Extortions costing oil firms in Aceh

Extortions costing oil firms in Aceh

Wahyoe Boediwardhana, The Jakarta Post, Denpasar, Bali

Extortions made against oil companies are on the rise in Aceh,
following last December's landmark truce between the Free Aceh
Movement (GAM) and the Indonesian government, an official said on
Thursday.

Rachmat Soedibyo, the chairman of the Oil and Gas Implementing
Body (BP Migas), complained that the extortions were inflating
the economy, and costing the oil companies dearly.

Rachmat lashed out at GAM members, whom he accused of
intensifying the extortions after the successful peace pact.

"Those people, who claim to be GAM members, no longer carry
out the extortions in secret, but they now do it openly after the
truce," Rachmat said during a meeting between BP Migas and its
production sharing contractors (KPS) on the resort island of
Bali.

"The irresponsible people extort money from several oil firms
in Aceh on the grounds that they need funding for 'organizational
consolidation,'" he said.

He said this had increased the production costs of the oil
companies in Aceh by about 1 percent.

The amount is quite significant because average production
costs for companies in Aceh reaches between US$4 billion to $5
billion per year, Rachmat said.

He said that rampant extortions had also contributed to a
lower oil output in Aceh, which means that the oil companies were
unable to meet the oil production target.

He said that as a result of the problem, BP Migas had to
reduce the oil production target to 1.27 million barrels per day
this year, compared to about 1.4 million barrels per day over the
past 10 years.

BP Migas has asked the police to immediately tackle the
extortion problem because of the severe impact it was having on
oil production.

Rachmat feared that oil and gas investors would continue to
shy away from investing in the country unless the government
moves decisively to resolve the problem.