Pertamina Subsidiary Offers to Assume Role of Dissolved BPMigas

By webadmin on 11:01 am Nov 17, 2012
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Tito Summa Siahaan

Pertamina Hulu Energi — a subsidiary of the state-owned energy firm Pertamina — has offered to assume the role of the defunct oil and gas regulator, BPMigas, which was dissolved by the Constitutional Court on Tuesday.

Salis Aprilian, the president director of Pertamina Hulu Energi, said the firm was prepared to take over the role should the government give the instruction. “We are ready, because Pertamina Hulu Energi already has similar tasks,” Salis said in Jakarta on Thursday . “We actually have performed similar tasks and functions to those of BPMigas, but on a much smaller scope,” Salis said.

Established in 2008, PHE is tasked with managing the upstream business portfolio that Pertamina jointly controls with other oil and gas firms. It also manages Pertamina’s coal-bed methane assets.

Salis, however, has little confidence that such a transfer of authority will take place. “There’s a possibility that the government will establish a new state enterprise or transfer the BPMigas authority to an existing state enterprise,” he added.

The Energy and Mineral Resources Ministry has formed a special working unit within the ministry to temporarily assume BPMigas’s role until another regulation is enacted.

Salis did not say whether the government has offered the opportunity to PHE.

There are at least 42 assets under PHE, and the company controls operating rights to 12 of them. Among the assets under PHE are the operating rights to the Offshore Northwest Java block and the West Madura Offshore block.

Industry observers, though, see potential problems should state enterprises like Pertamina assume BPMigas’s role.

Kardaya Warnika, a former chief of BPMigas, was of the opinion that the energy ministry should take over the role and not Pertamina. “It would be much simpler than handing the authority back to state-owned enterprises like Pertamina, which, should it happen, would require the firm to amend its charter,” he said.

Hikmahanto Juwana, a professor of international law from the University of Indonesia, said that new problems will arise should Pertamina take over the responsibility.

“The complication in appointing state enterprises is that they will act as regulators, while at the same time also attempting to generate revenue,” he added.

The Constitutional Court made a headline-grabbing ruling early this week when it dissolved BPMigas on Tuesday. The court’s decision partially granted a request from several organizations, including the country’s second largest Muslim organization, Muhammadiyah, to annul the 2001 oil and gas law and declare the regulator unconstitutional.

Despite losing its status as a member of the Organization of the Petroleum Exporting Countries in 2008, Indonesia still enjoys a substantial amount of revenue from the oil and gas sector. Last year, BPMigas collected $35.8 billion in revenue from oil and gas, and the amount was expected to reach $34.9 billion this year.