ARCO allocates US$50m for 900 golden handshakes

ARCO allocates US$50m for 900 golden handshakes

JAKARTA (JP): Oil and gas company Atlantic Richfield Company
(ARCO) Indonesia, the subsidiary of Los Angeles-based ARCO, has
set aside US$50 million to compensate about 900 workers who will
retire voluntarily, the company said on Monday.

ARCO Indonesia's vice president of human resources and
administration Wibowo Brodjonegoro said the company was seeking
to reduce its workforce to 900 from 1,800 through a voluntary
redundancy program in six months as part of its efficiency drive
amid the severe economic crisis in the country.

"We have prepared the necessary money but the redundancy
program might not absorb all the allocated funds," Wibowo said at
a press conference.

With these funds the 900 workers will receive an average of
$55,000 in severance pay per head.

"If the retiring workers deposit their severance pay in the
banks, they will receive interest which could be higher than
their current monthly take-home salary," Wibowo added.

Also on hand at the conference were ARCO Indonesia president
Leon Codron and state oil firm Pertamina's head of foreign
contractor supervision Gatot K. Wiroyudo.

Codron said the redundancy program would enable the company to
save $100 million per year.

The company had taken advice from a consultancy firm regarding
the proper number of workers that would fit its needs.

Codron said the retired workers would be offered a
comprehensive severance package, including enough funds to set up
business either in or outside the oil and gas industry.

But if participation in the voluntary separation program did
not reach the required level, the company will apply a compulsory
separation program, he said.

He said ARCO Indonesia had pursued an efficiency program since
1993 that had led to a 25 percent reduction in costs, but the
global economic crisis which has led to collapsing oil prices has
forced the company to restructure and rationalize its workforce
in order to stay competitive.

As part of the restructuring, Codron said ARCO Indonesia had
reduced its expatriate staff by 50 percent to 30 people.

"Our plans for restructuring our operations in Indonesia are
based on the new economic realities of our industry and an ARCO
global initiative to become a more price-competitive energy
producer in every country in which we operate."

ARCO's Indonesian office is the last of its offices across the
world to conduct the workforce-restructuring program, Codron
said.

Nevertheless, ARCO Indonesia is thus far the only oil and gas
company here which has taken a real step to cut down its
workforce amid the economic crisis and collapsing oil prices.

ARCO has been operating in the country for 30 years and is
currently involved in 10 production sharing contracts (PSC), of
which three are productive blocks offshore North West Java, East
Java and Kalimantan.

It accounts for 40 percent of the natural gas needs for power
plants on Java.

Pertamina's data say ARCO currently produces the equivalent of
209,880 barrels of oil per day.

Codron said despite the workforce-reduction program, ARCO
remained committed to further investing in the country.

It would proceed with its multi-billion dollar Tangguh
liquefied natural gas (LNG) project in the country's eastern
province of Irian Jaya where ARCO, together with British Gas and
other partners had found more than 18.3 trillion cubic feet of
proven and potential natural gas reserves.

The development of the Tangguh LNG project will require $4
billion in investment. (jsk)