Indonesian Firms Could Nake Expired Foreign Oil Contracts: Expert

An executive at Indonesia's Chamber of Commerce and Industry (Kadin) has called on the Indonesian government to let domestic companies take over the blocks, noting the work contracts of certain foreign companies on a few oil and gas blocks are to expire in 2011.

Riqwan Hisjam, Kadin's vice chairman for organizational affairs, said Tuesday the contracts of Indonesia-based Kodeco Energy and US-based ConocoPhillips on the Western Madura offshore blocks would expire in March, 2011.

He called on the Oil and Gas Regulatory Body (BP Migas) to give domestic oil and gas companies a greater share in the development of the country's fossil fuel resources.

"Although there is already a regulation enabling regional administrations to take part in oil and gas development deals through the 10 per cent participation interest concept, domestic companies should be given a bigger chance to operate oil and gas blocks through a tender system," he said.

Hisjam, who was previously a member of the House of Representatives commission on mineral and energy affairs, said foreign investors should still be allowed to operate in the oil and gas sector but no longer as much as before.

"If domestic companies have the capability to operate oil and gas fields, why should we continue to depend on foreign operators," he asked.

Hisjam said it was time for the government to empower national enterprises to engage in oil and gas development, "unless we prefer to remain spectators in the exploration and exploitation of our own oil and gas reserves."

He said the first oil and gas blocks that should be given to national companies to operate were those in the western Madura offshore region as soon as the foreign companies' contracts on them expired in March 2011.

Meanwhile, a lecturer at the Economic Faculty of Airlangga University in Surabaya, Mohammad Nafik Hadi Riandono, said the government should be more assertive in increasing the role of national companies in the oil and gas sector but it should be a gradual process.

"The policy needs to be pursued gradually in line with our own capability. But a start should be made soon as many national oil and gas operators already have the needed experience," he said.

A good example of the government's assertiveness towards foreign operators in the oil and gas sector was given under former President Abdurrahman Wahid's (Gus Dur) administration, Nafik said.

"At the time Gus Dur terminated Caltex's oil and gas work contract in Riau and handed it to PT Pertamina and the Riau regional administration with each holding a 50 per cent interest without any foreign involvement. We have been waiting for a long time to see the present government pursue a similar policy," Nafik said.

ANTARA
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