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GENERAL

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DEPARTMENT OF ENERGY AND MINERAL RESOURCES

ACT OF THE REPUBLIC OF INDONESIA NUMBER:  22  OF 2001 ; DATED: NOVEMBER  23, 2001

ON

OIL AND NATURAL GAS

WITH THE BLESSING OF THE ALMIGHTY  GOD THE PRESIDENT OF THE REPUBLIC OF INDONESIA

Considering               

a.   that  oil  and  natural  gas  are non-renewable  natural  resources which is controlled by the State and which constitute a vital commodity which controls the life of the people and plays an important role in the national economy, the management of which must be able to provide the maximum prosperity  and  welfare to  the nation;

1. that the oil and natural gas business activities has an important role in providing a real added value to an everlasting, increasing and expanding national economic growth;
2. that Act number 44 Prp of 1960 on the Oil and Natural Gas Mining, Act Number 15 of 1962 the Determination of Government Regulation in lieu of Act Number 2 of 1962 on the Obligation of Oil Companies to Fulfill the Domestic Requirements, and Act Number 8 of 1971 on the State  Owned Oil and Natural  Gas Mining Company are no longer in line with and are incapable of  accomodating  the need 'for development in the oil and natural gas business.
3. that by still considering the national as well as international development the amendment of the legislative regulations on Oil and Natural Gas Mining must be able to create an independent, reliable, transparant, competitive and efficient oil and natural gas business which is environmental conservation oriented and stimulating the development  of the national potential  and role.
4. that on the basis of the considerations as referred to in letters a, b,  c, and d, and as an implemntation of the provisions of Article 33 sub section (2) and sub section (3) of the 1945 Constitution and  to provide a legal foundation for the steps of renewing and rearranging the execution of the oil and natural gas trade, it is necessary to lay down an Act on Oil and Natural  Gas.

Bearing in mind

 Article  5 sub section (1), Article 20  sub section (1). sub section (2) and sub section (4) and Article 33 sub section (2) and sub section (3) of the 1945 Constitutions as they have been amended with the Second Amendment on the  1945 Constitution;

CAF! 101/DECEMBER  18, 2001

With the approval  of the

HOUSE OF PEOPLES REPRESENTATIVES O THE REPUBLIC OF INDONESIA HAS DECIDED

To lay down                            THE ACT ON OIL AND NATURAL  GAS

CHAPTER  I

GENERAL PROVISIONS

Article 1

In  this act referred to  as :

1. Natural Oil is a hydrocarbon which in the condition of the atmospheric pressure and temporature is in the form of a liquid or solid phase, including asphalt, mineral wax or ozoerite, and bitumen which is obtained from the mining process, but not including coal or other hydrocarbon sediments in solid form which is obtained from activities which are not related  to the oil and natural gas business activities.
2. Natural Gas is a hydrocarbon which in the condition of the atmospheric pressure and temperature is in the form of a gas phase which is obtained form the process of mining oil and natural gas, including natural gas which is changed into a liquid to facilitate the transportation.
3. Oil and Natural Gas is Natural Oil and Natural Gas.
4. Fuel Oil is fuel originating and or processed from Natural Oil.
5. Mining Concession is the authority given to carry out Exploration and Exploitation activities.
6. General Survey is an activity which covers the collection, analysis and presentation of data which are connected with the information on geological  conditions  to  estimate/  forecast the location and potential of Oil and Natural Gas Resources outside the Working Territory.
7. Upstream Business Activity is the business activity which covers Exploration and Exploitation.
8. Exploration is the activity which is aimed at obtaining information  to  find Oil and Natural Gas reserves in certain Working Territory.
9. Exploitation is an activity which is aimed to produce Oil and Natural Gas from a certain Working Territory, which consists of but is not limited to  the  drilling  and completion  of wells; the construction of transportation, storage means and field processing, including the processing of  natural gas which is changed to  become liquid.
10. Downstream Business Activity is a business activity which covers Processing, Transportation, Storage, and Trading.
11. Processing is the activity to purify, to obtain parts, to improve quality, and to increase the added value of Natural Oil and or Natural Gas, but not including field  processing.

