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GR42 2002
GR42 2002
GR42 2002
42 OF 2002
ON
THE IMPLEMENTING BODY FOR UPSTREAM CRUDE OIL AND NATURAL GAS
BUSINESS ACTIVITIES
Considering: that to implement the provisions of Article 4 clause (3), Article 41 clause (2),
Article 43, and Article 49 of Law Number 22 of 2001 on Crude Oil and Natural Gas, it is
considered necessary to establish a Government Regulation on the Implementing Body
for Upstream Crude Oil and Natural Gas Business Activities;
Bearing in mind:
1. Article 5 clause (2) of the 1945 Constitution as revised through the Third
Amendment to the 1945 Constitution;
2. Law Number 22 of 2001 on Crude Oil and Natural Gas (State Records of the
Republic of Indonesia for 2001, No. 136, Supplement to State Records No. 4152);
HEREBY DECIDES
To establish this:
CHAPTER I
GENERAL PROVISIONS
Article 1
1. "Crude Oil," "Natural Gas," "Oil and Gas," "Upstream Business Activities,"
"Exploration," "Exploitation," "Work Area," "Business Entity," "Permanent
Establishment," "Cooperation Contract," and "Minister" are defined as mentioned in
Law No. 22 of 2001 on Oil and Gas.
CHAPTER II
ESTABLISHMENT AND STATUS
Article 2
1. Through this Government Regulation, the Implementing Body for Upstream Crude
Oil and Natural Gas Business Activities is established, hereinafter to be referred to
as "the Implementing Body."
2. The Implementing Body as mentioned in clause (1) shall have the status of a state-
owned legal entity.
Article 3
The Implementing Body shall be domiciled and have its head office in Jakarta.
Article 4
CHAPTER III
ASSETS, FINANCES AND MANAGEMENT
Article 5
1. The Implementing Body's assets shall be assets of the state that have been separated
[from the state budget].
Article 6
1. The Implementing Body shall obtain fees as compensation for performing its duties
and functions.
2. The amount of the fees as mentioned in clause (1) shall be determined by the
Minister of Finance as a percentage of the state's share of revenues from every
Upstream Business Activity.
3. The Implementing Body is required to formulate and submit an annual budget plan
and work plan for the Implementing Body to the Minister of Finance for each fiscal
year of the Implementing Body.
4. The annual budget and work plan as mentioned in clause (3) shall be determined
and approved by the Minister of Finance after obtaining the opinions of the
Minister.
Article 7
1. The Implementing Body shall manage the funds for financing its activities and the
reserves for operational finances.
2. The amount of the reserve funds as mentioned in clause (1) shall be determined
along with the determination and approval of the Implementing Body's annual
budget and work plan by the Minister of Finance.
3. The surplus of funds consisting of the difference between the revenues of the
Implementing Body as mentioned in Article 6 clause (1) and clause (2) and the
funds for financing of activities and the reserve funds for operational finances as
mentioned in clause (1), and the revenues from transfer of assets of the
Implementing Body, shall be Non-Tax State Revenues.
Guidelines regarding the assets and the method of formulating the annual budget and
work plan of the Implementing Body shall be determined by the Minister of Finance.
Article 9
1. The Implementing Body shall manage its finances in accordance with financial
accounting standards.
2. The management of the Implementing Body's finances shall be done on the
principles of efficiency, effectiveness, transparency, and accountability.
CHAPTER IV
ORGANIZATION
Article 10
Article 11
To execute its function as mentioned in Article 10, the Implementing Body has the duties
of:
c. studying and presenting plans for development of fields that are to produce for the
first time in a given Work Area to the Minister to obtain his approval;
d. granting approval for field development plans other than those mentioned in letter
c;
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e. granting approval for work plans and budgets;
g. appointing sellers of the state's share of Crude Oil and/or Natural Gas who can
provide the greatest possible benefit/profit to the state.
Article 12
In carrying out its duties, the Implementing Body has the authority to:
d. supervise and guide all the assets of Cooperation Contract contractors that
are the property of the state;
Article 13
1. The Implementing Body shall consist of the elements of management, expert staff,
technical staff, and administrative staff.
2. The element of Management as mentioned in clause (1) shall consist of the
Chairman, the Vice-Chairman, and the Deputies.
3. The Deputies as mentioned in clause (2) shall be a maximum of five (5) persons.
4. The Expert Staff as mentioned in clause (1) shall be a maximum of five (5) persons.
Article 15
The duties and authority of the Chairman of the Implementing Body are as follows:
a. to lead and manage the Implementing Body in line with the Implementing Body's
functions and duties;
e. to regularly provide reports to the President on the execution of duties and on the
finances of the Implementing Body;
Article 16
1. The Vice-Chairman shall have the duty of assisting in the smooth execution of the
duties of the Chairman of the Implementing Body.
