Sydney (Platts)--22Nov2012/448 am EST/948 GMT

Australian exploration and production company Santos has been "extremely pleased" with the Indonesian government's response to the Constitutional Court's November 13 ruling to disband upstream regulator BPMigas, the company's vice president for Asia Pacific Martin Eames said Thursday.

The day after the ruling, Indonesian President Susilo Bambang Yudhoyono issued a decree establishing an interim unit to take over BPMigas' role as regulator.

That was an interim solution, Eames said, but it gave Santos "confidence in the sanctity of its existing contracts and confidence it can continue working with the new body as it's set up."

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The Constitutional Court, or Mahkamah Konstitusi, ruled that BPMigas contravened the part of the 1945 constitution on state control of natural resources, and that its legal powers and responsibilities were revoked.

Indonesia's annual oil and gas revenue averages around Rupiah 300 trillion ($3.1 billion), according to Yudhoyono. When announcing the establishment of the new regulator, which would work under the Energy and Mines Ministry, the president said it was essential to "provide certainty to the upstream oil and gas business."

The new unit will retain the function and role of the former BPMigas, while the ministry will conduct an audit of the former agency to ensure transparency, the president said. During the transition period, the government will draft a new law to keep the oil and gas business well run and transparent, Yudhoyono added.

Santos has a significant business in Indonesia, which contributed about 6 million barrels of oil equivalent to the company's total output of 47.2 million boe in 2011.

Santos' Oyong/Wortel project in East Java is producing at a gross rate of 90,000 Mcf/d of gas and 2,200 b/d of crude oil. The company plans to make a final investment decision on its 25,000 Mcf/d Peluang project, to be tied into the Maleo operation, in early 2013, with startup expected in the first half of 2014.

Santos also holds interests in four coalseam gas licenses close to the South Sumatra-West Java gas pipeline. A six-well commitment drilling program is scheduled to begin at the licenses in the first half of 2013.

--Christine Forster, christine_forster@platts.com --Edited by Martin O'Rourke, martin_orourke@platts.com

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