Oil and gas exports exempted from L/C requirement

By Febry Silaban

Minister of Energy and Mineral Resources Sudirman Said said that the Ministry of Trade has issued a regulation to exempt oil and gas exports from L/C requirements as part of President Joko Widodo?s newly-released First Phase Economic Policy Package.

"The exemption from the L/C requirement is welcomed by oil and gas community and it would allow oil and gas exports to be carried out more smoothly," said Sudirman.

The Ministry of Trade issued Ministerial Regulation No. 4/2015 early this year, effective April 1, 2015, which obliges the use L/C in the exports of four commodities, namely minerals, coal, palm oil and oil and gas. The regulation however sparked protests from the oil and gas community.

Director General of Oil and Gas Wiratmaja Pudja added that the new rule that exempts oil and gas from the L/C requirement is expected to support the efforts to achieve this year?s oil and gas upstream investment target of US$24.8 billion.

Investment in the oil and gas upstream sector reaches $5.9 billion to date, Wiratmaja said. It is much lower than the annual target, which analysts say has happened due to the slowdown in the oil sector and the rule on the L/C requirement.

Wiratmaja hoped that the government targets the investment to reach $26.7 billion next year, which is expected to be achievable thanks to the new rule.

Editing by Johannes Simbolon