CAFI 101 /DECEMBER  18, 2001

1. Transportation is the activity of moving Natural Oil, Natural Gas, and or the products of its processing from the Working Territory or accumulation and Processing places, including the transportation of Natural Gas through transmission pipes.
2. Storage is the activity of receiving, collecting, accumulation  and release of Natural  Oil and or Natural Gas.
3. Trading is the activity of purchasing, selling, exporting, importing Natural Oil and or Natural Gas and or the products of its processing, including the Trade of Natural Gas through distribution  pipes.
4. Indonesian Mining Legal Territory is the entire territory of  land,  waters,  and continental shelf  of Indonesia.
5. Working Territory is a certain region within the Indonesian Mining legal Territory for the execution of Exploration and Exploration.
6. .      Business  Entity  is any  legal entity  which  carries  on  the  type  of  business  which is of  a permanent and  continuous nature  and  which  is  established  in  accordance with the applicable legislative  regulations,  and  is working,  domiciled  within  the  territory  of the Republic of Indonesia.
7. Permanent Establishment is a business entity which is established and is a legal entity outside the territory of the Republic of Indonesia and carries on its activities within the territory of the Republic of  Indonesia.
8. Cooperation Contracts are all forms of contracts or cooperations in Explorations and Exploitations  which can be used and is beneficial  to  the State.
9. Business Licence is a licence issued to to a Business Entity to carry out the Processing, Transportation, Storage and or Trade with the objective of obtaining a benefit and or profit.
10. Central Government, hereinafter called Government, is an instrument  of  the Unified Stat<! of  the Republic of Indonesia consisting of  the President and the  Ministers.
11. Regional Administration is the Head of the Region together with the other instruments of the Autonomous Region as the Regional Executive Body.
12. Minister is the Minister whose field of duty and responsibility covers the  Oil and Natural Gas business activities.

Article  2

The execution of the Oil and Natural Business activities which are regulated in this Act is based on people's economy, benefit, justice, equilibrium, equal distribution, welfare, environmentally oriented,  security  and safety, and legal certainty.

Article  3

The execution of  the Oil and Natural Gas business activities has as objectives  :

1. to ensure that the Exploration and Exploitation is carried out and controlled efficiently effectively  and  on  a  long  term  basis  on  the  State  owned  natural  resources   which is strategie and non-renewable;
2. to ensure that the Processing, Transportation, Storage and Trade is carried out and controlled openly and transparently by leaving matters to the fair and sound business competition mechanism;
3. to ensure the availability of Oil and Natural Gas, both as a source of energy and as raw material;
4. to support and develop the growth of the national capability to complete  at  national, regional and international level;
5. to improve the earning of the State to give the greatest contribution to the  national economy,  and to  develop and strengthen the Indonesian industry  and trade;
6. to create employment opportunities, to improve the enviroment, to increase the welfare and prosperity of the nation.

CHAPTER II

COTROL AND MANAGEMENT

Article 4

The Oil and Natural gas business activities consist of : (1 )     Upstream Business Activities covering :

1. Exploration
2. Exploitation

(2)           Downstream business  activities covering :

1. Processing;
   1. Transportation;
   2. Storage;
   3. Trade.

Article 5

(1)    Oil and Natural Gas as a strategic natural resource contained within the Indonesian Mining Legal Territory constitutes  a national  wealth  which is controlled by  the State.

(2)    The Control by the State as referred to in sub section (1) is carried out by the Government as holder of the Mining Concession.

3)             The Government as holder of the Mining Concession establishes an Executive Body as executor  of the Mining Concession.

Article 6

( 1)             The  Upstream  Business  Activity  as referred  to  in  Article  4  figure  1  is carried out and controlled through a Coopera-tion Contract  as referred to  in  Article  1 figure 19.

(2)            The Cooperation Contract as referred to in sub section (1) covers all forms of contracts or cooperations on the condition that the ownership of the natural resources reamains with the Government  up to  the point of delivery.

Article 7

(1)           The Downstream Business Activities as referred to in Article 4 figure 2, is carried out by issuing a Business licence as referred to  in  Article  1 figure 20.

(2)           The Downstream Business Activities as referred to in Article 4 sub section (2) is left to the reasonable  and sound business competition mechanism.

Article 8

(1)                         Fuel Oil which constitutes a vital commodity and controls the life of the people must be guaranteed as regards its availability by the Government throughout the territory of the Republic of Indonesia.

(2)                         The Natural Gas Transportation business through pipes which concerns the interests of the public, the management should be arranged openly for all users.

(3)                         The government is responsible for the regulation and control of the business activities as referred to in sub section (1) and sub section (2) which will be executed by the Regulating Body.

Article 9

(1)                         The Upstream and Downstream Business Activities as referred to in Article 4 figure 1 and figure 2, may be carried out by a Business Entity which is in possession of the financial, technical and operational capabilities in the form of  :

1. A State Owned Business Entity;
2. A  Regional  Owned Business Entity;
3. Cooperatives;
4. Private Business Entity.

(2)                         Permanent Establishments are only permitted to carried out Upstream Business  activities.

Article 10

(1)                         Business Entities or Permanent Establishments which carries on Upstream Business Activities cannot  carry out Down Stream Business  Activities.

