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Gulf Indonesia Giving its best for mutual interdependence

Having been one of the few multinational firms to establish transparent win-win relationships with local communities and governments in its operational areas and surrounds, Gulf Indonesia Resources has pledged to continue efforts to share its success with locals.

"We look at our community development programs in two ways. First, they're a part of our corporation's social responsibilities, and secondly -- for our own interests -- we want to continue building a mutually beneficial and interdependent relationship between our company and the communities and local governments in those areas where our business operates," S. Santosa, Gulf Indonesia's vice president for corporate strategic development and government relations, said.

"Without such a good relationship, we cannot create a stable environment to work in," he said.

"And the local people are able to see that our presence on their land is also useful for them."

Gulf Indonesia, which marked its 41st anniversary of operations in the country this year, operates a variety of community development programs, from education to health, cultural activities, farming and infrastructure development.

Local people and authorities in its operational areas, particularly in the Musi Banyu Asin district of South Sumatra, have witnessed and benefited from the company's assistance, such as scholarships, training, free medical services and the construction of schools, prayer houses, roads and wells.

Each year the firm, which has been 72 percent owned by Conoco since September 2001 and has the remaining 28 percent of its equity listed on the New York Stock Exchange, spends some US$1 million on community development programs.

"We hope that we can build ongoing positive relationships with local residents, intellectuals and local authorities, starting with those at the subdistrict level and working up to municipalities and provincial offices," Santosa explained. "We also need to work with local intellectuals as they play a significant role in shaping public opinion."

An independent upstream company engaged in the exploration, development and production of oil and gas resources, Gulf Indonesia operates under a production-sharing agreement with Pertamina in three core regions: Sumatra, the Natuna Sea and East Java.

According to Santosa, Gulf Indonesia's community development programs cover three major sectors, namely education, economic empowerment for local communities and the development of social infrastructure.

"Education is our top priority since it's very important for the future of the locals," he said.

In 2001 alone, the company participated in building a number of schools and a school dormitory, and provided scholarships to 4,000 students from primary to high school level, and similar financial assistance for university students, including those preparing for final exams.

"Also, we provide an honorarium to teachers in remote areas who fail to receive payments from the government," Santosa added.

To help boost local economies, the firm has over the past two years sponsored on-the-job training for some 80 locals in Sukabumi in Bogor, West Java, in the fields of farming and animal husbandry.

"Under the supervision of senior tutors in Bogor, they learned many things related to agriculture, such as how to farm, run a fish pond, and raise chickens and goats," Santosa said. "From there, we then provided them with some initial working capital to start their own businesses. And it works, with a success rate of around 70 percent."

The well-trained locals not only employ others, but also indirectly share their knowledge and know-how with neighbors, friends and other villagers, he said.

In a similar vein, the company sponsored 20 local women to participate in sewing classes.

"We hope that this group can one day handle the procurement of our uniforms," he explained.

Santosa said that Gulf Indonesia was of course unable to provide jobs to everyone in a village. "But we always try to generate self-employment for them and we -- in cooperation with various parties, including intellectuals from Sriwijaya University -- are still looking for appropriate methods."

In 2002, for instance, Gulf Indonesia hopes to train a group of local farmers to breed bees and improve their techniques in planting rubber trees, oil palms and snake-skin fruit.

"We also plan to introduce home industry businesses to the villagers since we realize that not all of them, who come from different backgrounds and cultures, have an interest in agriculture," Santosa noted.

Apart from its regular programs, the firm also arranges a kind of MOU with locals, including the authorities, leading figures and youths, in which the villagers assume responsibility for helping secure Gulf Indonesia's assets and operations in the areas concerned.

In return, the company will meet the locals' requests, such as for the construction of a school or a mosque.

"We see it as a mutual commitment," Santosa said, adding that in 2001 his firm had signed MOUs with five villages. "Our operational areas are so large and scattered that we can not handle them on our own. The MOUs will give villagers a sense of ownership over our assets and will therefore encourage them to help secure our property against outsiders."

For local administrations, Gulf Indonesia regularly funds training for five staff members at a time at the firm's headquarters in Jakarta, where they learn about the oil business, contracts, accounting systems and local share arrangements.

"We often hold seminars for them. We want the local administrations to see us as an open and transparent company," Santosa went on. "We have nothing to hide"

"From our side, we just want them to be our partners," he said.

T.M. Razief Fitri, the firm's service and external manager, added: "We find the scheme works very well since all our wells and pipes are safe. There's no oil being stolen."

Santosa said that the programs would be expanded this year.

Throughout most of its history, Gulf Indonesia had been a crude oil producer but branched out into natural gas production when it opened its Corridor Gas Project in South Sumatra in October 1998.

The company, which was previously 72 percent owned by Gulf Canada Resources Limited, currently has interests encompassing 11 million gross acres in 13 onshore and offshore contact areas in Aceh, Jambi, South Sumatra, Natuna, and several spots in the eastern part of Java and near Lombok.

Besides South Sumatra, Jambi and Natuna, the other areas are still under exploration.

Its total daily production reaches 33,000 million barrels of oil and 280 million cubic feet of gas.

"We're a growing company, with our production estimated to double in the next three or four years, partly due to the massive sales of our gas," Santosa said.

Headquarters: Wisma 46, Kota BNI, 29th floor Jl Sudirman Kav. 1, Jakarta 10220 Telp: (021) 574 2120 Fax: (021) 574 2122 e-mail: