Minister sets rules on contract extension in new regulation
Saturday, May 16 2015 - 03:06 AM WIB
The Minister of Energy and Mineral Resources Regulation No. 15/2015 on the Development of Expiring Oil and Gas Working Areas was issued on May 8, 2015.
In the press release obtained on Friday, the ministry unveiled some key points of the regulation as follows:
1. After contract expiration, working areas can be developed by either state owned oil and gas firm PT Pertamina, or the previous contractor, or the joint venture between Pertamina and the contractor.
2. Minister decides who will develop the working areas.
3. If Pertamina is interested in an expiring working area, the firm has to submit a request with the minister through the director general of oil and gas no earlier than 10 years or no later than two years before the contract expires.
4. In case the existing contract submits a request for contract extension earlier than three years before the contract expires, Pertamina has to submit its request no later than one year after the submission of request of the contractor.
5. In case the existing contract submits a request for contract extension later than three years before the contract expires, Pertamina has to submit its request no later than six months after the submission of request of the contractor.
6. Minister may extend a contract for a maximum of 20 years for each extension request. Request for extension should be submitted to the minister through SKK Migas with a copy of the request sent to the director general of oil and gas.
7. A contractor should submit request for contract extension no earlier than 10 years and no later than two years before its contracts expires. Such request can be submitted earlier than 10 years before the contract expires if the contractor has clinched oil and gas sales agreement.
8. In case a working area is owned by several companies and not all of the companies want to extend the contract, interested companies may submit request for contract extension. In case all of the companies want to extend the contract, the request for contract extension should be submitted based on the agreement between all the companies.
9. Minister will decides on extension request no later than one year before the contract expires
10. Requests for contract extension will be evaluated by the director general of oil and gas. The minister may decide to allow Pertamina to take over expiring working areas, or extend the existing contract or allow Pertamina together with the contract to develop the working area.
11. Regional state owned enterprises (BUMD) may have a maximum 10 percent participating interest in a working area after contract expiration.
12. In case, Pertamina has been appointed to take over expiring working area, the contractor is obliged to cooperate with Pertamina during the transition period before the contract expires by among others providing access to their data room.
Editing by Johannes Simbolon