Energy and Mineral Resources Minister Jero Wacik said on Wednesday that he would assist oil and gas contractors facing difficulties in executing investment plans.  “We’ll help those companies. We’ll facilitate whatever they need to fulfill investment commitments as written in their Work Plan and Budget [WP &B]. They can directly report to me,” he told House of Representatives Commission VII during a hearing session in Jakarta.  He once again emphasized his intention to strengthen supervision over contractors’ compliance with their investment commitments. He claimed that he would not hesitate to terminate contracts of those failing to perform as promised.

“There are companies which already have contracts for oil and gas areas but do nothing. Their contracts will be terminated, but if companies are serious in realizing their investments and meet difficulties, we’ll do our best to help them,” said Minister Jero. He acknowledged that the core problems which had hindered investment in the upstream oil and gas sector was the implementation of regional autonomy which granted regional heads greater authority.

BPMigas operation deputy Rudi Rubiandini, speaking to The Jakarta Post, agreed with Jero’s opinion that most problems faced by contractors were external problems related to regional governments and clashes with other institutions.  “The problems mostly found by contractors are overlapping land use, delayed permission issuance from regional governments and demands from regional governments to hire more locals in operations,” he reported in a telephone interview.

While in the exploration phase, many contractors did not have sufficient financial capability to execute programs they had submitted in WP&Bs, Rudi said. Most of the current investors were not big and reputable companies therefore they found difficulties in raising funds. “What the government has to do now is review all exploration contracts and terminate those with companies lacking financial capability,” he argued.

According to BPMigas, the slow progress in exploration could be seen from the amount of drilled exploration wells. At this time, only 87 out of the targeted 237 wells had been drilled by contractors.  To solve the external problems, the government had to improve coordination between institutions and regional governments, he added.

A lawmaker on the commission, Satya W. Yudha from the Golkar Party, suggested that to solve constraints in investment, the government should set up a team comprising officials from ministries related to the oil and gas sector and representatives of regional governments.
“The final aim is to ramp up our oil and gas production. I agree that the government has to take more firm action with contractors,” he said.