Last hurdle cleared in Tangguh talks<\/p>\n
Fabiola Desy Unidjaja, The Jakarta Post, Jakarta<\/p>\n
A BP Plc.-led consortium has finally dropped its demand to
\ninclude regental administrations in the \"government acts\" clause
\nof the Tangguh construction contract, over concern that in future
\nthere would be the possibility of wider autonomy being given to
\nregencies, an official says.<\/p>\n
\"The consortium agrees that we do not include the regental
\nadministration in the government act clause as previously
\ndemanded,\" Ministry of Energy and Mineral Resources director
\ngeneral of oil and gas Iin Arifin Takhyan told The Jakarta Post
\non Sunday.<\/p>\n
He claimed that in the latest negotiation last week, BP was
\nsatisfied with the government's explanation that the revised
\nAutonomy Law had given some power back to the governors.<\/p>\n
Previously, the energy and mineral resources ministry had
\nnegotiated with the finance ministry for a possible financial
\nrisk guarantee for BP, should there be a change in government
\npolicies that prevent the plant from fulfilling its supply
\ncommitments.<\/p>\n
The Tangguh project construction -- to be conducted by a
\nconsortium comprising of BP, Kellog Brown & Root, JGC Corporation
\nand PT Pertafenikki Engineering -- hit a snag in the ongoing
\ndebate on the \"government act\" clause.<\/p>\n
The request was due to various problems faced by foreign
\ninvestors since the implementation of regional autonomy, which
\ngave more power to the regencies since 2001.<\/p>\n
Revised Law No. 32\/2004 on regional autonomy has provided
\nwider authority to governors to oversee decisions made at the
\nregental and municipality levels and limits the power of regents
\nand mayors.<\/p>\n
The ongoing debate was brought to President Susilo Bambang
\nYudhoyono late last month before the consortium finally agreed to
\ndrop the request.<\/p>\n
However, there is another problem to be settled before both
\nparties can close the deal. Iin said the two parties still had
\ndifferences over BP's request that the government pay the
\ninterest resulting from claims paid by BP to buyers should the
\nfirm suffer financial losses.<\/p>\n
\"We are still working on their demand for interest resulting
\nfrom the time difference between BP's payment of claims to buyers
\nand the government's reimbursement to BP,\" Iin said.<\/p>\n
He said he hoped this problem would be the last.<\/p>\n
\"We want the project to move forward and negotiations are
\nexpected to finish as soon as possible.\"<\/p>\n
Tangguh, located in Papua, is Indonesia's third LNG plant
\nafter Arun in Aceh and Bontang in East Kalimantan. Tangguh is
\nexpected to make up for the country's declining gas projects.<\/p>\n
The consortium is to cover some US$2 billion of the total $5
\nbillion estimated cost of the project, while the rest will come
\nfrom lenders.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/last-hurdle-cleared-in-tangguh-talks-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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