Political turmoil may delay oil & gas bill, report says

The Indonesian Parliament's move to impeach President Abdurrahman Wahid is expected to delay an anticipated August vote on legislation aimed at opening up the country's oil and gas industries to competition, analysts are reported by Dow Jones as saying.

"I don't think that (the final vote on the oil and gas bill) will happen in August," Peter Best, director of CS First Boston's Asian oil and gas research, said.

Best added that considering the political upheaval and the parliament's move to impeach Wahid on Aug. 1, the oil and gas bill isn't at the top of the legislative agenda.

Bill Fanagan, president of the Indonesian Petroleum Association and chief executive and president of Gulf Indonesia Resources Ltd. (GRL), said he is hopeful that the bill will be passed late in the third quarter or in the fourth quarter this year after impeachment proceedings are concluded.

The likelihood of a vote on the oil and gas legislation by the end of this year is slim, a Jakarta-based oil and gas analyst with ABN Amro said.

"I think it's more reasonable to say we'll see some action next year," he said.

"Considering the political situation, I don't think this bill is a priority...and if (Indonesia's oil minister) is replaced after Wahid is removed...it will slow down the process even more, because the new administration will take time to review all issues," he added.

In an interview with Dow Jones Newswires earlier this week, Indonesia's oil minister Purnomo Yusgiantoro said he hoped parliament would approve the oil and gas bill before Indonesia's Independence Day Aug. 17.

Pramono Anung, a member of parliament's oil commission, said earlier this month he expects parliament to take a final vote on the oil and gas law by August, barring further political upheaval surrounding Wahid.

When asked if the Wahid scandal will result in a delay in the review and vote on the bill, Pramono said, "I hope there is no delay."

Under the proposed bill, the government plans to end the monopoly of state-owned oil and gas company Pertamina in the upstream and downstream sectors. Pertamina will have to compete with other oil and gas companies, mostly large international companies, to operate oil and gas blocks.

Currently, Pertamina holds exclusive exploration and exploitation rights, although it is allowed to contract the blocks out.

The previous parliament, which was dominated by the Golkar party, rejected the bill in 1999, saying Pertamina should keep its exclusive rights in the country's oil and gas upstream industry. (*)