Indonesia's Pertamina nixes regulatory role after dissolution of BPMigas

Jakarta (The Jakarta Post/ANN) - PT Pertamina president director Karen Agustiawan says that the Indonesian state-owned company has no plans to take over the supervisory role of recently dissolved upstream oil and gas regulator BPMigas.

Speaking at a press conference yesterday, Agustiawan said that Pertamina would not deviate from its plan to become one of the leading oil companies in Southeast Asia by 2014 and in the world by 2023.

"We do not wish to be involved in regulation," Agustiawan said. "I object that the company would have to go back to the old days during this transition period."

Under the tenure of president Soeharto, Pertamina was given dual roles as an oil and gas operator and as a industry regulator. Pertamina lost its regulatory function when BPMigas was created in 2002 after the enactment of the Oil and Gas Law.

Agustiawan's statement, made before Energy and Mineral Resources Minister Jero Wacik and State-Owned Enterprises (SOEs) Minister Dahlan Iskan, put an end to speculation that Pertamina was keen to resume work as a regulator to obtain more oil and gas projects amid tough competition from foreign contenders.

Previously, Salis S. Aprilian, the president director of Pertamina Hulu Energi (PHE), said that Pertamina was ready if the government decided to transfer BPMigas' remit to them.

PHE is Pertamina's subsidiary for the upstream oil and gas business, managing domestic and overseas oil and gas fields administered under production sharing contracts (PSCs) and joint operating body-production sharing contracts (JOB-PSC). It also holds participating interest in several blocks.

Iskan said that the ministry wanted Pertamina to meet its current targets, confirming that he had no desire for Pertamina to take over the work of BPMigas.

"Pertamina has learned from the past. In reality, Pertamina has already gained momentum to become a professional company after its regulatory function was transferred to a new agency, BPMigas," he said.

Pertamina has estimated that it would have an average oil and gas output of 583,600 barrels of oil equivalent per day (boepd) this year, much less than Malaysia's Petroliam Nasional Bhd. (Petronas), for example, which currently has an average oil and gas production of 1.63 million boepd, according to its website.

The Constitutional Court dissolved BPMigas in a decision last week upholding a judicial review of the Oil and Gas Law filed by several organisations, including Indonesia's second-largest Muslim social organisation, Muhammadiyah.

The review claimed that BPMigas had been "pro-foreign interests and was unconstitutional".

The government quickly moved to create the SKSPMigas task force to replace the regulator after the court announced its decision. President Susilo Bambang Yudhoyono appointed Wacik to lead the task force.

Earlier this week, major rating agency Moody's said in a report that although all existing oil and gas PSCs remained valid until their expiration after the court ruling, "the regulatory transfer and uncertainty arising from the pending formation of a new supervisory body and new law are credit negative for Indonesia."

Another prominent ratings agency, Fitch Ratings, said in its report yesterday that while the ruling "highlights regulatory and legal risks in Indonesia, especially in the natural resources sector", it would have "minimal immediate impact on the operations of the country's upstream oil and gas companies".

Commenting on the reports, Wacik said that even though the industry was initially shocked by the dissolution of BPMigas, he remained optimistic that prominent investors would continue to support Indonesia.

"I have discussed this with multinational oil and gas companies who have been doing business here for years and are facing a number of changes in the regulations. They have never left, for Indonesia's economic growth is very promising," Wacik said.


Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Mercy pleas for Indonesia death row inmates as families arrive
    Mercy pleas for Indonesia death row inmates as families arrive

    Families of foreign drug convicts set to be hauled before the firing squad in Indonesia issued desperate mercy pleas on Saturday, as France warned of "diplomatic consequences" if one of its nationals is executed. Consular officials and relatives were arriving at a town near Nusakambangan, the high-security prison island where Indonesian executions are carried out, and where all of the death row convicts are now congregated. The foreigners -- two from Australia, one each from Brazil, France …

  • United States seeks access to Philippine bases as part of Asia pivot
    United States seeks access to Philippine bases as part of Asia pivot

    The United States has asked for access to Philippine military bases in eight locations to rotate troops, aircraft, and ships as Washington shifts its forces to Asia and as China expands its military presence in the South China Sea. U.S. Defense Secretary Ash Carter, in a speech in Arizona, has outlined Washington's next phase in its Asia "pivot", deploying its most sophisticated destroyers, bombers and fighters to the region. The Asia "pivot" has already seen U.S. Marines rotating through the …

  • China's island-building to loom large at SE Asia summit
    China's island-building to loom large at SE Asia summit

    China's creation of new island footholds in contested seas will hover over a Southeast Asian summit that has become an annual test of the region's nerve in standing up to its massive neighbour. The South China Sea hot potato drops this year into Malaysia's lap as the rotating chair of the 10 member Association of Southeast Asian Nations (ASEAN) and host of Monday's meeting. ASEAN states Vietnam, the Philippines, Malaysia and Brunei claim parts of the strategic South China Sea, but Beijing …

  • Philippines, China trade accusations over sea threats

    MANILA, Philippines (AP) — The Philippines accused China of aggressive maneuvers against its reconnaissance plane and fishermen in disputed seas where Beijing has stepped up construction of artificial islands, but China reiterated its claim on the strategic waterways. …

  • Indonesia orders execution of Mary Jane, 9 others
    Indonesia orders execution of Mary Jane, 9 others

    Indonesia has ordered preparations for the execution of 10 drug convicts, including Filipina Mary Jane Veloso, as the Philippine government filed yesterday a second appeal for judicial review of the case to save the maid from death by firing squad. The Attorney General’s Office (AGO) of Indonesia released an official letter dated April 23, instructing prosecutors to prepare for the execution of 10 convicts, the Jakarta Post reported yesterday. The execution would be conducted after the …

  • Noy to visit Canada, Japan
    Noy to visit Canada, Japan

    President Aquino will embark on a state visit to Canada in May and Japan in June to meet with his counterparts and promote Philippine interests. Deputy presidential spokesperson Abigail Valte said Aquino accepted the invitation from Canadian Governor General David Johnston to make a state visit to Canada from May 7 to 9. Tied to this trip is the President’s one-day working visit to the United States to meet with potential investors and with the local Filipino community in Chicago, Valte …

  • Business groups back K to 12 program
    Business groups back K to 12 program

    The government’s K to 12 program adding two more years to basic education received support from various business groups yesterday. However, they urged relevant government agencies to deal with issues regarding the implementation of Republic Act 10533, the Enhanced Basic Education Act or K-12 Law. In a statement, business groups led by the Philippine Business for Education (PBEd) said RA 10533 is a milestone piece of legislation that intends to bring the Philippines up to par with the rest of …

  • Happiest nations: Phl ranks 90th
    Happiest nations: Phl ranks 90th

    Switzerland is the happiest country in the world, while the Philippines placed 90th, according to a global ranking of happiness unveiled in New York on Thursday. Switzerland was followed closely by Iceland, Denmark, Norway and Canada. The 2015 World Happiness Report is the third annual report seeking to quantify happiness as a means of influencing government policy. The United Nations published the first study in 2012. …


Should Aquino be held accountable over the Mamasapano operations?

Poll Choice Options