Indonesia to Pool Money to Finance ‘Petroleum Fund’ for Oil and Gas Exploration
Tito Summa Siahaan
Tito Summa Siahaan
Indonesia is considering establishing a “petroleum fund” consisting of money sourced from the government’s non-tax revenue from the oil and gas sector, a senior minister said.
Deputy Energy Minister Rudi Rubiandini said on Tuesday that the money was intended to help finance exploration and research in the oil and gas sector. The government is looking at setting aside as much as 5 percent of non-tax revenue from the sector for the fund.
Indonesia has been criticized for not doing enough to encourage exploration as oil and gas firms have had to venture into riskier territories in search of the valuable resources.
“Large firms are reluctant to invest in Indonesia because of the lack of accurate data and low-level technology adaptation. We want to address the issue by forming a petroleum fund,” Rudi said.
He said the fund could be used by related ministries and government institutions for exploration and research purposes. “It doesn’t matter which institutions or ministries as long as we have a fund specifically allocated for such purposes,” he added.
Rudi was speaking on the sidelines of the Asean Latin Business Forum in Jakarta.
The revised 2012 budget sets a target of Rp 198.3 trillion ($21 billion) in revenue from the oil and gas sector. From January through June, the government has collected Rp 68.7 trillion, or just 34.7 percent of the target.
The government has submitted a proposal for a revision of the 2001 Oil and Gas Law that would allow some of the revenue from the sector to be channeled into the new fund.
In a bid to attract investors, the government is considering reviewing its current profit-sharing scheme with oil and gas contractors.
In the current scheme, the state receives 70 percent of the profit.
Any spending by contractors in the exploration stages of a project will be reimbursed through a cost recovery plan.
Pri Agung Rakhmanto, an executive director of the Reforminer Institute, a think tank, said a 5 percent allocation would only “modestly” boost oil and gas exploration. He suggested 15 percent would be a more appropriate figure.
Pri Agung, however, expressed doubts about whether the fund would come to fruition as revising the law would take quite some time to be approved by the House of Representatives.