Maintaining Business Relation

It is really interested to learn and practice how to maintain your business relation with the Business Community. We are really lucky to have the experience in mastering a certain professional who are needed by the Business Community. You can build and maintain such relation after you are fully aware what is your function and what does the Business Community Needs. 

Every Business Community needs growth and ideas how to survive, establish continuity of cash flows,  make profit,   expand and  and grow. If you are eager to assist your Business Clients  desires and wants you have to be aware what they want to achieve success in their business objectives.     

You have to have certain value added to your business community. Business players needs funds or investors to establish their business desires and goals  which needs customers to purchase their products.  

Networks are really significant and important to get their business dreams comes true. You have to be patient in the process of learning and you have to be prepared to educate yourself to tune in the business community. Besides being a Business Lawyer you must have to continuously  expand your networks so that you can link and match the various stakeholders in the business community. 

You have to go out and make contact to your networks and serve the needs they required to start and make actions and steps to perform the desires and wants of the relevant business players. Business Lawyers does not stand by itself but has to develop and maintain contacts with the various business stackhloders. You have to be active and not pasive. You have to meet people and check what they need and require. Do not loose the momentum but create and make the momentum.

You will be amazed on the outcome of your making contacts and relations with the networks that you are linking and matching.  The results needs some time but you have to be consistent in developing the added value of your self in the business community.  Keep on maintaining and increasing your potential ability to establish and mainain such business relation so that a deal for the business transactions can be achieved and result a positive path.

Seeking Investors and Funds

You may notice that in the real business world, business players frequently are seeking funds or investors to expand their production capacity or pursuing new projects. In seeking there funds we as Business Lawyers might have an active role to assist our Clients in seeking such funds or investors. The mechanism of seeking such funds is that you must have networks who can advise you who to contact such Investors or Funds. 

The Funding or investors might be from your local area Country but they may also be from outside of your Country. The first thing that you must do is just ask one of your Business Investors Network who you can trust and ask whether they have some relevant contacts or experiencing in seeking such Funds or Investors. Your network may be some Capital Investment Consultants who have a wide range of networks in several countries.   There may be the Big players but there also may be middle class or boutique players. 

Your  Business Consultant Management Group may request you to contact your Clients who are seeking such Investors or Funds. When a specific date for a meeting had been set up you  may  coordinate  both of them to meet in  a certain place such as for instance in a coffee shop in a Hotel or in the office of your Business Management Consultant. In such first meeting  you will introduce each other and discussions will be held. In such meetings if both  parties had been acquainted with  each other  and communication has taken place,   the Business Consultant may request the Business Player to deliver what they want and might raise some questions which  usually relates to the capacity of the current production and the equipments and supporting infrastructure which they plan to develop to achieve their desire toincrease their production level capacity

 The Business Management Consult or the Investment Capital Company might also request the Business Player to provide them with the written Info Memo or Business Plan which requires such funding  or Investors. There may also be questions on what kind of cooperation or business relation is going to be established  and worked out relating to the need of such new Funds or Investors. These maybe Equity Share, cooperation, or split of the Profit and risk.

So it is quite interesting and exiting to make such contacts for which you as a Business Lawyer not only functioned as Business Lawyer giving Legal Advise,  but you may also seek, contact fund raiser  or Investors to your Clients,  for which you may also have the chance to get some fee payments for your services and also a certain Success Fee if such Business Contacts succeed in making a Business Deal.  

As the Business Players they may be able to seek the investors or funds by themselves, but if there is a media between them who can arrange and assist them professional in handling such business opportunities, it will for sure be benefit to safe their financial problems and difficulties, where  there might be someone out there, who can solve their business problems in a professional manner. These also depends upon your networks as to whether they are pro-active in striving to get their business deal succeed.

Well folks the above are some brief glance relating to seeking Investors and Funds to support your Client's Business Activities;

Cheers
Agung Supomo Suleiman 
     

New Decree Cost Recovery Scheme Oil and Gas

From reading some sources it appears that Indonesia will issue a government decree which will clarify what oil and gas contractors can claim under a scheme to reimburse their operational costs, including exploration spending. 

