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Ramba, AWE Unfazed by Regulatory Changes in Indonesia

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The recent dissolution of Indonesia's upstream oil and gas regulatory body, BPMigas, has not dampened the appetite of regional investors who are looking for oil exploration and development opportunities in the country.

Two oil exploration companies, Ramba Energy and AWE, noted last week that they are progressing smoothly ahead with their production sharing contracts (PSC) in the country.

The announcement of BPMigas' dissolution was made official Nov. 13, when the Constitutional Court of Indonesia, or Mahkamah Konstitusi, ruled that BPMigas – the independent body set up to administer the oil and gas industry, and in particular the oil and gas PSC regime – had contravened part of the 1945 constitution on the state control of natural resources. The court declared BPMigas as unconstitutional and ordered that the regulator be abolished on the same day. The court also ordered all of BPMigas' authority and responsibilities be transferred to the Directorate General of Oil and Gas at the Ministry of Energy and Mineral Resources.

The day after the ruling, President Susilo Bambang Yudhoyono issued a decree establishing an interim unit to take over BPMigas' role as regulator. At present, the new unit retains the function and role of the former BPMigas.

Singapore-listed Ramba Energy's CEO David Aditya Soeryadjaya told Rigzone in an interview last week that exploration and development plans for all of its onshore blocks, including the West Jambi KSO and Lemang PSC in Sumatra, and the Jatirarangon TAC in Java, remain on schedule. Ramba spud the Selong-1 exploration well – the first well to be drilled in the onshore Lemang block – and is currently conducting logging and analysis. Ramba is aiming to announce the results of its drilling operations in Selong-1 in December.

Commenting on the dissolution of BPMigas, Soeryadjaya said that while the change is initially "uncomfortable", it may be "for the best" as it may mean increasing efficiency in the approval process, as well as in the execution and supervision of oil and gas contracts.

Australian oil and gas exploration and production company AWE echoed similar sentiments.

AWE's Managing Director Bruce Clement noted in an annual general meeting address Nov. 22 that the company "has not seen major disruptions" for its Ande Ande Lumut (AAL) development, a PSC offshore East Java.

"We have had meetings going on last week in relation to the approval process for AAL … I was advised that there will be no impact on the PSC," Clement said.

AWE also said in a Nov. 14 statement that although the change in administration may result in some near term delays for the AAL project; it does not anticipate significant issues in the longer term delivery of the project.

Indonesia has been spotlighted as a very attractive investment region when the government announced in early November that it is aiming to boost the country's oil production volume to one million barrels of oil per day (bopd) by 2014. BP Statistical Review of World Energy published in June this year states that Indonesia holds proven oil reserves of 4 billion barrels and ranks twenty-first among oil producers, accounting for around 1.2 percent of global oil production.

WHAT DO YOU THINK?

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