(2)                          Business Entities carrying on Downstream Business Activities cannot carry out Upstream Budiness Activities.

CHAPTER Ill

UPSTREAM BUSINESS ACTIVITIES

Article 11

(1)    The Upstream Business Activities as referred to in Article 4 figure 1 is carried out by a Business Entity or Permanent Establishment based on a Cooperation Agreement with the Executive Body.

(2)    Each Cooperation Contract which has been signed must be conveyed to the House of Peoples' Representatives of the Republic of Indonesia.

(3)    The Cooperation Contract as referred to in sub section (1) must contain at least the main provisions,  i.e. :

1. the State's revenues
2. the Working Territory  and its repayment

.c.        the obligations to  expend funds

1. the transfer  of  the right of  title on Oil and Natural Gas
2. the period of time and conditions  of  the contract  extension
3. settlement  of disputes
4. the obligation to  supply Natural Oil for domestic  requirements
5. the expiry of the contract
6. post mining operations obligations
   1. occupational safety and health
   2. environmental  management
   3. transfer of rights and obligations
   4. the required reporting
   5. field development plans
   6. to  give priority  to  the use of domestic goods and services.

Article 12

(1)           The Working Territory which will be offered to the Business Entity or the Permanent Establishment shall be determined by the Minister.

(2)           The offer of the Working Territory as referred to  in sub section (1) shall be carried out by the Minister.

(3)           The Minister shall determine the Business Entity of Permanent Establishment which has been given the authorization to carry out the Exploration and Exploitation business activities at the  Working Territory  as refered to  in sub seciton (2).

Article 13

(1)     To each Business Entity or Permanent Establishment shall only be given 1 (one) Working Territory.

(2)    In case the Business Entity or Permanent Establishment operates in several Working Territories, a separate legal entity must be established for each Working  Territory.

Article 14

(1)                         The period of the Cooperation Contract as referred to in Article 11 sub section (1) shall be at the longest  30  (thirty) years.

(2)                         The Business Entity or Permanent Establishment can always apply for an extension of the Cooperation Contract as referred to in sub section (1) may be carried out only 1 (one) time for a period of at  the most 20  (twenty)  years.

Article 15

(1)     The Cooperation Contract  as referred to  in  Article 14  sub section (1) consists of a period of Exploration and a period of Exploitation.

(2)     The period of Exploration as referred to in sub section  (1) shall be 6  (six)  years and may be extended only  1 (one) time for a period of  at the most  4 (four)  years.

Article 16

The Business Entity or Permanent Establishment is obliged to return part of its Working Territory in phases or in its  entirety to  the Minister.

Article 17

When a Business Entity or Permanent Establishment which has obtained a first permission for a field expansion  within a Working Territory does not  carry out  its  activities  within a period of at the longest 5 (five) years as from the expiry of the Exploration period, must return the entire Working Territory to  the Minister ..

Article 18

The guidelines, procedure and conditions concerning the Cooperation Contract, Xthe determination  and offering  of  the  Working  Territory,  the extension  of  the  Cooperation  Contract, and the returning of the Working Terr1tory as referred to  in  Article 11  through  Article  17 shall be further regulated with a Government Regulation.

Article 19

(1)           To support the preparation of the Working Territory as referred to in Article 12 sub section (1), a General Survey is carried out by or  with the permission of  the Government.

(2)           The procedure and conditions of Execution of the General Survey as referred to in sub section (1) shall be further  regulated with a Government Regulation.

Article 20

(1)    The data obtained from the General Survey and or the Exploration and Exploitation is the property of the State  which is controlled by  the  Government.

(2)    The data obtained by the Business Entity or Permanent Establishment within its Working Territory may be used by the Business Entity or Permanent Establishment concerned during the period of the Cooperation Contract.

(3)    When the Cooperation Contract expires, the Business Entity or Permanent Establishment is obliged to  deliver all data obtained during the Cooperation  Contract  to  the Minister.

(4)    The confidentiality of the data obtained by the Business Entity or Permanent Establishment within the Working  Territory  shall apply during a certain period.

(5)    The Government regulates, manages, and uses the data referred to in sub section (1) and sub section (2) to  plan the preparations  for the opening of  a Working Territory.

(6)    The implementation of the prov1s1ons on ownership, period of use, confidentiality, management and the use of data as referred to in sub section (1) through sub section (5), shall be further regulated  with a Government Regulation.

Article 21

( 1)                  The  plan  for  the  development  of  a  field  which  will produce  for  the  first  time within a Working Territory  must obtain the approval of  the Minister.

(2)           In developing and producing the Oil and Natural Gas field, the Business Entity or Permanent Establishment  must carry out an optimation in accordance  with the good technical norms.

