Pertamina ready to lose oil, gas controlling rights
Pertamina ready to lose oil, gas controlling rights
JAKARTA (JP): State oil and gas company Pertamina's president
Baihaki Hakim said on Wednesday the state company was ready to
lose its decades-long controlling rights on the country's oil and
gas industry.
Baihaki said Pertamina had told the government's team for the
drafting of the oil and gas bill that it was ready to transfer
its controlling rights to an independent body.
"Pertamina emphasized (to the drafting team) that there should
be a body, which is independent from Pertamina and the
government, to exercise the (oil and gas) mining rights," Baihaki
said in a written statement presented to legislators during a
hearing with the House of Representatives' Commission VIII for
mines and energy.
Baihaki noted however that the transfer of the rights should
be conducted gradually to avoid political turmoil.
"(The oil and gas bill) should contain transition clauses to
ensure a smooth change of 'old Pertamina' into 'Pertamina of the
new oil and gas law' and to avoid social and political turmoil,"
Baihaki added.
Under the existing Pertamina Law No: 8/1971, Pertamina holds
the rights to manage the country's oil and gas industry, regulate
it and issue licenses to oil and gas contractors.
Pertamina exercises the special rights through the so-called
foreign contractors management body, which is locally known by
the acronym of BPPKA.
Former minister of mines and energy Kuntoro Mangkusubroto
proposed last year an oil and gas bill to end the special rights,
but he failed to pass it into law due to strong opposition from
the former House.
In the proposed bill, it was not clear if Kuntoro intended to
transfer the rights to the Ministry of Mines and Energy or an
independent body.
Foreign contractors supported Kuntoro's plan and Baihaki, who
was then the president of American oil and gas company PT Caltex
Pacific Indonesia, also praised Kuntoro's efforts.
But, Pertamina, under the leadership of Martiono Hadianto,
insisted that it should maintain the special rights and worked
hard to lobby the former House's members to shoot down Kuntoro's
bill.
After more than half a year of debates -- the longest law
debate in the country's history -- the House rejected the bill,
labeling it "too liberal".
They accused Kuntoro of trying to weaken Pertamina and to
boost the domination by foreign investors of the country's oil
and gas industry.
Minister of Mines and Energy Susilo Bambang Yudhoyono said
earlier the ministry would re-submit a new oil and gas bill to
the House around the middle of the year for discussions.
Output
Baihaki also said Pertamina planned to increase its oil and
condensate output to 126,000 barrels per day (bpd) next year from
89,000 bpd at present.
The state company would further increase its output to between
150,000 bpd and 218,000 bpd in 2004, he said.
Pertamina would optimize production at its existing fields and
develop new fields in the country and overseas to reach the
target output, Baihaki said.
"To reach the target, Pertamina needs US$325 million in
annual investment funds, and Pertamina is thinking of ways to
raise this," Baihaki said.
He said with the current oil and condensate output of 89,000
bpd, Pertamina now accounted for 6 percent of the national total
output, which stood at 1.4 million bpd.
Pertamina's share would rise to 10 percent of the national
output if it was able to raise its output to 150,000 bpd in 2004,
or 15 percent if its output increased to 218,000 bpd that year.
During the hearing, Baihaki also expressed concerns about the
Riau province's insistence to operate itself the Coastal Plains
Pekanbaru oil field, situated in the province, after Caltex's
contract on the field expires in 2001.
The Riau provincial administration did not reportedly want to
tie up with either Caltex or Pertamina in operating the field.
"Pertamina opines that the wishes of the Riau provincial
administration may set a bad precedent for other areas and would
affect the investment climate in Indonesia," he said. (jsk/udi)