Kelantan finally withdraws nine-year oil royalty legal battle

The federal government said it will pay oil royalty to Kelantan after the proceedings for the withdrawal of the state government’s lawsuit are settled. (Bernama pic.)

KUALA LUMPUR: The PAS-led Kelantan government has finally abandoned its nine-year oil royalty legal battle against Petronas and Putrajaya.

Lawyer Aleeya Elyana Ahmad Mahreez said today the state government had agreed to file a notice of discontinuance against the federal government.

“Parties have today signed the notice of discontinuance before High Court judge (Ahmad Bache),” she told reporters after a case management in chambers.

Aleeya said the notice would be filed in the registry today.

The lawyer said Ahmad also made no order as to costs or for the plaintiff the liberty to file a fresh suit.

Senior Federal Counsel Natrah Idris represented Putrajaya while counsel Syukran Shafiq appeared for Petronas, the first defendant in the suit.

On May 21, it was reported the Kelantan government had also dropped the suit against Petronas which it filed in 2010

The legal battle between the state and Putrajaysa went up to the Federal Court, with a five-man bench unanimously ruling in 2014 that the dispute should be decided on points of law.

Judge Abdul Hamid Embong, who delivered the judgment, said there was no necessity to call witnesses. However, no proceedings started in the High Court.

In its statement of claim, the Kelantan government demanded that Petronas pay the outstanding and future cash payments for petroleum produced off the Kelantan coast, as set in their petroleum exploration agreement.

The Kelantan government had also sought costs and damages but did not specify the total amount from Petronas.

In the suit, the state government said the Kelantan Petroleum Agreement signed on May 9, 1975, clearly stated that Petronas should pay in cash 5% of oil revenue, either from exploration onshore or offshore.

It claimed that a clause in the agreement stated that payments should be made twice a year, on or before March 1, and one more on or before Sept 1.

On March 7, Economic Affairs Minister Mohamed Azmin Ali said the federal government would pay oil royalty to Kelantan after the proceedings of the withdrawal of the Kelantan government’s lawsuit against it and Petronas were settled.