Saturday, November 29, 2008

Enjoy Drafting Commercial Contracts

  • Drafting Business Commercial agreements
  • Well as a Business Lawyer it is really interesting in drafting and preparing agreements for your Clients.
  • The interesting part of drafting for me as a Business Corporate Lawyer, is because I really love and enjoy experimenting making clauses and provisions which is actually, the art of accommodating our Clients wants to protect their business interests since every pennies of their monies are really worth to be protected in order to maintain the continuity of their business operations.
  • From my experience in assisting our Clients, I understand that they are really rich with new ideas to develop their business.
  • It appears that they never are asleep and are always waiting for new ventures and ideas in setting up and growing their business.
  • It makes us always being inspired by our Business Clients, since they are always seeking for new ventures and opportunities.
  • We as business lawyers have to be smart and must always maintain and enriched ourselves with alternatives ideas and ways to accommodate our Client wants and needs.
  • Why am I really interested in helping our business clients ideas, is because if we can develop in making an agreement which could accommodate their wants in entering into an arrangement with their co investors or counterpart , this will result a ground for our Clients to visualize their business wants and visions, through a proposal written agreement with their co partners or business counter part, which will than be responded by their co partner or co business counter part to incorporate their counter business ideas.
  • These will be followed by several meetings and negotiations between the relevant parties, which will involved the management, technical, commercial, tax, lawyer and other related professions.
  • Accordingly, under a certain cooperation agreement relating to certain business ventures, we usually have to be aware of the commercial aspects, the respective technical aspects, business legal aspects and other relevant aspects.
  • The most important thing that you as a Commercial Lawyer has to do is to really to understand what your Clients wants, wishes and visions.
  • Thus you have to capture and really capture their business visions and goals.
  • Once you have digest their wants and visions, we as Corporate Lawyers will than have to make our best efforts to translate their vision, wishes and wants through the legal agreements that you drafting, in order to assist your Clients wants.
  • if at the end of the day, such negotiated Commercial Agreements are signed on the closing and signing date, this will be the embryo of the new venture which will results new jobs and opportunities and will absorb many workers and professions engaged in such new established ventures and thus with the help of the ALL Mighty, this new venture, may feed many families, kids of such involved people, and makes the lives cycles continue in moving its part;
  • As a Corporate lawyer the above tasks are really very challenging jobs for us.
  • It makes us as Corporate Lawyers really feel alive, maybe it is comparable or the same as painters, who likes to paint, what they captured from their perspective and translate into paintings on their canvas with their paint brush, or photographers or film makers, who can professionally capture this life cycles with their photograph instruments.
Cheers Sunday November 29, 2008 18.20 Agung Supomo Suleiman Partner Business Lawyer Partner Law Firm Suleiman Agung & Co

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

Email : agungsacolaw@telkom.net

Wednesday, November 12, 2008

DMO ON COAL Producers IN Indonesia

  • I read in the News Paper Kompas dated 11 November, that there is going to be a Domestic Market Obligation (DMO), 20-60 million ton per year, shall be stipulated at the latest of December 2008.
  • This amount can be changed in accordance with the real needs movement domestically.
  • It is said that such was the statement from the Director Mineral Program Development Coal, and Geothermal Department of Energy and Mineral Power Resources (Direktur Pembinaan Program Mineral, (ESDM), Sukma Saleh Hasibuan, Monday 10/11) in Cirebon.
  • The production of Coal is 200 million ton per year.
  • The draft of the Ministerial of ESDM relating to this DMO appears to be nearly final.
  • The rulings of this DMO among others includes ruling the minimum DMO coal sales ( PMPBDN) for the entire coal producer in Indonesia.
  • Whereas, the coal mining companies with qualification of coal types which are not matching for the DMO is subject to certain compensation value in the form of fulfilling transfer quota PMPBDN.
  • With Coal DMO, there will be a guarantee of standard price of DMO.
  • Such sources says that according to the Coordinator Committee Securing the State Assets Marwan Batubara the rulings of DMO has to be immediately determined because the coal stock for the State Electricity (PT PLN) is decreasing.
  • According to him the rulings on the DMO must be adjusted with the State financial strenght and the public interest as the user of the PLN services.
  • Meanwhile, the conversion program of coal becoming gas or coal gasification as the mixed fuel source for the Diesel Electricity Power Plant (PLTD) is merely effective to be developed for the territory of Kalimantan and Sumatera.
  • Such Kompas newspaper says that the PLN Expertise Functional Service and Production, Sadar Tobing emphasize that the usage of coal gas for the PLTD territory is geared to the PLTD territory which is near to the mining location, namely West Sumatera (Sumatera Barat), South Sumatera, and Kalimantan. This is to save the transportation cost and storage effectiveness.
  • The Example Project coal gasification in Paliman, Cirebon, is being developed by PLN to gether with the Mineral and Coal Research and Development Centre together with PT Coal Gas Indonesia.
  • Coal Gasification is using the low calorie coal 4.500-5.000 calorie, 6-50 millimeter diameter
  • The usage of the coal gas shall substitute 70% of solar usage.
  • From the PLN test, the usage of coal gasification as solar mixed for PLTD with 130 Kilowatt Power can safe the solar consumption 63%.
Quoted from the Kompas Newspaper of 11 November 2008 by Agung Supomo Suleiman Partner Business Lawyer

