Fri, 30 Jan 2009
The government said it would reevaluate incentives in the oil and gas sector taking into account the contribution of the sector to the country's economy, Asia Pulse reported.

Coordinating Minister for Economy Sri Mulyani Indrawati said incentives have been provided for investment in the oil and gas and geothermal sectors such as in the form of import duty exemption for exploration equipment.

The government will give further incentives exempting capital goods needed in oil and gas and geothermal investment from import duties, she said.

The incentives have been modified to be provided this year mainly for export-oriented businesses and could create many jobs, she added.

Director General of Oil and Gas at the Energy and Mineral Resources Ministry Evita Legowo, told Dow Jones Newswires the government is planning two alternatives, in addition to its current production-sharing system. One is a royalty method being used by many oil-producing countries and the other a combination of tax and royalty.

Indonesia currently applies a production sharing system in which it mostly takes 70% of the net revenue of the oil blocks and 60% from the gas.

Legowo said that the government hopes to offer between 10 and 15 new oil and gas blocks this year but said she could not give any names of the areas as yet.

Most oil and gas investors have expressed their intention to go ahead with their exploration plans this year despite weakening global oil prices, she said.



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