Monday, October 13, 2008

People's Representative Proposal to Law No. 22/2001 Oil/Gas Law

At this present moment the People's Representatives are making suggestions to LAW No. 22/2001 Oil/Gas Law.

The suggestion are among others :

Note the inside brackets are the suggestions

Article 1 Paragraph 19 The Cooperation Agreement is a Production Sharing Contracts or other form of Cooperation Agreement which is more beneficial to the States by "increasing the products and efficiency and the results shall be used for the most welfare of the people.

Article 8 paragraph 1

The Government is "obligated" to grant priority upon the usage of the Gas for the domestic consumption and shall have the task do make available the Oil Strategic Reserve to support the supply of the Domestic Oil which shall be further agreed with a Government Rulings.

Article11 paragraph 2 Every Cooperation Agreement "which shall be signed is obligated to be consulted and obtained the approval" from the Peoples Parliament of the Republic of Indonesia.

Article 12 paragraph 1 The Working Area which shall be offered to the Business Body (Badan Usaha) or Fixed Business Body ( Badan Usaha Tetap) is determined by the Minister after consultation with the Local Government and "the Local Peoples Representatives."

Article 12 paragraph 3 The Minister shall determined the Business Body or the Fixed Business Body "to" conduct the Exploration and Exploitation in the Working Area as meant by paragraph 2 "after obtaining the approval form the Local People Representatives".

Article 14 paragraph 1 The duration of the Cooperation Agreement as meant by Article 11 paragraph 1 shall be performed at the most" 25 years"

Article 14 paragraph 3 "The Government shall be entitled to revise and /or cancel the working contract if it is deemed not to be in accordance with the national interest and State with the consent of the Peoples Representative Body."

Article 14 paragraph 4 "The People Representative is entitled to propose revision upon the cooperation agreement as meant by paragraph 1 if in the implementation evidence is found, showing that there is a violation against the rulings.

Article 22 paragraph 1 The Business Body or the Fixed Business Body is obligated to deliver 75% of the oil and/or Gas production to full fill the domestic consumption.

Article 28 paragraph 1 A Oil Fuel and the result of certain ......(olahan) may only be exported after the domestic consumption is fulfilled.

Article 28 paragraph 2 The Oil and Gas price is determined by the Government after obtaining the approval from the Peoples Representative Body.

Business Lawyer

As a business Lawyer you must have the skill and knowledge of drafting legal advice and legal opinion relating to the business of your Client.From my experiencing as an Independent Lawyer for more then 10 Years, I realize that we have to concentrate on a certain field of business that you are mastering and that types of Client that are being referred to you.

Most of the Clients that are being forwarded to my firm, are Oil and Gas Contractors, Mining Companies, Coal Trader Companies who intend to purchase coal but at the same time is willing to financing the Coal Mining License owner who needs some financing back up to support their infrastructure such as their Coal Plan Facilities, in order to produce their Coal products.

Occasionally I had also been requested to assist Hotels who wishes to enter into a Management Agreement with other Hotel who has international interchange contacts, which includes the Technical Assistance Agreements.

During my previous experience of Lawyering, I was also experiencing drafting Financing arrangements such as Loan Agreements including its collaterals agreements, which involve the financing of Vessels operations and Aircraft Operations.

Thus, it was really quite a wide range of experience, and when I was in the Oil and Gas Lawyer as in-house Lawyers, I usually handle explorations and productions sides of the operations, in which we are also requested by the end-users to assist them in reviewing and drafting the Vessels Charter Agreement as well as the Helicopter Agreements.

Since I was frequently involve in the Vessel and Aircraft business operations, which includes from the registration of the flags and nationality and numbers of the Vessel and the Aircraft in the respective Directorate General Office, which for Vessels are in the Directorate General of Sea Communications and the Aircraft with the Directorate General Of Air Communication, it really helps me, conducting such supporting activities which are needed in the Oil and Gas Operations as well as in the General Mining Operations.

On the upfront side within the Oil and gas Operations, we as Lawyers are requested to advise on the Production Sharing Contracts Agreements (PSC), starting from reviewing and advising the management upon the meanings or interpretation of such PSC.

We are also frequently requested to contact the Directorate of Oil and Gas, which is now the Directorate of Mineral and Energy, to discuss about issues which needs some clarifications. When I was experiencing as In House Legal Counsel in the Mining Copper Contractor, we also were usually requested to make contacts with the Legal Bureau of Legal Divisions within the Directorate General Of General Mining, to obtain or clarify certain significant informations relating to the COW (Contract of Work) as well as the rules and regulations relating to the General Mining Activities.

Based on the above range of experience, as a business lawyer I am attached and is most interested in the progress and development of the legal aspects occurring in Indonesia, in particular related to the Oil and Gas, General Mining Operations, Coal Mining and other related legal aspects surroundings such operations activities. Jakarta, October 13 , 2008

Agung Supomo Suleiman

Partner of the Law Firm of Suleiman Agung & Co http://www.sacolaw.blogspot.com

Email : agungsacolaw@telkom.net

Mobile Phone : 0816830647

Friday, October 10, 2008

The Skill and Art of Drafting Oil/Gas and General Mining Contracts

Well as a Lawyer it is really fun for me to prepare, draft or review Contracts.

Maybe, it is like a geologies, when they see rocks or stones whether it still at the ground or at the mountain, or even after it had been polished, placed in a building at the walls or as titles, such geologies can tell many stories about such stone or rocks, the history of it where does it originated and came from and many other interesting stories related to such rocks.

It is also like painters, when they painted something either it is nature, abstract, or whatever imaginations they have captured and visualized it with their paintbrush, such painter seems to be deeply involved and is having fun in drawing such painting.

In my personal experience, this kind of fun, enjoyment and excitement can also happen to us as lawyers when we are drafting, preparing and reviewing legal documents or legal transactions.

