Indonesia Petroleum Association (IPA) considers the petroleum fund plan has the potential to create bigger risk to the state’s financial condition. Moreover, the fund would be taken from the State Budget, said the association. The petroleum fund managed by government’s special institution means the government is fully involved in the national oil and gas business.
Sammy Hamzah, IPA Vice President, said the petroleum fund concept is beneficial in reducing the investment risk, besides complimenting the geological and geophysical facts of oil and gas partnership areas. Therefore, the interest to invest in oil and gas sector prevails. “However, the existence of petroleum fund would be in vain if the current oil and gas investment climate in Indonesia does not change,” he said to IFT, Friday.
IPA suggests the government to focus on the investment climate improvement rather than thinking about the petroleum fund. The government needs to give various incentives encouraging investors to invest in upstream oil and gas sector, so they would not need to use their budget. Some of the stimuli suggested by oil and gas investors are fiscal incentive and overlapping land acquisition settlements. “If the investment climate is favorable to investment, even without the petroleum fund investors would come uninvited,” he said.
BPMigas suggested to the government that 5% of non tax oil and gas revenue (PNPB) to be allocated for petroleum fund. Rudi Rubiandini, BPMigas Deputy Operation, said the fund would be spent to improve exploration activities to increase the national oil and gas reserves.
“4% of the fund suggested for petroleum fund would be used on exploration development and 1% for human resource development,” Rudi said.
According to the Finance Ministry data, the oil and gas PNPB is projected at Rp 149,3 trillion, it consists of Rp 107,5 trillion oil revenue and Rp 41,8 trillion gas revenue, lower than last year’s . in 2010, the oil and gas PNPB was Rp 151,7 trillion, Rp 112,5 trillion oil revenue and Rp 39,2 trillion gas revenue.
Inconsistent
IPA, according to Sammy, gets the impression from the investors that the government’s objective and policy to improve the oil and gas sector have been inconsistent. The government still needs investors to improve the upstream investment, but the micro policy, among the Energy and Mineral Ministry, BPMigas and the regional governments are not in harmony.
“The disharmony between the government’s objective and policy is what makes the investors are in doubt and reluctant to invest in the national upstream oil and gas sector,” he said.
Sammy also considers the petroleum fund as nothing new in some countries. In other countries like Libya, the government is doing business as well. Therefore, when a new reserve is found, the government would also invest to increase their national revenue.
Gde Pradnyana, BPMigas Head Division of Public Relation, Security and Formality said a governmental institution, similar to government investment center (PIP) of the Finance Ministry, would manage the petroleum fund. “In our view, the petroleum fund would be managed by a PIP like institution but not PIP,” he said.
According to Pradnyana, the petroleum fund would not be distributed to PSCs. The fund would be used for general survey activities to complete the geological and geophysical facts data before the government offer the oil and gas working areas to potential investors.”The investors would not have any doubts in the oil and gas working areas offered by the government, we are hoping for more big investors to participate in the oil and gas working area auction,” he said.
Satya W. Yudha, member of Comission VII of the DPR, supports the petroleum fund plan because it is beneficial in improving data availability related to national oil and gas working areas, particularly in Eastern Indonesia. “The oil and gas potential in those areas are quite big, but the data currently available is very limited due to the budget limitations,” he said.
Unlike the BPMigas suggestion regarding the petroleum fund management, Satya thinks it would be better if the fund is managed by the Energy and Mineral Ministry and BPMigas. What is more, the Energy and Mineral Ministry already has the Geology Board and Oil and Gas Directorate General, administering the geological studies and oil and gas working areas.
Askolani, PNBP Director of the Finance Ministry, said they could not comment on the BPMigas suggestion regarding the petroleum fund using the oil and gas PNPB yet. “We will have further study and review of that suggestion,” he said.