Govt says legal basis for Riau?s claim over Natuna gas revenues not clear

Oil and gas director general Rachmat Sudibyo said on Wednesday he was not clear whether the Riau provincial administration is lawfully entitled to part of the revenues from the sales of gas from three offshore gas fields in Natuna islands which is administratively part of the province.

Sudibyo admitted Natuna islands is part of Riau in accordance with Regional Autonomy Law which clearly regulates the borders of the country?s provinces. But, he said the recently ratified Oil and Gas Law did not say how far provincial administrations are entitled to the revenues from the sales of oil and gas from offshore fields.

?The oil and gas law only regulates the working areas of oil and gas operations. So, please ask the home affairs minister about provincial borders in relation to the division of oil and gas revenues,? Sudibyo told reporters on the sidelines of a seminar on ?Oil and Gas Industry in the Regional Autonomy Era?, which was jointly organized by Petromindo.com and public relations firm Bikap-PR.

Last month, Riau governor Saleh Djasit demanded that the region get a share of the revenues to be raised from the sales of gas from three offshore gas fields in Natuna islands, which is part of the province. Natuna islands is located in South China Sea.

Djasit said they rejected existing government regulations that the production of any offshore oil and gas fields located 12 miles from the beach is fully under the control of the central government. The policy was absurd, he noted.

The governor said the new oil and gas law is against the regional autonomy law which stipulates that provincial administrations have the rights to receive 30 percent from oil and gas production in their respective provinces.

Over the past months, the Riau administration has repeatedly demanded that it be given five percent of area oil and gas production, and that it be given the authority to decide oil and gas contracts and supervise oil and gas companies operating in the region.

There are three oil and gas fields offshore Natuna islands at present which are operated by US oil and gas firm Conoco Inc, Premier Oil, and Gulf Indonesia Resource. Natural gas from the fields will be sold to Malaysia and Singapore through an undersea pipeline network under a long-term contract agreement. The channeling of gas to the two countries will start in 2003.

Meanwhile, on Monday, Riau?s provincial legislative council (DPRD) rejected the newly approved oil and gas law and asked the House of Representatives (DPR) to revise it. The law did not represent the aspiration of the region?s people, DPRD chairman Chaidir said after chairing the council plenary session in which legislators deliberated the law. (godang)