Indonesia’s parliament is set to debate new draft oil and gas laws on January 29th that would revoke state oil firm Pertamina’s monopoly status, according to the energy and mines ministry on January 26th.
A ministry spokesman said that: “The government will stress to parliament the importance of new laws in encouraging the development of the oil industry both upstream and downstream.”
He added that: “One of the important implications of the draft laws is to revoke Pertamina’s monopoly in the oil sector and to open the downstream oil industry to the private sector.”
The parliament had rejected the first new oil and gas laws submitted in 1999 by the government under then President B.J. Habibie.
Under current law, Pertamina has the sole authority for negotiating contracts over working areas, although the contracts have to be approved by the president. The state oil company also has a monopoly over distribution rights for domestic oil products.
If the law is passed, the responsibility for negotiating and managing oil contracts and production-sharing agreements would be transferred to the oil ministry.
At that time, Pertamina could be divided into two subsidiaries -- one upstream and the other downstream -- and those subsidiaries would then be privatized.
A company official said that: “Pertamina will respect whatever parliament decides on the oil sector. If Pertamina loses its monopoly in the oil sector, it does not mean it cannot become a first class oil company.”
The energy ministry indicated that no time frame had been set for the debates, but Energy and Mines Minister Purnomo Yusgiantoro had said on January 3rd that a planned privatization of Pertamina should be completed by 2003.
© 2001 Mena Report (www.menareport.com)