Cost Recovery Scheme.

As we are aware under the Indonesian system for the oil and gas operations it  adopts Cost Recovery mechanism for all the costs for exploration and production costs, incurred  by the Oil and Gas Contractors where it consists operation costs for the expenditure of current year and the capital costs which will recover based on the life time use of such capital item depending on the Group under the Accounting Clauses as Appendix in the PSC ( Production Sharing Contracts.    

Intervened by the DPR ( Parliament)to Limit The Cost Recovery Items

The House of the People's Representative has intervened for having limits on such  Cost Recovery. As we may noticed some of the Technical Assistance Agreement (TAC) in the Oil and Gas  previously  has a  certain cap for the Cost Recovery for the running Year. To guarantee the Government's cash in for its State Budget the  FTP or First Tranche Petroleum was adopted where the value is  equal to  20% of the Total Oil and Gas  production of the current Year  has to be  firstly deducted before Cost Recovery  is done to reimburse such costs  during the current running  Year.  So the Reimbursement is taken out from the remaining 80% of such Current Year Oil and Gas production.

We understand from reading the news that the Finance Minister Sri Mulyani  said  in a parliamentary hearing that such Decree will contain special rules for oil and gas, especially on cost recovery to calculate (production) sharing and tax. 

The Minister said that in this decree, the costs will be based on normal principles of business and tax rules.

Furthermore she said  that the government had previously issued sort of a "negative list of items and services that oil and gas contractors working in Indonesia could not be reimbursed for.

The list includes the cost of employees, expatriate costs, as well as costs for legal and tax consultants, and community development expenditure.

However according to the sources the Minister said that the decree is not aimed to intimidate those claiming costs. If the costs are related to exploration, exploitation and development, it can be claimed from the government.

It is noted that Indonesia expects the spending by  the Oil and Gas Contractors for  exploration in the  Indonesian Oil and Gas Fields Area will fall to $2.3 billion this year, which is down  to about 15  %  from the Estimated $2.7 billion in the Year  2009.

The Crude production, which was about 1.5 million barrels per day (bpd) in the 1990s, has nearly halved for which Indonesia has in the current years become a net importer of crude oil. We are aware that the Major Global Oil and Gas Players such as ConocoPhillips, Chevron (CVX.N), (COP.N) and Total (TOTF.PA) are operating  in Indonesia,  however the country  appears to be struggling  to attract fresh investment to develop new fields.

Indonesia is Producing  949,100 Bpd of crude oil and condensate in the Year 2009, which is missing a target of 960,000 Bpd in  such Year.

A certain sources said that the target of producing 965,000 Bpd  of crude and condensate this year would be very difficult to be accomplished  since  the Output from  the Older wells was falling  to about 10-15 percent per year. In order to encourage the Exploration we understand that The Government  has offered New  Exploration  Rights and  will provide new incentives to oil and gas investors, including more favorable tax treatment and a better production split.

However there are others saying that the incentives may not be sufficient for the Oil and Gas Investors  since many of the unexplored fields are in the Remote Locations and often in deep water, and so expensive to develop.

We can observe in practice that incentives issues are always brought up when a certain Oil and Gas Investors are having a negotiation with the Government Team in the process of getting a deal in a new contract in the Oil and Gas such as PSC, TAC or JOB. The Oil and Gas are taking all the Risks for the sinking funds if oil and gas is not commercially discovered. However, as we also note that pursuant to the spirit of  the  principles under the Indonesian Basic Constitutional  Law Article 33 (3)  the Resources which are owned by the public has to be managed for the social best welfare to increase the quality life of the people of Indonesia as a whole. Thus the concept of treating oil and gas Resources in Indonesia has a different approach with countries adopting the Concession Right where any person / party  can own the oil and gas which is discovered under the land such party/person owns.     

Accordingly, besides the Commercial side and consideration that had to be considered by the Oil and Gas players in Indonesia, we have to remember that  the Government of Indonesia as well as the House of Representatives  has to balance  the commercial side and the public function aspects.   