The surroundings of their day-to-day place or field of work will shape their perception on what they are drafting. So if we focus drafting contracts related to oil and gas and general mining operations activities, the skill of preparing such legal documents to support the management, the end users, the operations person in the field, is to open widely your imagination but focusing and concentrating on the core of the business operations in the oil and gas, or general mining operations.

For instance, as the business lawyer, we have to be fully aware of the circumstances surrounding the operations person, where they are shaped to be persons who are always rushing to get the operation start without delay, if possible to be done yesterday. In the Oil /Gas as well as in the General Mining operations, the stages of the operations are usually processed through the same pattern of stages starting from general survey, exploration, appraising whether there are deposits which are commercially ready to be developed, or un commercial, or in the oil and gas operations dry hole.

If commercial production is being agreed upon, then development of production, will commence and ready to be stored either in the station gathering if it is oil/gas, or production stock for mining products and after that ready to be sold to the market and make profit.

Well, it sounds very interesting isn’t.

Yes, but please make sure that the risk are high, where there will be sinking fund situation borne by the oil/gas or general mining investors, if they have spent lost of monies for starting up the operation from general survey and exploration stages, but after being appraised in the appraisal stage it is determined, that such location is as non commercial for production.

Accordingly, having said the above, then you or us as a business Oil and Gas Lawyer and General Mining Lawyers, must have full consciousness and awareness from the operations/technical side, the business/ economics / commercial side, as well as the legal aspects, and safety, environmental, local culture perspective must be in such a manner, to maintain balance upon all such significant aspects.

Agung Supomo Suleiman

Senior Partner

Of the Law Firm Suleiman Agung & Co

Blog: http://www.sacolaw.blogspot.com

Email : agungsacolaw@telkom.net

Mobile Phone : 0816830647

Privatization Program of Infrastructure of a Mining Company

It was really an interesting experience when I was involved as one of the legal team in a General Mining Company who wishes to sell out and privatize all of its infrastructure assets that it had build among others its Airport and its airplanes, its Special Harbor including its vessels, its Telecommunications Infrastructure. Why could this occur and why must it occur ?

Well this is the very interesting part of the matter, which really taught and inspired us as to how the real mining entrepreneurs are doing their mining business operations. As we are all aware, the huge deposits of cooper are frequently located in a very remote area in this place of the earth, where no access road nor any other infrastructure are available.

This also occurs on the Copper Deposit which the Mining Company had discovered in the far east part of Indonesia, namely Irian Jaya or Papua , where such location lies on the top of the high mountains of such beautiful island of Papua, which height is approximately 4000 meters above the sea level.

One of the most interesting things of the mother nature, which captured my attention was that in such high places, you, can find many sea fossils, shell fossils, which was processed by the journey of the time and nature to become stones in the shape of such shells fossils.

According to the geologist, these high rough but beautiful mountains, was formerly hundreds or thousand years ago, to be the bottom of the sea or oceans where many sea shells are living.

Based on the process of the movements and activities of the earth, in which according to the geologist, it was the meeting point of the Australian plate structures and Indonesian plate structures, which then emerged up, to the top, and became the High Mountains, as can be seen and shown on the steep lines structures of the rocky stones mountains.

Amazing isn’t it.

This high mountain among others are called Grassberg, which contains huge amount of copper deposits, which are very significant and needed by human mankind, around the globe, especially for electrical devices such as the connection/head of dynamos in a car and or other electrical devices and equipments, telecommunications devices etc.

Due to the remoteness of the places, during the first exploration period, there were no any infrastructure facilities, nor any access roads, starting from the seaport, unto the access roads straight ahead to the very high top places in such mountains where lies such copper deposits.

The weather above the mountains are very unpredictable, which mostly is fogging and covered by fog. In such weather you have to wear your jackets, because it is really cold up there.

During the early beginning of the exploration phase there were also no any airport infrastructure founded in the low land.

We usually call the high mountains where the copper deposit is located, as the High Land and the special ship harbor and the airport as the Low Land.

Accordingly, the Mining Company who operates such Copper Mining Operations, are really entrepreneurs and pioneers who has high visions and guts to start up such operations in such remote area.

In the progress of the production, after several years of production, when such Mining Company intends to increase their production capacity, there comes a stage, where such Copper Mining Company, desires to maintain its cash flows for supporting the continuity of their core business on the Copper Mining.

In reaching such stage the management then after approved by the shareholders, decided to sell out all its already build supports infrastructures, such as the airports and its air fleet, the special harbor and its ships/ vessels, the telecomunication infrastructure facilites, to the potential respective investors whose main business is respectively running and operating such infrastructures.

Thus the Airport Facilities and its airplanes are sold to an Airplane /Airline Investors, the Harbor and the ships /vessels are sold to the professional Shipping and Special Harbor Investors, and the Telecommunications infrastructures are sold to the Telecommunication facilities Companies.

This also includes the Super Market, which was also sold to the Super Market Investor.

Such transactions, involved financing and Bankers, to finance the respective investors buyers to purchase such Infrastructures.

The Copper Mining Company shall then received the Purchase Price of such infrastructures from the Buyers of such Infrastructures to be used to expand, develop in increasing its Production Capacity of the Copper and Gold.

Well we as the Business Companiy Lawyer, are happy and eager to fully support the management goals, by having the responsiblity and legal task to to prepare and review all the necessary legal documentations starting from the Sale and Purchase of such Infrastructures, Legal Due Diligence on all the agreements, licenses, permits, agreements with 3rd parties involved or related to such infrastructures, which includes for instances the proper legal documentation and licenses attached to the Special Harbor and the Ships/Vessels, which we have to go and check with the Directorate of Sea Communication.

These also applies to the Airports and the airplanes where all the necessary documents and licenses and permits have to obtain and checked with the relevant Directorate of Air Communication.

