Law amendment aims to increase local contents

The Ministry of Energy and Mineral Resources aims among others to raise local contents in oil and gas activities in its proposed amendment to Oil and Gas Law No. 22/2001.

Under the draft amendment, Production Sharing Contractors (PSC) will be obliged to involve local service companies in their operations, Minister of Energy and Mineral Resources Sudirman Said.

Sudirman said the government has thus far only monitored the activities of PSC holders and overlooked activities under PSC holders, that is the service sector.

?If you tour the operations of PSC holders, you will find out that the gloves they use were imported,? Sudirman told the lawmakers.

Giving another example, he said until now, there isn?t yet any industrial company in Indonesia which produces pipes for oil and gas sector.

?Through the amendment of the oil and gas law, we also want to develop service sector. Thus, the energy sector should also develop industrial community. The oil and gas industry should not only extract (oil and gas) but also develop its supporting industry,? he said.

Aside from raising local contents, the draft amendment also seeks to create a Petroleum Fund that will be used to develop national oil and gas industry, including improving the competence of human resources competence in the industry and improve the role of regions in supervising oil fuel distribution. The government will spare some of its revenue for the Petroleum Fund.

Editing by Johannes Simbolon