Partner Law Firm Suleiman Agung & Co

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

Email : agungsacolaw@telkom.net

Mobile Phone : 0816830647

Saturday, November 08, 2008

Snapshots on Oil and Gas Rules

  • Based on the considerations of the Law No. 22 Year 2001, the National Development has to be directed to achieve the peoples prosperity by conducting the reformation of all fields of the nation and state based on the Pancasila and the Indonesian Constitution 1945.
  • For Foreigners readers, I would like to inform that Pancasila is the five principles of the Indonesian people and State which is being used as the motto to unite the various ethnics and background culture found in Indonesia.
  • Whereas the Indonesian Constitution 1945, was the Constitution which was established and agreed by the founding fathers of this Nation, during the period when Indonesia was formed after its Independent day.
  • The oil and gas is the strategic nature resources which are non-renewable which is controlled by the State and is the vital commodity which controls the mainstream live of the majority people and has an important role in the national economy so that the management has to maximize in contributing the welfare and prosperity of the people.
  • the oil and gas activities has an important role in giving the real value added to the growth and continuity of of the national economic.
  • The Law No.44 Prp.Year 1960 concerning Oil and Gas, the Laws No. 15 Year 1962 concerning the stipulation of the Government Regulation of Replacing Law No.2 Year 1962 concerning the Obligation of the Oil Companies to fulfil the domestic needs and Law No. 8 Year 1971 concerning the State Oil and Gas Enterprise is no longer in accordance with the development of the oil and gas enterprise
  • Whereas, by still considering the national as well as international development the changes of the laws regulations concerning the oil and gas mining which can establish oil and gas enterprise which is self standing, strong, transparent, having the competitive power, efficient, and having the environmental vision, and boost the potential development and national role.
  • Based on the above considerations and in order to give the legal base for the renewal steps and redress the oil and gas performances the Law No. 22 Year 2001 had been formed.
  • After having implemented since the Year 2001, we understand from our sources there is an amendment being proposed and discussed between the House Representative of the People ( DPR ) and the oil and gas Community.

Agung Supomo Suleiman

Partner Law Firm Suleiman Agung & Co

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

Email : agungsacolaw@telkom.net

Mobile Phone : 0816830647

Exiting and Thrilling Experiences

  • Well I feel like writing in this Blog of mine.
  • I know its already late at night time shows 1.00 night.
  • Finally I realize that I am a business lawyer and specializing in Oil and Gas, General Mining, Coal Mining, Hotel activities, Construction and financing arrangements.
  • Well in this Oil and Gas, it started when I was working 5 Years as In house Lawyer in Huffco Indonesia (Virginia Company) who has its oil and gas operations under a Production Sharing Contract with Pertamina.
  • These Oil and Gas operations produced oil and gas, where the gas is being delivered to the processing and refinery plant in Bontang being purified and processed as LNG ( Liquefied Natural Gas) which shall be delivered to its customers in Japan. Wauw really exiting isn't ?
  • I was assigned as the in house Lawyer who was reporting directly to the Senior Vice President Exploration & Production, who are mostly engineers.
  • It was really an exiting experience because I was responsible for handling and reviewing the Exploration and Production Contracts, and is also responsible to answer any question from the Management relating to the interpretation of the Production Sharing Contract ( PSC).
  • Some of the questions relating to this PSC are among others what is meant by commercial production, when is the Oil and Gas Company obligated to surrender part of its Contract Area and other significant PSC issues.
  • On the Exploration and Production side, I was responsible to draft and review the E & P Contracts from the legal aspects. Such Agreements covers operational contracts among others the Drilling Contracts, Well Testing, Cementing Agreements, Helicopter Charter Agreements,Vessel Charter Agreements, EPIC (Engineering,Procurements, Installation, Commissioning Agreements) and other Exploration and Production Agreements.
  • It was really exiting and interesting tasks working as In House Legal Counsel in an Oil and Gas Company.
  • The most interesting part of the tasks, which I really enjoyed, is when you are assigned to go to the Site Location, in Badak or Bontang in East Kalimantan of Indonesia.
  • Why is so exiting ?
  • The existing part is because you will directly go to the terrain and remote places, where the access roads are not asphalts but are brown land and dusty, where you can see the pipelines which transported the oil and gas from the production wells in the commercial producing wells, and the oil and gas station gathering, the rigs, the wells, the plants and other oil and gas facilities;
  • You will also see the green forests trees, all around you which makes you feel , you are trapped in a beautifully wild nature.
  • The fun part is also when you fly with the Helicopter Bell 412, and sea the view of the Site Location from the chopper.
  • It is really exciting and thrilling experience.
  • On the Site Location you usually travel with jeeps which is really exiting.
  • Well, such view and adventure in the Fields are really important for you so that you can capture the whole and comprehensive picture, as a contribution when you are drafting the oil and gas contracts.
  • Remember as a Lawyer, part of your job are incorporating the rights and obligation of the parties which is the Oil and Gas Companies and the Supporting Contractors in a contractual agreements which is actually the reflection of the meeting of minds and understandings between the parties.
  • The readers and the stack holders of such Contracts which you are drafting and preparing consists of various disciplines and background which are managements, shareholders, engineers, technical and finance people.
  • So the art of being a Lawyer is to having writing skills to establish communications and understandings between the various stockholders to achieve their common goals and interests.

