Oil and gas contracts lack government's protection

The government's lack of protection to the contracts awarded to the oil and gas has become the main concern not only of the existing oil and gas contractors but also of potential investors intending to enter the industry, according to the association of the oil and gas companies.

The association's chairman Effendi Siradjuddin said in Jakarta on Tuesday that the lack of the government's protection had brought uncertainty in the investment climate in the oil and gas sectors, Bisnis Indonesia reported Wednesday.

According to him, the lack of confidence on the part of investors had partly contributed to the sharp drop in the investment in oil and gas sectors which fell by about 40 percent during the last 10 years.

If there is no adequate protection on the present and future oil and gas contracts, it would surely be difficult for the government to increase the country's declining oil production, he said.

He cited that a number of oil and gas companies such as the investor of the Cepu oil block and PT Lapindo Brantas had, for example, complained about the lack of the government's protection on their contracts. But he did not elaborate.

He feared that the failure of the government to protect the existing oil and gas contracts would discourage foreign oil and gas companies from investing in Indonesia.

"As we still heavily rely on foreign funds to develop our oil and gas industry, the government should ensure that any companies involved in the business would get an adequate legal protection," he said. (*)