We as Lawyers must also provide the Legal Opinions, reviewing the Financing / Bankers /Loan Transactions and its collaterals for financing purposes of such infrastructures, which are required by the Bankers.

It was really interesting for the Business Lawyers to be involved in such exiting privatization transactions to fully support the management goals and achievement in conducting and maintaining the continuity of the Mining Operations for production.

Well, that is what I have to share with you relating to the privatization of the Infrastructures which once occur and experienced by one of the Big General Mining Companies, who had a Contract of Work with the Government of Indonesia.

Agung Supomo Suleiman

Partner

Law Firm Suleiman Agung & Co

Blog: http://www.sacolaw.blogspot.com

Email : agungsacolaw@telkom.net

Mobile Phone : 0816830647

Experience Conducting Legal Due Dilgence

There were several instances where we were requested by our Client to conduct legal due diligence of our Client who was an Oil Company and Gas Company, who wishes to farm out an undivided portion of its Participant Interest under a certain Production Sharing Contract (PSC) or Technical Assistance Agreement to a potential prospective Oil / Gas Investor.

The most interesting part, of our task before we could make the report of our Legal Due Diligence, is that we have to conduct certain legal due diligence on the legal corporate documents, any and all of the necessary required licenses, permits as well as the necessary oil and gas contracts our Client has signed by with the government of Indonesia (GOI) being represented by Pertamina , and know BP MIGAS.

As a standard practices we also have to check any of the financing or credit agreements/loan agreements including its collaterals it may have entered into so that the potential Investor will be fully aware of the condition of our Client who wishes to request to participate in the development of the Oil and Gas Operations in Indonesia.

We as an Independent Lawyer is also requested to check any third party contracts which our Client is engaged in an agreement or contracts during the period when such Legal Due Dilgence is conducted.

We also will check whether there any legal proceedings either arbitration, litigation or any other legal proceedings that has a material impact on such transactions.

Well those are among others the tasks which we were requested to conduct, when our Client as an oil and gas investor, wishes to farm our portions or all of its undivided Participant Interests under a certain PSC or TAC to a certain potential prospective oil/gas investor, where we also are required frequently requested to provide them with a Legal Opinion.

Agung Supomo Suleiman Senior Partner

Law Firm Suleiman Agung & Co Blog:

http://www.sacolaw.blogspot.com

email : agungsacolaw@telkom.net

Mobile Phone : 0816830647

Wednesday, October 08, 2008

Legal Liability Risk Exposures

In the Oil and Gas and General Mining Contracts, we as lawyers must really be fully aware upon the Legal Liability Exposures surrounding the operations.

These legal exposures have to be taken into considerations when we give legal advices and legal opinions, including when we are preparing, reviewing or drafting the necessary legal documentations that might be exposed during the starting of establishing the vehicles being used by the oil / gas, general mining investors to conduct its business activities.

In practice, this starts from preparing the corporate documents, the licenses, permits which are required to be fulfilled by the respective Indonesian Authorities as well as the prevailing Rules and regulations.

Relating to Oil/Gas and General Mining activities, where pollutions on the environments are potentially to be exposed, we shall then have to observe all the applicable environmental laws, rules and regulations that has to be fulfilled.

Why are these significant?

These are really significant, because the principle under the environmental laws are “strict liability concept”, in the sense that if there are other activities which maybe impact by the operations activities from the oil/gas operations, general mining operations, then the "burden of proof" is not exposed on the parties claiming of suffering polution against the mining companies, but is upon the mining companies, who must proof that their activities are not causing such polution.

I have experienced, that even fish and shrimp pond owner, may file claims for loss of profits, income and damages, with the reasoning that their fish and shrimp pond business, was polluted by elements arising from the oil/gas or general mining activities.

What was also interesting, is that person or individuals might also claim for compensation due to the noise coming from the operations of engines, which caused illness to their hearings.

The above are among others examples of legal exposures which may arise in the oil/gas and general mining business operations, which have to be anticipated by the oil/gas as well as general mining companies conducting their operations in Indonesia. agung supomo suleiman Email : agungsacolaw@telkom.net

HP 0816830647 http://www.agungsacolaw.blogspot.com

Tuesday, October 07, 2008

Comparison between Oil & Gas Contracts and General Mining Contracts in Indonesia

Comparison between Oil & Gas Contracts and General Mining Contracts in Indonesia From my experience working for 5 Years as In house Legal Counsel in the Oil and Gas Sectors(Virginia Company Indonesia / Huffco Indonesia)(Oil and Gas), 5 Years as in house Legal Counsel in the General Mining Sectors (Copper and Gold) (PT Freeport Indonesia Company), 5 Years in a reputable Law Firm in Indonesia, 2 Years as Partner of a Leading Reputable Law Firm in Indonesia, and 10 Years as Partner in the Law Firm of Suleiman Agung & Co in Indonesia, I can conclude that even though both resources are from the same Indonesian below grounds deposits, the treatment in entering into agreements for general survey, exploration, exploitation, producing up to marketing between the products of Oil and Gas and the General Mining are different.

In the Oil and Gas Sectors, the Government of the Republic of Indonesia now being represented by BP Migas will usually enter into a Production Sharing Contracts (PSC) with the Oil and Gas Contractors, where the Oil and Gas Contractors will be responsible to seek the funds and technology for seeking the oil and gas reserve deposits starting from the general survey, exploration, exploitation and producing the commercial oil and gas products, where all the risks shall be borne solely by the Oil and Gas Contractors.

Once the Oil and Gas produced from a certain field /portion of Contract Area are considered and agreed by BP Migas and the Oil and Gas Contractor, as commercial field / commercial portion of the Contract Area, ready to be developed for commercial production, then all of the expenses and costs incurred by the Oil and Gas Contractors, shall be cost recovered by the Government of Indonesia (GOI).

