Indonesian Mines and Energy Minister Purnomo Yusgiantoro said on October 26th that until new legislation is approved, state oil firm Pertamina will continue to manage oil contract negotiations.
Industry sources had said on October 24th that the energy ministry would be taking over the management of oil contracts from Pertamina on January 1st, 2001, after a letter was sent from the ministry to the company to inform it of the move.
Purnomo said that: “Pertamina will keep handling the production-sharing contract agreements and the terms of condition.” A new draft oil law, under which the ministry will be granted control of oil contracts, is expected to be debated by the country’s parliament, but the ministry, which has more clout than Pertamina, had been hoping to exercise its power sooner.
Under current legislation, called the Law on Pertamina, the company has the sole authority to negotiate with contractors concerning working areas before the president approves the contracts.
The draft bill, submitted by the government to revoke Pertamina’s monopoly over the oil sector -- particularly over downstream distribution -- has not been discussed in the parliament, and no date has been set for debating the proposed law, after an earlier draft was rejected.
Industry sources have questioned whether ministry officials have enough experience in negotiating oil contracts and caution that the move might hinder efforts to increase oil production in Indonesia, which is already having difficulty in meeting its current OPEC quota.
The country produces around 1.3 million b/d of crude, falling short of its 1.36 million b/d quota.