* Rupiah's fall in value makes rules more problematic
* Chevron warned it may cut investment
* Indonesian regulation "very difficult", says Total
By Fergus Jensen
JAKARTA, Feb 18 French oil major Total
has added its voice to complaints by U.S. leviathan Chevron
that Indonesia's rules for overseas investors are
hampering operations in the southeast Asian country.
Indonesia's central bank brought in rules in 2011 to force
exporters to channel earnings through local banks, but the issue
has become more sensitive in recent months because of the fall
in value of the rupiah and could threaten future
investment by the two companies.
"With today's contracts and way of working, it would be very
difficult," Total's Indonesia CEO Elizabeth Proust told
reporters on Monday, in reference to the Bank Indonesia
regulation. "It's not possible."
Indonesia, a former OPEC member and now a net oil importer,
is trying desperately to boost energy production and encourage
investors to put more money into exploration. But it has been
widely criticised for confusing and sometimes contradictory
regulations that some have warned could end up scaring off
The complaint by Total, the biggest producer of liquefied
natural gas (LNG) in Indonesia, follows a warning by Chevron
that it could reduce its investment in the country.
Chevron, Indonesia's biggest oil producer, had told the
state oil and gas regulator (SKK Migas) that the central bank
rules were among a number of issues threatening its investments
in Indonesia. Chevron accounted for 45 percent of Indonesia's
total crude production in 2012.
'RISK TO INVESTMENT'
"We have engaged with Bank Indonesia and the government of
Indonesia to clarify its regulations, given (that) they conflict
with terms of the Production Sharing Contract (PSC) under which
Chevron operates," the company's Asia Pacific spokesman Alex
Yelland told Reuters in a written statement.
"(The regulation) will increase economic risk to new
There was no immediate comment from the central bank. Its
rules do not state how long funds need to be held in local
The issue of gas production has become politically
sensitive, with some politicians arguing that Indonesia should
stop gas exports unless its trade partners help it to balance
its own needs through alternative energy infrastructure
Total operates the Mahakam block with Japan's Inpex
, but state oil and gas company Pertamina has expressed
an interest in the gas field, which was producing 100 million
standard cubic feet of gas a day in late 2012.
While Total's investment plans for 2013 remain intact,
Proust said that uncertainties over the company's Mahakam
contract extension could interfere with its business in future.
"For the time being we can still work, but in the coming
years it will be more difficult."
Another oil major, ExxonMobil, also ran into
difficulties when the government decided not to renew its local
CEO's work permit, accusing him of being uncooperative and of
moving too slowly to ramp up production in the Cepu oil block,
Indonesia's main hope for increased production.