Indonesia must improve investment scene fast-Chevron
Tue Aug 30, 2005
JAKARTA, Aug 30 (Reuters) - Indonesia needs to quickly cut red tape and improve its tax regime if it wants to attract more foreign investment in the energy sector, the CEO of Chevron Corp. (CVX.N: Quote, Profile, Research) said on Tuesday.
Chevron owns Caltex Pacific Indonesia, the biggest oil contractor in the country.
"To ensure the full flow of that investment, we suggest that all levels of government in Indonesia create a greater sense of urgency and begin quickly to enact a few key reforms," Chevron chief David O'Reilly, who is in Jakarta for an industry conference, said in a statement.
"In order to make long-term investments, energy companies -- indeed, all foreign investors -- must be assured that the government at all levels will honour the terms of production-sharing contracts and other agreements."
O'Reilly said Indonesia needed to also provide more transparency and equity in its tax system.
"It is critical for the Indonesian government to take steps now to streamline the regulatory process in order to accelerate project development," he said.
President Susilo Bambang Yudhoyono said the government would listen to what oil contractors had to say.
"We are aware of your concerns and we will listen to you and act on your input wherever practicable and justified," Yudhoyono said in a speech at the Indonesian Petroleum Association conference.
The association said last week that Indonesia's crude and condensate output could fall by half within a decade from 1.07 million barrels per day (bpd) if the investment climate did not improve.
Indonesia has said output at its ageing oilfields was declining at 5 percent or more a year.
Asia-Pacific's only member of the Organization of the Petroleum Exporting Countries (OPEC) was a net importer of crude oil throughout the second quarter of this year. Indonesia first became a net importer during several months of last year.
Indonesia produced 946,600 bpd of crude oil in July, compared with 934,000 bpd in June.
The country also produces condensate, a very light form of oil, which is excluded from OPEC quotes. In July it pumped 128,000 bpd of condensate versus 124,000 bpd in June.
© Reuters 2005. All Rights Reserved.