re: Ann: BPMigas-Indonesian Constitutional Co... All contracts with BP Migas still valid, President
Irawaty Wardany, The Jakarta Post, Jakarta | Business | Wed, November 14 2012, 7:38 PM
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President Susilo Bambang Yudhoyono has issued a presidential decree stating that all contracts with the now defunct upstream oil and gas regulator BP Migas will remain valid as its function would be taken over by the Energy and Mineral Resources Ministry.
The presidential decree regulates the transfer of all BP Migas functions, including its employees, to the ministry.
“Oil and gas investors and business players should not worry about the dissolving of BP Migas. All cooperation contracts will remain valid and its operations will continue as usual [under the ministry],” the President said in a press conference on Wednesday.
The Constitutional Court annulled on Tuesday all articles relating to the regulatory body stipulated in Law No. 22/2001 on oil and gas. The court said that the articles violated the Constitution and the regulatory body did not have any legal basis.
The court said that the regulatory body limited state control over natural resources as it did not directly manage oil and gas. Instead, BP Migas handed the management over to state-owned companies or private companies through cooperation contracts.
BP Migas was established in 2002 to take over the authority of managing and supervising the upstream oil and gas industry from state-oil company Pertamina.
Since its establishment, BP Migas has been operating under the system of cooperation contracts, with 85 percent of its revenue from oil going to the state and the remainder to the concerned company with a contract with BP Migas. As for gas, the state gets 70 percent of the revenue.
Between 2001 and 2011, 74 percent of oil and gas in the country was handled by foreign companies, according to data from the Energy and Mineral Resources Ministry.
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