Incorporation of PETRONAS. Parliament passed the Petroleum Development Act, vesting in PETRONAS the ownership and control of Malaysia’s petroleum resources. The establishment of PETRONAS by the Malaysian government was part of a wave of nationalistic oil legislation that swept the Southeast Asia region in the 1970’s era. It followed the example of Pertamina, the Indonesian state oil company, to replace standard concession (previously awarded to foreigners) contracts with more lucrative production sharing schemes.
The Petroleum Development Act provide for exploration and exploitation of petroleum whether onshore or offshore by a Corporation (PETRONAS) in which will be vested the entire ownership in and the exclusive rights, powers, liberties and privileges in respect of the said petroleum, and to control the carrying on of downstream activities and development relating to petroleum and its products. The entire ownership in, and the exclusive rights, powers, liberties and privileges of exploring, exploiting, winning and obtaining petroleum whether onshore or offshore of Malaysia shall be vested in PETRONAS which was incorporated under the Malaysia’s Companies Act 1965 or under the law relating to incorporation of companies. PETRONAS shall be subject to the control and direction of the Malaysia’s Prime Minister.