Locals may get oil firms' stock

Locals may get oil firms' stock

JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangksubroto has asked state oil and gas company Pertamina to
tender shares to be divested by its foreign oil and gas
contractors to national companies.

Kuntoro said on Friday the tender would provide equal
opportunities for all national companies to participate in the
development of the country's oil and gas reserves in joint
ventures with foreign contractors.

He noted, however, that if no national companies had enough
funds to acquire the shares, foreign contractors could keep them.

"If no company is able to buy the shares, just keep on
working. Why should foreign contractors be concerned about that?"
Kuntoro asked.

Oil and gas production sharing contracts (PSC) initially
allowed foreign contractors to wholly own their contract areas
throughout their operation.

But, in the late 1970s, Pertamina on behalf of the government
introduced an "Indonesian Participation" clause in PSCs obliging
foreign contractors to divest 10 percent stakes to national
companies at the beginning of production.

The contracts provide Pertamina with the right to appoint the
national companies that buy the shares.

However, during the 32-year rule of former President Soeharto,
the divestment of the foreign contractors' ownership mostly went
to Soeharto's family and cronies.

The most recent divestment of shares involved the Bimantara
Group, controlled by Soeharto's son Bambang Trihatmodjo, in the
Kangean onshore and offshore block in East Java.

The contractors of the block are Atlantic Richfield Bali North
Inc., a subsidiary of the giant United States energy company
Atlantic Richfield Company (ARCO) and British Petroleum and
Production.

President and resident manager of Atlantic Richfield Indonesia
Company (ARII) Leon Codron said recently that Bimantara had no
more shares in the block.

He argued that Bimantara had been given an option to purchase
a 10 percent interest in the block, but it failed to exercise it
within the period stated in the contract.

Codron said that it was Pertamina which appointed Bimantara to
take the option.

Pertamina officials told The Jakarta Post that the company was
often helpless to resist interference from the government and
contractors in selecting companies to buy the divested shares.
(jsk)