Six oil, gas firms sign joint account with local banks

Six oil and gas operators have opened six joint bank accounts at domestic banks to deposit their so-called abandonment and site restoration budgets totaling US$60 million.

The nation?s regulator for oil and gas upstream industry also has access to the account.

The six contractors are: PT Pertamina EP, an upstream unit of state oil, gas firm PT Pertamina; MedcoTarakan, Medco Rimau, two upstream units of IDX-listed energy firm Medco Energi Internasional; Kalrez Petroleum, Kangean Energy Indonesia Ltd, and Kondur Petroleum SA, said BPMIGAS? chairman R. Priyono Wednesday.

The abandonment and site restoration budget is the amount of funds oil and gas contractors must set aside to uproot their production facilities and restore environmental surroundings after they complete their activities.

Priyono said the contractors used to place the money in individual accounts, which could be in foreign banks. Now, BPMIGAS has ordered them to put the money in domestic banks, whose accounts will be jointly held with BPMIGAS.

?This joint account mechanism is a sort of control mechanism. By using this joint account, contractors can only withdraw the money with the approval from BPMIGAS,?

Priyono said during the signing ceremony with the contractors. On Wednesday, Kalrez Petroleum, Kangean Energy Indonesia,. Medco Tarakan and Medco Rimau opened joint accounts with BPMIGAS at BNI, while Pertamina EP and Kondur Petroleum opened an account at BRI.

This regulation forms part of a package of new regulations issued by BPMIGAS that basically require oil and gas operators to use domestic banks to deposit their funds for their entire business operations within the country.

In the past, many contractors placed their operational funds in overseas banks, particularly in countries where their headquarters are located. For next year, oil and gas contractors here planned to spend up to $13 billion for their operations.

However, the joint account mechanism only applies to abandonment and site restoration budgets.

Currently, there are 64 contractors operating at the production stage, according to BPMIGAS data. However, BPMIGAS? general deputy Hardiono said not all oil and gas contractors would be implicated by the regulation.

BPMIGAS did not set a deadline for oil and gas contractors to move their budgets into joint accounts. However, Hardiono said the process might take some time because contractors need to build their trust in domestic banks. (*)