STATE SUES PETRONAS FOR ALLEGED BREACH OF CONTRACT

KUALA LUMPUR, Aug 30 (Bernama) -- The northeastern state of Kelantan government
has sued Petroliam Nasional Berhad (Petronas) for alleged breach of contract and
demanded that the national oil corporation honour the Petroleum Development Act
1974 agreement signed between them.

The summon was filed at the High Court Commercial Division Registry here by
Messrs Tommy Thomas at 9.30am Monday.

The plaintiff named Petronas as the sole defendant.

The state government, among others, is seeking an order to compel Petronas to
make full and truthful disclosure of all facts relating to cash payments payable
to Kelantan, including for the period when petroleum was produced, found or
obtained off the coast of Kelantan; areas or blocks from where petroleum was
found and obtained; and the total sum of cash payments that should be paid to
Kelantan.

The state government, run by opposition Parti Islam Se-Malaysia (PAS) also
demanded that all outstanding cash payments determined by the court must be paid
within one month of the court order.

In addition, Kelantan is also seeking an order that all future cash
payments, for petroleum produced off its coast as stipulated in the petroleum
agreement, shall be paid to the state by Petronas.

The state government is also seeking five other reliefs including in terms of
damages and costs.

The originating summon did not specify the total amount of the claim sought from
Petronas.

In its statement of claim, the state government explained that the Kelantan
Petroleum Agreement signed on May 9, 1975 clearly stated that Petronas should
pay in cash five per cent of oil revenue either from exploration onshore or
offshore.

It said that a clause of the agreement stated that the payment should be made in
cash twice a year on or before March 1, or on or before Sept 1.

The state government also said that Clause 3 of the agreement stated that the
payment should continue until the oil deposit obtained from the state had been
exausted.

The state government also explained that ownership of petroleum resources and
special rights were not a privilege for exploration by Petronas without giving
any reward or compensation to the state.
-- BERNAMA