These cost recovery are taken from the Oil and Gas produced from such Contract Area during the current Year pursuant to the terms and conditions under the PSC. Since there is a cost recovery mechanism introduced by the GOI, then the GOI through BP Migas shall have the right to manage the oil and gas operations conducted by the Oil and Gas Contractors in terms of approvals of performing the services and procuring the services and contracts relating to the operations of the oil and gas activities.

Accordingly, all the material and goods being purchased and used by the Oil and Gas Contractors shall be owned by the GOI, however, for the term of the PSC, the oil and gas Contractors shall have the right to use such materials and goods for performing the oil and gas operations. Furthermore after the operating cost and expenses are being recovered by GOI or BP Migas, there will be an Equity oil and gas split between the Oil and Gas Contractors and BP Migas / the GOI.

Whereas, relating to the General Mining Activities, there is no any such cost recovery mechanism made and developed by the Government of Indonesia to the Mining Contractors for the costs incurred and spent by the Mining Contractors. There is also no any Equity split of production of the General Mining Products between the GOI and the General Mining Contractors, except to Coal Mining Contractors where there is a certain split of production around 13, 5 % for the GOI pursuant to the Coal Mining Cooperation Agreement between the Coal Mining Contractors and the GOI.

The Government’s take in the General Mining is from the royalty of the Production of the Mining products which are being sold to the Buyers of the General Mining products which is around 1 % to 3 %. There is a certain sort of rental fee of the Area per HA, which is a progressive rate starting from the General Survey period, which will be increased in a certain percentage during the explorations phase, production phase until marketing phase.

These rental fee is being adjusted and modified from year to year. There are also some instances, where the General Mining Contractors are entering into an agreement with the Local Government, where a certain Community Development program is being agreed upon, for which a certain percentage of its annual production is agreed upon to be contributed for the development of the Local Area in the frame work of Community Development.

In these arrangements, the General Mining Contractor may try to request for assurance from the Local Authority such as the Bupati, that such contribution is really being used for the Local Area Development and not being transferred to the Central Government, which was frequently experienced, as not being used for such respective Local Area Development.

Accordingly we can see that, even though, the products are taken from the same Indonesian Mining Territory within the Territory of the Republic of Indonesia, the treatment in entering the agreements between the GOI and the Contractors, are being ruled and treated differently.

Agung Supomo Suleiman October 7, 2008 Practicing as Business Lawyer particularly in the Oil and Gas and General Mining, and Coal Mining Sectors in Indonesia for more than 25 Years since 1985. Partner at the Law Firm of Suleiman Agung & Co http://www.sacolaw.blogspot.com http://www.agungssuleiman.blogspot.com email : agungsacolaw@telkom.net agungsuleiman@gmail.com Mobile Phone : 0816830647

Tuesday, September 30, 2008

Glance of Rulings in Indonesia in the Mining Sectors

Indonesia is now facing a new era of democracy. However it appears that we are in a rather dilemma situation, since it appears that everything is expensive in Indonesia including education and health treatment. Everything that you buy is expensive.

If you happen to be in the middle class, then you still have the chance to develop your money strength cash in. But if your just coming from the below class, then it really will be difficult for you to school your children as well as health treatment to maintain your health condition.

Relating to the development of legal structure, it appears that there are many products of law ruling being established and introduced, these recent years, which includes that every rulings issued by the DPR (Indonesian People’s Parliament) together with the Government shall be subject to the Court Constitution to ensure that it does not violate the more higher level of Law which is the Indonesian Constitution Act.

For instance when the new Oil and Gas was being introduced, there was a Court Constitution Decision which was launched which states that the Domestic Market Obligation which is the obligation of the Oil and Gas Contractor’s to contribute or sell its portion of Oil Entitlement to Domestic Market which words was mentioned “maximum” 25% of its Portion of Oil Share was being decided by the Court Constitution to drop the words “maximum”.

During my practice as Business Corporate Lawyer in the field of General Mining, there frequently appears to exist overlapping rulings between the inter departmental rulings among others between the Laws and Rulings of the Department of Forestry and the Department of Mining and Energy.

There often also raises overlapping Rulings between the Law Products from the Local Government and the Central Government, whereas the Local Governments Ruling sometimes are in contradictory with the Ruling form the Central Government.

Thus no coordination seems to frequently appear between the Local Government and the Central Government, and among the various Departments who sometimes are only looking from their angle and perspectives.

These situation of courses resulted confuse ness on the Mining Contractors who has been granted a Working Area by the Government to mine their minerals deposits, which part of the Mining Area is overlapping for instances with the Forestry Area.

If we faced such problems, in practice there will then be a meeting which will be held by the inter departmental officials, in the efforts to try to solve such overlapping problems.

Accordingly, before the Various Departments and Contract Area are making its rulings or granting a Forestry Rights which may be overlapping with another Activities such as Mining Activities, it is really strongly advisable that coordination between the Departments must have been prior conducted to avoid such overlapping obstacles.

Agung Supomo Suleiman – Partner of Suleiman Agung & Co http://www.sacolaw.blogspot.com

Email : agungsacolaw@telkom.net

Mobile Phone : 0816830647

Tuesday, September 23, 2008

Promoting your Positive Contribution

My hobby is to be independent and free. But Freedom is not enough, because in reality there is no free lunch in this world. Thus the purpose of me Creating My Own Law Firm was actually starting to be a free man. And thanks to GOD the ALL Mighty, I have manage to survive and be independent for more than 10 Years since I June 2008. And the real problem to attack is cash flow problems. Because every month you need to have some income or cash in order to feed your family and also the supporting staff in my Office.

Frankly, speaking I am more of an independent type in which I wanted to have the freedom in setting my working time schedule. And I have manage to establish this flexible time for more than 10 Years. At this present moment, I have already establish my blog, where I have inserted some of the writings of my life experience, travel experience, experiencing to be independent in running my Law firm for more than 10 Years, and also writing of my professional experience being a lawyer particularly, serving business clients mostly in the Oil and Gas Business, Coal Mining Sectors, Hotel Sectors, either in supporting their business from the legal aspects such as drafting their business contracts, reviewing and advising their business transactions, advising the rules and regulations as well as defending their business legal rights in the Arbitration or Court.

