"Indonesia should attract new investors rather than maintaining old investors to increase national oil and gas production," President of the Indonesian Association of Oil and Gas Producers (IPA) Elisabeth Proust said.Jakarta (ANTARA News) - The government will have difficulties attracting investment in the upstream oil and gas sector next year due to a lack of legal certainty about domestic oil and gas management, an executive said.
"Indonesia should attract new investors rather than maintaining old investors to increase national oil and gas production," President of the Indonesian Association of Oil and Gas Producers (IPA) Elisabeth Proust said on Thursday.
To raise oil and gas output, the country needs huge investment in the next few years, she said.
"Given the existing rules on oil and gas management, we predict it will be difficult to attract new investment," she said.
She noted that rules on contract sanctity, cost recovery, and income tax in the upstream oil and gas sector are among those hindering investment.
The revision of the oil and gas law of 2001, lengthy bureaucracy and licencing procedure and domestic gas pricing also pose an obstacle to investment in the oil and gas sector, she added.
"Hopefully, the government will respect the contracts it has agreed upon and signed with investors. This way, in case of a change in rules and policies, the contracts will remain valid. So far, there has been misunderstanding that cost recovery reduces state revenues. In fact, the revenue carried in the state budget is net revenue and no cost recovery is deducted from it," she said.
"Cost recovery is useful to increase oil and gas production. If restricted, it will lead to a decline in oil and gas
investment which will eventually have an impact on national oil and gas production," she said.(*)
Editor: Heru Purwanto
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