MEMR finalizes regulation on participating interest of regions in oil, gas assets
Monday, April 11 2016 - 02:01 AM WIB
Director General of Oil and Gas at the ministry IGN Wiratmaja Puja said in a statement that a maximum 10 percent participating interest (PI) in oil and gas assets that are set to come into production for the first time will be allocated by the contractors to regional governments via their respective local government-owned company (BUMD) following the approval of the first plan of development (POD).
According to the draft of the regulation, BUMD which does not have sufficient financial condition to finance the participating interest can cooperate with state-owned company (BUMN), state financial institution or national private-owned company through loan mechanism or Islamic syariah based arrangement, not equity participation. The designated BUMD that would acquire the 10 percent PI must also meet a number of conditions.
The statement said that oil and gas assets located within zero to 4 nautical miles are allocated to regency or mayoralty governments. Assets located within 4-12 nautical miles are allocated for provincial governments. Allocation of PI on assets which are located in areas spanning more than one province will be negotiated by the respective provincial administrations. In case of deadlock, the MEMR will decide the interest allocation.
Editing by Reiner Simanjuntak