Govt may up local stake in oil and gas sector

The government is devising a new policy to increase the ownership of local companies in the country?s oil and gas sector, currently dominated by foreign enterprises and provide more benefits to surrounding communities.

The policy will be included in the government?s 2006-2009 policy blueprint for the oil and gas sector, the energy and mineral resources ministry?s director general for oil and gas, Luluk Sumiarso, said Wednesday in Jakarta.

?How much we are planning to increase the ownership is still to be discussed with all stakeholders,? he was quoted by Antara newswire as saying at seminar.

?We still run an assessment shortly with all stakeholders to identify exactly how many oil and gas fields are operated by our own companies,? The Jakarta Post reported Thursday.

The new policy also would require the use of more local equipment, services and employee in oil and gas exploration projects, he said.

Luluk also said the government would revise production sharing contracts currently used in the exploration and production of oil and gas to ensure future projects would give more benefits to the public.

At present, oil and gas producers operate under a production-sharing contract entitling oil firms to receive 15 percent of the total production after the deduction of operating costs and the government taking the remainder. Gas producers, meanwhile receive about 30 percent of the total net production.

Optimizing the century?s share of its own rich oil and gas resources is among the government?s main objectives in the 2006-2009 policy blueprint, apart from the planning of reserves, production, exploration technology and environmental impact.

The chairman of house commission VII on energy matters, Agusman Effendi said the government could apply a different kind of contract for the projects similar to ones used in the mining sector.

?In such contracts, the government receives shares in the form of royalties, so there wil no longer be any cost recovery,? he said.

?Cooperation contracts are not the only form contracts. We want the government to come up with contracts which will be more beneficial to the state.?

Novian M Thaib. An expert adviser at the ministry, said the government applised alternative contracts besides the production-sharing contract, called a ?cost and fee? scheme, in which it only paid a fee for any production output.

The chairman of the national oil and gas caucus, Effendi Sirajuddin, supported government?s plan to increase local ownership and suggested limitations on contracts with foreign companies.

?Local companies under a join ownership and joint operatorship agreement, if the contracts are extended,? he said. (*)