Wacik signs into law regulation on oil price
Wednesday, September 26 2012 - 01:36 AM WIB
Energy and Mineral Resources Minister Jero Wacik has signed into law his ministry?s regulation No.23/2012 on the procedures of deciding the methodology and formula for calculating Indonesian crude oil price.
The ministerial decree, made effective starting September 5th of 2012, is determined to implement the article 22, verse 3 of the government regulation No. 79/2010 on operational costs that can be reimbursed and stipulations of income tax in the oil and gas upstream business.
The energy and mineral resources ministry?s decree No.23/2012 consists of five chapters and nine articles.
Chapter I consists of two articles on general stipulations. Article 1 is about definitions of things mentioned in the regulation, such as that Indonesian crude oil is the oil as explained in the Law No.22/2001, and the main crude oils are the Indonesian crude oils that are traded at the international market and publicized by international media.
It also stipulates that the formula of Indonesian crude oil price is the formula used to decide the prices of Indonesian crude oils.
The formula is proposed by a price team to the energy and mineral resources minister and is evaluated regularly.
Its article 2 stipulates that the Indonesian crude oil price consists of the main crude oil price and other crude oil price.
The Indonesian crude oil price is used as the basis to calculate the share of production as stipulated in the production sharing contract and also as the basis to sell the government?s share of production.
Chapter 2 stipulates on the methodology of deciding the price formula, by using the method of benchmarking or indexation.
Chapter 3 stipulates that the energy and mineral resources has the authority to decide the formula based on a proposal from the price team, and coordination with the minister of finance.
The price team, chaired by director general of oil and gas, consists of representatives from the ministry of energy and mineral resources, the ministry of finance, BPMIGAS, and PT Pertamina.
Chapter 4 stipulates about changing procedures. The old formula that had been determined before the issuance of the regulation will be allowed to be effective for one year.
Editing by Benget Besalicto Tnb.