Well, through this Blog, so called Agung’s Note Blog, in the development, I have manage to starting linking it with the services and the products which they can offer, either through advertisements or through selling their products.

Thus, I hope that Agung's Note Blog may also be useful in promoting my Client’s or any party’s Services and Products either to their Customers or to the management, directors, employees, who needs some supports for helping to boost up their carrier path in their working offices or sites, working fields starting from printers, computers, telecommunications accessories, tools and hard wares, safety shoes and other significant products.

And If they need some refreshing and break, there also advertisements of hotels and nice places to visit and relax your minds from the day to day high tension activities and under pressure overloaded works and assignments.

When I was working as the in-house Legal Counsel in big MNC Companies, I am also aware that promotion of what the respective MNC Companies are doing, or had continuously contributing to the society surrounding their working locations, needs some sorts of promotion or public awareness and publications not always in a formal way or manner, but in a more non - formal manner and way such as through Blogs or Websites Sites which may now be playing an important role to promote their positive continuous contribution.

Based on such experience My Agung’s Note Blog is ready to assist such MNC Companies, or any companies who are seeking ways to promote their contribution to the society.

Based on the above circumstances if your Companies are interesting to put your ads or publications in my Agung’s Note Blog, please feel free to contact me.

Agung S.Suleiman HP: 0816830647

Email : agungsacolaw@telkom.net

Thursday, September 18, 2008

Experience Handling Arbitration Case in Indonesia

I have experienced handling Arbitration Case at the Indonesian National Board of Arbitration ( BANI) in Jakarta, Indonesia. At one time my Law Firm was representing one of our Clients who was involved in the Oil and Gas Sectors at BANI in which my Client was claimed to pay for a certain amount of monies, by a drilling Contractor. Such experience was very interesting for me as the Partner of my Law Firm Suleiman Agung & Co, since the condition of defending our Clients interest in this Arbitration Board is totally different than handling a case in the Indonesian Court.

The most different part is because in Arbitration proceedings the conditions are very informal, where the Arbitrators consists of 3 members, whereby 2 arbitrators were each chosen by each Party from the list of arbitrators available in the list provided by BANI. The 2 Arbitrators shall then select 1 arbitrator who shall act as the empire of such Board of Arbitration. The Arbitration fee is being paid upfront by the Party who is applying for such Arbitration Proceedings, and will be adjusted accordingly to be shared by both Parties pursuant to the rules under the BANI ruling, depending on the Award of such Arbitration. We experienced that in practice, BANI may only proceed the Arbitration Cession, if the full Arbitration Fee had been made by the Party who request such Arbitration to take place.

Before the Arbitrations proceeding commence, we experienced that the Arbitrators will informed both Parties that the most significant element in handling this case is, processed through a fair arbitration proceeding, where both Parties are being given the same chances and opportunities to represent their argumentation, and mutual solution shall be strive to settle the differences between the disputing Parties through this Arbitration Proceedings.

In practice, each Party shall not only just launch their argumentation in writing, but may also be granted the chance to orally represents their argumentation. In my view, this is a significant difference compared to handling civil cases in the Indonesian Court, where only written argumentation can be submitted by each Party, during the Court Proceedings, and the time for launching oral argumentation is only given during the stage of submission of evidence by each Party.

The surroundings or place of such Arbitration during the arbitration proceedings is also not too formal, as we experienced in a Court Cessions. Thus, such condition really helps establishing a friendly environment of arbitration proceedings, and shows more of a meeting cession.

During such Arbitration Proceedings if there appears to be a dead lock or stagnant, the Board of Arbitrators shall act as a middleman, trying to seek out a way for the Parties to reached a win and win situation. If the Parties failed to reach such settlement, the Arbitrators will then remind the Parties that the Arbitrators may make its decision according to their perception of the case, which may end up the feelings of loosing and winning by a Party.

Frequently, in order for the Parties to cool down, if the tension rises, there will be a break of time, before the proceeding continues and emerged into a dead lock situation.

Well, at the end of the day, I may say that based on my above experience, the forum through the Indonesian National Board of Arbitration (BANI) appears to be a good and attractive alternative solution for the Parties who entered a Business Transactions in Indonesia, in choosing a forum to handle and settle disputes between the Parties, if such event occurred.

This is based on our Law Firm and or Senior Partner's experience of this Law Firm of Suleiman Agung & Co, where the process, which resulted in an Arbitration Award, is satisfactory to both Parties or close to a win-win situation. And as a business man who seeks and try to maintain good long term business relationships, we believe that there must always be a room to negotiate and settle differences, and avoid selfishness and greediness in conducting business, in other words we have to honour honesty, integrity and fairness in conducting our day to day business.

Cheers April 30, 2009

Agung Supomo Suleiman

Partner of Law Firm Suleiman Agung & Co

HP 0816830647

This is also Published in ALLVOICES GLOBAL MEDIA

Law Firm Blog: http://www.sacolaw.blogspot.com

Email: agungsacolaw@telkom.net

Oil and Gas Contracts and legal works

During my experience in running my Law Firm which now is called Suleiman Agung & Co, there are many experiences involving legal works relating to Oil & Gas. When I started in June 1, 1998, I started my office from my home at Cipete, South of Jakarta. After around 3 months I got legal works from an Oil Company who has returned its Contract Area /Block to the Indonesian Government.

For such purpose I had been requested to give them legal advices as to what are the procedures required to be completed, and ask my law firm to conduct, research and legal due diligence on their documents including reseraching with the relevant authorities, as to what are the steps that must be taken. Based on such request I made such legal research and legal due diligence, and provide my Client with the legal advices and legal services.

