IPA urges govt to stop criminalization of oil and gas industry
Monday, October 27 2014 - 10:28 AM WIB
?Finding him guilty and sentencing him with 4 years imprisonment and Rp 200 million fine is an extremely worrying development for the oil and gas industry and contrary to the dispute resolution mechanism under the Production Sharing Contract (PSC),? the IPA said
The IPA said it is also very concerned with the ongoing legal process that created an ordeal to other CPI employees, Endah Rumbiyanti, Kukuh Kertasafari and Widodo, as well as two CPI contractors, Ricksy Prematuri and Herland Bin Ompo.
As other members of the IPA which have working areas in oil and gas upstream activities, CPI operates under a PSC which is a binding legal agreement with the Government of Indonesia as sanctioned by the 2001 Oil and Gas Law. This contract provides a clear civil dispute mechanism if there are questions about the implementation of oil and gas projects involving cost recovery. This mechanism has been in place for decades and has allowed both the company concerned and the Government of Indonesia to successfully address any disputes arising from the contract.
The oil and gas industry is a highly regulated sector and each of its activities is based on the standard review and approval of SKK Migas and related State agencies, in addition to being regularly audited by government auditors. As mandated by the environmental law, all oil and gas companies are obligated to manage safe, reliable and environmentally friendly operations. To meet that obligation, the CPI bioremediation program was a pioneer and has set the standard in the industry as well as becoming a model that has been followed by numerous other companies in Indonesia.
Therefore, the criminal proceeding toward the CPI bioremediation program and singling out CPI employees and its contractors for criminal prosecution in relation to this program have set an unwarranted precedent and created legal uncertainty. Specifically for this bioremediation program, all costs were borne by CPI with no reimbursement from the government and therefore there was no ?state loss? associated with the program.
Continuation of this bioremediation case as a criminal case also creates wide concerns and fears among oil and gas workforce and their companies which could hamper the ability of the industry to continue providing the energy and government revenue needed to support the country?s economic growth. Currently, the IPA members contribute almost all of national oil and gas production.
?Due to the above-mentioned reasons, the IPA urges the government to stop the criminalization of the oil and gas industry as it will have wide ranging consequences and negatively impact Indonesia?s need to attract more investment in the energy sector,? the organization said.
?The IPA believes that legal clarity, legal certainty, and contract sanctity are the cornerstone of the success of Indonesia?s oil and gas industry. The IPA therefore respectfully requests the Government of Indonesia to refer this case to appropriate resolution mechanism described under the terms of the PSC that governs oil and gas operations in Indonesia,? it added.
?All IPA members are committed to continue operating to the highest ethics and integrity standards and in full compliance with the applicable laws in Indonesia. The IPA also promotes implementation of good corporate governance not only within the oil and gas sector, but also in the wider business community in Indonesia,? it further said.
Editing by Johannes Simbolon