"It is a common case. There is nothing special in it. We are all aware that investors have the right to reduce their investments and they don't even need to officially acknowledge it," SK Migas Director of Planning Gde Pradnyana said.
Jakarta (ANTARA News) - SK Migas, the temporary regulator of the upstream oil and gas sector, has stated that it is up to Chevron to decide whether it should reduce its investment in Indonesia.

"It is a common case. There is nothing special in it. We are all aware that investors have the right to reduce their investments and they don't even need to officially acknowledge it," SK Migas Director of Planning Gde Pradnyana said here on Thursday.

"However, Chevron must meet its investment obligations under the contract it has signed," he pointed out.

Meanwhile, Deputy Minister of Energy and Mineral Resources Rudi Rubiandini said he would ensure that Chevron was provided with the "legal certainty" it had sought earlier.

"We are now preparing a new presidential decree which would assure more legal certainty," he added.

After the decree is issued, SK Migas will be renamed as SKK Migas and serve as a special working unit that will regulate upstream oil and gas businesses.

Chevron sent letters to SK Migas regarding the 2013 Work Program and Budget (WP&B), dated November 30, 2012, in which the US oil and gas company threatened to reduce its investment in Indonesia if the business climate in the country changed.

Such a move could cause a drop in oil and gas production.

Two of the letters were signed by the president director of PT Chevron Pacific Indonesia (CPI), A Hamid Batubara, which represented production sharing contractors for Rokan and Siak oil blocks.

Six other letters were signed by Jef E Shellebarger, as the president of a company managing Rapak, Ganal, East Kalimantan, Makassar Strait, West Papua I and West Papua II blocks.

The 2013 WP&B was signed by SK Migas chief Jero Wacik on December 28 last year.

This year's WP&B was set at US$26.2 billion, with approximately US$3 billion to come from Chevron.

CPI has set a target of producing 320,000 barrels of oil per day, accounting for more than 30 percent of the national production target of 900,000 barrels a day.

One of Chevron`s letters, numbered 4103/JKT/2012 and signed by Hamid, said the proposed WP&B 2013 had been submitted to SK Migas with an assumption that the conditions in the contract would be accepted by the Indonesian government.

"We have a right to reduce our investment, which could cause a drop in production if big changes take place in the investment climate of Indonesia," Hamid said in the letter.

"Investment will also be reduced if criminalization continues, export approval is revoked, penalty is imposed due to the implementation of Bank Indonesia Regulation No13/2011 or changes happen in the fiscal regulations as a result of the implementation of Government Regulation No 79/2010 on cost recovery and revision of oil and gas laws," he stated.

"It may also happen if delays occur outside the common practice for approval of expenditure (AFE) due to transitional activities in SK Migas," Hamid continued.

"However, we are willing to discuss further issues that could hamper investment," he added. (*)

Editor: Heru Purwanto
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