Pertamina finally ready to lose oil and gas controlling rights

State oil and gas company Pertamina finally said on Wednesday it was ready to lose its rights to control the country's oil and gas industry.

Pertamina's president Baihaki Hakim said in a written statement during a hearing with the House of Representatives' Commission VIII that during the drafting of the new oil and gas bill, Pertamina and the government had agreed that the future management of the country's oil and gas industry should be carried out by a body to be set up independent from the state company and the government.

Under the existing Pertamina Law No. 8/1971, Pertamina held the rights to manage the country's oil and gas industry, regulate it and provide licenses to oil and gas contractors.

Pertamina carried out the rights through the foreign contractor management body, which is better known locally by the acronym of BPPKA.

"Pertamina puts emphasis (during the drafting of the oil and gas bill) that there should be a body independent from Pertamina and the government, which is assigned to carry out the mining rights," Baihaki said.

Baihaki however noted that the revocation of Pertamina's controlling rights should be conducted gradually as to prevent unwanted political turmoil.

"There should be transition clauses (in the new bill) to ensure a smooth change of

Pertamina into 'Pertamina of post-new oil and gas law' and to prevent political turmoil," Baihaki said.

The former administration of President BJ Habibie proposed last year to strip Pertamina of its controlling rights but then Minister of Mines and Energy Kuntoro Mangkusubroto failed to pass the bill into law due to the strong opposition of the former House.

In the bill, Kuntoro proposed to revoke Pertamina's rights to control the country's oil and gas industry but it was unclear whether he would transfer the rights to the Ministry of Mines and Energy or an independent body outside the ministry.

Pertamina under the leadership of Martiono Hadianto, who considered it necessary for Pertamina to retain the monopoly right, intensively lobbied the House's members to shoot down Kuntoro's proposal.

The former House turned down the bill after more than a half-year of debates, the longest law debates in the country's history.

Most of foreign oil and gas contractors then threw their weight behind Kuntoro's proposal. Baihaki was the president of the country's largest oil and gas company PT Caltex Pacific Indonesia, a joint venture of American oil and gas companies Chevron and Texaco, when the debates on the oil and gas law took place.

Minister of Mines and Energy Susilo Bambang Yudhoyono earlier said the government planned to submit the new oil and gas bill to the House for debates in the middle of the year. (*)