Oil association calls for security, fair competition<\/p>\n
JAKARTA (JP): The Indonesian Petroleum Association (IPA) on
\nWednesday called upon the House of Representatives and the
\ngovernment to enact an oil and gas law which ensures investment
\nsecurity and fair competition in the oil and gas sector.<\/p>\n
Association chairman William T. Fanagan, who is also president
\nand chief executive officer (CEO) of Gulf Indonesia Resources
\nLimited, said in a conference that the future oil and gas law
\nshould underline the sanctity of contracts and contain a
\nprovision regarding dispute resolution.<\/p>\n
He also said the law should provide a level playing field for
\ncontractors and the state oil and gas company.<\/p>\n
\"To have a workable oil and gas law, there must be a level
\nplaying field and certainty of law,\" Fanagan said in a seminar
\ntitled PDI-Perjuangan face to face with investors on the oil and
\ngas bill. The seminar was organized by online mining and energy
\nnews provider Petromindo.Com.<\/p>\n
IPA is comprised of foreign and domestic oil and gas investors
\noperating in the country.<\/p>\n
The seminar was held while the House and the government have
\nstarted debates on the oil and gas bill proposed by the latter.<\/p>\n
Investors have often raised concerns over the growing disputes
\nbetween them and local communities, who have often resorted to
\nacts of violence in demanding shares in the companies' oil and
\ngas revenues.<\/p>\n
The investors have also often voiced concerns over the dual
\nrole of Pertamina as an oil and gas producer as well as the
\nindustry regulator, claiming the dual role obstructs fair
\ncompetition in the country's oil and gas industry.<\/p>\n
John S. Karamoy, the president of PT Medco Energi
\nInternational Tbk, said in the seminar the dual role undermined
\nthe bargaining position of investors negotiating with Pertamina.<\/p>\n
Karamoy, who was speaking in a personal capacity, said oil and
\ngas investors expected the future oil and gas law to eradicate
\nall monopolies and guarantee fair competition in the country's
\noil and gas sector.<\/p>\n
\"The oil and gas law that production-sharing contractors (PSC)
\nwant to see, is the one that provides opportunities for the
\ndevelopment of the oil and gas upstream and downstream sectors in
\na competitive way,\" he said.<\/p>\n
Under the bill proposed by the government last January to
\nreplace the existing Pertamina Law No. 8\/1971, the government
\nwould set up an independent body to take over Pertamina's role of
\nmanaging and regulating the oil and gas industry. The so-called
\nImplementing Body would be accountable to the President.<\/p>\n
Fanagan noted, however, the planned Implementing Body should
\nguarantee the sanctity of contract.<\/p>\n
\"The law must clearly state that signature of the Implementing
\nBody binds the government of Indonesia,\" Fanagan said.<\/p>\n
He also said the future law should clearly state that there is
\nno sovereign immunity under the cooperation agreement signed by
\ninvestors and the government's agency, and investors may declare
\nforce majeure in cases where the government's actions precluded
\ncontractors from advancing their projects.<\/p>\n
Fanagan said the current political instability, unreliable
\nsecurity of operations, uncertainty surrounding contracts, new
\nlevels of taxation imposed by the government and lack of a
\nworkable domestic gas policy had been hindering new oil and gas
\ninvestments in the country.<\/p>\n
Yet, oil and gas investors are still attracted to developments
\nin Indonesia in view of the country's abundant hydrocarbon
\nresources; low development costs; the availability of experienced
\npersonnel and new technologies; as well as the industry's track
\nrecord on cost control.<\/p>\n
Also speaking in the seminar were the head of the PDI-
\nPerjuangan faction at the House, Arifin Panigoro; deputy head of
\nthe House's Commission VIII for energy and mineral resources,
\nenvironment, science and technology Emir Moeis; and the president
\nof lubricant producer PT Wiraswasta Gemilang, AP Batubara. (jsk)<\/p>",
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"sponsor": "Okusi Associates",
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