ENERGY POLICY DMO COAL IN INDONESIA

Yes, we have to be fully aware that a strong Country must be backed up by its Energy, where as an alternative besides Hydrycarbon Oil and Gas and Geothermal, we have to make sure that the Policy made by the Indonesian Government as well as the Rulings from the Legislator  have to support  increasing Coal Products to support the Energy in Indonesia;

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• As already practiced in the Oil and Gas Policy applied by the Government of Indonesia as reflected in the rulings,  DMO (or Domestic Market Obligation)  is obligated to Oil and Gas Companies operating in Indonesia to market and sell its 25% (twenty five percent)  of its Annual Oil Production in the Indonesian Territory to secure the Energy supply and need in Indonesia; 

This similar Policy shall and have to be ensured and secured by the Government of Indonesia as well as the Legislator in the People House Of Representative in the Coal Sector, where the Coal Producers are obligated by the DMO (Domestic Market Obligation) Policy to market portion of its Coal Production to be sold within the Indonesian Territory; This Policy is really significant for a Developing Country like Indonesia who has around 250 million of People who needs energy supply to support its standard of living; 

• As we are aware  implementation of this DMO is  applied in the Mineral and Mining Law No. 40 of 2009 and the Ministerial of Energy and Mineral Resources No. 34 of 2009 which applied the prioritizing of the the domestic mineral and coal supplies, and the Directive of the Directorate General Of Mineral, Coal and Geothermal on the technical supervision on supervision on providing the minimum precentage of sales for domestic purposes; 

This Policy is aimed to at least secure the domestic coal supply to back up the Energy in Indonesia especially which is needed for the Power Plant operated by PLN (The State Electricry Enteprise) to support the Electricity need for the Industry as well as the people of Indonesia;  Accordingly, we have to be sure and certain that this Policy must  improve the Indonesian Country's capability  to compete in the National and International level.  Thus the  national interest must be put up front.

• Since Indonesia is still considered a Developing Country, we have to manage our abundant natural resources to our Nations best interest,  especially to support the quality of life of the 250 million people living in Indonesia; We must prioritize our goal and target for the Indonesian Nation which is free education, and hospital for its people so that we can increase the educated and healthy person in Indonesia;

In order to achieve such target we have to think as Indonesian Inc. and must learn from other neighboring countries like India and China who has also huge numbers of population that have to be taken care by this Country, and have succeeded to seriously made a good Road Map Planning in their Energy Policy system which could back-up the needs of the Energy needed by their Power Plant to support the Industry and human household ;

• Based on the above, we have to make sure the Policy and the Rulings made by the Indonesian Government as well as the People House of Representative,  must be geared to develop the Policy and Rulings which must support such goals and target;       

Jakarta, 21 August 2012
Agung  S.Suleiman

   

New Government Regulation No. 24 Year 2012

Recently, the Government of the Republic of Indonesia had issued Government Regulation No.24 Year 2012, which regulates amendment to the Government Regulation No. 23 Year 2010. 

• In essence, this Government Regulation was issued to encourage and boost the Indonesian Participant to  participate in the Mining of Mineral and Coal within the Indonesian Territory;  The IUP or Mining Permit may not be transferred,  except if the Party receiving such IUP owns more than 51% shares of the PT holding such IUP; 
• Pak Sony as the Legal Officer from the Ditjen Mineral and Coal in a Seminar  explained that the intention by the Government is that The Government can monitor the Party who controls such IUP holder who is responsible upon the performances of the Mining Operations in the given Mining Area under such IUP;

Furthermore under Article 7A of the Government Regulation No. 24 Year 2012, it is stipulated that if the applicant of the IUP is foreign capital company or foreign capital Investor, the Minister of ESDM approval is required; Thus, since the IUP is granted by the Bupati, than an IUP cannot be granted by the Bupati to a foreign Capital Investor;

• We can see that in every country now a days, the Government in the Region of the Development Countries based on the development of China, India, Brazil, Russia,  South Africa are gaining confidence in encouraging the Local Participant or Local Investors including Indonesia to play a significant role to actively participate  in the business operations including in the Mineral and Coal business which could be shown by KPC in Kalimantan which is owned by Bumi Resources as the Indonesian Owned National Participant in the Coal Mining Project in Indonesia; 

