Pertamina told to check contract irregularities

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto has called on state oil and gas company Pertamina to check possible irregularities in oil and gas contracts awarded to foreign companies in joint ventures with former president Soeharto's family and cronies.

"Pertamina should check if the contracts contain irregular clauses regarding production splits between the government and contractors, taxation or contract duration," Kuntoro said on Friday.

He said if no "irregular clauses" were found in the contracts, the government would not interfere in the deals, including the acquisition of shares owned by Soeharto's family and cronies by their foreign partners.

But, he said, if the contracts contained irregular clauses that caused losses for the government, the government would take over the shares owned by Soeharto's family and cronies and ask foreign contractors to deal with the government rather than Soeharto's family and cronies in any possible share acquisitions.

"The foreign contractors should give the payment to the government if they want to buy shares which smack of KKN," Kuntoro said at a weekly press conference.

KKN is the Indonesian acronym for corruption, collusion and nepotism.

Several foreign contractors have acquired or are seeking to acquire the shares owned by Soeharto's family and cronies in their joint ventures in order to comply with Pertamina's advice to sever such ties.

Pertamina's director of exploration and production, Priyambodo Mulyosudirdjo, has said that the advice was given to foreign contractors to prevent their operations from being troubled because of the involvement of Soeharto's family and cronies in their companies.

Atlantic Richfield Indonesia Inc. (ARII), a subsidiary of United States energy company Atlantic Richfield Company (ARCO), and its partner British Petroleum have taken over the 10 percent stake owned by the Bimantara group in a production sharing contract (PSC) for the Kangean block in East Java. Bimantara is linked to Soeharto's son Bambang Trihatmodjo.

ARII president Leon Codron earlier said that the company had given Bimantara an option to buy a 10 percent stake in the block, but Bimantara never exercised the option.

Codron cited a clause in PSC contracts awarded from the late 1970s saying that foreign oil and gas contractors had to offer national companies an option to buy a 10 percent stake in the contract areas at the beginning of production.

Under such contracts, Pertamina has the right to appoint a company to buy the shares, and if the company does not exercise the option within three months the option is eliminated.

"Bimantara had been given the option to buy our shares but it has never exercised that option," Codron explained.

Unocal Indonesia Company, a subsidiary of U.S. energy company Unocal Corp., is seeking to buy the 10 percent stake owned by PT Nusamba in the Rapak and Ganal PSC block in East Kalimantan. Nusamba is linked to Soeharto's golfing partner Muhammad "Bob" Hassan.

U.S. company Mobil Corp., through its Australia-based subsidiary Ampolex (CEPU) Pty Ltd., is also seeking to acquire Humpuss Patragas' 51 percent stake in the Cepu block bordering Central and East Java. Humpuss is controlled by Soeharto's son, Hutomo Mandala Putra, also known as Tommy.

Kuntoro said that thus far Pertamina had only found irregular clauses in the contract awarded to Humpuss Patragas.

"As such, if Ampolex (which has a 49 percent stake in the block) wants to buy Humpuss' stake in the block, the company should give the money to the government, not to Humpuss," Kuntoro said.

Kuntoro, however, did not reveal the alleged irregular clauses in Humpuss' contract.

According to data from Pertamina, Humpuss signed a technical assistance contract (TAC) with Pertamina in 1990 to develop the state company's 1,670 square kilometers oil and gas block in Cepu and neighboring areas.

Under the TAC contract, Humpuss, which was to develop areas already explored by Pertamina, had to give Pertamina 65 percent of the block's oil output and 70 percent of its gas output.

In comparison, PSC holders, which have to develop unexplored areas, must give Pertamina 85 percent of their oil output and 70 percent of their gas output. (jsk)