(3)           The provisions on the field development, production of Oil and Natural Gas reserves  and the provisions on the technical norms as referred to in sub section (1) and sub section (2) shall be further regulated with a Government Regulation.

Article 22

(1)                         The Business Entity or Permanent Establishment must deliver at the most 25 % (twenty five percent)  of  its portion of  the Natural Oil production  yield to  fulfil the domestic needs.

(2)                         The implementation of the provisions as referred to in sub section (1) shall be further regulated with a Government Regulation.

CHAPTER IV DOWNSTREAM BUSINESS ACTIVITIES

Article 23

(1)                          The Downstream Business Activities as referred to in Article 4 figure 2, may be carried out by the Business Entity after obtaining a Business Licence from  the Government.

(2)                         The Business Licence required for the Oil business activities and Natural Gas business activities as referred to  in  sub section (1) is  differentiated into :

1. Business Licence for processing;
2. Business Licence for Transportation;
3. Business Licence for Storage;
4. Business Licence for Trading.

(3)                         Each Business Entity may be given more than 1 (one) Business Licence as long as it is not in contradiction  with the legislative  regulations  in force.

Article 24

(1)     The Business Licence as referred to  in  Article 23 shall at least contain :

1. the name of the organizer;
2. the type of  business given
3. the obligations in organizing the management;
4. the  technical conditions.

(2)    Each Business Licence which has been issued as referred to in sub section (1) can only be used in accordance  with its designation.

CAFI 101/DECEMBER  18, 2001

Article 25

(1)                          The Government may issue a written reprimand, suspend the activities, freeze  the activities, or revoke the Business Licence as referred to  in Article  24  based on :

1. the violation of  one of  the conditions  mentioned in the  Business Licence;
2. a repetition of the violation on the  conditions of  the Business  Licence;
3. failure  to  fulfil the conditions  laid down based on  this Act.

(2)                         Before the revocation of the Business Licence as referred to in sub section (1). the Government will give an opportunity to the Business Entity during a certain period within which to remedy the violation which has been committed or the fulfilment of the conditions which have been laid down.

Article 26

For the activities of field processing, transportation, storage, and the sale of its own production results as a continuation of the Exploration and Exploitation carried out by the Business Entity or Permanent Establishment, no separate Business Licence shall be required as referred to in  Article 23.

Article 27

(1)     )                              The  Minister   shall  determine  the  national  Natural  Gas  Transmission and Distribution Network  Master Plan.

(2)    To a Business Entity holder of a Natural Gas Transportation Business Licence through a network  of  pipes a certain Transportation segment can only be given.

(3)    To a Business entity holder of a Natural Gas Trading Business Licence through pipes, only a certain Trading Territory can be given.

Article 28

(1)     )                                Fuel Oil and certain processing yields which are marketed at home to fulfil the needs of the community  must fulfil the standard  and quality determined by  the Government.

(2)    The price of Fuel Oil and the price of Natural Gas is left to the mechanism of a fair and sound business competition.

Article 29

( 1)                        In  territories  suffering  from a scarcity  of  Fuel Oil and in remote regions, the facility of Transportation, and Storage including its supporting facilities, may be jointly used with another party.

(2)           The use of facilities as referred to in sub section (1) shall be regulated by the Regulating Body  while still considering the  technical and economical aspects.

Article 30

The prov1s1ons on the business of Processing, Transportation, Storage, and Trade as referred to in Article 23 through 29 shall be further regulated with a Government Regulation.

CHAPTER V STATE EARNINGS

Article 31

(2)     The State Earnings  in the form of tax as referred to  in sub section (1) consists  of  :

1. taxes;
2. import  duties, and other  levies on imports and excise;
3. regional tax.

(3)     The non-tax  State  earnings  as referred to  in  sub section  (1) consists  of   :

1. the portion of the State;
2. State levies in the form of fixed contributions and exploration and exploitation contributions;
3. bonus.

(4)     In the Cooperation Contract shall be determined that the obligations to pay tax as referred  to  in  sub section (2) letter  (a) shall be carried out in accordance  with :

1. the provisions of the legislative regulations applicable in the field of taxation at the time  the cooperation Contract  is signed; or
2. the provisions  of  the legislative regulations applicable in  the  field of taxation.

(5)     The provisions on the determination of the amount of the State portion,  the State  levies, and bonus as referred to in sub section (3), and the procedure of its payment shall be further regulated  with a Government Regulation.

(6)     the non tax State earnings as referred to in sub section (3) constitute the earnings of the Central Government and the Regional Administration, the division of which shall be determined in accordance with the provisions of the legislative regulations in force.

Article 32

A Business Entity which carries on a Downstream Business activity as referred to in Article 23 is obliged to pay tax, import duties and other levies on import, excise, regional tax and regional re-compense, and the other obligations in accordance with the provisions of the legislative regulations  in force.

