BPK audits BPMIGAS on cost recovery claims

State Audit Agency (BPK) has questioned mining companies? huge cost recovery claims from the upstream oil and gas authority BP Migas, the Koran Tempo newspaper reported in its Wednesday edition.

Under cost recovery procedure, oil and gas companies will get refund of their operational costs from the state after the production process is completed.

BPK chairman Anwar Nasution said his office has already started the auditing of BP Migas, which handles the cost recovery claims.

?There was already a request from the House of Representatives (DPR) to audit it (BP Migas) and we are doing it,? Anwar told the Tempo on Monday.

During the auditing, Anwar said, BPK will see whether cost recovery claim figures from the companies are reasonable or not. Last year the total cost recovery claims reached Rp 52 trillion.

Yudiana Ardiwinata, special advisor to the Indonesian Petroleum Association?s board of directors, has admitted that cost recovery figures are increased significantly because of the over 100 percent increase in operational costs like in drilling and fabrication activities

?To rent an off shore rig, for example, the costs jumped until 300 percent in the last two years,? Yudiana said in a separate occasion.

The rise in steel prices is also one of the factors that lead to the huge operational costs. Because steel prices are important factors of oil and gas industry?s construction section that determine the total operational costs.

The industry is facing the problems of lower production level and higher operational costs.

He repudiated the claims that mining companies are inflating their cost recovery claims.

?The higher cost recovery claims are not helping us. Because if the costs are much higher, our profits will be smaller,? he said.

Besides auditing cost recovery claims, BPK will also evaluate the converting the technical assistance contract into a contract of work between ExxonMobil and Pertamina.

?All these things we will see in our audit,? Anwar said. (*)