Review Contracts

As a Business Lawyer you are frequently requested to review and draft business contracts which are needed to cover the terms and conditions of your Business Clients who are dealing and enggaging contractual relation with their co partner in pursuing their Business. We have to be experienced in handling this kind of business transactions. You have to identify and explore their business venture and the legal exposures which are attached to their business relation. As a Business Lawyer besides practicing your skills in drafting such Business Contracts you may also purchase books which gives you some knowledge on Drafting Contracts.

 In drafting contracts you have to dig all the relevant data that Your Clients desires to pursue their business goals. You have to identify what your Clients wants out of the business. We have to check the rights and obligations of each party. Who will be responsible to do what, who is responsible on seeking the funds or investors to fund the investment. Is the Business deal in the form of cooperation between such Business players. Are there going to be a joint venture or setting up a new company. Is there going to be partnership, acquisition or merger between the companies.

Where are the business operations going to be performed. Is it in the manufacture of products. What are the products ? is it Customer Goods  ?  Is there a Principal and Agent or Distribution arrangements ? There are many several data and business information which you as a Business Lawyer have to dig out from your Client. You have to conduct legal research upon the corporate documents of your Clients Business Counter part.

The business licenses and permits they have. Are they engaged with other business investors in the field of business that your Clients desires to cooperate with such Co Prospective Investors.  Does such company received  loans with bankers which still outstanding ? Is their any collateral which are attached to their assets which shall be used in such Cooperation or Co Ventures ? Those are among others the relevant elements that have to be checked  by the Business Lawyer who are assisting their Clients in  drafting contracts to pursue a cooperation or joint venture arrangements with a prospective Investors / partner.             

Legal Marketing Strategy

As a Business Lawyer you have to seek a Legal Marketing Strategy. You have to be honest to your Customers and Client.  You have to put trust to your Client. Even you start your Law Firm from scratch since more than  11  3/4 Years ago, you have the real experienced in establishing your Track Records in handling and giving Business Legal Services to your Clients. As a Partner of your Firm you have gained the Professional Skills as Business Lawyer and you also have experienced in performing, operating your own Law Firm now called Suleiman Agung & Co (SACO Law Firm) where there is no school education but you have to experienced by yourself.

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• You have to be consistent in always learning and experiencing the legal aspects that must be highlighted to your Clients. Your Clients interests is to get their  Business Ventures succeed. You as a Business Lawyer are responsible to high light the Legal exposures and aspects that might occur where your Business Clients desires to pursue their Business. You have to advise your Clients upon the relevant Laws and Rules that are surrounding and may have to be high lighted to your Clients. 

You have to advise your Clients on the rules and laws that have to be abide by your Clients starting from the Permits, licenses required to operate their business.The rules relating to Foreign Investors including the manpower for the Expatriates. The Policies from the Relevant Government and Authorities. Since Indonesia consists of many Islands which are scattered you have to advise your Clients on the Policies and Rules between the Central Government and the Provincial/ Regional Governments. 

• The distributions of Authorities in granting the Business Licenses, Business Operating Permits  and distributions of revenues, levies, charges imposed against the Business Operations  between the Central Government and the  Provincial/ Regional Governments.  

The Land / Building title and Rules on Land and Building rights title to use governed by the Land Regulations. The Relevant Technical Departments involved in the operations of the Business and Investments of such Company. The Community Development Program as well as the Environmentl aspects that have to be taken into considerations.        

NATIONALIZATION 

The risk factor that  have to be looked out is the possibility of Nationalization by the Government. Although the Foreign Investment Law ( FIL) explicit stated that the Government will not nationalize or expropriate the investment or the right to manage the investment company, in exceptional circumstances we have to observe whether there is a ruling which regulates that it could be done according to the Law in the interest of the State   ( as was regulated in Article 21 Foreign Investment Law No.1 Year 1967).

Washington Convention 

As we are aware Indonesia is a member of the International Washington Convention which is the Convention on the International Centre for the Settlement of Investment Disputes ( "ICSD"), the International Centre fo Settlement of Investments Dispures between Staes and nationals of other States sponsored by the World Bank based on Law No.5 Year 1968. In case a dispute will arise between the foreign investor and the Indonesian Government, such dispute will be referred to ICSD, arbitration in Washington. One of the concrete example  of such investment dispute had caused a premature withdrawal of the investment licence in the case of Amco vs Indonesia filed in 1981 and is ultimatel finalized after 12 Years of arbitration proceedings.

