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Fri, February 10, 2012
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Oil and Gas Rigs Snared By Curbs on Steel Trade
Mita Valina Liem |

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In an apparently overzealous bid to comply with a Trade Ministry decree, customs offices at several of the nation’s ports have held up shipments of heavy machinery needed for local oil and gas exploration, forcing some companies to halt their activities, a senior official said on Tuesday.

Through a Trade Ministry decree that took effect in April, the government tightened restrictions on steel imports to protect domestic producers. Any companies wanting to import iron and steel were made to secure the services of a licensed importer and file shipment reports with a state-appointed surveyor.

The regulations were issued because of concerns about illegal steel imports.

Evita Legowo, the Energy Ministry’s director general of oil and gas, said that the machinery — which included rigs — had been held up at customs offices since early May.

She said that ministry officials were planning to talk with the Coordinating Ministry for the Economy about securing exemptions for the shipments.

“The oil and gas companies don’t have clearance to import iron and steel, or importer licenses; that is why customs haven’t released the machinery,” Evita said. “They consider the rigs a form of steel.”

Evita said the incident involved “a lot of ports across the country and some oil and gas companies,” but she declined to provide specific names of the ports involved or the energy companies that were affected.

William Deertz, a technical analyst at PricewaterhouseCoopers, said that the customs offices’ crackdown would only hinder the country’s efforts to boost oil and gas production by delaying drilling projects.

“I fail to see the direct connection between rigs and steel,” Deertz said.

“Drilling rigs are surely more than just steel,” he continued. “[The oil and gas companies] have to suffer financial losses from having the rigs in idle positions. Renting a rig for deep-water drilling can cost over $100,000 per day, while an ordinary one costs around $50,000 a day.”




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