Agung Supomo Suleiman

Partner Law Firm Suleiman Agung & Co

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

Email : agungsacolaw@telkom.net

Mobile Phone : 0816830647

Thursday, November 06, 2008

Breaking NEWS - Congratulations OBAMA

  • I wanted to congratulate him for winning the USA Presidential election in USA on November 2008.
  • I really like Obama's style. He is still young in age 47 Years old, but he is really mature when he delivers his speech.
  • All the people around the world no matter where they are, appears to be putting high hopes on Obama, because he really gives hopes of changing this world into a more peaceful place to live.
  • It happens to be that when his mother divorced his father, she married an Indonesian men, namely Soetoro and thus there is certain attachment between his family and Indonesia.
  • In a certain way we are all really proud having Obama elected as the new President of USA.
  • He happens to be at the right time and the right place to make the changes in a positive way.
  • When he made his speech after winning the election, everybody sings : Yes We Can.
  • This is really a dynamic motto which inspired us all Yes We Can.
  • Well again congratulations to Obama.
  • We wish you all the the best, good luck and success in your new position as the Leader of USA.

Wednesday, November 05, 2008

Understanding Indonesian Goals in Mining

  • The Legal Sources of the General Mining Law in Indonesia is Article 33(2) and (3) of the Indonesian Constitutional Law.

What is Article 33 (2) and (3) of the Indonesian Constitution LAW ? Why you as a Foreign or Local General Mining Company who operates in Indonesia, must really understand this Famous Article which was "Planted" in the Indonesian Constitutional Law by the "Founding Fathers" of this Great Nation of Indonesia. Well, let me try to explain to you why this Article 33(2) and (3) of the Basic Constitution Law 1945 is really significant to be understood by the Mining Companies operating in Indonesia.

  • Pursuant to this Article it states that the branch of productions which are important for the State and which exploits the mainstream live of the majority people shall be under the sovereign of the State.
  • The earth and the water and the natural richness which is contained therein shall be under the control of the State and be used at the most for the welfare of the people.
  • Furthermore the basic principal of the control and the beneficial of the natural richness upon the various mining minerals for the social welfare of the people in the mining activities shall be implemented under the Indonesian Mining Law.
  • The Indonesian Nation as the holder of the Ownership Title upon the natural richness in the form of various mining minerals which is contained in the earth and water within the Indonesian Territory which is the "Indonesian Mining Legal Area", shall thereafter "grants the power" to the State to regulate and makes benefit of such national richness with the utmost to achieve the justice and prosperity of the society as a whole.
  • Thus based on the above principals, The State has the Authorization Right ( Hak Penguasaan) upon such National Richness, whereas the execution/the performance of the State Sovereign is called " The General Mining Authorization".
  • Since the State posses the right to control or the Authorization Right ( Hak Penguasaan) upon the various mining minerals, than the State cannot not grant other rights which is more larger then such Authorization Right.
  • Accordingly, what can be given by the State is the General Mining Authorization Enterprise ( Kuasa Usaha Pertambangan Umum ) or abbreviated (Kuasa Pertambangan Umum) General Mining Authorization, which covers the general mining efforts ( usaha-usaha pertambangan umum : general survey, exploration, exploitation, pengolahan ( treatment ) and pemurnian (purification), transportation and selling.
  • Furthermore, the State shall give the performance of the General Mining ( Pengusahaan Pertambangan Umum) to the holder of the Mining Authorization.
  • Since there are many various mining minerals, the State needs to determine the categorization or grouping of such mining minerals and the performance of such mining minerals.

