Foreign investors reassured on mining contract security<\/p>\n
JAKARTA (JP): Minister of Mines and Energy Kuntoro
\nMangkusubroto reassured foreign investors yesterday that the
\ngovernment would honor existing mining, gas and gas contracts
\ndespite future changes in the country's regulations on the
\nsector.<\/p>\n
\"We can assure you that we are not going to amend investor
\ncontracts which guarantee terms and conditions which may no
\nlonger be in compliance with the prevailing laws and
\nregulations,\" Kuntoro told about 300 Australian mining, oil and
\ngas businesspeople at a business luncheon organized by the
\nIndonesian-Australian Business Council (IABC).<\/p>\n
Kuntoro said the government was preparing a new law to
\nliberalize the country's upstream and downstream industries of
\nthe oil and gas sector and was also mulling a plan to replace the
\nmining law.<\/p>\n
But these would not affect contracts that had been signed by
\nthe government, he said.<\/p>\n
Regarding the oil and gas sector, Kuntoro said the government
\nwas committed to scrapping the decade-long monopolies enjoyed by
\nstate oil and gas company Pertamina and changing the latter into
\na limited company which would compete with private companies for
\nbusiness.<\/p>\n
In the mining sector, Indonesia was committed to regaining its
\nprecrisis position as one of the world's top destinations for
\nmineral investments.<\/p>\n
He said the monetary crisis, which has gripped the country for
\nmore than a year and was followed by the political crisis leading
\nto the downfall of former president Soeharto, caused a downturn
\nin foreign investments.<\/p>\n
He said that while the mining, oil and gas sectors were not
\nmuch affected by the crisis, many potential investors had taken a
\nwait-and-see position until they were assured of security for
\nlong-term investment.<\/p>\n
To reinstate confidence among investors regarding the security
\nof their ventures, the ministry will establish a system which
\nwill produce a more simple and transparent service for the mining
\nand energy industries, Kuntoro said.<\/p>\n
Caltex<\/p>\n
Kuntoro confirmed on the sidelines of the luncheon that he may
\ndrop a plan to transfer the development of the Coastal Plain
\nPakanbaru (CPP) oil block in Riau to state oil and gas company
\nPertamina after PT Caltex Pacific Indonesia (CPI)'s contract on
\nthe block expired in 2001.<\/p>\n
Caltex wanted to continue developing the block for another 30
\nyears after 2001, but Soeharto gave approval last year to
\nPertamina to take over the development of the block at the end of
\nCPI's contract.<\/p>\n
Analysts doubt Pertamina's ability to develop the block due to
\nits financial difficulties.<\/p>\n
Pertamina will need an investment of around US$1.3 billion to
\ninstall the high enhanced oil recovery (EOR) technology in the
\nblock to maintain its current production rate of 70,000 barrels
\nper day (bpd), analysts say.<\/p>\n
They say the block's throughput would significantly drop if
\nPertamina does not funnel in new funding.<\/p>\n
\"The most important thing for me is (how) to secure state
\nincome (from the oil block). It makes no difference for me
\nwhether Pertamina or Caltex will continue developing the block,\"
\nKuntoro said, adding that was studying the ability of both
\ncompanies to develop the block.<\/p>\n
Caltex, the country's largest oil producer, is jointly owned
\nby Chevron Corp. and Texaco, both of the United States. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/foreign-investors-reassured-on-mining-contract-security-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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