OIL & GAS BILL: No hidden agenda behind deliberation

The director general of oil and gas at the Ministry of Energy and Mineral Resources, Rachmat Sudibyo, said the government had no hidden agenda in the deliberation of the oil and gas bill, replacing Oil and Gas Law No. 8/1971, Kompas daily reported on Wednesday.

Speaking after the deliberation of the bill with a special team of the House of Representatives, Rachmat said the government had no intention to revive the contract of works (COW) system in the oil and gas business. Instead, the government would continue implement the production sharing contract (PSC) system to maximize the benefits for the government.

He explained that under the PSC, the crude oil would belong to the government until they were sold to a third party, while in the COW system, the crude oil would belong to the contractors, and the government would only get a portion from the sales of the oil.

Meanwhile, a legislator from the House's Commission VIII, Emir Moeis, said that the deliberation of the oil and gas bill now entered its crucial period, namely deliberating the establishment of the executive body and regulatory body, that would take over the licensing authority from state oil and gas company Pertamina.

Emir said Pertamina currently collects 2 percent fee out of the total crude oil production from signing the PSC contracts with private oil and gas companies. Assuming oil production reaches 1.7 million barrels per day, Pertamina would get a total fee of Rp 7 trillion (US$=Rp 11,310) per annum.

He said the Rp 7 trillion belongs to the people, and not to Pertamina, and therefore, it is correct to take over the licensing authority from Pertamina. However, it is also necessary for the government to treat Pertamina fairly, and therefore, the government should not anymore buy oil from Pertamina using rupiah. (*)