Pertamina slams PSCs for being insensitive in handling community problems

State oil and gas company Pertamina on Thursday slammed foreign oil contractors for being "insensitive" towards the demands of local communities, blaming the insensitiveness for worsening the relation between the contractors and the locals.

Pertamina's president Baihaki Hakim said during a meeting with the House of Representatives' Commission VIII, which oversees among others mines and energy affairs that production-sharing contractors (PSC) applied a too legalistic and formal approach in their effort to solve their problems with communities.

He said contractors often created the problems by themselves.

The recent burning by locals of the oil pumps in Riau owned by American oil and gas company Caltex Pacific Indonesia was the result of CPI's failure to understand the demands of the locals, Baihaki said.

Several years ago, he said, CPI bought the land where the pumps were located from several "powerful" people who held ownership certificate on the land. CPI then left the land idle for several years.

Settlers from North Sumatra then came to occupy the land and developed it into palm oil plantation. Then suddenly, he said, CPI wanted the land back and refused to adequately compensate the settlers.

"In my opinion, CPI should have given fair compensation to the settlers. Even in Jakarta, if one wants to clear his land of settlers, he will compensate the squatters," Baihaki said.

Baihaki said nowadays, contractors can not rely solely on security apparatus to solve its problems with local communities.

"Indonesia is changing, you cannot depend solely depend on government to guarantee the security of your investment. You should be an active player too, you should listen to the local community's aspiration," Baihaki said.

He further said contractors should not rely on formal and legalistic approach but be more flexible.

Many oil contractors have been hit by unrest stemming from disputes with local communities and workers.

Unocal Indonesia and Vico Indonesia's production facilities in East Kalimantan were blocked by locals for several days last month, while CPI production facilities in Riau were disturbed by locals several times.

These problems affected Indonesia's ability to meet oil production quota set by OPEC (alex)