The first law governs PSC contracts and allows firms to enter into a 30-year agreement with the government. However, these firms cannot sell a majority of their stake during the first three years of any exploration phase and they have to offer a 10% participating interests to provincial government owned firms during the first year of production.
The second law allows foreign firms to invest in the downstream sector, formerly the sole domain of state-owned PT Pertamina, and allows these firms to enter the distribution, refining, storage and sale sectors.
The new laws are expected to augment the 2001 Oil and Gas Law, which effectively ended the monopoly held by Pertamina and encouraged competition within the industry.
