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Indonesia cabotage law a threat to investment

Legislation to ensure vessels operating in Indonesian waters are domestically owned or flagged, has led to a dip in investment interest

NEW CABOTAGE regulations, if enforced, look set to dent Indonesian oil and gas production and dampen further offshore investment. Plans to extend cabotage to Category B vessels from May 2011 have sparked concern across the industry. The legislation, which aims to ensure vessels operating in Indonesian waters are Indonesian owned or flagged, has led to a decline in investment interest, says Evita Herawati Legowo, director general for oil and gas at the energy ministry. Upstream regulator BPMigas claims cabotage will disrupt offshore production, predicting oil volumes will fall by 260,000 b/d and gas output will slide by 20% from an average of 7.6bn cf/d. The problem is a clear shortage of I

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