Government expects new oil and gas law out in April

Government expects new oil and gas law out in April

JAKARTA (JP): Minister of Energy and Mineral Resources Purnomo
Yusgiantoro said on Monday that he hoped the House of
Representatives would be able to pass a new bill on oil and gas
in April this year.

"The debate on the bill might take until the end of the year,
but we hope to speed the process up so that the bill can be
passed in three to four months time," he told reporters following
a canceled plenary meeting with the House.

Purnomo was supposed to formally submit the oil and gas bill
before legislators in a plenary meeting on Monday but it was
canceled as legislators were preoccupied with the plenary meeting
on President Abdurrahman Wahid's alleged role in the Bulog and
Brunei financial scandals.

As that particular meeting took longer than expected, the
House postponed its session with Purnomo until Monday next week.

According to Purnomo, the new oil and gas bill comprised of
eight topics.

These topics, he said, are related to the government's
policies on the downstream and upstream of the oil and gas
industry, business in the oil and gas industry, and the
transformation of state oil and gas company Pertamina into a
limited liability company.

The bill would be the third draft on oil and gas laws that
have been made since 1996 in attempts to replace the two current
laws, Law No. 44/1960 on the oil and gas industry, and Law No.
8/1971 on Pertamina.

The first draft was made in 1994 by the then Ministry of Mines
and Energy but it was turned down by the President before it was
submitted to the House.

The ministry drafted its second bill in 1999 but it failed to
gain the House's support, as political factions criticized the
bill for being too liberal.

Factions opposing the bill have said that the oil and gas
industry is too important as a state asset to be privatised.

They said full privatization of the industry was untimely,
since no major player, including Pertamina, was ready to compete
in an open market.

Analysts described the lengthy debate over the bill as a tug-
of-war between Pertamina, which they said sought to maintain its
control over the industry, and the then Minister of Mines and
Energy, Kuntoro Mangkusubroto.

But the present bill is only slightly different from its
predecessor.

Like the one in 1999, the new bill would remove Pertamina's
exclusive rights over the oil and gas industry.

It would allow foreign oil and gas companies to sell fuel in
the local market, by pegging prices to international market
prices.

But unlike last time, Pertamina has expressed its full support
behind the bill, saying it strives to become a world class
company.

Pertamina president Baihaki Hakim, who once headed the United
States-based oil and gas firm PT Caltex Pacific Indonesia, has
said he planned to transform Pertamina into a world class oil and
gas firm.

The present bill gave Pertamina two to three years to prepare
before becoming a limited liability company, after the enactment
of the bill, Purnomo went on.

Meanwhile, Baihaki said Pertamina was hoping to supply Taiwan
with five to six million tons of liquefied natural gas (LNG)
starting this year.

"We will join a tender process for the supply of LNG to
Taiwan," he said.

He said that for Pertamina to win the tender, it must lobby
LNG buyers outside the southern part of Taiwan, the region which
is a regular buyer of Indonesian LNG.

"For regions outside the southern part of Taiwan, the total
annual demand is about two to three million tons this year,
rising to five to six million tons a year afterwards," Baihaki
explained.

Indonesia is still the world's largest LNG exporter, but is
facing increasing competition from Australia, Malaysia and Qatar.

Taiwan, Japan and South Korea, are Indonesia's main LNG export
markets.

Besides Taiwan, Pertamina is also eying to supply India with
LNG. Both countries have formed a negotiation team to hammer out
a sales contract.(bkm)