Indonesia's parliament approves new energy law

JAKARTA, July 17 (Reuters) Indonesia's parliment has approved a new energy law to guarantee energy stockpiles from domestic sources and imports, the mines and energy minister said today, as the nation struggles with regular power outages and declining oil output.

A council headed by the president to look after national energy development will also be created under the law, Purnomo Yusgiantoro said.

Indonesia, Asia Pacific's only OPEC member, produced crude oil at the lowest levels in June since the 1970s and are making efforts to shift some of its energy demand to more abundant natural gas or coal and biofuel.

''With the approval of this energy law, we will encourage people to use more renewable energy instead of fossil fuel in future,'' Purnomo told reporters.

''Under the law, we will form a national energy council that will be headed by the president. It will plan and set a national energy policy. It will also take action if there is an energy crisis and emergency,'' he said.

The law will make it compulsory for the government to maintain energy reserve stockpiles.

''The types, amount and location for reserves stockpiling, will be decided further,'' the law stated.

Indonesia's President Susilo Bambang Yudhoyono will ratify the law before it takes effect.

Indonesia has said it has 8.6 billion barrels of proven and potential oil reserves and 182 trillion cubic feet of natural gas reserves.

However, oil analysts have said that major investors are reluctant to invest in in exploration in the country because of the long adimistrative and bureaucratic process.

Indonesia subsidises retail fuel prices, such as low octane gasoline, diesel oil and kerosene.

REUTERS SKB HS1719