Riau questions government?s decision on oil revenue

The legislative council of the Riau province has questioned that finance ministry?s estimate on the amount of funds that must be received by the province from the production of oil and gas, Bisnis Indonesia reported on Saturday.

According to Finance Minister?s decree No: 214/KMK.06/2002, the Riau province will receive about Rp 3.479 trillion from the oil and gas production this year. The amount is slightly lower than Rp 3.9 trillion paid in the previous year.

The chairman of the budgetary commission of the council, Nurbay Juss, said in Pekanbaru on Friday that the criteria used by the finance ministry in calculating the oil and gas fund was not clear. "We therefore plan to make recalculation based on the actual oil production," he said.

Meanwhile Adyanus Herman Halim, a member of the drafting team of the province?s budget, said that the finance ministry?s calculation was lower than those made by the team.

Based on the team?s calculation, the province will receive at least Rp 3.62 trillion from this year?s oil and gas production. The calculation is based on the assumption that the oil price averages at US$22 per barrel and the oil production of 641,072 barrels per day or 233.00 million barrels a year.

According to the new oil and gas law, provincial administrations receives 15 percent from oil production and 30 percent from gas production in their territories .The portion given to provinces come from the government?s share from total oil and gas production in each area.

Most of the oil production activities in the country are carried out by private oil companies under a production-sharing contract. The government generally receives 85 percent from oil output, and 65 percent from gas production. (*)