Oilfields development
Energy Industry Group Decries Plan to Amend Oil and Gas Law
House of Representatives Commission VII, which oversees energy affairs, plans to begin discussing possible changes in July. However, IPA vice president Sammy Hamzah says any alterations would be counterproductive.
“I doubt it will make the investment climate more conducive. I think it shows uncertainty,” Sammy said.
Satya W. Yudha, a Golkar Party lawmaker on Commission VII, said the revision was expected to be finished by early 2012. He declined to get into specifics about the proposed changes, though, saying only that the House was taking input from analysts and industry figures.
The oil and gas law, which was enacted in 2001, states that oil and gas companies must enter into production-sharing contracts with upstream oil and gas regulator BPMigas.
“We are aware there are several things in the law that have to be fixed, but is it necessary to revise the whole thing?” Sammy said.
He and the IPA lashed out in January over government regulations designed to clear up uncertainty over cost recovery, claiming it was unneccesary and would discourage investment.
However, Satya said the sector would not be hurt by the change.
“Oil and gas producers should not be worried about the revision. I am sure that we will have an objective and comprehensive study about this. We guarantee its consistency,” the legislator said.
Under the existing law, state oil and gas company Pertamina has the right to acquire shares in every new resource block. If the revision goes ahead, Satya said, all companies would have an equal opportunity to invest in a block.
Kurtubi, an economist at University of Indonesia, said lawmakers should change the terms of production-sharing contracts. “The 2001 law stipulated that it was between the government and the business. That should change to business-to-business terms,” he said.
Kurtubi said Pertamina should represent the country “like in Malaysia. They use the terms of contracts between Petronas and oil and gas companies.” He claimed this would allow Indonesia to control cost recovery — expenses incurred by companies that are reimbursed by the government.