For my legal services rendered, my Law Firm received legal fees, for which I then moved to a certain office building where I had shared space with my friend who was renting office space and offered me a space to be shared. I then obtained another retainer arrangement with an Oil and Gas Company who retained my Law Firm for 1 year.

It was really interesting. My Client is actually the holding company, which I was requested among others to review and look at their Production Sharing Agreements (PSC) and Technical Assistance Agreement (TAC) and assisting and accompanying them in meetings and negotiations in their efforts to reschedule their financing/ loan agreement. Well, related to the Production Sharing Contracts, it is really interesting because there are several types of Oil and Gas Contracts between the Government of Indonesia and the Oil and Gas Contracts, among others PSC, TAC, Enhance Oil Recovery(EOR), PSC-JOB ( Joint Operating Body).

One of the interesting part in drafting and reviewing such Oil and Gas Contracts, is the history surrounding such oil and gas activities, where according to the geologies, such oil and gas products was actually originated from fossils and plankton of animals, plants which was buried deep down in the earth, through process of over more than 350 Years, where the pressure is very high and the temperature is very high, which changed them to become oil and gas and are being trapped or deposited in a reservoir deep below the earth.

Amazing and really interesting isn't it? The risk in the oil a gas industry is very high, because you may find that after spending huge amount of monies, you may end up in finding a dry hole. And there are also risks exposure such as blow-out which is a kick of high pressure to the well head which could not be controlled, and shall then cause a blow out which could collapse the Drilling Rig, and even cause a crater, after such blow-out occurred. Of course there is the Blow Out Preventer ( BOP), but, this Blow Out, which is beyond the capacity of the BOP can occur. Thus the liabilities and financial exposure is really huge.

Since the risk is very high, the Government Of Indonesia’s policy is to shift the risk to Oil and Gas Contractors. After commercial production is declared by the Government, which right now is BP Migas, together with the Oil and Gas Contractors, then if such field or portion of the Contract Area is decided to be developed for production, then all the prior expenses which was incurred by the Contractor will be recovered by the Government in this case represented by BP Migas.

Thus the philosophy adopted by the GOI, is that such cost recovery is made by the Government of Indonesia ("GOI) "not" with cash and fresh monies, but through the oil and gas products produced from such Contract Area, field or portion of the Contract Area which had been declared commercially production. If no commercial oil or gas is made, then the risk of spending the monies or sinking fund is solely borne by the Oil and Gas Contractor, and not by the GOI, accordingly the GOI will not make any cost recovery upon the costs and expenses incurred by the Oil and Gas Contractor.

We should also note that, under the concept under the Indonesian Constitution Law, the Oil and Gas deposits are owned by the whole people of the Republic of Indonesia, and is totally different with the concept of a country which allows individual to own such oil and gas deposits which lays below their individual land property. Since the oil and gas reservoir and deposits which are under the ground is owned by the whole people of the Republic of Indonesia, the Government then has the full responsibility and obligation to ensure that the social welfare of the whole people of the Republic of Indonesia is guaranteed from such oil and gas reservoir and assets.

Formerly Pertamina, was being established, by Law No.8 Year 1971, as the proxy of the oil and gas authority mining rights, granted by the people, but now this concept had been changed where Pertamina is changed and become a PT Pertamina (Persero), which has the same status as Oil and Gas Contractors like other Oil and Gas Contractors, but this PT Pertamina (Persero) is 100 % owned by the State.

As we then realized, the GOI, who has the obligation and responsibilities to manage the social welfare of the whole people of Indonesia, based on the Indonesian Basic Constitutions Article 33 paragraph 3 Basic Law 1945 and its amendments, really needs the sources of revenue, which until know, the main resource is still depending on the oil and gas assets. Such resources from the oil and gas from the whole Area of the Republic of Indonesia, is then considered as the resources to fill in be the Governments Yearly Income and Budgets Program, which usually is made based on a 5 Year Plan, but every year the Government has to make report to the Indonesian Peoples Parlement (MPR and DPR).

Thus to make sure that GOI is guaranteed to get the portion of the Oil and Gas produced from the whole Contract Area located within the Whole Oil and Gas Territory of the Republic of Indonesia, then for each Contract Area under the PSC, TAC, PSC JOB, EOR, there is always a First Tranche Petroleum ( FTP) mechanism, built in such contracts, which means that on the Current Year before cost recovery is made to the costs and expenses incurred by such Oil and Gas Contractors, after commercial production has been declared by the Government of Indonesia represented by BP Migas ( a State Regulatory Body in Oil and Gas), and production is to take place, 20% of the Total Oil and Gas produced from such Contract Area has to be allocated aside to fill in the Yearly Government Income and Budget Program.

This FTP is split between the GOI and the Contractor in proportion to their split equity portion as been mutually agreed in their PSC. Besides this FTP there is also a Domestic Market Obligation (DMO) imposed to the Oil and Gas Contractors, where a certain formula is established under the PSC, TAC, EOR, PSC -JOB, where in essence based on the latest Oil and Gas Law including the Decision from the Constitutional Court, such DMO is 25% of the Oil and Gas Contractors portion of the Crude Oil produced in the current Year.

