President signs oil and gas law

President Megawati Sukarnoputri has formally signed into law an oil and gas bill approved by parliament last month, Mines and Energy Minster Purnomo Yusgiantoro quoted by Reuters as saying Thursday.

"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," he told reporters.

The new law revokes state oil company Pertamina's monopoly over the lucrative sector. Pertamina will become a limited liability company.

Under the law, the government through a special agency will also take over management of upstream contracts with both foreign and domestic companies from Pertamina within one year.

Officials have said the law would mean a more open atmosphere in the oil and gas sector after about 30 years of Pertamina control, especially in domestic oil products distribution.

But some oil industry executives have criticised it, saying it would breed uncertainty, especially over tax obligations. Several implementing regulations now need to be issued.

The industry is critical to Indonesia's wobbly economy, providing much-needed foreign exchange.

Another Mines and Energy Ministry official said on Thursday an inventory would be taken of Pertamina assets and other petroleum-related assets owned by the government.

"There will also be an audit of Pertamina's assets and liabilities. Assets of Pertamina that need to be audited include refineries and oil and gas fields," the official told Reuters. (*)