Patrick Heller

The revision of Oil and Gas Law that ongoing in House of Representative, highlight the institutional framework aspect. The debate constrict to a motion that there is a necessity to build a particular State Owned Enterprise (BUMN) in manage oil and gas. To deepen that knowledge, Patrick Heller, Director of Legal and Economic Program of Natural Resource Governance Institute (NRGI), shared his knowledge about institutional framework and contracts structure in PWYP Knowledge Forum (PKF) last (22/10).

According to Heller, improvement of oil and gas governance can focused on institutional framework with emphasize 3 (three) things. First, measure the effectiveness of institutional structure in Indonesia, with knowing the role of each institution. For example, the role of Pertamina, SKK Migas, Ministry of Energy and Mineral, etc. Second, there is a responsible institution in monitoring the compliance of oil and gas companies. Third, there is a mechanism that ensure the public accountability.

Heller also elaborated the effectiveness of oil and gas institutional structure in Norway and Malaysia. In Norway, he added, oil and gas policy maker is Stortinget, then the commercial activity running by Statoil. The national development function running by Ministry of Finance, and Norway Petroleum Directorate do the monitoring and regulation role.

Different with Norway, in Malaysia, the fourth functions are ran by Petronas. However, encourage the State Owned Enterprise (BUMN) is not apart from the threat. The threat are lack of management and monitoring aspects. If the management and monitoring are weak, the development and state revenue will not effective, the public revenue management will not accountable, and poor relation with community.

Heller also explained about contracts scheme in several countries. UK, US, Colombia, Brazil, use concession contract, where the companies as the owner of 100% of production. Then Indonesia, Azerbaijan, Angola, these countries adopt production sharing contract system, where the production are shared between government and companies with percentage according to the contract.

“Iran, Iraq, Mexico, Bolivia, these countries adopt service contract system where the owner is government, and companies paid for the activity,” added by Heller.

Meliana Lumbantoruan, Research and Knowledge Manager PWYP Indonesia, hopes the discussion can give insight in develop a better oil and gas institution, and the new Oil and Gas Law can regulate the transparent and accountable institution.