Government suspends cost recovery payments worth $16.31b
Tuesday, February 23 2016 - 06:54 AM WIB
The government has yet to reimburse a total of US$16.31 billion spending made by oil and gas production sharing contractors in the country as the projects have yet to start commercial production.
Chairman of upstream oil and gas authority SKK Migas, Amien Sunaryadi told House of Representatives Commission VII on energy and mining on Monday that the balance of unrecovered cost of oil and gas contractors under exploration stage reached $7.60 billion, while that of contractors under exploitation stage totaled $8.71 billion.
?This is because (the projects) have yet to start commercial production, or the production has yet to be able to recover the spent cost,? Amien said.
Under the cost recovery mechanism, the government reimburses investment spending made by the oil and gas contractors.
Amien cited as examples that contractors Genting and Saka Energi have respectively spent $145 million and $38 million, but the government has yet to reimburse the cost because they have yet to start production.
Other contractors with large cost that have yet to be reimbursed by the government included PT Pertamina EP ($ 2.1b), and PT Chevron Pacific Indonesia ($2b).
According to SKK Migas data, cost recovery payments made last year totaled $13.4 billion.
Editing by Reiner Simanjuntak