BP Migas defends 25 percent domestic market obligation

Upstream oil and gas authority BP Migas chief Rachmat Sudibyo dimissed calls for a revision of contractors' domestic obligation as stipulated in the new governmental regulation on upstream sector, Neraca daily reported on Friday.

Some people, including former Minister of Industry and Tade Rini MS Soewandi, called for a revision of an article in the regulation obliging contractors to allocate a maximum of 25 percent of their oil and gas output for domestic market.

?I see they misunderstand the regulation. Their interpretation is that the 25 percent must be calculated from the total production. In fact, the maximum 25 percent must be calculated the portion of contractor,? Rachmat said in Jakarta on Thursday.

Rini earlier said she had suggested former President Megawati Soekarnoputri change "maximum 25 percent" with "minimum 25 percent" to ensure supplies to domestic market.

Her suggestion has apparently been rejected by Megawati.

Meanwhile, former director of development of state-owned oil and gas firm Pertamina Effendi Situmorang said the article on the minimum-25 percent domestic obligation is cofusing.

?If we mention a minimum of 25 percent, it can be 1 percent or 0.001 percent. What is important is that they (contractors) fulfill their obligation,? Effendi said.

According to Effendi, the government must determine the exact portion of their outputs that contractors must allocate for domestic market. (*)