Much still to be done in oil, gas sector: IPA<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government must work hard to provide legal certainty --
\nparticularly in the area of tax regulations -- if it wants
\ninvestment in the country's oil and gas sector, which has lately
\nbeen on a declining trend, to pick up, an industry player says.<\/p>\n
President of the Indonesian Petroleum Association (IPA)
\nChristopher B. Newton said there at least were four main issues
\nthe government needed to address immediately in its efforts to
\naccelerate investment in the sector.<\/p>\n
"First, the government should seek the complete resolution of
\nthe value-added tax (VAT) issue that investors are facing, while
\n(second) taking the opportunity presented in the new tax law to
\nenhance fiscal certainty," he said during the first day of the
\nassociation's annual convention on Tuesday.<\/p>\n
Newton was referring to the tax incentive that the government
\nhas been giving to production-sharing oil and gas contractors in
\nthe country, which enables them to reimburse the VATs imposed on
\nthe equipment they use for exploration and production.<\/p>\n
On a day-to-day basis however, the reimbursements are often
\ndelayed, creating uncertainty, Newton added.<\/p>\n
His third and fourth points respectively were that,"the
\ngovernment should continue improving the coordination between
\nrelated ministries and local administrations, as well as the
\npartnership between investors and the sector's regulators."<\/p>\n
The IPA is holding a three-day convention and exhibition here
\nin Jakarta, which President Susilo Bambang Yudhoyono officially
\nopened. Some 1,700 participants are expected to attend the event,
\nwhich will showcase 96 exhibitors and include a series of
\ndiscussions on the latest developments in the oil and gas sector.<\/p>\n
Among the exhibitors are state oil and gas firm PT Pertamina,
\nlocal energy firm PT Energi Mega Persada, as well as major
\nforeign oil companies such as BP Indonesia, PT Caltex Pacific
\nIndonesia, Chevron and ConocoPhillips. Speakers include Minister
\nof Energy and Mineral Resources Purnomo Yusgiantoro and Chevron
\npresident David J. O'Reilly.<\/p>\n
Newton further said that recent high oil prices alone would
\nnot be enough to attract investors to Indonesia as other
\ncountries had also increased their efforts to do so.<\/p>\n
"The drive to attract foreign direct investment is
\nsignificantly more competitive today," he said.<\/p>\n
Newton said Indonesia's share of global upstream capital
\nallocation had declined from 8 percent to 3 percent over the last
\nfive years, indicating its eroding competitiveness.<\/p>\n
The IPA estimates that Indonesia's oil and condensate
\nproduction will average this year some 1.06 million barrels per
\nday (mbpd), a 2.5 percent decline from last year's output. Its
\ngas production is still high at 8 billion cubic feet (bcf) per
\nday, but below 1996's peak of 8.7 bcf. Without significant
\ninvestments in production optimization, production from existing
\ndiscoveries will decline by 50 percent in the next decade.<\/p>\n
Speaking after Newton, President Susilo Bambang Yudhoyono said
\nthat the government was committed to providing a favorable
\ninvestment climate in its efforts to boost the country's current
\n1 mbpd oil production to 1.3 mbpd by 2009.<\/p>",
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