A group formed to protect the oil royalty rights of Kelantan, allege that national oil company Petronas will connect three gas blocks found offshore of Kelantan directly to Terengganu, thus denying the PAS-governed state from enjoying the benefits.

Mohd Hishamuddin Ghazali, the secretary of Gabungan Profesional Tuntut Royalti, Pendaratan Minyak & Gas Negeri Kelantan (Royalti) said this in a statement issued yesterday.

azlan He cited a report published last Friday in Malay daily Utusan Malaysia and demanded an explanation from Petronas.

According to the report, Petronas will invest US$5.2 billion (RM15.6 billion) for the Malay North Basin project which includes the exploration of some 1.7 trillion cubic feet of reserve gas in the waters off the Kelantan state.

The gas reserve in Block PM302, Block PM325 and Block PM326B will be connected via a 300km pipe to the gas processing plant in Kerteh, Terengganu.

"Why is gas found in Kelantan waters connected to Kerteh in Terengganu?" asked Hishamuddin.

"The distance from the exploration area mentioned (PM302, PM325 and PM326B) to Pantai Senok, Bachok, Kelantan is only around 140km to 160km compared to Kerteh which is around 300km," he pointed out.

Hence the group proposed that the facilities of gas storage, processing, transportation and pipeline to be constructed in Kelantan.

"This would indirectly save costs, bring a positive economic impact to Kelantan, and create many job opportunities to professionals and semi-professionals," said Hishamuddin, adding that this is in line with the concept of federalism.

The Kelantan government claims that Petronas owes the state RM800 million per annum from the Kelantan-Thailand offshore area since 2005.

It filed a suit last year against Petronas for breaching the Petroleum Development Act (PDA) 1974 for failing to pay the state oil royalties.

Instead of oil royalties, Putrajaya responded that it will only provide Kelantan wang ehsan , or goodwill payments.