2. In the case that the Chairman of the Implementing Body becomes permanently
unable to perform his duties, the Vice-Chairman shall carry out the functions,
duties, and authority of the Chairman of the Implementing Body until a definitive
appointment of an official has been made.
Article 17
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The Deputies shall have the duty of assisting Chairman of the Implementing Body in
carrying out the duties of the Chairman of the Implementing Body in accordance with
their respective areas of duties.
CHAPTER V
PERSONNEL
Article 18
1. The Chairman of the Implementing Body shall be appointed and removed by the
President after consultation with the People's Representative Assembly (DPR) of the
Republic of Indonesia.
2. The consultation as mentioned in clause (1) is to carry out fit and proper testing of
candidates for Chairman of the Implementing Body by the People's Representative
Assembly, in this case by the Commission responsible for Oil and Gas.
3. The Chairman of the Implementing Body, in carrying out his duties, shall be
responsible to the President.
Article 19
a. citizen of Indonesia;
c. having knowledge of and managerial ability in the Oil and Gas industry;
Article 20
The Vice-Chairman and the Deputies shall be appointed and removed by the Minister on
the recommendation of the Chairman of the Implementing Body.
Article 21
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1. Members of the Management may not have a personal interest, whether direct or
indirect, in an association or business that is aimed at making a profit.
2. Members of the Management are not allowed to simultaneously hold any of the
positions mentioned below:
Article 22
1. The maximum retirement age for the Chairman of the Implementing Body and for
Expert Staff shall be 60 (sixty) years.
2. The maximum retirement age for personnel other than as mentioned in clause (1)
shall be 56 (fifty-six) years.
3. In certain cases when it is considered extremely necessary, the President may
extend the term of duty of the Chairman of the Implementing Body for one year at a
time and for a maximum of three (3) times.
Article 23
1. The President may remove the Chairman of the Implementing Body, in the
following cases:
a. resignation;
CHAPTER VI
ANNUAL BUDGETS AND WORK PLANS
Article 24
1. No later than three (3) months before the start of the fiscal year, the Chairman of
the Implementing Body shall present the annual budget plan and work plan of the
Implementing Body to the Minister of Finance to obtain approval/ratification, after
obtaining the opinions of the Minister.
2. The approval/ratification by the Minister of Finance as mentioned in clause (1)
shall [be issued] no later than the start of the fiscal year.
3. If the Minister of Finance expresses objections in writing, or rejects activities
included in the Implementing Body's Work Plan and Budget before the new fiscal
year begins, the Implementing Body shall use the budget and work plan of the
preceding year.
4. Any additions or changes to the Work Plan and/or Budget as listed in the accounts
must first be proposed to the Minister of Finance, following procedures and time
limits set by the Minister of Finance, to obtain approval/ratification.
5. If, within three (3) months after the request for approval is submitted, the Minister
of Finance has not presented any objections in writing as mentioned in clause (3),
such changes to the work plan and budget shall be considered to have been
approved/ratified.
Article 25
The Implementing Body's fiscal year for accounting purposes shall be the fiscal year.
Article 26
a. Pertamina shall, within not more than six (6) months, surrender to the
Implementing Body all documents related to the guidance and supervision of
contractors in Production Sharing Contracts and other related contracts;
b. the Chairman of the Implementing Body and the President Director of Pertamina
shall, within not more than one (1) year, complete the administrative matters
related to the contracts as mentioned in letter a;
d. the Chairman of the Implementing Body and the President Director of Pertamina
shall regulate the completion of administrative matters for the transfer of Pertamina
employees as mentioned in letter c;
e. the salaries and other earnings of personnel of the Implementing Body who have
come from Pertamina as mentioned in letter c, when they become personnel of the
Implementing Body, shall be at least the same as their salaries and earnings when
they last worked at Pertamina;
f. the system of categories for salaries and other earnings of personnel of the
Implementing Body shall be the same as the system in operation at Pertamina, until
determined otherwise by the Chairman;
g. all the assets of the state that are managed by Pertamina and that have up to now
been used in carrying out its duties and functions of guidance and supervision of
Production Sharing Contract contractors shall have their management and use
transferred to the Implementing Body, after receiving the approval of the Minister
of Finance;
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h. all the assets of the state that are managed by Pertamina and that, before the
enactment of this Government Regulation, have been used by contractors in
Production Sharing Contracts shall have their management transferred to the
Implementing Body, after receiving the approval of the Minister of Finance;
Article 27
a. until the end of fiscal year 2002, the operational costs of the Implementing Body
shall be charged to the budget of Pertamina;
b. for the charges for the Implementing Body's operational costs as mentioned in letter
a, Pertamina shall continue to be given compensation in the form of fees for
guidance and supervision of Production Sharing Contract contractors for the same
period of time.
