Jambi governor threatens to cut crude oil supply to Plaju refinery
Tuesday, December 12 2000 - 04:30 AM WIB
Jambi governor Zulkifli Nurdin has threatened to cut the supply of crude oil from the province to Plaju refinery plant in neighboring province of South Sumatera if the central government did not give a fair compensation for the province's crude oil production.
"If there is no fair compensation given to Jambi, the supply of the crude oil from the province to Plaju, Palembang will be stopped," he said in his speech during the deliberation of the province's budget.
According to the governor, although Jambi produces a significant amount of crude oil, the province is not regarded as the producer of the oil because the central government's calculation is based on the final product at Plaju refinery. As the consequence, the Jambi province did not receive a fair compensation for its oil production usually in the form of financial supports from the central government to a provincial budget.
The central government provides the so called general allocation funds, specific allocation funds and production sharing fund to a province as compensation of its oil production. But according to Zulkifli, the funds allocated by the central government to Jambi were less than 50 percent it was supposed to obtain.
Major oil companies including Gulf Resource, BPP and Santa Fe Energi Resource are operating in the province's main oil blocks in Batanghari, Muara Jambi, Merangin and East Tanjung Jabung. All of the companies' oil production is transmitted to the Plaju refinery plant in Palembang.
Zulkifli said he could invite investors to build a refinery plant in the province to process the crude oil production. According to him, the local crude oil production is more than enough for the province to have its own refinery. "Santa Fee alone produces about 23,000 barrels per day and this level could be raised to 100,000 bpd," he added.
In his speech, the governor also warned regency administrations in the province of possible conflicts when the autonomy and the fiscal decentralization began effective next year. The autonomy which will give the region more authority to manage its financial resources will give regencies especially those which host mining sites a stronger financial source. (*)