Audit agency finds irregularities in expenditure of Pertamina?s PSCs

The Supreme Audit Agency (BPK) has found some irregularities in the expenditure of state owned oil and gas company Pertamina?s production sharing contractors including those of Beyond Petroleum West Java (BPWJ), YPF Maxus and TotalFinaElf Indonesia. The alleged fraud has caused a financial loss worth millions of U.S. dollars to the state, Suara Karya reported on Tuesday.

"The state loss occurred as the oil companies breached the procedure in the authorization for expenditure (AFE) of their working plans," BPK said in its audit report for the first semester of this year. The breaches have resulted in an excess of the cost recovery of BPWJ by 10 percent from the initially planned (or those stated in AFE).

BPK found that the total cost recovery for the production sharing contractors had exceeded the initial plans by about 33.2 percent or US$6.85 million for the 2000 period and 44.55 percent or US$50.76 million for 2001 period. The total loss suffered by the government during the periods reached about US$56.84 million.

According to the BPK, the alleged breaches also occurred because the oil companies reimbursed their operating costs without the initial consent of Pertamina such as those found in six AFEs for the year 2000 and six AFEs for 2001.

The oil companies are licensed to explore and produce oil and gas in their concession rights under a production sharing contract (PSC) agreement. The companies receive about 15 percent from net oil production and 35 percent from net gas production. Under such PCS schemes, all the expenditure for their operating costs is covered directly from part of their oil or gas production. (*)