* New rules not to impact projects already underway
* Could take as long as 5 years to fully implement
* Halliburton, McDermott, China Oilfield among firms
operating in country
By Wilda Asmarini and Randy Fabi
JAKARTA, May 5 Indonesia has introduced new
regulations restricting foreign investment in drilling,
maintenance and construction in the oil industry, in an effort
to give domestic firms an opportunity to better compete,
government officials confirmed on Monday.
The nationalistic policies were introduced as part of a
major overhaul to foreign investment rules, which President
Susilo Bambang Yudhoyono on Friday said was a way to attract
In a 100-page document released late on Friday, it eased
foreign investment regulations for several industries including
pharmaceuticals, large power plants and advertising.
But it also introduced limits for foreign ownership of oil
platforms, pipelines, maintenance companies, drilling firms and
"It is a priority of national interest to increase
competitiveness in these industries and to allow national
investors (to play a role)," Farah Indriani, deputy chairwoman
of investment climate and development, told Reuters.
The mining ministry said the new rules would not impact
projects already underway and could take as long as five years
to fully implement.
Halliburton Co, McDermott International, and
China Oilfield Services Limited are among the major
oil services companies already operating in Indonesia.
"It won't disturb or change any existing contracts,"
Naryanto Wagimin, programme director for the oil and gas
directorate in the mines ministry, told Reuters.
"If it was directly implemented today, maybe no (foreign)
drilling companies would do business here," he added.
Under the new rules, foreign ownership of offshore oil and
gas drilling services was limited to 75 percent from 95 percent.
It also limited foreign ownership in pipeline projects and
small power plants between 1-10 megawatts to 49 percent.
Previously there was no such limit.
Indonesia has steadily imposed regulations to get more
control over its natural resources, most recently introducing a
mineral ore export ban in January to force miners to process
their raw materials in the country.
Partly due to the ban, foreign investment growth in the
first quarter slowed to its lowest level in nearly five years.
The FDI data excludes investment in the oil industry.
(Editing by Muralikumar Anantharaman)