CHAPTER VI

RELATIONSHIP  BETWEEN THE OIL AND NATURAL GAS BUSINESS  ACTIVITIES  AND THE RIGHT ON LAND

Article 33

(1)     The Oil and Natural Gas business activities as referred to in Article 4 shall be carried out within the Indonesian Mining Legal Territory.

(2)     The right on Working Territory  does not cover the right on land at the surface of  the earth.

(3)     The  Oil and Natural Gas business activity  cannot  be carried  out  at   :

1. burial place, a place considered sacred, public places, public means and infrastructure,  natural  preserves,  cultural  preserves,  and  land  owned  by the traditional community;

1. defence fields and structures  and land in the surrounding area;
2. historical buildings and State sy, bols;
3. buildings,  residences or  factories together  with the vards around it; 

except with the permission of the Government agency, the approval of the community, and individuals  related  with the said matter.

(4)    A Business Entity or Permanent Establishment intending to carry out its activities may move the building, public place, public means and infrastructure as referred to in sub sectic:1 (3) letters a, and b, after first obtaining permission from the authorized Agency.

Article  34

(1)                        In case the Business Entity or Permanent Establishment intends to use privately owned or State owned plots of land within its Working Territory, the Business Entity or Permanent Establishment concerned is obliged to first arrange a settlement with the holder of  the right or the user of the land on State owned land, in accordance with the provisions of the legislative  regulations in force.

(2)                        The settlement as referred to in sub section (1) shall be carried out by deliberations and agreement by way  of a sale-purchase, exchange, reasonable indemni fication 1  recognition or any other form of  indemnification to the  holder of  the right  or  the  user  of  the  land on State owned land.

Article 35

The holder of a right on land is obligated to permit a Business Entity or Permanent Establishment  to  carry out  an Exploration and exploitation on the land concerned,  when : 

1. before the activity  is started, the Cooperation  Contract  or a legal copy  thereof  must  first be shown, and the purpose or place where the activities will be carried out must be mentioned; and 
2. an exhaustive settlement must be carried out or a guarantee of the settlement  must  be given which is approved by the holder of the right on the land or the user of  the  land on State owned land must  first be carried out  as referred to  in  Article 34.

Article 36

(1)                        In case a Business Entity or Permanent Establishment has been given a Working Territory, then to the plots of land which are directly used for the Oil and Natural  Gas  business activities and its security area, a will be given a utilization right in accordance with the provisions of  the legislative regulations in force and must maintain and guard the  said plot of land.

(2)                        In case the granting of a Working Territory as referred to in sub section (1) covers a large  are on State owned land, then the parts of the land which are not used for the  Oil  and Natural Gas business activities, may be given to another party by the Minister whose duties and responsibilities cover the field of agrarian affairs or land affairs by giving priority to the local community  after  receiving  a recommendation from the Minister.

Article 37

The provisions on the procedure for the settlement of the use of private owned land or State owned land as referred to in Article 35 shall further be regulated with a  Government Regulation.

CHAPTER VII DEVELOPMENT AND SUPERVISION

Part One Development Article 38

The development of the Oil and Natural Gas business activities shall be carried out by the Government.

Article 39

(1)          The development  as referred to in Article 38  covers :

1. the implementation of Government affairs in the field of the Oil and Natural Gas business activities;
2. the determination of the policies concerning the Oil and Natural Gas business activities based on the reserves and potential of the owned Oil and Natural Gas resources, the production capabilities, the domestic need for Fuel Oil and Natural Gas, the  mastering of technology, the national capability, and development  policy.

(2)           The execution of the development as referred to in sub section (1) shall be carried out transparently  and fairly on the execution of the Oil and Natural  Gas business  activities.

Article 40

(1)     )       The Business  Entity  or  Permanent  Establishment  guarantees  the applicable standard and quality in accordance with  the provisions  of  the  legislative  regulations  in force  and the application  of the proper technical norms.

(2)     The Business Entity or Permanent Establishment guarantees the occupational safety and health and the environmental management and the adherence of the provisions of the legislative  regulations in  force in the Oil and Natural Gas business activities.

(3)     The environmental management as referred to in sub section (2) constitutes the prevention and overcoming of pollution and the restoration when an environmental damage has taken place, including  the post mining operation obligations.

(4)     The Business Entity or Perman,ent Establishment which carries on Oil and Natural Gas business activities as referred to in Article 4 shall give priority to the transparent and competitive use of  domestic   oods, services,  and engineering  and design capabilities. 

(51 the Business Entity or Permanent Establishment which carries on Oil and Natural Gas  business activities as referred to it'l)\rticle 4 shall also be responsible for  the development  of  the local community envirorimeht.

