Position of the Indonesian Government in Profit Sharing Contract Ability of the Indonesian Government to Use its Sovereignty Over Its Natural Resources in Renegotiating Terms Under Profit Sharing Contract

• Main Authors: , MARAL BIMANTI JUBILINE DIPODIPUTRO, , Prof. M. Hawin S.H., LL.M, PhD.
• Format: Theses and Dissertations NonPeerReviewed
• Published: [Yogyakarta] : Universitas Gadjah Mada 2013
• Subjects: ETD
• Online Access: https://repository.ugm.ac.id/125400/; http://etd.ugm.ac.id/index.php?mod=penelitian_detail&sub=PenelitianDetail&act=view&typ=html&buku_id=65568
• Institution: Universitas Gadjah Mada

The oil and gas is considered as a strategic business sector in Indonesia. Many investors both local and foreign are interested to invest in this sector. Nevertheless many still sees that there is no legal certainty for investors. As a developing country Indonesia tend to amend and introduce new laws and regulations, and expect all investors to respect and follow it. In many Middle East and South American Countries this action done by Indonesia is called act of nationalization. To many developing countries (where most natural resources are found) the government is given full control over the natural resources, and to several of them this power supersede any obligations, including contractual obligations. This is why countries such as Venezuela nationalize many oil fields from foreign investors. Many begins by requesting amendments to their concluded contract (renegotiation), when they reached into a dispute and went to arbitration proceedings, the Host State would argue that such amendments is necessary due to change of national interest, with this usually the Host State will then pay compensation to the investor and take over the whole oil fields. The possibility of using nationalization to amend terms under profit sharing contract (PSC) is the main issue discussed in this paper. If many developing countries use nationalization, this paper evaluate whether Indonesia have the ability to conduct the same action. However before this, the paper also tries to look at the position of Indonesia when it enters into PSC. Considering that it is a State Indonesia might owns sovereignty over its natural resources, it might own certain privileges. In finding the answer this legal research evaluate the concept: of PSC