Purnomo says House to approve new oil and gas bill

House of Representative will soon pass a new oil and gas bill to reduce government control over state energy firm Pertamina, Energy and Mineral Resources Minister Purnomo Yusgiantoro said Tuesday.

The government and legislators have reached agreement on major issues and the bill could be passed in mid-October, he said after a parliamentary hearing on the legislation.

Purnomo said the bill would retain the production sharing system under which the government and oil and gas contractors shared revenues but scrap the 'contract of work' mechanism because this was deemed to be more advantageous to investors than local people.

Pertamina would become an normal business enterprise but would still be responsible for distributing fuel to the various regions whenever necessary.

It would receive some sort of compensation from the government for its distribution role.

To supervise production-sharing contractors -- previously Pertamina's task -- the government would set up an implementation board with members appointed by the president.

Purnomo said the new bill opens up broader opportunities for private companies to operate in downstream sectors.(*)