Foreign investors banned from acquiring local stake in oil, gas blocks
Monday, February 11 2013 - 02:18 AM WIB
Vice Minister of Energy and Mineral Resources Susilo Siswoutomo said that the ministry is currently drafting a new ruling on participating interest of regional government in the development of oil and gas blocks.
The new ruling will among others bans foreign investors from acquiring stake in the participating interest. The local government-owned companies as the holder of the interest, however, can still team up with national-owned companies such as state-owned Pertamina and private owned PT Medco Energi Internasional or local investors with experience in the oil and gas sector, he explained.
?The participating interest is intended to provide (economic) opportunity for the regions in the long run,? Susilo told Petromindo.com.
Local governments have been allocated a 10 percent participating interest in the development of oil and gas blocks in their respective regions. But often the local governments lack the necessary funds to participate in financing the oil and gas block development, prompting them to seek partnership with investors including foreigners, a condition lamented by some government officials as it would only lead to the outflow of the profits from the project to foreign countries.
Editing by Reiner Simanjuntak