Good Signs of Outlet Retail Store Sport Shoes Business in Indonesia

If you are starting from scrap bottom Rock, even though you have established and operate your Firm for more than 11 and a quarter Years of life time since June 1998, it is not easy to maintain continuous Clients with the right selling prices that could maintain your cash flow. You have to be tough and have strongly motivated spirit to survive in operating your Firm now called Law Firm Suleiman Agung & Co .  

Your Firm actually has a long term Track Records and have lots of experience in conducting various legal services and works in the Business Community. However  it is not that easy to perform growth to your Firm. Your cash Flows are actually from Clients  who are using your legal services. But  some of our Clients which are using us, they are  experiencing cash flows issues and are struggling hard to survive and really needs and seeks  funds or investors to assist them to continue  or expand their  business.

Accordingly some of the Businessmen experienced cash flow problems, which resulted delaying the  payments of  our  legal services fee, for which these in reality disturb our cash flows during the running operating years. 

It had been more than 11 Years that Indonesia had survive from the Economic Crisis since June 1998. I thought that after restructuring loans faced by the Indonesian Investors it will be much better, since their debts and loans had been rescheduled. However,  perhaps due to the Politics situation in Indonesia particularly relating to the Bank Century issues,which involve politicians in the Indonesian Parliament, who are  controlling the Policy of the Government in Bailing out Bank Century,  these conditions has affect the healing situation  of  the Indonesian Businessmen who suffered  turbulence caused by the Economic Crisis.  These situation occurred after Indonesia had experienced completing its Presidential Election and Parliament election. 

Positive Signs

However,  there are also signs  that several of  our Business Networks who are conducting  Outlet Retail Sport Shoes Consumer Goods in Indonesia are on their good business stage and phase, which could be indicated by their employees purchasing power and expansion of their Outlet Retail Sport Shoes Business in Indonesia. One of our Networks is engaged in the the Outlet Retail Consumer  of Sport shoes in Indonesia with their website address at  where it appears that they are in a good expansion condition. So in the Retail Consumer Goods in Indonesia it shows good expansion business progress. 

We really can learn from their good high spirits as Indonesian Entrepreneurs.  If you are really interested in purchasing such Sport Shoes you can  visit their above websites or you may contact us  for which  we  can contact you with the proper right persons  at PT Star who are operating and selling such sport shoes through their inter connection Retail Store  Outlets  Sport Shoes within several cities throughout Indonesia.  

Agung Supomo Suleiman 
Mobile Phone 0816830647
 

Brief Legal Notes on Preparing Drilling Contracts

When you enter and try to draft Drilling Contract,  you must be aware that the relation between the owner of the Drilling Unit, or Contractor and the Company  who requires such Drilling Operation  is governed by The Drilling Contract.  It is really  interesting as a Business Lawyer to be requested by  the end-user  to draft such Drilling Contract Agreement.

Within the petroleum industry, the drilling of wells is significantly important, since without a well - a simple yet complex ) hole in the ground -there is no way to get the oil and gas.  Basically the people directly involved in drilling are employed by operating companies, drilling contractors and various services and supply companies. The Operating Companies are the financiers of the industry and the principal users of the services provided by Drilling Contractors and Services Companies.

An operating company often called an Operator, is a person or company who actually has the right to drill and produce the petroleum that may exist at particular Site.  In Indonesia this Operator has to enter into a certain contract called  i.e.  Production Sharing Contracts (PSC) with  BP Migas pursuant to the terms and conditions under the PSC.  This Operator based on the PSC  who shall be the Oil and  Gas Company shall than enter into a Drilling Contract with a Drilling Company. The Oil/Gas Company itself under the PSC  has the right to explore, exploit, produces such Oil and gas in a certain Block Area as described under the PSC.   
 
