Regents continue to oppose oil and gas law, creates uncertainty in industry

Adianto P.Simamora, The Jakarta Post, Jakarta

Uncertainty continues to plague the oil and gas industry as the country's regions persist in rejecting the new oil and gas bill, which was recently approved by the House of Representatives.

Meanwhile, the central government is determined to soon put the new arrangements into effect.

East Lampung Regent Irfan Nuranda, who is also the secretary of the Consultative Forum for Oil Producing Regencies, insisted on Wednesday that the bill should be reviewed so as to better accommodate the regencies' wishes before the government moved to put it into effect.

Irfan said he had been informed that President Megawati Soekarnoputri would sign the bill into law on Nov.23.

"We (the regency forum) have agreed to ask the President to delay signing the law and to review it so as to accommodate the regencies' demands," Irfan told The Jakarta Post on the sidelines of a seminar on oil and gas organized by Petromindo.Com

But, Rachmat Soedibyo, the director general of oil and gas at the Ministry of Energy and Mineral Resources, said there were no indications that the government would delay signing the bill into law.

"It's not necessary to review the bill because we had no intention of enacting a "super" law that would be capable of accommodating every demand."

"We (the government) are now at the stage of discussing the executory government regulations (on the implementation of the law). All parties, including the forum, are invited to provide input," he said, adding that the government regulations were expected to better accommodate the regencies' demands.

The new oil and gas bill, which will replaces the Oil and Gas Law No. 44/1960 and Pertamina Law No.8/1971 upon receiving presidential approval, is aimed at liberalizing the country's oil and gas sector through the abolition of Pertamina's decades-long monopoly over the industry.

Under the new bill, the government will establish an independent agency to be called the Implementing Board, which will comprise experts and professionals, to replace Pertamina in regulating and managing the country's oil and gas industries.

The forum has been demanding that it have representatives on the board, but this has been rejected by the House.

The forum has also complained about the distribution of oil and gas revenue by the central government, which it said "lacked transparency".

The provincial assembly of resource-rich Riau province on Monday also rejected the oil and gas bill, saying that the bill still gave a dominant role to the central government and provided no justice for local people.

Also speaking at the seminar, John S.Karamoy, the chairman of Medco Energi International, said oil and gas investors were no longer interested in talking about the new bill as it had already been approved by the House.

"For investors, the discussions about the oil and gas bill are now over. We are now paying attention to the new government regulations," he told the Post.

Karamoy said that the government had asked for input from investors in drafting the government regulations, and investors appreciated this move.

"We hope that under the new regulations, the government will cease its excessive involvement in investors' day-to-day operations," he said.