Incentives planned to increase local content in oil, gas projects

The government plans to provide tax incentives for oil and gas companies to increase the level of local content in oil and gas projects.

Acting Director General of Oil and Gas, IGN Wiratmadja said in a statement obtained Wednesday that the government wants to increase the use of local goods and services particularly in offshore oil and gas projects.

He said that oil and gas projects have different level of local contents, depending on their locations, with on-shore projects having higher level of local content than off-shore projects as offshore technologies are mostly produced by foreign firms.

Wiratmadja said that the level of local content in oil and gas projects had been on the rise from 43 percent in 2006 to around 60 percent in 2012, and 54 percent last year as offshore projects were more dominant during the year. He expected the local content level this year to increase back to 60-65 percent particularly driven by two major projects namely Indonesia Deepwater Development and Masela Block projects.

In a bid to help increase the use of local goods and services in offshore oil and gas projects, the government will require the use of domestic vessels for seismic survey activities, said Coordinating Minister for Maritime Affairs, Indroyono Soesilo as quoted by Kontan Thursday.

He said that his office would soon send a letter to the upstream oil and gas authority SKK Migas on the obligation to use domestic survey vessels.

Editing by Reiner Simanjuntak