The Jakarta Post reported that Indonesia's oil and gas production may slump by around 196 million barrel oil equivalent in 2011 if the government insists on going ahead with a plan to implement the cabotage principle in May 2011.

Mr Sammy Hamzah VP of Indonesian Petroleum Association told the House of Representatives Commission V overseeing transportation affairs that the House should consider excluding several types of vessels used in the oil and gas industry from being subject to the principle.

He added that "The country may also lose as many as USD 13 billion in investments per year if the principle is implemented."

Mr Sammy said that the production and investment losses came from four major production sharing contract holders, which are Chevron, ConocoPhillips, Total E&P Indonesie and ExxonMobil.

He added that several types of vessels such as jack-up and submersible rigs, drills, cable pipe laying and seismic ships were not available in the country. The number of those types of vessels was limited around the world and no Indonesian shipping company has owned those vessels yet due to their incredibly expensive prices.

The IPA fully supported the 2008 Shipping Law that aimed to empower the national shipping industry, however he reminded the house of the limitation of the country's shipping companies in providing for vessels in the oil and gas industry.

Mr Sammy explained that "Some other countries, such as China, Australia, India, Brazil and the US, also implement the cabotage principle, but they understand the specialty of the oil and gas industry, so that they exclude several types of vessels from being subject to the principle."

(Sourced from www.thejakartapost.com)