Minerals Report - International Seabed Authority

said that the remainder of the production is apportioned in graduated levels
of production from sixty-four to eighty-three per cent for Pertamina, and with
the company receiving between seventeen and thirty-six per cent. He said that
the more the company produces crude oil, the less it gets. For natural gas,
Ambassador Djalal stated that if it can be produced in liquefied form, the
companies normally get up to seventy per cent of the profits accruing from
processing the gas, with thirty per cent paid to Pertamina.
In addition to the above, Ambassador Djalal said that a most
important consideration is the payment of compensation and production
bonuses to the Government for companies that produce more oil than
projected and therefore increase their incomes. Ambassador Djalal said that
there are about five such bonuses. He described three such bonuses, starting
with the bonus for information help by Pertamina. Ambassador Djalal said
that under this scheme, every time that Pertamina supplies a company with
information and new data on its specific area, the company pays for this
information and data. A second bonus that is paid is in relation to the
obligation of companies to help Pertamina develop its resources. In this
regard, Ambassador Djalal said that the companies pay for goods and services
required by Pertamina, whose costs are then recovered by the company as
part of operating costs. Ambassador Djalal said that another bonus is the
graduated level of production bonus, which is determined by the level of
production of the company.
Ambassador Djalal pointed out that in addition to the obligation to
turn over all equipment to the Government of Indonesia, contractors are also
obliged to train Indonesians in all aspects of the contractor’s business, to
purchase the goods and services that they require from local suppliers if
available, and to refine up to 28.57 per cent of their share of the crude oil that
they produce in Indonesia. If Indonesia does not have the refining capacity to
process this amount of crude oil from the contractor, Ambassador Djalal
pointed out that the law obligates the contractor to invest an amount of
money that is equivalent to refining their share in other petrochemical or
related industries in Indonesia. He gave as an example of these industries
fertilizer plants. Ambassador Djalal informed participants about one other
obligation whose purpose is to broaden Indonesian participation in the oil
and gas industry. This provision of Indonesian law obligates contractors to
INTERNATIONAL SEABED AUTHORITY 876