Pertamina seeks amendment of PSC contracts

Pertamina is seeking to amend existing production sharing contracts with a number of oil producers saying that the contracts had been more disadvantageous to the state oil and gas company, Suara Karya reported on Thursday.

Effendi Situmorang, the director of production sharing management of Pertamina, said in Jakarta on Wednesday that the disadvantage was, for example, seen in the inability of the company to terminate the contract, when a project was inflicting a loss.

"It has happened in one of oil fields. Although the field has no longer operated, but Pertamina ironically could not terminate the contract," he was quoted as saying. "If we do so, we can be sued," he added.

Because of such weakness, Pertamina is seeking the possibility of amending the contracts but he said that the revision could be made without the consent of the producers. "We will try to negotiate it with the existing producers," he added.

The other weakness, according to Effendi, is seen in the fact that Pertamina could not involve in settling a conflict with local residents. "When workers went on strike at the Devon Energy field in Papua, Pertamina could do nothing, although the strike had caused a halt in the supply of crude to the oil and gas company?s refinery," he added.

At the end, he said, the oil company should pay compensation worth about US$20 million to the workers and the money would be taken from the recovery cost at Pertamina, he added. (*)