Indonesian industry concerned about future without BPMigas

Jakarta: several executives have raised concerns in a meeting with Indonesia's energy and mineral resources minister about the future of the oil and gas industry after BPMigas' abolishment

Several executives have said they are concerned about the future ofIndonesia’s oil and gas industry after the court decision to abolish BPMigas, according to a report by the Jakarta Post.

The newspaper said BP Asia-Pacific president William Lin was one such executive who voiced concerns on the sidelines of a gathering with the Energy and Mineral Resources Minister Jero Wacik on Monday night in Jakarta.

“Everyone is wondering what’s going to happen. What’s the permanent solution? What are the long-term prospects? And what will the new oil and gas law be,” the Jakarta Post quoted Lin as saying.

The meeting was organised by the government with the intentions of soothing investors after Indonesia’s Constitutional Court deemed the upstream oil and gas regulator as unconstitutional and ordered it to be dismantled on 13 November.

Following the court’s verdict, the government created a task force to be managed by the Energy and Mineral Resources Ministry, which honoured all existing production sharing agreements. These included deals with majors including ExxonMobil, Chevron and CNOOC.

Lin reportedly said BP would work with the task force to proceed with its investment plan and operations that started under the supervision of BPMigas, including its plan to build a third liquefied natural gas train at its Tangguh plant in the Bintuni Bay area of Papua, Indonesia. He added that the government’s quick reaction in forming the task force had “alleviated some of the doubts” and remained hopeful of concluding everything on time.

“As long as we have certainty about our investment plan, contracts and framework, we will continue to move forward,” Lin was quoted as saying.

France-based Total E&P Indonesie general manager Elisabeth Proust said Total would continue to invest in the gas-rich Mahakam Block in East Kalimantan, however, she said the company’s future investment in Indonesia would be uncertain once the contract expires in 2017.

Chevron Pacific Indonesia’s vice president for government policy and public affairs, Yanto Sianipar, said it needed legal certainties to continue investing locally.

“In addition to the elimination of BPMigas, we are still facing legal problems as four of our workers are still being detained by the Attorney General’s Office in the alleged graft case in our environmental project. This situation causes us concerns about continuing our investment here,” the Jakarta Post quoted Yanto as saying.

According to the newspaper, Yanto said Chevron would invest $7 billion in the Indonesia Deep-water Development project in the Makassar Strait pending approvals and if the company gained confidence in the legal and regulatory climate.

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