House turns down request for higher cost recovery

The House of Representatives has turned down a request from the government for higher oil and gas cost recovery this year.

During a hearing session between the House and the government Friday held to deliberate the revised 2014 State Budget, it was concluded that the oil and gas cost recovery in the state budget remains unchanged at US$15 billion, the Directorate General of Oil and Gas said in a statement issued over the weekend.

The government has earlier proposed for higher oil and gas cost recovery of $16.5 billion due to the weakening of the rupiah against the US dollar, which in turns increases operation cost of upstream oil and gas activities. But the House of Representatives Budget Committee turned down the request considering that the country?s oil lifting target for this year has been reduced to 818,00 bpd from the initial target of 870,000 bpd.

Meanwhile, Public Relations Head at upstream authority SKK Migas, Handoyo Budi Santoso was quoted by Kontan Monday as saying that the move by the House to turn down the request for higher cost recovery is feared to cause a delay in some upstream projects.

Editing by Reiner Simanjuntak