(6) The provisions on occupatlorial sa,fety an.d health and the environmental management as referred to in sub .sectiohs]f). and (2) shall be further regulated with a Government Regulation.

Part Two Supervision Article 41

( 1)     The responsibility for the supervisory activities  on the  work  and the  execution  of  the  Oil and Natural Gas business on the adherence to  the provisions of the legislative regulations in force lies with the department which field of duties and authority covers the  Oil  and Natural Gas bus.iness activities and the other related departments.

(2)           The supervision on the execution of the Upstream Business activity based on the Cooperation Contract shall be carriedlout by the Executive Body.

(3)           The supervision on the execution of the Downstream Business activity based on the Business Licence shall be carried out by the Regulating Body.

Article 42

The supervision as  referred to  in Article 41  sub section (1) covers  :

1. the conservation  of  the Oil and Natural Gas resources and reserves;
2. the Oil and Natural Gas data management;
3. the application of  the proper  technical norms;
4. the types  and quality  of processing yields;
5. occupational  safety and health;
6. the environmental management;
7. the  use of  domestic goods, services, technology, and design and engineering capabilities;
8. the use of foreign manpower;
9. the development  of Indonesian manpower;
10. development  of  the environment of  the local community;
11. the mastery, development, and application  of  Oil and Natural  Gas technology;
12. other activities in the field of the Oil and Natural Gas business activities as long as it concerns  the public interest.

Article 43

Furtner prov1s1ons concerning the development and supervision as referred to in Article 38, Article 39,  Article  41  and Article 42  shall be further regulated  with a Government Regulation.

L. Determination ....... To be continue

ACT OF THE REPUBLIC OF INDONESIA

NUMBER: 22 OF 2001; DATED  : NOVEMBER  23, 2001

ON

OIL  AND  NATURAL GAS

(Continuation From Warta CAFI No. 05)

CHAPTER VIII

EXECUTIVE BODY AND REGULATING BODY

Article 44

(1)            The supervision on the execution of the Cooperation Contract on Upstream Business Activities as referred to in Article 4 figure 1 shall be carried out by  the  Executive Body as referred to  in  Article  5 sub section (3).

(2)            The function of the Executive Body as referred tb in sub section 1 is to carry out the supervision on the Upstream Business Activities in order that the taking of the Oil and Natural Gas natural resources owned by the State can give the maximum benefit and earnings to  the State for the largest  welfare of  the people.

(3)            The duties of the Executive Body as referred to  in sub section  (1)  are:

1. to  sign the Cooperation Contract;
2. to study and submit the plan of  field development  which  will be produced  for the first time within a Working Territory to the Government to obtain  its approval;
3. to give an approval on the field development plan other than as referred to in letter b;
4. to  give an approval on the  working and budget plan;
5. to monitor and report to  the Minister the execution of the Cooperation Contract;
6. to appoint  an Oil or Gas seller for the portion of  the  State.

Article 45

(1)                          The personnel of the Executive Body as referred to in Article 5 sub section (3) consists of  experts in the field of  Oil and Natural Gas.

(2)                         The Head of  the Executive Body shall be appointed and disrnissed by  the President.

CAFI 06/JANUARY 18, 2002

(3)                        The establishment of the Executive Bodv as rntern;,,i to in Aitide fi sub section (3) shall be determined with a Decree of the President.

(4)                         the Head of the Executive Body as referred to in :':>Ub section is (:3) responsible to the President.

Article 4,6

(1)           The supervision on the supply of Fuel Oil and the Transportation of Natural Gas through pipes shall be carried out by the Regulatino Body as referred to in Article 8 sub section (3).

(2)           The function of the Regulating Body as referred to in sub section ('1) is to regulate that the availability of Fuel Oil which is determined by the Govemrr1Emt can be guaranteed throughout Indonesia and to increase the domf}Stic use of Natural Gas.

(3)           The duties of the Regulating Body as referred to in sub section (1) cover the regulation,

determination and execution of :

1. Natural Gas transportation tariff
2. the price of Natural Gas for household and small size customers
3. the Natural Gas transmission and distribution managemtmt
4. the National Fuel Oil Reserve
5. the use of the facilities for the Transportation, and Storage of Fuel Oil

d.             the availability of Fuel Oil

(4)           The duties of the Regulating Body as referred to in sub section ('I) also cover the duties of supervision in the fields as mentioned in sub section (3).

Article 47

(1)                            )                            The structure of the Regulating Body as referred to  in  Article 8 sub section (1) consists of a Committee and Departments.

(2)                         The Committee as referred to in sub section (1) consists of ·1 (one) Chairperson concurrently  member and 4 (four) members  originating from professionals.

