Top oil executive calls for a reduced govt role in oil, gas sector
Tuesday, November 21 2000 - 04:00 AM WIB
The government role in the country's oil and gas sector starting 2001 should be reduced to a shareholder role from a managerial role in a bid to reach optimum result from the investment in the sector, according to Hilmi Panigoro, CEO of Medco oil and gas group.
Hilmi said that the government should focus on supervisory role not operational aspect.
Speaking on the sidelines of Medco 20th anniversary ceremony, Hilmi made the statement in the run up to the transfer of authority in the issuance of oil and gas production sharing contract from the state-owned oil and gas firm Pertamina to the director general of oil and gas in January next year.
Hilmi said that the role of the director general of oil and gas was expected to be only temporarily because the authority would be transferred to an independent agency once the country's new oil and gas law had been approved by the parliament.
He said that the current role of Pertamina both as producer and regulator had made the company to be unable to develop itself into a world-class player.
Elsewhere, Hilmi said called on the authority to allow oil and gas contractors to have 50 percent of revenue from operation in high risk and difficult frontier areas.
He said that a 50:50 percent split would encourage investors to invest in frontier areas.
The government currently gets 85 percent of revenue from the revenue sharing mechanism with private contractors in oil project, while the private players get the remaining 15 percent. In gas project the government gets 70 percent of the revenue.
Minister of Mineral Resources and Energy Purnomo Yusgiantoro said recently that the government was planning to provide incentives for investment in remote frontier areas. (R. Amoros)