Environmental Regulations in Malaysian Offshore Oil and Gas Industry

This profile has been produced with the assistance of Ms. Mashitah Darus and Ms. Kalsom Abdul Ghani of the Department of Environment Malaysia

National Profile

Summary of Malaysian offshore regulatory measures

• There is an emphasis on legislation to regulate the industry

• Environmental legislation applies to the offshore petroleum industry through the Environment Quality Act 1974 and the Exclusive Economic Zone Act 1984

• International agreements do apply

• Economic incentives are not in place

• Voluntary measures do apply in the form of codes of practice

• Reporting and monitoring of environmental performance is required

Contact Information:

Ms. Mashitah Darus, Department of Environment, Level 3-7, Block C4, Parcel C, Federal Government Administrative Centre, 62662, PUTRAJAYA, MALAYSIA
md@jas.sains.my

Other contact persons for further details:
Ms Kalsom Abdul Ghani, Department of Environment, Malaysia
kag@jas.sains.my

Related Websites:
The Department of Environment website which outlines all the activities of the department
http://www.jas.sains.my

Ministry of Domestic and Consumer Affairs website
With outlines relevant laws and its activities under the domestic trade division.
http://www.kpdnhq.gov.my

Petroliam Nasional Berhad [PETRONAS]- Malaysia's National Oil Company
http://www.petronas.com

1. Major bodies that exercise regulatory control over environmental aspects of offshore operations, either directly or indirectly

• Department of Environment [DOE]- through the Environment Quality Act 1974. The Malaysian DOE enforces mandatory EIA through an order under this Act, if the Oil and Gas Activities are within Territorial Waters. In the EEZ, direct regulatory control is by PETRONAS and Ministry of Domestic Trade and Consumer Affairs [petroleum authorities] but the DOE is required to give environmental input. There is a peculiar arrangement where the petroleum authorities have direct regulatory control but the exercise of enforcement is done by the DOE

• PETRONAS and Ministry of Domestic Trade and Consumer Affairs- If the Oil and Gas activities are beyond the Territorial Waters i.e the Economic Exclusive Zone [EEZ], the EIA is required administratively by the Petroleum Authorities [PETRONAS and Ministry of Domestic Trade and Consumer Affairs with input from the DOE. The Petroleum Mining Act 1966 creates the Petroleum Authority, PETRONAS in relation to offshore area. Under the EEZ Act, a special committee is formed to regulate activities [not specifically environmental] in this area. The activities include grant of licence for construction of artificial islands, installations and structures and the laying of submarine cables and pipelines in the EEZ area. The committee is comprised of the DOE, Marine Department [Peninsula, Sabah and Sarawak], Ministry of Transport, National Security Division of the Prime Minister's Department, Ministry of Energy, Communication and Multimedia Attorney General Department, Hidrography Branch of Ministry of Defence and Department of Safety and Occupational Health. Though the Committee is led by the Ministry of Trade and Consumer Affairs, the protection and preservation of the marine environment especially against oil pollution is under the DOE.

• The Marine Department enforces claims and compensation covering damage to marine environment by vessels under the Merchant Shipping Oil Pollution Act 1994

• Ministry of Transport Malaysia

• National Security Division of the Prime Minister's Department

2. Major industry associations with instruments for environmental performance of offshore oil and gas activities

- Federation of Malaysian Manufacturers [FMM] http://www.fmm.org.my/
This is Malaysia's Largest private sector organisation representing over 2000 manufacturing and industrial service companies of varying sizes. They outline and promote occupational health and safety guidelines amongst other. See http://www.fmm.org.my/main-hrm.htm

- Malaysian Gas Association http://www.mga.org.my/mga

- Society of Petroleum Engineers http://www.spe.org/
The society provides online HSE information and is currently organising the sixth SPE International Conference on Health, Safety and Environment
in Oil and Gas exploration and Production. The host organisation is PETRONAS. For more information contact:
Cordella Wong-Gillett,
Director of Operations,
Asia Pacific, SPE.
Cwonggillett@spe.org.my

3. National Regulatory Frameworks

i) Major environment legislation applying directly to offshore operations

- The Environmental Quality Act 1974 [EQA], which is applied by the Malaysian DOE to offshore territorial waters makes it a mandatory requirement to have an environmental impact assessment for offshore oil and gas activities in this area. Under this act, the following regulations have been made:

• Environmental Quality [Industrial effluents and sewage] regulations 1979

• Environmental Quality [Clean Air] Regulations 1978;
  to regulate pollution standards within the territorial waters.
  

• The EEZ 1984 also stipulates pollution standards particularly the oil in the Water limit should not be > 100 mg/l
  

• Merchant Shipping [Oil Pollution] Act 1994 covering claims and compensation for the environmental damage done by vessels. This is enforced by the Marine Department

Other Relevant Acts

· Petroleum Mining Act 1966
· Petroleum [Safety measures] Act 1984
· Continental Shelf Act 1966
· Merchant Shipping Ordinance 1952
· Merchant Shipping Ordinance 1952

ii) National regulatory environmental regulations which indirectly apply to offshore operation

Environmental Ouality [Scheduled Waste] Regulations, 1989- applying to Toxic/ Scheduled Waste Disposal

iii) Negotiated agreements on environment between industry and government

No Negotiated agreement exist

iv) Management instruments incorporated into national legislation

The Environment Impact Assessment is required under the EQA 1974 by the DOE Malaysia for Oil and Gas Activities in the Territorial Waters and beyond that [within the EEZ], it is required administratively by the Ministry of Trade and Consumer Affairs. Environmental Auditing, Environmental Quality Monitoring and Reporting have been incorporated into the national legislation applicable offshore. The EIA guidelines for specific activities can be ordered through the DOE website http://www.jas.sains.my/doe/egeia.htm The DOE licensing requirements and time frame for industrial activities is also available on the website. see http://www.jas.sains.my/doe/eglicreq.htm .

The DOE has a management plan format which requires an outline of a policy, the budget, environmental requirements, monitoring programs, impact and pollution control measures and environmental contingency plan. This format of EMP is to be adopted by consultants and project proponents. http://www.jas.sains.my/doe/egemp.htm
The DOE intends to require activities granted licences under the EQA 1974 and subsidiary regulation to undertake a compliance audit with auditors registered with the DOE. http://www.jas.sains.my/doe/Audit_Sekeliling/ANNOUNCEMENT.htm

4. International agreements applied to offshore operations

• International Convention for the Prevention of Pollution From Ships 1973 as modified by the Protocol of 1978 (MARPOL 73/78)
  

• The United Nations Convention on the Law of the Sea [UNCLOS] 1983
  

• Basel Convention
  

• Convention on Wetlands of International Importance [RAMSAR]
  

• Vienna Convention for the Protection of the Ozone Layer and the Montreal

• Protocol on Substances that Deplete the Ozone Layer

5. Major economic instruments applying directly to offshore environmental performance

No economic instruments are applied.

6. Voluntary environment measures adopted by the national oil industry

The PETRONAS website clearly states that Malaysia has adopted a legislative framework for the control of pollution and the protection of environment in Malaysia but it has also adopted a HSE policy and carries out frequent inspections and audits. It also conducts oil spill exercises and sponsors research in pollution prevention. http://www.petronas.com/community/index.htm
Other applicable voluntary environmental measures are:
- Environmental codes of practice
- National emission targets
- Co-operative research programs
- Guidelines or indicators for environmental reporting
- Environmental Management Systems [EMS/ISO 14001]

Environmental Regulations for Malaysian Oil and Gas Industry-
Which instrument is used to deal with selected environmental issues.

INSTRUMENTS