CHAPTER VIII
CONCLUDING PROVISIONS
Article 28
Article 29
This Government Regulation shall become effective on the date that it is enacted.
GENERAL
In an effort to provide a legal basis for steps toward renewal and restructuring of oil and
gas business activities, Law Number 22 of 2001 on Oil and Gas was passed.
Law Number 22 of 2001 states that crude oil and natural gas, as a non-renewable strategic
natural resource contained within the Legal Mining Territory of Indonesia, represent a
national asset controlled by the State. This control by the State is conducted by the
Government as holder of the Mining Authority.
Further, the Government, as holder of the Mining Authority, has established the
Implementing Body to carry out control of Upstream Business Activities in the oil and
gas sector.
This Government Regulation contains the basic substance regarding provisions for the
establishment and status of the Implementing Body, its assets, financing and
management, organization, personnel, and annual budgets and work plans.
ARTICLE BY ARTICLE
Article 1
Sufficiently clear
Sufficiently clear
Article 3
Sufficiently clear
Article 4
The Implementing Body is not permitted to accumulate funds for operational costs in
excess of limits as specified in this Government Regulation.
Article 5
Sufficiently clear
Article 6
Clause (1)
The meaning of compensation in this provision is fees that represent pay for the
management received by the Government for the activities carried out as mentioned in
Law Number 22 of 2001.
Clause (2)
Sufficiently clear
Clause (3)
Sufficiently clear
Clause (4)
Sufficiently clear
Clause (1)
The reserve for operational finances is the amount of funds managed by the
Implementing Body in order to ensure the continuity of operational finances for the
Implementing Body in the current fiscal year.
Clause (2)
Sufficiently clear
Clause (3)
Sufficiently clear
Article 8
Sufficiently clear
Article 9
Clause (1)
Financial management in this provision encompasses recording each transaction or other
occurrence in the Implementing Body that influences changes in assets, liabilities, capital,
expenditures, and revenues.
Clause (2)
Sufficiently clear
Article 10
Sufficiently clear
Article 11
Sufficiently clear
Letter a
Sufficiently clear
Letter b
Sufficiently clear
Letter c
Supervision by the Implementing Body includes Exploration and Exploitation
activities, including activities of field management, transportation, storage, and
sales of [a company's] own products as the continuation of activities of
Exploration and Exploitation conducted by a Business Entity or Permanent
Establishment.
Letter d
Sufficiently clear
Letter e
Sufficiently clear
Article 13
Sufficiently clear
Article 14
Sufficiently clear
Article 15
Sufficiently clear
Article 16
Clause (1)
To assist in the smooth execution of the duties of the Chairman of the
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Implementing Body, the Chairman of the Implementing Body may assign certain
duties to the Vice-Chairman of the Implementing Body.
Clause (2)
The meaning of "permanently unable to perform his duties" includes being
removed from office on the basis the provisions of Article 24 and passing away or
being declared missing.
Article 17
Sufficiently clear
Article 18
Sufficiently clear
Article 19
Sufficiently clear
Article 20
Sufficiently clear
Article 21
Sufficiently clear
Article 22
Sufficiently clear
Clause (1)
Sufficiently clear
Clause (2)
Efforts for improvement, in this provision, include reinvigorating the organization of the
Implementing Body to achieve better performance, and to achieve the targets set by the
Government.
Article 24
Sufficiently clear
Article 25
Sufficiently clear
Article 26
Letter a
Sufficiently clear
Letter b
Sufficiently clear
Letter c
Within the period of one (1) year as mentioned in this provision, employees of Pertamina
employed at the Implementing Body shall continue to have the status of Pertamina
employees, except if the persons concerned choose to become permanent employees of
the Implementing Body.
Letter d
Sufficiently clear
Letter e
Sufficiently clear
Letter g
Sufficiently clear
Letter h
The assets used by contractors in Production Sharing Contracts include land, buildings,
material and equipment used in Upstream Business Activities related to Production
Sharing Contracts.
Letter i
Sufficiently clear
Article 27
Sufficiently clear
Article 28
Sufficiently clear
Article 29
Sufficiently clear