At one time when I was experienced working as In House Legal Counsel for 5 Years in one of the Oil and Gas Companies in Indonesia called Huffco Indonesia (Vico), where such Oil and Gas Company were engaging 8 Drilling Rigs  to conduct the Drilling activities in the Contract Area of its PSC.

We must understand that in this kind of Drilling operations, there are high risks involved since the well which are being drilled are really deep wells  containing High Pressure  for instance 1,000 feet.  The oil, gas with such high pressure will flow and push  the casing and tries to found out a way to seek  places with lesser pressure to relieve its high pressure from  the hole below the Rotary Table. On land rigs Blow Out Preventers  (BOPs) are attached to the top of the well beneath the rig floor for preventions. The preventions are nothing more than large, high pressure valves  capable of being remotely controlled. When closed, they form a pressure tight seal at the top of the well and prevent the escape of the fluids. Without such BOP, if blow out occurs, gas, oil; and salt water spew on the air with a tremendous roar.

If there are gas, the whole thing will probably be on fire, and the Rig will lie as melted, twisted mess of junk.Human lives are threatened, pollution may occur,  precious Oil and Gas are wasted, and a Rig worth of  thousands or even million dollars maybe at a total Loss. Thus, obviously, it is desirable not to allow a blow out occur, and in fact not many occur. However, since a blow is spectacular, blow events becomes a media event. In reality according to the oil and gas expertise, Rig Crews will do their best and up most with great efforts that the well they are drilling remains under control. A hole with full of mud that weights the right amount or has the proper density, will not blow out.But sometimes the unexpected occurs.          

Having taking into the above consideration, as Business Lawyer / In-House Legal Counsel we have to ensure that a proper Drilling Contract is drafted and prepared to cover any and all such above risks, which may involved the loss of personal, equipments and event the Wells, for which we have to make sure that the rules concerning the liabilities, indemnities and risks relating to such  losses and damages which imposed legal exposures have to be covered and taken care under the Drilling Contracts. 

In the preamble of the Drilling Contract it shows how the contracting parties may describe the nature of the Drilling Task to be conducted by the Drilling Contractor. 

The Oil / Gas Company desires to have wells drilled in the Contract Area of the Company in Certain part of  Kalimantan as described under the Oil and Company Production Sharing Contract with the Government formerly Pertamina and now BP Migas. We as the Business Lawyer must emphasized in such Drilling Contract  that the Drilling Contractor has the expertise and experiences in the business of drilling, testing, completing. work over, and deepening wells. Such Drilling Contractor represents that it has adequate resources and equipment in good working order and has fully trained personnel capable of efficiently operating such Drilling Rig.

We have to make sure that the Drilling Contractor is ready, willing and able to drill said wells and carry out the said auxiliary operations and services for the interest and satisfactory of the Company. We also  have to stressed out that the Drilling Contractor agrees and is obligated to furnish the Drilling Unit with the Drilling and other equipment and personnel as described in detailed in the Appendix attached to such Drilling Contract.

 

The Contractor shall without prejudice comply with all instructions made by the Company consistent with the provisions under the Drilling Contract, which may from time to time be given by the Company. However, in performing the Drilling Work such Contractor shall be an independent Contractor with the authority to control and direct the performance of the detailed work, subject to Company's right to give instructions and of inspections and supervision by the Company's representatives at the Site Location where the Drilling operations is conducted and shall not relieve Contractor from Contractor's obligation and responsibilities. 

We have to be aware that many service companies such as Cementing Services, Mud, Well Testing, are also at the Location of the Rig Site, for which,  we have to make sure that the liabilities, indemnification,  and insurance clauses covering their respective properties and personal are properly covered with respect to loss and damages that might occur during the Drilling Operations. If there are tools stuck deep in the hole, usually the Insurance Company does not want to cover such down hole equipment loss. If there are losses to the structure of the well causing damages to the well or oil and gas reservoir, the Drilling Company, may request  that the Company absorb such well reservoir loss.           

Well, those are some brief provisions which the In-House Legal Counsel of an Oil and Gas Company must take into consideration in preparing and drafting a Drilling Contract to support the Drilling Operations conducted in the oil and gas operations in Indonesia.