(3)                         The Chairperson and members of the Regulating Body Commiw e as refem d to in sub section (1) are appointed and dismissed by the President  after  obtaining the approval of the House of People's Representatives of the Republic of  Indonesia.

(4)                         The Regulating Body as referred to in Article B sub St'}ction (:J) is responsible to the President.

(5)                         The establishment of the Regulating Body as refarred to in ArticlH 8 sub .section (3) shall be determined with a Decree of the President.

Article  48

The operational  budget  of  the Executive  Body  mid  the Hegulating  Body  as referred  to in Article 5 sub section (3) and Article 8 sub soction (:1) sh,111 be GharnHd 10 the State Reveneus and  Expenditures Budget.  

The provisions concerning the structure of m{Ji:lnization, status, function, duties, personnel, authority and responsibility and the working mechanism of the Exocutive Body and the Regulating Body as referred to in Article 41 through A11iclo ,48 shall b1:1 further regulated with a Government Regulation.

CHAPTER IX INVESTIGATION

Article  50

(1)           In addition to Investigating Officials of the State Police of the Hepublic of Indonesia, certain Civil Servant Officials within the department which scope of duties and responsibility covers the Oil and Natural Gas business activities, shall be given a special authority as Investigator as referred to in Act Number 8 of 1981 on the Law of Criminal Procedure, to carry out an investigation on crimes in the Oil and Natural Gas business activities.

(2)           The Civil Servant Investigator  as referred to  in sub section (1)  is authorized

1. to carry out an examination on the correctness o'I' a report or information concerning a crime in the Oil and Natural Gas business activity;
2. to carry out an examination on persons and bodies who/which are suspected of having committed a crime in  the Oil and Natural Gas business  activity;
3. to call a person to be heard and examined as a witness or suspect in a crime in the Oil and Natural Gas business activity;
4. to carry out a search at the place which is suspected to have been used to commit a crime in the Oil and Natural Gas business  activity;
5. to examine the means and infrastructure for the Oil and Natural Gas business activity and to discontinue the use of the equipment which is suspected to have been used to  commit a crime;
6. to seal up and or confiscate the equipment used in the Oil and Natural Gas business activity  to commit  a crime as evidence;
7. to. invite experts which are  needed  in  connection  with  the  e.xamination  of  a crime in  the  Oil  and Natural  Gas business activity;
8. to discontinue the exmaination of a crime in the Oil anol Natural Gas Business activity.

(3)           The Civil Servant Investigating Official as referred to in sub section ( 1) informs the commencement of an investigation of a crime to the Investigator of the State Police of the Republic of Indonesia in accordance with the provisions of the applicable legislative regulations.

(4)           The investigator as referred to in sub section (1) is obliged to discontinue the investigation in the event that the incident as referred to in sub section (2) letter a does not  have any proof  and or the incident  does not  constitute a crime.

(5)           The exercise of authority as referred to in sub section (2) shall be carried out in accordance  with the provisions  of  the applicablt legislative regulations.

CHAPTER X

CRIMINAL PROVISIONS

Article  5

CAFI 06/JANUARV 18, 2002

(2)     Whoever sends or delivers or transfers data as referred to in Article 20 without right in  any form  whatsoever, shall be subject to  imprisonment of  at th1 most 1 (one)  year  or  a fine of  at  the most  Rp 10,000,000,000.00 (ten billion  rupiah).

Article  52

Whoever  carries out an Exploration and or Exploitation  without being in possession of a Cooperation Contract as referred to in Article 11 sub section (1), shall be subject to imprisonment of at the most 6 (six) years  and a fine  of  at  the most  Flp 60,000,000,000.00 (sixty billion rupiah).

Article  53

Whoever carries out :

1. Processing as referred to in Article 2 without a Processing Business Licence, shall be subject to imprisonment of at the most 5 (five) years and a fine of at the most Rp 50,000,000,000.00  (fifty   billion rupiah);
2. The transportation as referred to in Article 23 without a Transportation  Business Licence, shall be subject to imprisonment of at the most 4 (four)  years and a fine of at the  most  Rp  40,000,000,000.00 (forty  billion rupiah);
3. The storage as referred to in Article 23 without a Storage Business Licence, shall be subject to imprisonment of at the most 3 (three) years and a fine of at the most Rp 30,000,000,000.00  (thirty   billion rupiah);
4. Trade as referred to in  Article 23  without a Trading Business licence, shall be subject to imprisonment of at the most 3 (three) years and a fine of at the most Rp 30,000,000,000.00  (thirty  billion  rupiah).

