Minerals Report - International Seabed Authority
Minerals Report - International Seabed Authority Minerals Report - International Seabed Authority
and cooperation with Pertamina and the Indonesian Government has been useful. Currently, under the difficult circumstances in Indonesia, about 50 oil and gas companies are operating in Indonesia, through 170 production-sharing contracts. These include most of the world’s biggest and prominent companies. 4. In general, offshore mineral producing operations have been smooth and free of conflicts compared to land-based exploration and exploitation of minerals. Ambassador Djalal reiterated that his paper does not deal with joint development zones in which Indonesia has a lot of experience in the South China Sea (Malaysia and Vietnam) and Timor Sea (Australia), or with offshore mining of hard minerals. SUMMARY OF THE DISCUSSIONS. The discussions following Ambassador Djalal’s presentation focussed on the types of contracts that are awarded for natural gas, the distinction between Pertamina and the Government of Indonesia, activities undertaken by Pertamina in oil and gas development, whether Indonesia’s new oil and gas law contemplates the use of concession agreements, the adequacy of a rate of return of 19 per cent, and how Indonesia ensures that costs that may be recovered are not genuine. One participant noted that during Ambassador Djalal’s presentation, he had referred very quickly to contracts for the development of natural gas. This participant wanted to know the types of contracts entered into for natural gas production. Ambassador Djalal said that for natural gas, in Indonesia two possibilities are recognised. The first is to flare the gas for which approval is required, and the other is to process it to liquefied natural gas. He said that in the case of the latter, the natural gas is produced separately under conditions more favourable to the company. He also said that natural gas production occurs in many places in Indonesia, in particular off the Natuna Islands in the South China Sea, and in East Java. He informed INTERNATIONAL SEABED AUTHORITY 878
participants that Indonesia is in the process of constructing a pipeline to transport natural gas from the southwestern part of the Natuna Sea near the border with Malaysia, to Singapore. Another participant noted that sometimes Ambassador Djalal referred to revenues for the Government and at other times to revenues for Pertamina. This participant wanted to know whether the two entities were the same. Ambassador Djalal informed this participant that Pertamina is the agent of the Government of Indonesia in the oil and gas industry and a state company. Yet another participant wanted to know the role of Pertamina before a production-sharing contract was concluded, to find out which entity undertook seismic surveys and mapping of an area before a contract is signed, and also to find out the process used by Indonesia in awarding contract areas. Ambassador Djalal said that areas were awarded on an open tender basis. He said that Pertamina was actually an offshoot of an old company Permina. There was a Dutch oil company called Stantech that developed into Permina, which was also an oil company. This company produced and processed crude oil. Ambassador Djalal said that Pertamina still produces a small portion of Indonesia’s oil and gas. With regard to awarded areas, he said that it is not through a tender process. Companies come forward and make proposals. He also said that most of Indonesia’s offshore area is open to oil production, and that it is estimated that 60 per cent of Indonesia’s oil and gas is produced in offshore areas, particularly in the Java sea, in Eastern Kalimantan waters as well as the southward part of the South China sea. Another participant wanted to know where the detailed numbers on Pertamina’s take came from, in particular numbers like 64.2837 per cent and 83.2134 per cent. Ambassador Djalal responded that these numbers are to be found in the contracts themselves. In response to a question about the tax system, Ambassador Djalal said that taxes are the responsibility of Pertamina. He pointed out however that since Indonesia runs a production- sharing system, most of the companies do not bother with tax, except income tax. He said that taxes such as production tax etc are factored into the system. He also pointed out that Indonesia has a double taxation arrangement with about 60 countries. INTERNATIONAL SEABED AUTHORITY 879
- Page 836 and 837: This tax must be paid up to January
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- Page 896 and 897: France Seapso 1985-1986 Cook Is, Fi
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participants that Indonesia is in the process of constructing a pipeline to<br />
transport natural gas from the southwestern part of the Natuna Sea near the<br />
border with Malaysia, to Singapore.<br />
Another participant noted that sometimes Ambassador Djalal referred<br />
to revenues for the Government and at other times to revenues for Pertamina.<br />
This participant wanted to know whether the two entities were the same.<br />
Ambassador Djalal informed this participant that Pertamina is the agent of the<br />
Government of Indonesia in the oil and gas industry and a state company. Yet<br />
another participant wanted to know the role of Pertamina before a<br />
production-sharing contract was concluded, to find out which entity<br />
undertook seismic surveys and mapping of an area before a contract is signed,<br />
and also to find out the process used by Indonesia in awarding contract areas.<br />
Ambassador Djalal said that areas were awarded on an open tender basis. He<br />
said that Pertamina was actually an offshoot of an old company Permina.<br />
There was a Dutch oil company called Stantech that developed into Permina,<br />
which was also an oil company. This company produced and processed crude<br />
oil. Ambassador Djalal said that Pertamina still produces a small portion of<br />
Indonesia’s oil and gas. With regard to awarded areas, he said that it is not<br />
through a tender process. Companies come forward and make proposals. He<br />
also said that most of Indonesia’s offshore area is open to oil production, and<br />
that it is estimated that 60 per cent of Indonesia’s oil and gas is produced in<br />
offshore areas, particularly in the Java sea, in Eastern Kalimantan waters as<br />
well as the southward part of the South China sea.<br />
Another participant wanted to know where the detailed numbers on<br />
Pertamina’s take came from, in particular numbers like 64.2837 per cent and<br />
83.2134 per cent. Ambassador Djalal responded that these numbers are to be<br />
found in the contracts themselves. In response to a question about the tax<br />
system, Ambassador Djalal said that taxes are the responsibility of Pertamina.<br />
He pointed out however that since Indonesia runs a production- sharing<br />
system, most of the companies do not bother with tax, except income tax. He<br />
said that taxes such as production tax etc are factored into the system. He also<br />
pointed out that Indonesia has a double taxation arrangement with about 60<br />
countries.<br />
INTERNATIONAL SEABED AUTHORITY 879
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