Local firms ask Indonesia to limit oil contracts with foreign firms

Aug 09, 2006 02:00 AM

Local companies grouped under the National Oil and Gas Caucus have asked the government to limit oil and gas cooperation contracts with foreign firms to one contract period.
"If such contracts are to be extended then the relevant foreign companies have to be required to involve private local firms," the caucus chairman, Effendi Siradjuddin, said.

He said the proposed limitation was included in the so-called 2020 Indonesia Incorporated in Oil and Gas -- a document that lists efforts needed to help develop local oil and gas companies. The document will be submitted to the government and relevant state agencies.
By involving local companies that have adequate knowledge of environmental conditions in the country, "we can be more confident that we can realize sustainable development in Indonesia", said Siradjuddin, who is also the chairman of the Association of Indonesian Oil and Gas Companies (Aspermigas).

According to Siradjuddin, the participation of private Indonesian companies in the oil and gas sector was limited, despite Indonesian firms having a relative mastery of the technology in the sector and quality human resources.
He also asked the government to tender out small oil fields that had been exploited by large foreign companies to local firms. He said smaller fields were able to generate sufficient returns to justify the expenditures of smaller firms.

Recently, Aspermigas said high global oil prices should prompt the government to adjust its oil and gas policies, with a view toward empowering domestic firms.
As a net oil importer, high oil prices place a heavy financial burden on Indonesia as it struggles to meet increasing domestic fuel demand. In 2003, the country's oil production reached 1.146 mm bpd. That figure dropped to 1.096 mm bpd in 2004 and 1.062 mm barrels last year.

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