Oil and gas industries in disarray following Jakarta court ruling

Jakarta: Indonesia’s oil and gas industries have been thrown into turmoil with the decision Tuesday to dissolve regulator BPMigas with immediate affect. The Constitutional Court deemed the regulator was not fully reporting to government.

“The court views the relation between BPMigas, as representative of the state, and companies in oil and gas management as degrading the meaning of state control over oil and gas resources,” the court noted.  

Raden Priyono, chairman of now-defunct BPMigas, told a press conference in Jakarta that the ruling would affect investments in the oil and gas sector.

“If the Constitutional Court declared us unconstitutional, so too the contracts that we signed. That is just logical because I’m no expert on law,” he said.

Ongoing negotiations with foreign investors, including the proposed $12bn investment by BP for the expansion of a liquefied natural gas facility at Tangguh in Papua, will be halted due to the court ruling.

Foreign firms such as Chevron, BP and Total are dominant in the archipelago. However, Jakarta has been making considerable noise this year about raising the profile and business of local giant Pertamina.   [14/11/12]

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