KUCHING: Companies involved in the oil and gas industries in Sarawak must obtain the necessary licences and leases required under the Oil Mining Ordinance 1958 and Gas Distribution Ordinance 2016 starting July 1.

Chief Minister Datuk Patinggi Abang Johari Tun Openg (pic) said the licenses, including permits, leases and other approvals will cover all persons and companies involved in the oil and gas industries in Sarawak including their contractors, sub-contractors and vendors.

He added that licenses will be issued by the Sarawak government under the Oil Mining Ordinance (OMO) and Gas Distribution Ordinance (GDO), in accordance with legislative powers conferred on the state under the Federal Constitution.

The state government will carry out engagement with all oil and gas industry players beginning next month on laws and regulations compliance including the Land Code and Natural Resources and Environment Ordinance. The session will also touch on penalties and consequences of non-compliances.

"This is normal practice. When you do business in other countries, you have to adhere to their regulations as well. We are asserting our rights within the Federal Constitution to regularise oil and gas operations in the state," he told reporters after a MoU signing ceremony between Bintulu Port Authority and Bintulu Supply Base Sdn Bhd here Thursday.

Abang Johari said the regulating of both upstream and downstream of the oil and gas production, as well as gas distribution in Sarawak is crucial to the state's planning to expand its economy and enhance level of participation by locals in the oil and gas industry.

He added that the forthcoming amendments to OMO 1958, to be tabled in the next Sarawak Legislative Assembly sitting, will require all oil and gas industry players in Sarawak, including Petronas, to comply with the ordinance.

"Section 2, Section 6 and Section 8 of the Petroleum Development Act (PDA) 1974 undoubtedly confirm that all industry players must comply with OMO and other state laws including the Land Code of Sarawak in regards to land use and occupation in the state.

"Under Section 8 of the PDA, only the Petroleum Mining Act 1966 (except Section 14 thereof) is not applicable to Petronas. Section 14 of the Act, which no longer applies to Sarawak, requires Petronas to seek permission to use and occupy land needed for its activities," Abang Johari said.

He added that Petronas, not being exempted by the PDA from compliance with the Sarawak Land Code, must have licenses or leases to use and occupy land including the continental shelf for the production of oil and gas in accordance to the land code.

Touching on the GDO, the chief minister said all persons and companies undertaking the distribution of gas, including the setting up of gas processing, separation or regasification plants and pipelines will be required to obtain a license.

The Gas Distribution (License) Regulations 2018 would set out the procedures for applying for license and fees payable by licensees, Abang Johari said.

Petroleum Sarawak Bhd (Petros), under direction of the state government, will enter into Mining and Production Sharing Agreements with Petronas and other major industry players. Petros would also be granted license by the state to distribute Gas from Petronas processing separation plant at Tanjung Kidurong in Bintulu.