Shipbuilding Industry awaits order windfall

State upstream oil and gas regulator BP Migas has urged the national shipbuilding industry to get more actively involved in the oil and gas sector, particularly in providing shipping facilities for oil and gas transportation. The call comes in the wake of increasing demand for freighters and tankers in 124 of the 189 oil and gas exploration sites soon to go into production.  BP Migas operational support division head Budi Indiyanto said recently the country's upstream oil and gas activities currently employed 613 ships, 541 of which fly the Indonesian flag, while the rest are registered overseas.  They are used in 51 oil and gas working areas, operated by joint-contract contractors, which are set to come on line soon.  Spending in the sector so far is relatively low. Total investment in ships for offshore oil and gas production is US$1.5 billion annually, less than 5 percent of total spending.  "The national maritime industry should capitalize on this opportunity and not let outside parties take advantage," Indiyanto said during a meeting with the Indonesian Offshore Industry and Shipping Association (Iperindo) in Surabaya.
He added prospects for the shipping and offshore oil and gas sectors were good, following the planned $11.5 billion offshore project in the Timor Strait, which will enter the production phase in 2015.  BP Migas's call is also part of efforts to comply with the cabotage policy that requires the entire oil and gas tanker fleet operating in the country to be registered in Indonesia by 2010, in line with a 2005 presidential decree on the empowerment of the national shipping industry.  Iperindo chairman Harsusanto expressed optimism about the implementation of the policy, pointing out it could spur growth in the national shipping and offshore oil and gas industries. Iperindo has mapped out the prospects for the national shipyard industry, he went on, so when the need arises to build new tankers, the advance assessment capacity will already have been done.  "The government can help in reducing or exempting import tax for components," said Harsusanto, managing director of state-owned shipbuilder PT PAL Indonesia.  He added if shipyards won 10 percent of orders, it would boost the national shipping industry.  "Ten percent is between $100 million and $150 million, and this is very good achievement," he said.
Iperindo is optimistic it can get 25 percent of the entire BP Migas order. Bambang Haryo, managing director of PT Adiluhung Saranasegara Indonesia, said the government should not only pay attention to scrapping the import tax on ship components, but also ensure banks provide low-interest loan to the shipping industry.