Papua New Guinea's Ombudsman Commission is seeking advice from the Supreme Court into whether the Act to create Petromin PNG Holdings Limited, was unconstitutional.
The Chief Ombudsman, Ila Geno, told the Post Courier newspaper that they believe the Act would take away control and accountability from the state via the Auditor General and the Public Accounts committee.
He says it sets a dangerous precedence because it would indemnify the company from any liabilities and corporate responsibilities.
But, the Foreign Affairs and Trade Minister, Paul Tiensten, who has been tasked with looking after Petromin, says the concerns of the Ombudsman were not new.
He says Petromin is a company and has responsibilities under the Company's Act.