Oil lifting allocation for local market set at 65 percent

By Godang Sitompul

Temporary working unit of the upstream oil and gas industry (SKSP MIGAS) has maintained that 65 percent of the total oil and gas lifting this year is allocated for domestic need.

The rest will be exported if their specifications do not meet the requirements of local refinery plants for processing.

?Our gross income from the upstream oil and gas industry at the end of 2012 is estimated to reach US$ 62,243 billion. About 58 percent of the total, or US$ 35,97 billion, will become state income,? said Energy and Mineral Resources Minister Jero Wacik, who also chairs the SKSP MIGAS, during a hearing with the Commission VII of the House of Representatives (DPR) in Jakarta on Monday.

The production sharing contractors (PSC) will get US$ 10,608 billion or 17 percent from the gross revenue.

?If it is realized then our income from the oil and gas sector will be 107 percent of the budget target (APBNP) set for this year,? he said.

He also asked the SKSP MIGAS to improve its efficiency by changing regulations and culture of its organization that was considered by stakeholders as not satisfactory. ?This is to improve its image. I asked them to reduce costs so that they will not be regarded as wasteful,? he said.

?And I am delighted that SKSP MIGAS was quick to respond by cutting a number of costs. For example, by reducing the standard of cars, and standard of traveling costs for officials. Overall, the efficiency improvement will result in a saving of about Rp 60 billion per month,? he said.

He also added that with the improvement of BPMIGAS, the process of approving Plan of Development (POD) had been accelerated from the previous 47 days during the period of 2006-2007 to only 28 days during the period of 2010-2011.

?For this year, we target that the process of approval will be finalized on December 13rd of 2012,? he added.

According to Jero Wacik, during the last eight years, the volume of gas allocated for domestic market has been increased by more than 250 percent. This is, of course, resulted in a decrease of gas export.

Meanwhile, Commission VII Deputy Chairman Achmad Farial of the Development Unity Party (PPP), questioned during the meeting on the legal basis to dismiss R. Priyono as BPMIGAS Chairman and terminate the upstream oil and gas authority.

"Is there any presidential decree to discharge BPMIGAS chairman, as he was appointed based on a presidential decree. Also, does the decision of the constitutional court (MK) contain any stipulation on the dimmissal of R. Priyono as BPMIGAS chairman,? said Farial during the hearing on Monday.

Jero Wacik noted that by the time MK made its decision, the government had been in a position to implement the decision. ?The oil and gas industry at that time was in need of legal certainty. Otherwise, we?ll lose trillions of rupiahs. For example, a presidential decree on the dismissal of Pak Priyono is being drafted. Pak Priyono and me, we?re close friends. But suddenly, BPMIGAS was terminated. And MK has said that the authority of BPMIGAS should be given the ministry,? he said. ?We?re not thinking perfectly at that time but that?s the decision we?ve made that night,? he explained.

Editing by Benget Besalicto Tnb