New oil law should be able to create better business climate
Monday, February 12 2001 - 04:15 AM WIB
The new oil and gas bill which is now being deliberated by the House of Representatives for approval should not only be designed to rule the change in the operation of state oil and company Pertamina into a full business entity but should also be able to provide a better business climate in the country's oil and gas industry, an executive of a local oil firm.
"The bill should not only regulate the separation of Pertamina's role as a regulator and as business player," Effendi Siradjuddin, an executive of a company which operates Pertamina's oil fields under a technical assistant contract.
According to him, the oil and gas law should also be able to provide more conducive business climate to private companies especially those operating under a technical assistance contract. "
The new bill should be able to give more room to local oil and gas companies to grow at par with international players," he was quoted as saying by Media Indonesia daily.
Pertamina has, at present, two cooperation schemes in operating the country's oil and gas fields. The first scheme is called Production Sharing Contract, which is given to an oil company operating new oil and gas fields while the second scheme is Technical Assistant Contract, which is awarded to companies operating old oil and gas fields.
Effendi said that about 30 companies are now operating oil and gas fields under the technical assistant contract but only 10 percent of them are now in operation. The others have quit their jobs due to lack of financial support to back up their activities.
The government recently submits a draft law on oil and gas to the House to open up the country's closed oil and gas oil sector to private companies. Pertamina, under the current law, besides acting as an operator, also functions as the regulator of the oil and gas industry. The company holds exclusive rights in managing the exploration and distribution activities.
The new law will scrap the monopoly and will turn Pertamina as a full business entity by cutting off its role as a regulator. (*)