Friday, 1st August 2014

Government urged to take over oil blocks

Selasa, 17 Juli 2012 22:08 WIB | 640 Views
Jakarta (ANTARA News) - Former Vice President Jusuf Kalla urged the government not to renew expired contracts for all oil blocks held by foreign contractors.

The government should not hesitate to take over control of the oil and gas blocks after the contracts have expired, Kalla he said.

The measure is needed to better guarantee the national energy security, he added.

"Some of the oil and gas blocks are on shore such as the Mahakam block which has lower production cost," he told a seminar on oil and gas block contracts held here on Tuesday.

The Mahakam block, which feeds natural gas to the Bontang liquefied natural gas plant is now operated by France`s Total Indonesia the contract of which will expire in 2017.

The government apparently is still mulling over whether to renew the contract or not.

Total has indicated it is keen on renewing the contract , and meanwhile, state oil and gas company PT Pertamina has said it wants to take over the operation of the block, which holds one of the largest gas reserves in the country.

Kalla said it is a good opportunity for Indonesia to take over control of oil and gas blocks after their contracts have expire.

He said Pertamina should have the technology to operate the blocks, and the government should have the courage to move firmly to take over control of the assets.

Greater courage is needed to face possible shortage in energy supply in the future and to press down oil fuel subsidy burden, he said.

However, he warned against illegal nationalization of oil and gas blocks from foreign companies with contracts not yet expiring.

Leading oil observer Kurtubi gave his support for Kalla`s call for the take over of oil blocks after the termination of contracts.

Kurtubi pointed to the country`s constitution which says that natural wealth belongs to the state, therefore, the government should recover the control of the assets for the state after tens of years in the hands of foreign contractors.

He said the blocks should be handed over to Pertamina and if the state company is not ready it could seek cooperation with foreign investors.

"The government should not make contract or has cooperation with foreign investors, he said, adding the government should act as the state representative above the contract," he said.

He said a mistake has been made so far when the government made contracts with foreign companies placing itself in equal position with the foreign companies.

When condition necessitates change, such as prices skyrocketing, the government could not do anything as it is bound by the contracts it has signed, he said.(*)