PM Anwar says Petronas project in South China Sea is in Malaysian territory

KUALA LUMPUR – Malaysian Prime Minister Anwar Ibrahim said on Tuesday he had told China that an exploration project by state energy company Petronas in the South China Sea was within Malaysian waters, in a reference to an overlapping claim in the area by Beijing.

China was worried that “Petronas has carried out a major activity at an area that is also claimed by China”, Datuk Seri Anwar said in response to a parliamentary question about his discussions on the South China Sea

during his visit to China last week.

“I stressed... that Malaysia sees the area as Malaysian territory, therefore Petronas will continue its exploration activities there,” he said, without specifying the offshore project or location. But if China feels this is their right, Malaysia is open to negotiations, Mr Anwar added, reiterating comments he made earlier this week.

His remarks, coming after he opened the door for negotiations with China, are a sign of mounting pressure on Malaysia’s energy operations in waters that Beijing claims as its own.

Petronas operates oil and gas fields within Malaysia’s 320km exclusive economic zone (EEZ) and has had several encounters with Chinese vessels.

China claims its territory via a “nine-dash line” on its maps, which cuts into the EEZs of Vietnam, the Philippines, Malaysia, Brunei and Indonesia.

But the Permanent Court of Arbitration ruled in 2016 that the “nine-dash line”, which stretches as far as 1,500km off China’s coastline, has no legal basis.

The Asia Maritime Transparency Initiative (AMTI), a US think-tank, said last week that a Chinese coast guard vessel had for the past month been operating near Petronas’ Kasawari gas development project off Sarawak, and came as close as 2.4km of the project. A Malaysian navy ship was in the area, AMTI said.

China’s Foreign Ministry said on Monday it was not aware of the specific incident, but said the conduct of the China Coast Guard was beyond reproach.

The Kasawari field holds an estimated 85 billion cubic m of gas reserves and is expected to start production in 2023.

Mr Anwar, in his parliamentary comments, said China believes that its ships were in international waters.

Malaysia’s Foreign Ministry will issue a protest note if there are collisions between Malaysian and Chinese vessels in the area, he said.

In response, the Chinese Foreign Ministry said Beijing safeguards its “legitimate rights and interests” in the South China Sea.

Speaking separately at a Finance Ministry monthly gathering on Tuesday, Mr Anwar said investments of RM25.5 billion (S$7.7 billion) by Amazon Web Services and RM170 billion by China in Malaysia are having a snowball effect, with many countries showing interest in investing in the country.

“If you just wait for investment, but don’t prepare the skills, machinery and infrastructure, this will be a problem. When they (investors) come, the need for infrastructure will increase,” he said.

Mr Anwar, who is also Finance Minister, said investment in Malaysia is increasing owing to the stable political system and clear government policies, as well as efforts made by government officers in attracting foreign investments. REUTERS