160 oil production sharing contracts will be amended

The government will amend 160 existing oil production contracts either in the form of Oil production Sharing Contracts (PSC), Technical Assistance Contracts (TAC) and Joint Operation Body (JOB) after the Implementation Body or Badan Pelaksana (Balak) of the country?s upstream oil operation is formally operated later this month, Neraca daily reported on Saturday.

The amendment will not affect the contents of the contracts but instead would only change the name of the signatory representing the government from state owned oil and gas Pertamina and the Implementation Body or Balak.

"The position of Pertamina as the representative of the government will be replaced by the Implementation Body or Balak in accordance with the new Oil and Gas Law," Director General of Oil and Gas of the Ministry of Energy and Mineral Resources Rahmat Sudibyo said.

He said that the amendment would be needed as an adjustment to the new law which has removed Pertamina?s operating and supervisory roles in the country?s oil and gas sector. Under the new legislation, Pertamina will operate purely as a common business entity. As the consequence, the company will have to surrender its regulatory functions and responsibilities managing oil production contracts either under PSCs, TACs or JOBs.

The government is still preparing the establishment of two separate agencies to take over Pertamina?s regulatory functions in both upstream and downstream operations. The Implementation Body or Balak will manage and control upstream activities that include exploration and production, while the other body called Regulatory Agency will supervise and administer downstream operation such as oil processing, transportation, distribution, storage and oil sales.

Rahmat said that the operation of the Implementation Body was still waiting for approval of President Megawati Sukarnoputri. (*)