Article  54

Whoever intentionally imitates or falsifies Fuel Oil and Natural Gas and the other Processing Yields as referred to  in Article 29 shall be sub_ject to  imprisonment of at the most  6  (six)  years  and a fine of  at  the most Rp 60,000,000,000.00 (sixty billion  rupiah).

Article  55

Whoever intentionally carries out the transportation and or trade in Fuel Oil which is subsidized by the Government outside the Indonesian legal territory shall be subject to imprisonment  of  at the most 6 (six) years and a fine of  at the  most

Rp  60,000,000,000.00 (sixty  billion rupiah).

Article  56

(1)                         In the  event  that  the crime as referred  to  in  this  Chapter  is  commited  by  or  on  behalf of a Business Entity or a Permanent Establishment, then the pH,seicution and sentencing shall  be  imposed  on  the  Business  Entity  or  Perrrn31n<mt Establishment  and  or its management.

(2)                        In the event that the crime is committed by a Business Entity or a Permanent Establishment, then the sentence imposed on the Business Entity or the Permanent Establishment concerned shall be a fime, on the condition that at the most it will be a fine plus one third.

Article  57

(1)           The criminal act as referred to in Article  52  through Article  55 shall be a  crime.

(2)           The criminal act  as referred to  in Article 51 shall be a violation.

Article 58

Apart from the criminal provisions as referred to in this Chapter, as an additional sentence is the revocation of the rights or the confiscation of the goods used for or obtained from the crime committed In the Oil and Natural  Gas  business activity.

CHAPTER   XI TRANSITIONAL PROVISIONS

Article  59

At  the time this  Act  comes into force :

1. Within a period of  at the most  1 (one) year, an Executive Body  shall be established.
2. Within a period of at the most  2 (two) years, a Regulating Body  shall be  established.

Article 60

At the time this Act comes into force  :

1. Within a period of at the most 2 (two) years, the form of Pertamina shall be transferred into a "Perusahaan Perseroan (Persero)" with a Government Regulation.

1. As long as the "Persero" as referred to in sub section (1) has not been established, Pertamina is obliged to carry on the Oil and Natural Gas business activities, to regulate and manage the assets, personnel and the other  required important matters.

1. At the time of the establishment of the new "Persero", the obligations of Pertamina as referred to  in letter b, must be transferred  to  the  "Persero" concerned.

Article  61

At the time this  At::t comes into force  :

1. Pertamina must continue to carry out its duty and function of development and supervision on the management of the Exploration and Exploitation contractors including the Production Sharing Contract Contractors until the establishment of the Executive Body;

1. At the time of the establishment of the Persero as a replacement of Pertamina, said State Owned Business Entity must enter into a Cooperation Contract with the Executive Body to continue the Exploration and Exploitation at the former Mining Concession Territory of Pertamina and is considered to have obtained the required Business licence as referred to in Article 24 for the business of Processing, Transportation, Storage and Trading.

Article  62

At  the time this  Act  comes into  force :

1. Pertamina must continue the duty of supplying and service of Fuel Oil for the domestic requirements up to a period of 2 (two) years at the most or until the Persero as replacement of Pertamina has been established.
2. Fuel Oil which is still subsidized is not permitted to be transported and or marketed outside the legal territory  of Indonesia.

Article 63

At  the time this  comes into  force :

1. At the time of the establishment of the Executive Body, all rights, obligations, and consequences which arise from a Production Sharing Contract between Pertamina and another party  will be transferred to  the Executive Body.
2. At the time of the establishment of the Executive Body, the other Contracts which are related to the contracts as mentioned in letter a between Pertamina and the other party will be transferred to the Executive Body.
3. All contracts as referred to in letters a and b shall be declared to  remain in force until the enpiry of  the  contract concerned.
4. The rights, obligations, and consequences which arise from the contract, agreement of treaty other than as referred to in letter a and letter b, must still be carried out by Pertamina until the establishment of the new "Persero" which is established for that purpose and is transferred to  said "Persero".
5. The negotiations between Pertamina and the other party in the framework of the cooperation in Exploitation  and Exploitation  shall be transferred  to  the Minister.

Article 64

At  the this time  Act  comes into force  :

1. The State Owned Business Entity other than Pertamina which carries on an Oil and Natural Gas business activity is considered to have obtained a Business Licence as referred to  in  Article 23.
2. The development which at the time this Act comes into force is being carried out by the State Owned Business Entity as referred to in letter a, must still be carried out by the State Owned Business Entity concerned.
3. Within a period of at the most 1 (one) year the State Owned Business Entity as referred to in letter a, is obliged to establish a Business Entity for its business activities in accordance  with the provisions  of  the Act.
4. The contract or agreement between the State Owned Busirmss Entity as referred to in letter a with another party shall remain valid until the expiry of the period of the contract or agreement concerned.