Jakarta (Platts)--22Nov2012/100 am EST/600 GMT

Indonesia's Pertamina said Wednesday that the state-owned company has no intention to resume the task of regulating the upstream oil and gas industry after regulator BPMigas was dissolved earlier this month by the constitutional court Mahkamah Konstitusi.

The company needs to focus on boosting its production and achieving the goal of being Southeast Asia's leading oil and gas company by 2014, Pertamina's chief Karen Agustiawan told reporters after meeting with Energy and Mines Minister Jero Wacik and State Enterprises Minister Dahlan Iskan.

"As President Susilo Bambang Yudhoyono said, Pertamina has to grow. Pertamina has to focus to increasing its production. We want to be a regional company and to achieve that in two years, and that will require all the president director's, board of directors' and management's attentions," she said. "We are on the right track right now, focused on business. We were regulator in the past, but as the president director, I have objected to the idea of Pertamina returning to the regulator role again."

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Dahlan Iskan also said that Pertamina had learned to be a professional company after the regulator role was transferred to BPMigas in 2002.

"Now Pertamina has the momentum to grow into a regional company, not a company which acts as regulator and enjoys preferential treatment and monopoly control of the industry," Iskan said. He declined to say whether the government would create a new state-owned company to take over BPMigas' role.

Pertamina is working to expand its upstream business and boost its output. The company's original plan had been to raise its output to 1 million b/d of oil equivalent by 2015, although in June that was reduced by 25% to a production target of 750,000 boe/d.

There have been some suggestions by government and industry officials that the government should return the regulatory role to Pertamina.

The establishment of BPMigas came under the oil and gas law number 22/2001, which gave the regulator the responsibility to sign and monitor production-sharing contracts. The government had wanted to separate the regulator and operator's roles, which had previously both been held by Pertamina. The removal of the regulator role from Pertamina's portfolio was widely welcomed by international oil and gas investors, and was hailed as a positive step for the country's industry.

BPMigas' role included giving input to the Energy and Mines Ministry over tenders of oil and gas blocks, signing production-sharing contracts, evaluating and giving development plans for oil and gas blocks, approving work programs and budgets for each contractor and monitoring them, and appointing buyers and sellers of natural gas, LNG and crude oil to enable the government to receive higher revenues.

When the agency was disbanded by the constitutional court, which ruled that the agency did not sufficiently make clear that Indonesia's hydrocarbon resources were state-owned, the decision was made to move the BPMigas role into a new body to be formed under the Energy and Mines Ministry.

Minster Jero Wacik said that with the move the government has ensured that the new SKSPMigas task force -- which is made up ex-BPMigas deputies and employees and headed by himself -- will not favor foreign investors and will be more efficient.

"We have to give opportunities to local companies as mush as possible. If there is an exploration field, we will offer it to local companies first -- if they have no interest, we will give it to foreign companies," he said.

But he said that Indonesia still needs foreign oil investment. Therefore, he asked that people not take "resource nationalism" too far and kick foreign investors out of the country.

"Foreign investors should be given chances as well, as we need the investment," he said.

Separately, Evita Legowo, oil and gas director general at the Energy and Mines Ministry, said Wednesday that the government and the parliament would discuss the creation of a permanent unit to take over BPMigas' roles.

It will be discussed along with revision of the oil and gas law 22/2001. There are some options which are being considered by the government, such as setting up an independent institution or creating a new state-owned company, she said. She declined to elaborate further.

The Mahkamah Konstitusi ruled November 13 that the creation of BPMigas in 2002 contravened part of the 1945 constitution about state control of natural resources and that the agency's legal powers and responsibilities should be abolished.

The decision of the court was that BPMigas' roles and tasks would be returned to the government or a state-owned company appointed by the government, until new regulations on the matter are issued, according to the court's ruling.

--Anita Nugraha, newsdesk@platts.com --Edited by Elston Soares, elston_soares@platts.com

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