President signs oil, gas cost recovery regulation: Official

The long waited Government Regulation on cost recovery in oil and gas exploration and production activities has been signed by President Susilo Bambang Yudhoyono and is ready for implementation in 2011.

?The regulation on cost recovery has been signed. It will be implemented in 2011,? director general of taxes M. Tjiptardjo said in Jakarta last week. With the issuance of the regulation, oil and gas production sharing contractors (PSCs) will have a legal certainty on the cost recovery system.

"The regulation specifies the costs contractors can or can't recover under the cost recovery system," Tjiptardjo said.

Director general oil and gas Evita Legowo confirmed on Monday the signing of cost recovery regulation that has been signed by President, but she did not give details.

Under the current production sharing contract, the government is obliged to cover the spending made during exploration and production activities. But due to the lack of clarity, the existing regulation has often misinterpreted.

The issuance of the cost recovery regulation has been delayed for about two years, as the government needs to harmonize it with other related regulations. (bernard)