BPMIGAS proposes scenarios on oil windfall profit

Upstream oil and gas regulator BPMIGAS said a change in oil and gas production split should be the last option the government would take in order to gain a greater amount of windfall profits from the escalating crude oil price, Kompas reported Saturday.

BPMIGAS? head R. Priyono made the remarks in Jakarta on Friday in response to an earlier statement by Energy and Mineral Resources Minister Purnomo Yusgiantoro that the government would take some actions on oil and gas contractors to reduce the burden on the state budget as a result of the soaring oil price.

Priyono said that there were several options being prepared to allow oil and gas contractors to share the government's burden.

?Imposing additional taxes has also been proposed, for instance, an export tax or an additional profit tax,? he said, adding the tax option was being prepared by the Ministry of Finance.

Apart from tax option, BPMIGAS is proposing a tight control over the cost recovery, he said.

Priyono admitted that oil and gas investors might not be interested in additional taxes. ?However, additional tax is more possible option than a change in production split because the change in production split also means a change in the contract. And so, changing the split is the last option,? he said.

According to Priyono, all the options would be conveyed to contractors. ?We will see which one accepted by investors. However, the last decision will be made at the ministerial level,? he said.

Meanwhile, President Director of Chevron Pacific Indonesia Suwito Anggoro said that under the production sharing system, contractors had shared the government's burden by giving bigger profit to the government. ?Under the split contract system, the right and obligation are in place. It is not only ?sharing the pain? but also sharing success and risk. However, we?ll leave to the government as to what form sharing the pain will take,? he said. (*)