Government to submit new bill on oil and gas

Government to submit new bill on oil and gas

JAKARTA (JP): The government is preparing a new bill on oil
and natural gas to anticipate global competition and
privatization in the petroleum sector, Minister of Mines and
Energy I.B. Sudjana said yesterday.

"The bill will be submitted to the state secretary later this
year, before it is proposed to the House of Representatives,"
Sudjana told reporters after opening the seminar on oil held by
Trisakti University in connection with its 30th anniversary.

Sudjana said the bill, which will replace Law No.8/1971 on
Pertamina, the state-owned oil company, will allow for more
private investment in the oil sector, especially in oil refining,
currently the monopoly of Pertamina.

"The government has no funds to develop new oil refineries,
which require big investments. One refinery with a daily capacity
of 125,000 barrels could require an investment of up to about
US$2 billion," he said.

Indonesia must now depend partly on imported fuel oil, he
added, because Pertamina's refining capacity of 998,000 barrels a
day is equal to the country's rapidly growing demand.

Therefore, Sudjana added, the government has been inviting
private investors to participate in the refinery sector.

The government has so far licensed seven private companies to
operate oil refineries: PT Indo-Xo, which will build a refinery
with an investment of $2 billion in Sorong, Irian Jaya; PT Sabang
Oil Refinery Corporation in Sabang, Aceh, with an investment of
$1.58 billion; PT Tanjung Uban Refinery in Riau, with an
investment of $1.5 billion; PT Asia Pasific Petroleum Indonesia
in Situbondo, East Java, with an investment of $1.09 billion; PT
Buana Ganda Perkasa in Probolinggo, East Java, with an investment
of $3.5 billion; PT Indo Moody Oil Comp. in Pare-Pare, South
Sulawesi, with an investment of $1.32 billion; and PT Norco
Internusa in Gresik, East Java, with an investment of $1.8
billion.

"Although the Cilacap refinery damage will not affect the
domestic fuel oil supply, new refineries are needed," the
minister said.

Sudjana said that, under the new bill, private investors will
be allowed to sell their products domestically.

Asked about crude oil supplies for new refineries, Sudjana
said that Saudi Arabia has made a commitment to supply Indonesia
with one million barrels of crude oil per day. (04)