm welcome and, at the Rumah Rassau longhouse, sat on a hand-woven screwpine mat, an honour reserved for important guests.
