Requirements on Vessel Operator in Indonesian Oil and Gas Industry

Vessel Ownership

Vessel ownership under Indonesian Law is specified under Procedures for Foreign Ship Decree No 48 in which Article 1 (1) states that foreign vessel is a flagged vessel other than Indonesian flag and is not registered under Indonesian Ships Registration list. The same regulation provides the opportunity for foreign vessel to operate in Indonesia for purposes other than transporting persons or goods within Indonesian territory as long as there is insufficiency for local flagged vessel and already awarded with necessary permits from Ministry of Transport, also that this opportunity is on limited time basis of 3 (three) months which can be extended under evaluation.

The purposes other than transporting persons or goods includes as follows:

a. Oil and gas survey, including Seismic survey; Geophysics survey; and Geotechnical survey;
b. Drilling, including Jack up rig; Semi submesible rig; Deep water drill ship; Swamp barge rig;
c. Offshore construction;
d. Offshore operational support;
e. Excavation;
f. Salvage and underwater works;

Procedures for Foreign Ship Regulation strictly regulates that the above purposes can only be performed by vessels operated by national sea-transport company, meaning a company constructed under Indonesian laws having the business in sea transport within Indonesian territory and/or to and from foreign ports. The sea-transport company as intended by Procedures for Foreign Ship Decree can only be partially owned by foreign company/individual through shares ownership.

From the above explanation it would seem that Indonesian law does not recognizes cabotage principles and prohibits foreign vessels in operating and supporting oil and gas industry in the territory. However, under Shipping Law and Procedures for Foreign Ship Regulation, dispensation is given for offshore oil and gas support services with certain conditions.

Foreign Vessel Operating in Indonesian Territory

Regarding the possibility of having foreign vessel operating within Indonesia must fulfill these conditions:

1. Administrative conditions as follows:
a. Working Plan completed with schedules and work area marked with geographical coordinates;
b. Charter party agreement between the company and foreign vessel owner also working contract and/or Letter of Intent (LOI) from contractor;
c. Permit for Sea Transport Company (Surat Izin Usaha Perusahaan Angkutan Laut/SIUPAL);
d. Ship’s Registration/Flag Certificate (Sertifikat Tanda Kebangsaan/Pendaftaran Kapal);
e. Ship’s Safety and Security Certificate (Sertifikat Keselamatan dan Keamanan Kapal);
f. Ship’s Radiation Prevention Certificate (Sertifikat Pencegahan Pencemaran Kapal);
g. Crew List;
h. Safety Management Certificate (Sertifikat Manajemen Keselamatan);

2. Evaluation condition in which the intended vessel can be categorized with the 6 categories of vessels permitted under the law and that the allocation for such local vessel is insufficient;

Based on the above, as stipulated under Foreign Ship Regulation, a vessel/or foreign vessel can be operated by other company although the registration/ownership belongs to other company under the condition that there is an existing contract/agreement between the owner and user, and that the vessel already completed with all administrative certification.

In regards to execution of cabotage principle and align with the prevailing laws, Ministry of Transportation sets out the time limit for foreign vessel to be able to operate within Indonesian territory complying with the administrative and evaluation conditions as follows:

a. For the purpose of oil and gas survey, including Seismic survey; Geophysics survey; and Geotechnical survey; the time limit is given until end of December 2014;

b. For the purpose of drilling, including Jack up rig; Semi submesible rig; Deep water drill ship; Swamp barge rig; the time limit is given until end of December 2015;

c. For the purpose of offshore construction, including Derrick/crane, pipe/cable/subsea umbilical riser flexible (SURF) laying barge/vessel; Diving support vessel (DSV); the time limit is given until end of December 2013;

d. For offshore operational support, including 5000 BHP with dynamic position (DP2/DP3); Platform supply vessels; Diving support vessel (DSV); the time limit is given until end of December 2012;

e. For the purpose of excavation, including: Drag-head suction hopper dredger; Trailing suction hopper dredger; the time limit is given until end of December 2013;

f. For the purpose of salvaging and underwater works, including: Heavy floating crane; Heavy crane barge; and Survey salvage; the time limit is given until end of December 2013.

Dual Flagged vessel

Shipping Law prohibits double registration of a vessel. Any vessel registered in Indonesia formerly registered elsewhere must provide confirmation of delisting from previous flag registration. Indonesian vessel can only displays Indonesian flag and any violation would resulted in administrative sanction, penalty, permits confiscation or revocation of permits, or revocation of operation permits. Registration and Ship’s Flag Regulation stipulates that should a vessel leaves Indonesia because of the below reasons:

- transfer of ownership to foreign individual/company;
- scrapping;
- hijacked;
- unusable
- lose of ship.

A request for delisting must be submitted by vessel owner to Ship’s Registration Authority in which one of the condition must be met is the payment on transfer of ownership duties.

Author:
Daniel Alfredo
Partner – d.alfredo@legisperitus.co.id

 



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