Indonesia's Pertamina says it has no interest in resuming oil, gas regulatory role
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."
Article continues below...
|Request a free trial of: Oilgram News|
Oilgram News brings fast-breaking global petroleum and gas news to your desktop every day. Our extensive global network of correspondents report on supply and demand trends, corporate news, government actions, exploration, technology, and much more.
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
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
--Anita Nugraha, email@example.com
--Edited by Elston Soares, firstname.lastname@example.org