bpmigas is forced out

http://www.thejakartaglobe.com/opinion/questions-left-on-hold-as-bpmigas-is-forced-out/556747

This article raises a few worrying issues. While it would appear as though there is a huge demand for internalised oil and gas production, it would appear that producing oil and gas with in Indonesia is fraught with hurdles which make this riskier then i first thought.... a few exerts

"But in trying to achieve such goals, BPMigas had only found itself crippled by the country’s own regulatory environment."

"Enforcement of the Regional Autonomy Law aggravated the situation. Under this law, foreign contractors have difficulty obtaining various licenses because the regency or district chiefs have their own interests to defend, not to mention overlapping of local bylaws that create confusion and uncertainty for investors."

"Ten years later, on Sept. 10, 2008, Indonesia lost its membership to the Organization of Petroleum Exporting Countries after becoming a net oil importer in May of that year. "

This shows that there is a high level of demand for local oil and gas but....

"Things got worse in 2010 when the Canada-based Fraser Institute described Indonesia as the country with the worst oil and gas industry management in the Asia Pacific. In its Global Petroleum Survey, Indonesia was ranked 111 out of 133 countries on oil and gas investments, lower than Papua New Guinea, the Philippines and Brunei, and only just higher than East Timor."

And this high demand would obviously have a lot of people wanting to jump on board but

"The requirement stipulated in Article 31 of the 2001 law that investors were obliged to pay various taxes during the exploration period further reduced Indonesia’s investment charm. The old law only required investors to pay taxes after producing oil and gas. "

and

"Indonesia has not found new proven reserves in the past 10 years."

But there is gas there

"Indonesia has an estimated 80 billion barrels of oil, but only about 4 billion barrels have been proven due to various circumstances."

So it would appear that although there is gas there and a huge demand, their is also a high sovereign risk of operating in indonesia dude to the high levels of red tape. So much so that even the government owned gas company had trouble cutting through it.

A little worrying

Also did anyone read yesterdays Financiial Review artical about this it was titled "advertising

"Investors warned on increasingly hostile Indonesia"

I am not subscribed so i couldnt read the artical n would love some one to sumerise. The first paragrapah s as follows

"Australian investors in Indonesia have been warned the country is becoming increasingly hostile to outside interests after a series of high-profile ownership disputes were capped this week by the dramatic dissolution of the nation’s independent oil and gas regulator."

Whats everyone else think?

HINKLESTAB.