Plan for oil contractors to offer 10% stake to regions
Fitri Wulandari, The Jakarta Post, Jakarta
The government is considering requiring oil and gas investors to give state companies in the regions a 10 percent stake in their business in a bid to increase the regions' share of oil and gas production.
The draft government regulations on oil and gas upstream activities require production-sharing contractors to offer the stakes to the regional companies when they began developing oil and gas fields.
Ministry of Energy and Mineral Resources oil and gas reserves director Iin Arifin Takhyan said the proposal would accommodate growing calls from the regions to share in the country's oil and gas wealth following the introduction of regional autonomy.
"It is in line with creating a fiscal balance between the central and regional governments," Iin said during the weekend.
Governors would select regional state-owned companies in their respective areas to buy the shares.
Iin said regional companies who bought participating interests would also shoulder a share of the investment costs to develop the fields. In turn, they would get shares in the oil and/or gas production business.
However, if no regional state companies expressed their interest 60 days after the share offer date, contractors would then offer them to national companies.
The offer would then close six days later if no national companies showed interest.
"Contractors would not be pushed into offering the (10 percent) stake in the case that there were no interested or capable regional companies," he said.
Onny Priyadi, the deputy head of Bojonegoro regional legislative council in East Java welcomed the proposal, saying the move meant the people would begin to benefit from the revenue generated from their oil and gas resources.
"People in oil and gas-producing regions remain poor, although there have been oil and gas projects in their regions for a long time. That is because the regions have not had the chance to participate in the process," Onny told The Jakarta Post during the weekend.
If this continued, it would lead to social unrest as happened in Aceh or Papua, he said.
Onny said revenue from oil and gas production could be used for the regions' economic and social development budgets.
A regional company in Bojonegoro had the financial and professional capabilities to work in the oil and gas sector, he said.
The company, PT Darma Asri Sejahtera, was already working in the sector in the area.
With initial capital of Rp 10 billion, the company planned to make investment in upstream (oil exploration and exploitation) and downstream (oil refining, fuel retailing and distribution) activities. It also planned to increase its capital up to Rp 20 billion.
"We can do it because we put professional people who know the oil and gas business in the company," Onny said.
Onny said the company hoped to get a participating interest in the Cepu oil and gas fields in the border area of Central Java and East Java, which is believed to contain huge oil and gas reserves.
State oil and gas company PT Pertamina has agreed to form a partnership with U.S.-based energy company ExxonMobil Oil Indonesia to operate the block.