Investment in energy sectors


Nation needs foreign investment in oil and gas: President SBY

President Susilo Bambang Yudhoyono says the nation still needs foreign investors in the oil and gas sector, since local companies cannot fully exploit the nation's reserves. President Yudhoyono said that domestic investment, despite repeated calls for its increase, was not enough to support the government's long-standing initiatives to increase oil and gas production.

"I have also invited energy companies from foreign countries [to invest locally]. This kind of effort has been underway since the administration of my predecessor," he told reporters at a press briefing on Friday. Yudhoyono also announced at the briefing the appointment of Deputy Energy and Mineral Resources Minister Rudi Rubiandini to head interim upstream oil and gas regulator SKMigas, which was formed last year to replace BPMigas.

 Susilo Siswoutomo, a special aide to Energy and Mineral Resources Minister Jero Wacik, was also named to replace Rudi by the President. The Constitutional Court annulled on Nov. 13 several articles off the 2001 Oil and Gas Law that served as the legal basis of BPMigas. The court ruled in favor of a judicial review that was filed by several organizations, including Muhammadiyah, the second-largest Muslim social organization in Indonesia, that claimed that BPMigas had been too "pro-foreign" in its administration of contracts for the nation's oil and gas resources and should be disbanded. The government, which was ordered to take over the work of BPMigas, formed SKMigas less than 24 hours after the verdict was announced.

Jero was appointed as the interim head of SKMigas, which was populated with a large number of former officials of BPMigas. Jero could not be permanently appointed to head SKMigas, as the law forbids Cabinet ministers from holding other senior official positions during their tenure.

Separately, Rudi, a Bandung Institute of Technology (ITB) graduate and formerly operations deputy at BPMigas, said that he had been instructed by Yudhoyono to reassure local and foreign investors in the oil and gas industry about in doing business in Indonesia. "To be honest, I have not done much as the deputy minister to assist the energy and mineral resources minister. But if I do get selected to lead SKMigas, I will perform my best," he told The Jakarta Post in a text message. Rudi was appointed by Yudhoyono to become deputy minister last year after the death of Rudi's predecessor, Wijajono Partowidagdo, in April from a heart attack while climbing Mount Tambora in West Nusa Tenggara.

The new head of SKMigas is a controversial figure for those that sought redress with the Constitutional Court. Indonesian Resources Studies director Marwan Batubara, for example, accused Rudi of hindering state-owned PT Pertamina's attempt to take over the operation of the Mahakam block in East Kalimantan.

Meanwhile, Susilo, the 62-year-old ministry staff expert, who was also a candidate to take over SKMigas, is set to replace Rudi as deputy minister. Susilo is a close friend of Jero. Both studied at the engineering department of ITB in Bandung, West Java in the 1970s.

Jero appointed Susilo as a staff expert in 2011, shortly after his own appointment as minister. Previously, Susilo worked for US-based energy giant ExxonMobil's subsidiary in Indonesia for 26 years before he retired in 2006. Subsequently, he was an advisor for BPMigas for two years before he led a special team for the erstwhile regulator that supervised big projects in Indonesia, such as the Cepu block in East Java and the Masela block in the Arafuru Sea.

Commenting on his appointment, Susilo told the Post in a telephone interview that as deputy minister he would support any policy undertaken by Jero and pledged to maintain the investment climate in Indonesia as requested by the President.

Contacted separately, Indonesian Petroleum Association (IPA) chairman Lukman Mahfoedz was upbeat on the appointments of Rudi and Susilo, saying that the men understood the problems facing the nation's hydrocarbon industry. "The IPA is ready to work together with the newly appointed officials to support the government," Lukman said.

The association's members produce 90 percent of the nation's total oil output, including big oil companies such as ExxonMobil, US-based Chevron and France-based Total. The Jakarta Post 12-1-13




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