Oil, gas contractors told to help local governments in acquiring 10% PI

Minister of Energy and Mineral Resources Ignasius Jonan urged oil and gas contractors to help local governments in financing the acquisition of 10 percent participating interest in oil and gas blocks.

Jonan was quoted by Bisnis Indonesia as saying Thursday that oil and gas contractors who are required to divest 10 percent interest in their oil and gas blocks to companies owned by local governments must help facilitate the acquisition process.

He said that the ideal scheme is that oil and gas contractor which has a majority stake in a particular oil and gas block provide loan to the local government in acquiring the 10 percent participating interest, and when the block starts production, the local government will repay the loan from its share of output.

He said that involving other private investor in the transaction is not ideal on fears that the private investor will be more dominant than the local government-owned company, thus belittling the expected benefits to the local economy from the oil and gas asset. (*)