JP\/1\/Law<\/p>\n
White knuckle time for oil execs as court verdict looms<\/p>\n
Dadan Wijaksana
\nJakarta Post\/Jakarta<\/p>\n
The Constitutional Court will soon rule on the validity of the
\ncurrent oil and gas law, but industry executives are gravely
\nconcerned that an annulment could mean a new wave of uncertainty
\nand put billions of dollars worth of contracts at risk.<\/p>\n
Industry players and the Oil and Gas Upstream Regulatory Body
\n(BP Migas) said over the weekend that an annulment of Law No.
\n22\/2001 would shatter confidence in the government for existing
\ninvestors and push potential ones further away.<\/p>\n
\"If the Court does annul the law, it'll put us back into a
\nsituation of uncertainty, which will stymie investment,\" Wahyudin
\nYudiana, president of Caltex Pacific Indonesia, told reporters on
\nSaturday.<\/p>\n
President of Medco E&P Indonesia Daryono Doyoatmodjo concurred
\nand added that the Court should invite everyone who would be
\ndirectly affected, so they could hear as much information about
\nthe issue as possible, before delivering a verdict.<\/p>\n
President of Star Energy, Supramu Santoso said: \"An annulment
\nwould be a setback.\"<\/p>\n
The court is scheduled on Tuesday to deliver the verdict on
\nwhether or not the Oil and Gas Law violates the spirit of the
\n1945 Constitution, as alleged by a number of non-governmental
\norganizations (NGOs) and a labor union representing the workers
\nof state oil and gas firm Pertamina.<\/p>\n
Tuesday's decision will see the second crucial ruling issued
\nby the newly established Constitutional Court within a week,
\nhaving annulled the Electricity Law No. 20\/2002 last Wednesday.
\nThat law would have liberalized and deregulated the power sector
\nand gradually reduced the authority of state electricity firm PT
\nPLN, which has long held a legal monopoly in the sector.<\/p>\n
As in the Electricity Law, the Oil and Gas Law is also aimed
\nat liberalizing the industry and opening up competition, thus
\nending the monopoly of oil and gas firm Pertamina.<\/p>\n
As result of that decision, the court reinstated Electricity
\nLaw No. 15\/1985. The government has said it was drafting a new
\nlaw on electricity, which it hoped could be finalized next week
\nto submit to the House of Representatives.<\/p>\n
Against this backdrop, industry players in the oil and gas
\nsector are anxiously awaiting the verdict.<\/p>\n
Harsher words came from BP Migas -- a regulatory body in
\ncharge in the country's oil and gas sector whose establishment
\nmore than two years ago was based on the Oil and Gas Law No.
\n22\/2001.<\/p>\n
BP Migas deputy head Kardaya Warnika said that not only would
\nan annulment damage Indonesia's credibility in the eyes of
\ninvestors, it would likely also mean that all the contracts
\nsigned after the endorsement of the Law would not be effective
\nany longer.<\/p>\n
\"Also, there are a number of domestic firms in the sector that
\nhave emerged because of the Law, such as PGN. What should we do
\nwith them if the Law were to be annulled?,\" Kardaya asked,
\nreferring to the state gas distributor Perusahaan Gas Negara,
\nwhich has been aggressive in recent years in the development of
\nits business, which has resulted in billions of dollars worth of
\nnatural gas contracts with various parties.<\/p>\n
\"These contracts would have to be terminated, because these
\ndeals will be legally flawed, if the Law is annulled,\" he said.<\/p>\n
The very existence of BP Migas would be in question should the
\njudges annul the law.<\/p>\n
For natural gas alone, BP Migas has signed, over the past two
\nyears, a total of 37 sales contracts worth $57.7 billion, coupled
\nwith the signing of around $12.4 billion worth of contracts to
\ndevelop and expand gas fields.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/jp1law-1447899208",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}