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• This trend is also stimulated by the Growing Awareness of the Indonesian Democracy, which had encourage the Indonesian Investors to actively participate not only as broker, but as a real player in the Mining Minerals and Coal Industry in Indonesia; Time will demonstrate whether the Indonesian Player can really use this momentum in the Mining of Hard Mineral and Coal business operations, which is inspired by the Indonesian Investors in the Oil and Gas, such as Medco, who are  really growing and playing an important role in the development of the Indonesian Oil and Gas Sectors; 

Technology, Financial engineering and Knowledge is not only owned, controlled and managed by the Former players, but is beginning to be tapped by the Local Investors from the fast Growing Development Countries, which can be seen by the planning of establishment of  Alternate Banks by BRICSA (Brazil, Russia, India China and South Africa);

Jakarta, 2 April 2012

Agung S.Suleiman

                             
    

Enjoying Being Independent Business Lawyer

• I can set up my own definition as to becoming success which is really unconventional and non-traditional  by setting up my own definition of being success, among others by gaining more flexible time depending on my own set of rules as to where and at what time I wanted to do my work.This concept of paradigm is pursuant to the Book which I am now reading called Career Success without a Real Job written by Ernie J.Zelenski

I managed to be more independent by having my own Special Purpose Vehicle (SPV) which is an Independent Law Firm now called  Suleiman Agung & Co ( SACO LAW FIRM); 

• After having been for more than 13 & a half  Years experiencing running this Law Firm, I realize that it really depends on our-self willingness and choice as to what do you want and prefer to be concentrating and focusing on your Career Success, which definition  of Success is being freely  set- up and design by you your self and no other person. 
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• You are the only person who really knows what type of career path that you wanted to establish and venture in this life; Besides working you must also have "time" to  enjoy your life and being alive in this world; You have to venture and sometimes make certain experimental moves in your life;

• In order to optimize your professional ideas in your field of professional you must really enjoy what you are doing and not because of being forced by others  perception in electing the life style that you really like;

The important and significant element that you have to do is that You must establish your hours of experience and track records  in serving your Clients which will certain be the Valuable Assets that you like to focus and sell as your expertise to your Clients;

• You must seek the ways as how you can grab the  opportunities  to demonstrate your expertise which you master and are in  confidence with, which will  benefit and be an  advantage as an Added Value to your Client's business goals and objectives;

From my self experience in developing my so called Professional Career, I noticed that this can be achieved by each and everyone  of  us,  if you are having the freedom to set up your own established  flexible time and place which you allocate,  to learn  the merits and core of your Clients business transactions;

• You have to focus with your best effort for example to make certain Brief Executive summary through a Scheme and a systematic bullet points at the right time and moment  which could help Giving Snapshots and Quick Glance of the Important Issues that your Client has to be aware of, because time is of the essence to make the right and proper business decision;

Well the above are some of the tips that I would like to share with you in the beginning of this Year of 2012, and I wish you a very Happy New Year 2012, New Hope, New Venture, New Spirit, New Venture

Jakarta 2 January 2012
Agung S.Suleiman 

EXITING EXPERIENCED INDONESIAN OIL LAWYER

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Being experienced as Business Lawyer  in the Oil Ventures in Indonesia is really quite an exiting experience. The difference being experienced as lawyer for Indonesian Local Oil Companies who is surviving and struggling to survive and being  lawyer serving legal services for Big Oil Foreign Companies is relating to the funding capability  in their Oil Business Venture.

•   Even though we are in Indonesia, Indonesian Oil Companies who are operating in Indonesia starting from Exploration can be counted. Usually Indonesian Oil Companies who started venturing in the Oil Business in Indonesia started by acquiring ex-Oil Blogs, which had been sold by the Foreign Oil Companies which are already in the Exploitation and Producing stage.  By doing this the Indonesian Oil Companies can manage to show to the bankers that they have cash-in from the selling of the Crude oil for a certain period of time . 

There is also an Indonesian Oil Company who started in the Oil Ventures in Indonesia, after they had   experience running a Drilling Company, where they have already owned certain numbers of Rigs as well as cash in revenues which can be used as collateral for the repayment of their  loans to their Banks. This Oil Company was also formerly at the early stage Managed and Chaired by an Indonesian Expert Oil Top Leader namely John S Karamoy  who had experienced in running big Foreign Oil Company such as Stanvac  and Vico Indonesia,  who is now the founder of JME which my SACO Law Firm is presently in association with.

• I am lucky enough to be experienced as an Indonesian Oil Lawyer who had assisted and were also being involved in reviewing the Sales Purchase Contracts of this ex Foreign Oil Blog acquired by said Indonesia Oil Company, when I founded and set up my Suleiman Agung & CO ( SACO Law Firm).  