Well the above are some of the legal aspects which my Law Firm and I am involved in giving legal advises to our Oil and Gas Contracts. If some of you readers needs some legal advises and assistance from my Law Firm of Suleiman Agung & Co, please do not hesitate to contact me as the Senior Partner of this firm through my Mobile phone 0816830647 or my email agungsacolaw@telkom.net or agungsuleiman@gmail If you wish to put your advertisement of your products or services we will be happy to offer you as space for your ads in our website of http://www.agungssuleiman.blogspot.com

Agung Supomo Suleiman September 20, 2008

Sunday

Wednesday, September 17, 2008

Drafting Contracts Related To Coal Mining Activities

When you draft Contracts, you have to make sure that the parties are clear, and the object of the agreements are also clear. Under the Indonesian Law, parties of the Contract has the freedom to make and develop and incoporate whatever terms and conditions of their contracts, subject however, that the contents must not violate the laws and the public order. The surroundings, circumstances and conditions of the parties shall have great influence in drafting contracts. It really depends on the nature and situation where the parties are involved and situated. The Indonesian Civil Code actually is just a supplement to the terms and conditions entered and agreed by the parties. For instances if you are involved in a Coal Mining Activites, there are some rulings issued by the Directorate General of Coal Mining; Our experience in assisting Clients related to Coal Mining Activites, among others are that we are requested to assist our Client in drafting the Loan and Fiduciary Deeds. Our Client is actually Coal Trader, in which their Customers who are purchasing the Coal Products, form our Client, are Power Plant Industries, outside of Indonesia, among others China, who requires Coal Products to generate their Plants, to run the Industries which are booming in China. Our Client, who is a Coal trader is willing to assist in financing Coal Mining Companies in Indonesia, usually located in Kalimantan Island, in Indonesia, who needs some financing to develop their infrustructures, among others their Coal Plant Facilites to produce the coal, their jetties. The payment of such loan by the Coal Mining Companies to our Client are through selling the Coal Products to our Client. In this case our Law Firm Suleiman Agung & Co will assist our Clients by checking the legal documentations involved in such transactions from reviewing the legal documentation of such Coal Mining Companies such as their Coal Mining Licensces, their Agreements with the Government, drafting the Loan or Financing Agreement, including its Collateral / Fiducia Documents, and registering such Fiducia Deeds with the Fiduciary Office in Indonesia, of course advising our Clients on the rules and laws involved and governing such transaction and coal mining activities. Accordingly, readers who are involved in the Coal Mining Transactions including its financing transaction who seeks for legal assistance may contact our Law Firm Suleiman Agung & Co, Mobile Phone HP 0816830647. For those who are interested in putting advertisement relating to their products and services related to such Coal Mining Activities may put their ads as shown in our website.

Hoping that the above information will be usefull and beneficial to all of you.

Wednesday, September 17, 2008

Agung Supomo Suleiman SH. Senior Partner Law Firm Suleiman Agung & Co

http://www.sacolaw.blogspot.com email: agungsacolaw@telkom.net

agungsuleiman@gmail.com

Monday, July 14, 2008

Milestone

I feel that I am in a milestone stage, where I feel that I am in a rather strange situation. I don't know why? I feel that I have worked for more then 28 years, and I feel like I need a break. Why is it like that. Maybe it is because almost everyday, in reality, I am always buried with my work. I think I need to rest for a while, and take a break. Eventually, since I am in Grand Wijaya from January 2008, it appears, that there is no time for me to take a rest. Thus I really feel fatigue. The most enjoyable time that I can feel, is when in the early morning, after I said my subuh prayer, I walked together with my wife, seeking for fresh air and walk within the surroundings area of Cipete, South of Jakarta,where I live. The air is clean and fresh, and together with my wife, we can feel the freshness and cool air and weather which we can inhale. It feels so good, and I really enjoyed it. On the way, we can watch many types of plants, with green leaves and colorful flowers. These are all the signs of the greatness of ALLAH the Creator of the plants, which are created by God for the benefits of human beings pursuant to the contents of the Holy Al Quran. We usually walked for about 1 hour. By walking, our body feels good, probably due to the circulation of the blood, since when you are walking, your heart beat starts pumping, which also works together with the clean air inhale by us containing oxigen which is also good for our lungs. By walking, it can also refresh your mind, since you go out from your house and watch the conditions and view outside your house. Well walking is also good for our body, because your feet are moving, and most part of your body is also in action, and that is really good for your body movement. Well, I am not a doctor, but I think walking is very good for keeping your body in action, especially, early in the morning when the air are still clean and fresh. That is all what I have to say this evening, since I also need to take a rest. Monday, July 14, 2008 at 23.20 hours.

Thursday, May 15, 2008

Experiencing Practicing Own Law Firm for 10 Years

Well I am back at the office from the Central Court Of Jakarta, where I had tried to submit letter to inquire whether a certain company is involved in court cases in Central Jakarta either, in the civil case and criminal case and bancruptcy case. I was requested to bring the original Power of Attorney and also the Articles of Association of such respective Companies. Based on such information I shall report to my Client accordingly. Our task is conducting certain legal due diligence, for which purpose, we have to collect data including data concerning the litigation involvement of such Company. Well, those are some of my legal works that recently my Firm is involved, and I think I have to find another legal works for the sake of maintaining the continuity of our firms' cash flow. I was already experiencing for nearly 10 years since 1 June 1998, practicing as an independent lawyer and also running our own boutique law firm. It is really fun and exiting since you newer, can now as to what type of Clients maybe contacting you and requesting for our legal assistance. Usually our potential Client will contact us and represent their case or legal issues which they feel, they need some legal assistance from our Firm. They will then normally ask for our Company's Profile and also our legal fee arrangement for handling the legal matters that they require us to be involve. Well, usually it will take some time waiting for their response, to our legal fee proposal. So this really depends, on the situation and circumstance, which is faced by our customers or potential Clients. Sometimes we feel, as if we are riding a roller coaster, since our cash flow is not certain, sometimes up sometimes down. These experience will goes on and on, where, sometimes we did not realize that, it has already been 5 months from January 2008 that we have stayed in this new rental building Located at Grand Wijaya Centre on the 4th Floor. Times goes by, very fast, from day to day, week to week, and month to month, without us realizing how rapid the time goes by. Well, I think I have to stop writing since I have to go back concentrating and focusing on the pending legal matters that I have to complete. See you readers, Chiao and good luck Hours 14.40 Thursday, 15 May 2008 Agung Supomo Suleiman Senior Partner Suleiman Agung & Co

