Purnomo invites BPK to audit cost recovery funds in oil industry

Minister of Energy and Mineral Resources Purnomo Yusgiantoro has invited the supreme audit agency (BPK) to audit the government's reimbursement of the cost recovery funds in the oil and gas industry if there is an indication that certain companies have abused the facilities.

The minister's invitation was made amid a growing criticism over the high amount of the cost recovery funds paid to the country's oil and gas production sharing contractors (PSCs) in 2005.

During the year, the cost recovery funds increased by about 60 percent to US$7.5 billion from US$4.9 billion in 2004. The increase, however, was not followed by the rise in the oil production which instead declined to 1.062 million barrels per day in 2005 from 1.094 million barrels per day in 2004.

"If there is an indication about the misuses of the funds, the state audit agency can be invited to audit them, " he said. The minister, however, said that the spending for the oil and gas exploration and production activities should not always be in line with the production.

The increase in the expenditure could be higher than the rise in the production because there was a significant increase in the prices or rental fees for the equipment used in both exploration and production activities, he said.

Under the existing production sharing contracts, the expenditures for oil and gas exploration and production are covered or reimbursed by the government from part of their production. (godang)