Oil and gas law put into effect on Friday: Official

The new oil and gas law which aims to liberalize Indonesia?s oil and gas industry was put into effect on Friday although President Megawati Sukarnoputri had not yet signed it, according to a senior staff at the Energy and Mineral Resources Ministry.

Kardaya Warnika, an economic expert staff at the ministry, said on Friday the President had been expected to sign the law on Thursday. But she could not do it because on that day she had to leave for Kuala Lumpur to pay her last respects to Malaysian King Salahuddin Abdul Aziz Shah who died on Wednesday.

?Because she had to leave for Malaysia, the President could not sign the law yesterday. Hopefully, she will do it today. But, even if it does not happen, the oil and gas law can be put into effect because existing laws allow it,? Warnika told Petromindo.com.

Reuters quoted Mines and Energy Minister Purnomo Yusgiantoro as saying on Thursday the President had signed into law the oil and gas bill approved by the House of Representatives on Oct. 23.

?In accordance with this, the government is now preparing new rules for oil businesses in Indonesia and forming a limited liability state-owned oil company,? Purnomo told Reuters.

Warnika also told Petromindo.com on Friday the government was formulating regulations to execute the law, and that the task involved production sharing contractors, Indonesian Chamber of Commerce and Industry, and oil and gas associations.

Warnika said the government would give priority to the preparation of regulations considering that the executive body, stipulated in the law to take over from state oil and gas company Pertamina the management of upstream contracts, will have to start functioning within one year.

He added the government would also give priority to the producing of regulations on the changing of Pertamina into a limited liability company within two years as stipulated by the new oil and gas law.

?Also at the same time, we have to prepare government regulations on upstream activities and downstream activities,? he added.

Earlier, oil and gas director general Rachmat Soedibiyo admitted that the oil and gas law was not a ?super? law, which could accommodate everybody?s wishes.

He was responding to officials from oil and gas producing regents that the law be reviewed so as to better address their wishes. Their demand had caused worries that the President would delay signing the bill.

Meanwhile, some House members had aired their worries that the law would provide too large rooms for foreigners to do business in Indonesia?s oil and gas sector. (arri)