KUALA LUMPUR, MALAYSIA - The Kelantan government is taking the oil royalty dispute against Petroliam Nasional Bhd (Petronas) to court.

It filed a suit yesterday at the Kuala Lumpur High Court (commercial) registry through Messrs Tommy Thomas.

The suit is to claim unpaid oil royalty since 1998.

Also present were Menteri Besar Datuk Nik Abdul Aziz Nik Mat, Deputy Menteri Besar Datuk Ahmad Yaakob and state excos.

In its statement of claim, the state government claimed that under the Kelantan Petroleum Agreement signed between the state government and Petronas on May 9, 1975, it was agreed that Petronas should make cash payments to the state government amounting to five per cent of the value of petroleum taken on-shore and off-shore Kelantan.

"The agreement also provides that the cash payment shall continue to be payable for as long as the petroleum is obtained from Kelantan," it stated.

It also claimed that the agreement was executed pursuant to the provisions of the Petroleum Development Act 1974 (PDA).

"By executing the agreement and issuing the Kelantan Grant pursuant to the provisions of the PDA, the state government had freely and voluntarily relinquished to Petronas ownership of all petroleum rights.

"Such relinquishing of ownership of petroleum resources belonging to and vested in Kelantan was done in good faith and for valuable consideration, namely the cash payments," it stated, adding that Petronas was obliged to make cash payments twice a year, but it had not done so.

It wants Petronas to make a full and truthful disclosure of all relevant facts relating to the payments and a court order to Petronas to pay Kelantan all arrears due.

After filing the suit, Nik Aziz and about 100 supporters went to the Federal Territory mosque nearby to perform solat hajat.

Speaking to reporters, Nik Aziz said as the state government's leader, he had to protect the state's rights.