IPA to draft oil and gas code of conduct
IPA to draft oil and gas code of conduct
Moch. N. Kurniawan, The Jakarta Post, Jakarta
The Indonesian Petroleum Association (IPA) said on Thursday it
would draft a code of conduct on good corporate governance for
the country's oil and gas industry to help strengthen business
ethics and eradicate rampant corrupt business practices in the
sector.
"I'm speaking before discussing with the board...but it will
be great support for putting together some general frameworks
into a code of conduct for the industry.
"A code of conduct is a powerful tool for industry and it's a
significant issue in the board of directors of the IPA." IPA
chairman Brian Marcotte told The Jakarta Post and Petromindo.com
after the plenary session of the IPA's 28th annual convention.
He added that oil and gas companies, all of which have
individual codes of conduct, could put their principles into an
industry acceptable code.
Marcotte said, for example, that one important area that
should be addressed was a code for outlawing corruption, which
would provide rules of thumb for companies in interacting with
the government.
The IPA would set up a forum to further discuss the planned
code of conduct, he added.
The country's oil and gas industry has been plagued by corrupt
and collusive business practices for decades although the sector
is dominated by foreign companies, many of which are listed
overseas.
The state-owned oil and gas company Pertamina, which controls
the management of production sharing contractors, has been blamed
for failing to curb the corruption.
Critics have also said that Pertamina had long been treated as
the cash cow of the family and friends of former authoritarian
president Soeharto.
In 1999, auditing firm PricewaterhouseCooper uncovered losses
amounting to US$4.69 billion at Pertamina between 1996 and 1998
due to various factors such as inefficiency, loss of income
opportunities and future obligations.
The situation has prompted the government to remove
Pertamina's supervisory role over oil and gas companies in the
upstream sector as provided for in the new oil and gas law, which
came into force in November last year.
Pertamina has to turn itself into a limited liability company
within two years, and the government will establish an
independent body known as the Executive Board to take over
Pertamina's supervisory role in one year.
Gulf Indonesia Resources Limited's Paul C. Warwick agreed that
rampant corrupt and collusive business practices in the industry
must be cleaned up to help raise foreign investors' confidence.