Oil and gas contractors object to new divestment obligation
Thursday, April 1 2004 - 01:49 AM WIB
While responding to the objections of contractors, director–general of oil and gas Iin Arifin Takhyan said the contractors preferred to offer the interest to their business partners first.
“Because, there is an agreement between them,” Iin said.
The government has proposed in a draft regulation in which it would be obligatory for oil and gas contractors to offer 10 percent stake to companies owned by regional administration under participating interest.
The Article 33 of the draft government regulation clearly says: “Since the approval of the plan to develop a field (oil and gas field) for the first time in an area, the contractor must offer 10 percent stake under participating interest to the company owned by regional government.”
The company, which is eligible to get the 10 percent stake, must be established and owned by the local administration, where the oil and gas field is located. And the offer to this company is valid for 60 days.
If this company fails to take 10 percent stake, the contractor has the right to offer it to state-owned companies, cooperative societies and national small and medium scale companies, whose entire ownership in the hands of Indonesian citizens.
In case, national companies including both government and private fail to respond the contractor’s offer within 60 days, the offer will become null and void.
Iin also mentioned that the obligation is confined to offer the ownership. Therefore the government cannot force foreign contractors to join with local partners.
“If the price is not suitable, the government will not force,” Iin said.
Investors’ objections will be accommodated in the draft government regulation on upstream sector, he said. (*)