BP Migas violates law if it operates Pertamina?s LNG plants

BP Migas, the government?s agency responsible for supervision of oil and gas exploration and production activities, will violates the oil and gas law if the company takes over the operation of state owned oil company Pertamina?s Liquefied Natural Gas (LNG) plants, according to oil and gas expert Kartubi.

Speaking to reporters on Friday, Kartubi said that under the new oil and gas law, the LNG plants should be operated by a state-owned company. According to him, BP Migas operates as an institution not as a business entity as required by the law.

Separately Kardaya, the head of BP Migas, said Pertamina should be given only the rights to operate and manage the LNG plants. "The LNG power plants should, however, be controlled by BP Migas because the plants are closely linked to the production sharing contracts awarded to oil and gas companies that supply the gas to the plants," he said.

The new oil gas law eliminates all the exclusive rights and monopolistic practices that have been enjoyed by Pertamina for decades. In the past, Pertamina acted not only as oil and gas operator but also a regulatory body. With the new law, Pertamina should focus its operation on oil and gas exploration and production activities.

Kartubi said that the establishment of LNG plants, which started in 1972, was aimed to accumulate profits in a bid to increase state revenues from oil and gas. "This is why the power plants should be operated by a state firm not by an institution," he said.

In the past, the operations of LNG plants were given to Pertamina because besides being a regulatory body, Pertamina also operated as a business entity. Because BP Migas was established only as a regulatory body it would be quite strange if the agency would be then given the rights to involve in business activities, Kartubi said.

The government through Pertamina operates two LNG plants, one in East Kalimantan and another one in Aceh, in cooperation with local gas producers. (*)