OIL & GAS BILL: Beware of foreign interests in oil and gas bill
Monday, July 23 2001 - 02:34 AM WIB
Oil and gas expert Kurtubi warned that foreign oil and gas companies, especially those that have controlled the upstream level of Indonesia's oil and gas industry, would also be interested in controlling the downstream industry.
Kurtubi contended that in an oil and gas economy, an efficient oil company should control the industry right from the upstream through the downstream level. Therefore, foreign oil and gas companies that have controlled the upstream level would likely expand their interests into the downstream level.
"If they could enter the downstream level, those foreign companise would feel really efficient. And in fact, they will become really efficient, as the crude oil they produce could directly be processed into fuels and distributed directly into their gas stations," Kurtubi said.
Kurtubi warned that the interests of those multinational oil companies in Indonesia's oil industry had been successfully presented by the International Monetary Fund that had demanded the Indonesian government to liberalize its downstream oil and gas industry through in its letter of intent.
One example of the interests of foreign companies wanting to enter into Indonesia's downstream industry is the decision by BP to build its refinery plant in Singapore, hoping to tap Indonesia's market. As the market remained closed, Kurtubi said, BP decided to sell its refinery plant in Singapore.
Nevertheless, as long as the government continued to subsidize fuel prices, foreign oil companies would not have the appetite to enter the downstream level. The ideal price for private participation in the downstream level should be Rp 3,500 per litter of premium.
If the bill is passed into law without much changes, it will destroy Pertamina.
In fact, Kurtubi said, the 2001 oil and gas bill currently being deliberated by the House did not differ much with the 1999 bill that had been rejected by the House. (*)