Several contracts and transaction were prepared, which includes reviewing the Sale Purchase Stocks, Farm in and Farm Out, Joint Operating Agreement ( JOA), Legal Due Diligence, providing Legal Opinion. There are also Indonesian Oil Companies who are selling out certain percentage part their of their Participant Interests to other Oil Investors in order to remedy and balance their cash flows.      

• In the oil business practices, if the Oil are still in below the ground however located already in the proven and exploitation stage, 1 (one) barrel  is usually valued to be USD1 dollar. If such oil is still located in the exploration stage however is located near by the structure of the exploitation stage shall be valued 30 cents United States Dollars. 

For the purpose of calculating the expected oil reserved,  a study is usually conducted by several expertise consultant to predict the volume of Crude Oil Reserves or Deposits  in a certain Oil Contract Area. This is usually detected by the Oil Reservoir Engineers and Geologist team. Accordingly, the Investors in the Oil Business have to be supported by these expertise engineers and chaired and Lead by the Expert Leader Management of such Oil Company. 

• Such team have to be solid and having real experience in their fields combined with the operation team members as well as the Finance and Legal Expertise to team up such Solid Working Team. One of the significant element is that somebody has to be recognized by the Bankers or Financial Institutions who financed such Oil Ventures which is usually performed through the Holding Companies, but the Oil Company has to be headed by a Certain Expert Management Leader who is already recognized by said Bankers through his track records of his capability and ability to manage and make the Oil Business Operations succeed  in generating Cash-In,  through sustainable production and selling such Crude Oil to the Buyers in a commercial and bankable cash in for a certain period of time. 

In practice, members of the Participant  Interest Holder,  is usually more than one Company, which one of the member of the Investors must also have some self funding sources to back up the financing of the Oil Ventures in addition to the Funding from the Bankers, because in the early stage of the exploitation and producing, several new exploration wells within the Oil Block under the Contract Area of such PSC Contracts with BPMIGAS,  must also still be  founded  and drilled to be further developed for producing to maintain the sustain producing,  lifting and selling of the Crude Oil for the cash in.....      

Jakarta 29 October 2011 - Agung S.Suleiman Partner of  SACO LAW FIRM  
                                                                          in association with   JME

   

Professional Business Lawyer

There are many challenges faced by a Professional Business Lawyers; Before you can advise your Clients you have to be sure that you know what you are talking; Your integrity and professional  reputation is on stack;  As an Indonesian Business Lawyer who had practiced more than 30 Years since 1979 - 1980, you realized that you firstly have to trust your self before you make any legal advise; It is not a matter of pride but more of a professional, where quality is more important than quantity;    

Having been in the real practice as Business Lawyer for more than 30 Years, you tend to love your professional work;   It is really exiting in handling legal aspects in a business community; The art of being independent in providing your legal advice needs some experience of real practice and down to earth matters;   

You have to master and increase your legal knowledge and broaden your mind; You have to research all the legal aspects from various angles of the matter surrounding the business matters of your Client; You must also be aware on the sensitivity of the business goals of your Client; At the same time Good Corporate Governance must be the basis of your target to achieve your integrity and professional character;

You have to be ready to be challenged by your Client, to the legal opinion that you provide and must really digest  the wishes and desires that your Client want to achieve;

You are the master of your mind in providing  your legal opinion;  You have to lead your Client  in your legal professional guide,  after you have really studied the rules,  policies, and master the nature of the contracts and  transactions to guard the business goals desired to be achieved by  your Client; 

Those are some of the tips to be considered and observed by a Business Professional Lawyer in dealing with matters face by your Clients;

Jakarta, August 27, 2011

Agung S.Suleiman 

Quite a While

Yes, it has been quite a while that I was not on the air in writing article in this Blog;  Apparently, I was really busy with the legal works in facing the implementation of the Commercial Production of an oil Area in Indonesia, where we have to strive hard in completing all the facilities production which includes the Gathering Storage Tank of the Crude oil from the Commercial Field  to be transported either by Pipeline, or trucks to the Gathering or Storage Tank at the Terminal Port  to be further shipped to the Tanker or Barge;  

    It is really interesting and quite challenging because under the Indonesian system, there are instances where the Idle Oil Production Facilities can be shared by other Oil Companies, where no profit basis is applied, and sharing costs of the Capital Expenses and Operation Expenses, shall be shared, through the oil throughput arrangements, relating to the sharing usage of such Production Facilities;

As a Business Lawyer you are involved in the legal aspects of this arrangements, where we have to be part of the team in drafting and finalizing this Oil Production Facilities Sharing Agreements.      

