Govt, Parliament postpone cabotage for oil, gas sector to 2015

Indonesian government and parliament on Tuesday agreed to postpone implementation of the cabotage principle for oil and gas activities to 2015, citing huge investment requirements.

The decision certainly would please oil and gas industry players who have been calling on the government to delay the implementation of the law for oil and gas sector given the unavailability or limited supply of specific vessels used in upstream oil and gas sectors, such as drilling ships and floating production, storage and offloading (FPSO)vessels.

Legal and Human Rights Minister Amir Syamsuddin told parliamentary hearing that such huge investments cannot be made by local companies in near term and the sector would require an exemption to the cabotage ruling.

Under the ruling, all ships transporting goods and people must be at least 51% owned by locals from May 2011. The government has previously given an extension until the end of the year for vessels supporting oil and gas activities as lack of domestically-owned ships for such purposes.

However, the timeframe is not sufficient for local companies to make such a huge investment, Amir said, and therefore need an exemption until 2015.

Chairman of Commission V Yasti Soepredjo Mokoagow stressed that the government needs to set out work plan to ensure the target can be met.

Rudi Rubiandini, Deputy Chairman for Operation of the upstream oil and gas regulator BPMIGAS, praised the decision to postpone the implementation of the ruling to 2015.

?This will certainly provide positive impact (on oil and gas industry) as it will give enough time for the industry players to adjust with the new cabotage ruling and therefore their exploration and exploitation activities will not be disrupted,? Rudi Rubiandini told Petromindo.com.

He expects that the delay of the implementation of the law to oil and gas sector would support the government?s efforts to ramp up oil and gas production through to 2015. (godang)