Cost recovery for Chevron?s bioremediation project suspended

Upstream authority SKK Migas has decided to suspend the reimbursement of the US$23.4 million bioremediation project carried out by PT Chevron Pacific Indonesia at its oil and gas working area in Riau province until the ongoing legal case involving the project is settled, Bisnis Indonesia reported on Wednesday.

SKK Migas Secretary Gde Pradnyana said in Jakarta on Tuesday that the upstream oil and gas regulator would decide on the disbursement of the funds once the court has made its final ruling regarding the alleged corruption case in the implementation of the bioremediation project.

?We will suspend until the litigation process is settled. We don?t want another problem to arise in the future,? he said.

Some expenses of oil and gas production sharing contractors operating in the country are reimbursed by the government under the so-called cost recovery mechanism.

The Attorney General Office (AGO) accused that the Chevron bioremediation project has been tainted with corruption. Under the case, which was opened in September 2011, the AGO charges the oil and gas company to have failed to carry out the project according to its initial purpose because two subcontractors appointed by Chevron had no experience to do the bioremediation works. A number of senior officials of the subcontractors and Chevron are currently being tried for their alleged role in the case.

Elsewhere, Gde said that the ongoing dispute over Chevron?s bioremediation project should have been settled via civil proceeding instead of the criminal law.

According to him, Chevron had conducted the bioremediation project in line with the existing regulations and procedures. Chevron, for example, had obtained a permit from the environmental ministry and had submitted it to SKK Migas for approval. (*)