A note on policies for the oil and gas sector
Production of oil and gas in Indonesia has fallen steadily during the last decade, owing to a combination of reduced exploration efforts and natural decline in currently producing fields. To counter-balance declining reserves in mature oil fields and a lack of expansion of known natural gas reserves, policy makers are now pursuing exploration initiatives more energetically. However, producers have expressed deep concern about the prospects for fair cost-recovery rules, and about the legal and regulatory environment more generally. Three issues are particularly relevant to the investment climate: resource nationalism; the anti-corruption drive; and decentralisation. Steps that the government could take include stemming the erosion of fiscal terms in contracts and ensuring contract sanctity. And although economic nationalists will find it hard to accept, maximising the benefits to the Indonesian people of exploiting the nation's hydrocarbon resources will require the presence of the world's most efficient operators.
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Volume (Year): 46 (2010)
Issue (Month): 2 ()
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