IPA regrets Supreme Court's decision on cost recovery ruling
Thursday, December 8 2011 - 11:29 AM WIB
?The basis of the denial is not yet known as the judgement is not expected for another one to three months,? IPA said in a statement.
?Although the IPA is very disappointed with this decision, the IPA will continue to strive for dialogue with the government to ensure that the implementation of the regulation will honor the sanctity of existing contracts,? it said.
?IPA believes that GR 79 will potentially cause a negative impact to the oil and gas investment climate in Indonesia and could reduce investment by as much as 20 percent and a production decline of 150,000 BOEPD,? it said.
IPA filed the judicial review petition with the Supreme Court in June this year.
Cost recovery is the amount of expenditures used by oil and gas contractors related with the production of oil and gas that can be claimed to the government (recovered). The GR 79 regulation issued last year limited the costs elements that can be recovered or claimed by the oil and gas contractors.
Chairman of IPA, Jim Taylor, told reporters Wednesday that the government should now focus on managing and boosting oil and gas production to benefit Indonesian economic growth for the people of Indonesia, instead of managing the cost recovery.
Sammy Hamzah, Deputy Chairman of IPA, said the regulation (GR 79) which changes the elements of the cost recovery, would result in the changing the posture or commercial viability of a project.
?This is a principle issue. The regulation authorizes the government in determining whether costs that we spent can be recovered or claimed or not,? he said.
He said the association and each member of IPA are currently assessing the Supreme Court's decision and considering follow-up steps.(roffie)