ARCO plans to shed staff for efficiency<\/p>\n
JAKARTA (JP): Atlantic Richfield Indonesia Inc. (ARII), a unit
\nof the giant United States energy company Atlantic Richfield
\n(ARCO) plans to shed employees as part of an efficiency program.<\/p>\n
Head of the foreign contractors management body at state oil
\nand gas Pertamina Gatot K. Wiroyudo confirmed on Wednesday that
\nthe company had asked Pertamina's approval of the plan, but
\nPertamina as management holder of all foreign contractors'
\noperations, had not yet made any decision.<\/p>\n
\"We are evaluating the plan. We are looking at schemes in
\nwhich the company could boost efficiency without having to lay
\noff its employees,\" Gatot told The Jakarta Post.<\/p>\n
Gatot said ARII had not yet detailed the number of workers it
\nsought to shed. The company has about 3,000 workers in the
\ncountry.<\/p>\n
\"My understanding is that ARCO is currently staging a
\nworldwide corporate restructuring in which it will reduce its
\nworkforce by between 6,000 and 9,000 worldwide, excluding
\nIndonesia,\" Gatot said.<\/p>\n
He said only ARII of the tens of foreign contractors operating
\nin the country had thus far planned to shed workers amid the
\ncollapse in oil and gas prices.<\/p>\n
The oil and gas sector was initially perceived as one of the
\nfew sectors in the country which were left unaffected by the
\ncurrent economic crisis, given its dollar-based earnings.<\/p>\n
However, the crisis, which had been battering many parts of
\nthe world, particularly East Asia for more than one year, has
\nresulted in a drop both in oil demand and oil prices globally.
\nThis has forced many giant energy companies to merge to prune
\ncosts.<\/p>\n
ARCO acquired the giant U.S. energy company Union Texas
\nPetroleum (UTP) in a transaction valued at approximately US$3.3
\nbillion in May this year to reduce costs by eliminating business
\noverlap of both companies.<\/p>\n
Analysts said ARCO's operation in Indonesia has also been
\naffected by the failure of state electricity company PLN to pay
\nfor its gas supplies from the Kangean gas block in East Java.<\/p>\n
The huge gas reserve it recently found in the Tangguh area in
\nIrian Jaya has thus far not been able to boost the company's
\noperations in the country. The development of a liquefied natural
\ngas (LNG) center there is still delayed due to the absence of
\nbuyers.<\/p>\n
Gatot said as part of the efficiency program, Pertamina would
\nadvise ARII to put its non core workers, including cleaning
\nservice people and security guards, into service companies and
\nre-employ them.<\/p>\n
As such, the company can reduce its overheads but still keep
\nall its workers in their present jobs.<\/p>\n
\"As a matter of fact, we have planned to apply such a cost and
\noverhead reduction scheme in all other oil and gas companies as
\npart of the effort to boost efficiency in the oil and gas
\nsector,\" Gatot said.<\/p>\n
Minister of Mines and Energy Kuntoro Mangkusubroto earlier
\ncalled on the country's oil and gas sector to boost efficiency to
\nmaintain large enough margins for themselves and the government
\namid slumping oil prices.<\/p>\n
Oil prices have decreased to the one-digit level over the past
\nseveral weeks, the lowest price in two decades.<\/p>\n
Gatot said oil contractors were also expected to reduce costs
\nthanks to the pending deregulation in the procurement of services
\nand equipment and deregulation in the licensing of operations.<\/p>\n
Pertamina will also request that contractors use state-of-the-
\nart technology, which could reduce costs, and create synergy
\namong contractors in their operations, including through joint
\nproduction facilities.<\/p>\n
Contractors have also been called on to temporarily shut down
\nhigh cost oil wells pending the recovery of oil prices.<\/p>\n
Gatot targeted savings on production costs of up to 35 percent
\nin the coming years thanks to the efficiency programs. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/arco-plans-to-shed-staff-for-efficiency-1447893297",
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