Well the operations and commercial professionals staffs must also be involved in completing these production sharing facilities arrangements;    

The target goal of the Oil Production Stream to enable in selling the Crude Oil is most challenging and the Financial aspects are really critical and plays an important role;   

Jakarta, 18 August 2011
Ags 

The History of Mining Act in Indonesia

From some sources of books  written  by  Indonesian writer concerning The History of Mining Act in Indonesia,  we understand that in  1899 : The (East) Indies Mining Act was passed which laid  down the ground rules under which mining operations, including those by private concerns might be conducted.

• One of the basic principle which was laid down in the Indische Minjwet of 1899  was that rights over land (Surface rights) is separated from the rights over the Mineral resources, these being vest to the the Governor

Prospecting for minerals was controlled by licenses issued by the Bureau of Mines or the Provincial administrations, and mining concessions were granted on application by the Governor General.

During these period, prospecting Licenses & Concessions could only be granted to  : Dutch Subjects, residents of the Netherlands Indies, and to Companies registered in the Netherlands or the Indies.

• In 1904 :   An Amendment was passed which froze the granting of concessions in an attempt to keep out new firms.

In 1918 : a New Amendment was passed under which the granting of new concession were resumed, which provides  more favorable terms to the Government.

Under the pre - 1904 concession contracts concessions were granted for a term of 75 years with the Government receiving a percentage of any oil produced plus a fixed price per acre of the concession area. 

We observed that under the concession contracts made after the 1918 amendment the concessionaire was required to pay the Netherland East Indies :

• 4% excise on the value of crude shipped,
• a 20% tax on oil profits, and
• a general tax on corporate profits of 20%.

According to the writer, these provisions was similar to the provisions in Middle East concession contracts on the same period.

by 1940 : 5 International companies was active in Indonesia. :

1912 : the Standard Oil Company of New Jersey began operations in Indonesia, latter merging operations with Mobil to form Stanvac.

In the 1930’s Standard Oil of California entered the scene, latter merging with Texaco to form Caltex.

In this book it is said that together with the Royal Dutch/Shell Company which at that time was the largest producers in Indonesia, these major companies was known as the Big Three..

In 1942, when the Japanese occupied Indonesia, the Indische Minwet of 1899 was rendered in operative, and in anticipation,  it appears that  the Dutch destroyed many of their oil facilities.

•  When the Japanese entered Indonesia, they put the oil operations under the regional military command and tried to rehabilitate the fields and oil facilities. With the Dutch gone, the Japanese forced to rely on experience Indonesian for help - a fact which strengthened Indonesian’ s confidence in their own ability to run the oil industry.

After the Japanese surrendered and the Indonesian declared its  independence in 1945 , and after taking  4(four) years  of war, a final agreement  was reached at the Round Table Conference in the Hague, which transfered the Netherlands East Indies(with exception of West Irian) to the Federal Republic of Indonesia.

In 1951 : The Indonesian Parlement passed a motion to create a commission to inquire in the problems of Oil & Mining Law, which urged the Government to form within 1 month a State Commission of Mining Affairs.

a) investigating asap problems of oil extraction, & of tin, coal, gold, silver & other mining In Indonesia.

b) Drafting an Indonesian Mining Law in harmony with present conditions.

c) Urges the Government to postpone all granting of concession & exploitation permits, pending the results of the work of the State Commission on Mining Affairs.

The Commission took 5 years to submit its Draft to the parliament.

• Not until 1960 did the Parliament adopt a New Mining Law (Law no 37/Prp 1960) and Oil and Gas Law (Law No.44/Prp 1960) both promulgated in the form of Emergence Acts to replace the 1988 Mining Law of the East Indies.

The New Statutes not only retained the State‘s Exclusive right to Mineral Resources contained in the colonial legislation but further make it more stronger  it by stipulating that * Only State is authorized to exploit the Mineral resources.

• The Ideas of Concessions, i.e. , the Grant by the State to a private party of rights to develop Mineral Resources in a certain area of Land  was abandoned. INDONESIA - Indonesian Exports, Marketing & Pricing.: An article from: APS Review Oil Market Trends

Only the State, as the custodian of the Indonesian people, or on its behalf  a state enterprise can have Mining Rights called an “ Authority to Mine” or Mining Authorization.”

Well, these are some interesting back grounds which was taken from the above interesting book;