Tuesday, May 13, 2008

Freedom & Independent

I really enjoy being Freedom & independent. It feels really good especially in my heart, since I can say and express whatever ideas and experimental spiritual experience which I can do with the Permit of ALLAH The ALL Mighty, as well as mental experience, by setting up my own vehicle or Law Firm by the name of Suleiman Agung & Co(SA&Co) as been permitted and allowed by ALLAH the Great and Only Creator of this Universe that we are allowed to be part of such beautiful live, to the extent, we have to be still within the guidance and blessing of God All Mighty the Creator of this Universe. As we all have to continuously remember and plant in our mind, heart, soul : is God's saying in Surah Fatir/The Originator of Creation (surat 35) paragaph 45 of the Holy Quran, in which ALLAH says : In the name of Allah The Most Gracious and the Most Merciful,
  1. All the praises and thanks are to ALLAH , the (only) Originator (or the (only) Creator of the heavens(sky) and the earth.Who made the angels messengers with wings :2 or 3 or 4 .He increases in creation what he wills. Verily ALLAH is able to do all things.
  2. Whatever of mercy (i.e.of good), ALLAH may grant to mankind, none can withold it, and whatever He may withold none can grant it thereafter. And He is the ALL-Mighty, the ALL-Wise.
  3. O mankind! Remember the Grace of Allah upon you! Is there any creator other than ALLAH who provides for you from the sky(rain) and the earth? La ilaha alla Huwa(none has the right to be worship but HE. How then are you turning away(from Him)?
Based on such God's saying, we really do not have to be afraid to make any experience with our live to reach the stage as freedom and independent and only to ALLAH shall we worship ourselvers and nobody else but ALLAH. Thus, it is only to ALLAH that we should be afraid of and not to any mankind, who sometimes try "to play god" and "try to play power". It is Allah who gives us the opportunity to live in this world. And it is to ALLAH that we have to report whatever deeds that we have done during our live on this World. As we all Know, in every Court Decision in Indonesia, the Heading of such Decision is always "For The Sake of Justice Based on GOD who is the only One God . Thus, since the Court's decisions is basing on GOD who is the only One GOD, we as Lawyers, Judges, Attorneys, Legal Advisiors, Advocates, Legal Consultants, businessmen and whomsoever we are, who seeks Justice from the Courts Decision in Indonesia, in the event of disputes / different of understanding / interpretation on contracts, by the Parties who have entered into such contract, or non-contracts , must really realized the Consequences of their efforts in seeking for such Justice, in the view and prespective of God the Only One GOD as the only Creator of this Universe, since the Court's Decision is always made : For the Sake of Justice based on GOD the only One God. Thus if the Name of GOD is being misused, due to misconduct / misbehaviour by a certain party who cheats, bribes, or whatever unfair conduct, in trying to force their interests unfairly, than it is our faith, that God the only One GOD, will not bless such Courts Decisions, which was resulted and made from such misconduct of cheating, or bribing, which therefore is really unfair to the other party's rights, who is being lessen and decreased materially or morally. Based on Al Quran, decreasing the other's party's rights especially through unfair- unJustice Courts's Decision is in fact breaching, God's rules, because all things/wealths which you may find in and between the sky and earth, are actually created and owned by GOD, and is being given to the well beings /creatures in this World and Universe, as a tool/ instrument of test from GOD, whether such human being is greatfull to ALLAH, or not. Based on the information in Al Quran, it is GOD who distributes /grants wealth to any and all creatures, which God has created, including the human beings, and shall all return to GOD as the owner of this Universe. One significant element of Faith, that we have to plant in our Heart is that " There will be a DAY where, the REAL JUSTICE will take place, and the Judge will be ALLAH the ALL MIGHTY POWERFULL. Regardless whether you like it or not, you believe it or not, regardless of your nationality, your etnics, your believes, such Final DAY will for sure come, and only GOD will know when such Final Day will occur. Well, having said all of the above, I just want to remind myself to be always consistent with the need to ask and really ask deeply in our hearts, for GOD' s guidance in continuing our life. Such GOD's Guidance has been forwarded to us through God's Messengers, which are all the Prophets, and in this present moment, in the Area of this Very Rapid Information, including through the internets, blogs, you may and can be find, and read and digest God's Written Manual : How To live in this World, namely the Al Quran and all the Book's which was given by God through its previous prophets, which, benchmark has to be on the Latest Book which is the Al Quran and through the latest and Final Prophet, named Mohammad ( peace be upon him ), who is originated from the region of Arab, at the Place of the 1st House Lord so Called Baitullah or Meccah, where Abraham, who is Mohammad's great-great grand father from the line of Prophet Ismail, who has inspired all of us to keep on seeking and find the real God as the the Real and True and only Creator of this Universe, where during that period of time, Abraham has to face his own blood father, who has worship his own created god ( man made god or false god), other than God the All Mighty. Hours : 2.45 midnight continued and revised 11.45 morning Tuesday 13 May 2008 Wrote by Agung Supomo Suleiman

Saturday, April 26, 2008

Awareness and Realization

Awareness and Realization Based on my experience, in running an independent vehicle or entity such as our Law Firm, which is now named SA & Co ( Suleiman Agung & Co) for nearly 10 Years, from 1 st of June 1998 until to date 26 April 2008 , I really am fully aware, and realize, that it is only with the Grace and permission of ALLAH, that I and my staff including my supporting wife, can still have the will and strength, physically, mentally, emotionally and spiritually, to continue full filing the excitement in experiencing our live in this world, and therefore,we must always keep on maintaining, thanking God, for giving us the permission to live in this World, and giving us the chance, to be independent and having Clients, who requires our legal services, which results cash in to our Firm, for which we can continue to feed our Family.

Drilling Rig

Drilling Rig
oil gas

AMAZON