Govt to issue regulation to allow use of foreign-flagged vessels

The government is considering issuing a regulation that allows oil and gas contractors to use foreign-flagged vessels in their operation after the implementation of cabotage principle in May this year, Minister of Transportation Freddy Numberi said on Thursday.

The regulation will temporarily provide a legal umbrella for a continued use of foreign-flagged vessels in the oil and gas industry until after the government and the House of Representatives (DPR) have amend Shipping Law No. 17/2008 to allow such a practice, the minister said.

Under the law, all vessels that carry goods from one island to another or operate in Indonesian territory should carry Indonesian flags starting May 2010.

Oil and gas conctractors however complain that the cabotage principle is impossible to implement in the oil and gas sector given that domestic shipowners do not have many types of vessels that they need to support their oil production. The vessels include floating storage and offloading (FSO), LPG FSO Gas Concord, warebarge, tender assist rig, jack up rig, anchor halding tug and supply, PMPV. The oil and gas contractors have to lease such vessels from abroad.

Coordinating Minister of the Economy Hatta Radjasa said on Wednesday the government will propose to the DPR an amendement to the law.

"We shall talk about this with the DPR. We shall probably review the law. Otherwise, we shall be stuck. We shall continue leasing the vessels (from abroad) because none of local shipowners provide the vessel," Hatta said. (*)