“The law must be able to answer challenges as far as possible”

KATADATA – Discussion on the revision of the Oil and Gas Law (UU Migas) has been included in the national legislation program. The House of Representatives (DPR) stated that the discussion on the revision of the Oil and Gas Law is expected to be completed this year.

Former Chairman of the Oil and Gas Governance Reform Team, Faisal Basri hopes that the revision of the new Oil and Gas Law will have to have a long life, so there is no need to revise it. That way there is a certainty for the business world.

“Do not be revised every 5 to 10 years. The law must be able to answer challenges as far as possible, “he said at the Ministry of Energy and Mineral Resources (ESDM), Jakarta, Tuesday (26/5).

He said in delivering the new Oil and Gas Bill there were at least four paradigm changes. The first change is the perspective of oil and gas as a commodity spearheading development and industrialization.

Second, the paradigm shift from oil and gas as a source of state revenue to oil and gas as a driving force for all sectors, thereby increasing the tax revenue base. Third, the change in the oil and gas paradigm, which must also consider the needs of future generations. Fourth, the paradigm shift from oil and gas as a source of rent-seeking renters to oil and gas that welfare the people at large.

According to him, this paradigm shift is very important, considering the condition of Indonesia’s oil and gas is very vulnerable. The ratio of reserves to production will run out in 11.6 years. The volume of new reserve discoveries is still small, only 17 million barrels. Far compared to Malaysia, which reached 77 million barrels.

On the other hand, domestic oil and gas consumption continues to increase. The Special Unit for Upstream Oil and Gas Business Activities (SKK Migas) estimates oil consumption in 2050 to reach 2.8 million barrels per day. It is estimated that consumption in 2050 will reach 2.8 million barrels per day. While the 2050 production is based on SKK Migas projections of 96,000 barrels per day.

“Trading activities will be more dominant than production activities,” he said.

In addition to the upstream sector, he wants the Oil and Gas Law to also pay attention to the downstream sector, including the processing of fuel oil (BBM). The formula for the fuel price must also be considered as well as possible, to be stable and provide business certainty.

Regarding the discourse on the formation of an oil and gas aggregator or supporting body, Faisal has his views. He reminded the government that aggregators do not turn into predators. According to him the formation of the aggregator will be successful if the Business Competition Supervisory Commission (KPPU).

“If you want to present it, don’t just oil producers. (But) must be owned by producers and consumers, PLN, and industry associations, “he said.

Improvement of Oil and Gas Governance

The revision of the Oil and Gas Law is expected to improve oil and gas governance for the better. Publish What You Pay Coordinator Maryati Abdullah said the revision of the Act must be able to improve oil and gas governance. She considers that the management of oil and gas in Indonesia is still not good, so it can open the rents for renters resulting in the oil and gas mafia.

An example is in the process of procuring crude oil which is not transparent and accountable. “So there are findings related to the case of Rubi Rubiandini, TPPI. That’s because governance is not transparent, there is no public access, ” she said.

She also wants the government to no longer consider oil and gas as a commodity. If considered as a commodity, the consequence is that oil and gas will only be drained and sold raw. “Don’t think about the downstream industry that can develop from natural gas,” she said.

Oil and Gas Cooperation Contract
A lecturer at the Faculty of Law at Tarumanegara University, Ahmad Redy, reminded that the rules regarding oil and gas cooperation contracts in the revision of the Oil and Gas Law must be by the decision of the Constitutional Court (MK) Number 36 / PUU-X / 2012.

According to him, the contract must be carried out by a State-Owned Enterprise (SOE) either by PT Pertamina (Persero) or a Special SOE to be made. This is important to minimize the risks faced by the government.

“It should be the government that gives permits to SOE or several SOEs. The Constitutional Court according to its decision ordered the concept of licensing in the hands of SOEs, “he said

The cooperation contract system is not appropriate using the concession system. Because this will provide an opportunity for businesses to have what is in the work area obtained.

“Most appropriate, it remains PSC (production sharing contract) but also gives permission. This permit is in the form of state control, “he said.

Makro 26 May 2015 Arnold Sirait | See more at: katadata.co.id