Agung Supomo Suleiman

Partner Law Firm Suleiman Agung & Co

http://www.sacolaw.blogspot.com

Email : agungsacolaw@telkom.net

Mobile Phone : 0816830647

Monday, November 03, 2008

Slight View on the Mining Law in Practice

The Mining Law in Indonesia regulates :
  1. Ownership
  2. Grouping of minerals according to their importance
  3. The way mining will be conducted by different parties
  4. The role of the Local Government
  5. The way in which mineral development can be licenced or authorized.
  • As regulated under the Mining Law, minerals are divided into 3 Groups based on the historic role, present and the future potential and possible economics significances each of such minerals to the state and the people. These grouping are being determined by a Government Decree from time to time.
  • The Groupings in general are divided into Group A : namely the Strategic Minerals.
  • Under this Strategic Minerals are among others : oil, asphalt, wax, natural gas, coal, brown coal uranium, radium, and other radioactive minerals, nickel, cobalt, tin .
  • Following thereafter is the Grouping B which is the Vital Minerals. This Vital Minerals among others are : iron, manganese, copper, lead, gold, silver, platinum, diamond, silver, mercury, sulphur.
  • These groupings of mineral shall have impacts on the issuance of the mining licenses and /or royalties.
  • While C Minerals are handled by the Provincial Governments. These C Minerals are usually relating to among others limestone, sand, gravel which are developed under a Regional Mining Permit ( Surat Izin Pertambangan Daerah or SIPD) which is issued by the Governor and can cover an area of 25 ha.
Based on the Mining Law, the Mining of Strategic Minerals can only be undertaken by a government agency appointed by the Minister or a state enterprise. Mining can be licensed or authorized in 5 ( five) ways :
  • 1. Ministerial Assignmentt to carry out mining by government bodies or agencies ( Penugasan Penambangan) as in the case of BATAN which is the atomic energy agency being assign to carry out the development of radioactive minerals.
  • 2. Issuance of Mining Authorization ( Kuasa Pertambangan or KP). This KP are granted to Mining Companies (sate or private) or to Indonesian Individuals.
    • As we are aware there are different stages of Mining Authorization which can be applied for.
    • In applying the Mining Authorization, we have to submit the required maps and other administrative requirements.
    • In practice the Mining Authorization will be given for a limited time. Reasoning of this is usually related to guarantee the seriousness of the applicant / the right holder in performing its obligations. If such right holder is not performing any exploration activities for a certain period of time, in a certain Area, the potential minerals in such location will be idle, which on the other hand, can actually can be explored, exploited by the other more serious mining companies to produce the mineral products.
  • 3. Contracts for Foreign or Domestic Companies ( Contract of Work or Coal Cooperation Contract). This is based on regulations under the Mining Act combined with the Foreign Investment Act.
  • 4. License or Permit for People's Mining. This License is granted to small traditional or manual mining operations which are using simple equipment and technology. Usually it is conducted in a small scale or through mutual cooperation using simple tools and equipments.
  • 5. Authorization by District Government ( Surat Ijin Pertambangan Dearah - SIPD) This usually in practice applies to Group C Minerals.
  • From my experience, as In house Legal Counsel in a Mining Company who conducts Mining Operations in Copper, such Company, who operates in Indonesia under a Contract Of Works ( Licence/Authorization) needs a certain volume of limestone for processing its product in the Mill Plant. The Company who conducts the limestone operation holds the Group C Minerals license issued by the Local Government.
  • This Limestone Company was granted work by the Copper Mining Company to manage the usage and supply of the limestone in the Mill Plant. Exiting isn't it.
  • Thus, in practice, you may found situation in the field operation at Site, where a cooperation mechanism, may arise between the Big Cooper Mining Company who is exploring, exploitation and producing the Cooper Mineral which falls under the Group B Vital Minerals, and the Limestone Mining Company who is granted the Authorization by the District Government for its C Mineral of Limestone.
Well, the above is a slight view of the Mining Law and its real implementation in the real practice operations which you may find in the Mining Field Operations in Indonesia, which hopely will be usefull for you readers who are interested in reading Legal aspects related to Mining Operations in Indonesia. Date : November 1 , 2008

Agung Supomo Suleiman

Senior Partner Law Firm Suleiman Agung & Co

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

Email : agungsacolaw@telkom.net

HP : 0816830647

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