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Local content of upstream oil and gas industry reaches 56%

JAKARTA (RAMBU ENERGY) – The value of goods and services procurement in upstream oil and gas sector for the period of January – November 2013 was US$ 11.78 billion. From such amount, the value of local content reached 56.42 percent or approximately equal to US$ 5.312 billion based on cost basis. The use of local component reached US$ 4.326 billion for services procurement and US$ 986 million for goods procurement.

“We are committed to increase multiplier effects on other economy sectors,” said Head of Public Relations Affairs of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), Elan Biantoro in Jakarta, as published on its official website.

Elan said SKK Migas has managed to continue encouraging the involvements of state-owned enterprises. Since 2010 until November 2013, it was recorded a sum of US$ 3.18 billion for procurement contracts performed by non-banking state-owned enterprises. In 2013, around US$ 662 million of procurement contracts was acquired from 15 state owned enterprises such as PT Pertamina (Persero), Rekayasa Industri, PT PAL, Asuransi Jasa Indonesia, and others.

Other than local component, at the end of 2008, the upstream oil and gas industry issued a policy for the compulsory use of national banking services in the transactions for goods and services procurement. As of the enforcement of the policy, the procurement payment transaction value using national banks keeps increasing every year.

In 2009, a transaction of US$ 3.97 billion was recorded. In 2011, it increased to US$ 6.348 billion. This year until 30 November 2013 has recorded a number of transactions in the amount of US$ 7.66 billion. Accumulatively, as from 2009 until November 2013, national banks have managed to handle transactions for upstream oil and gas procurement of US$ 31.94 billion spread out over state-owned banks and regional-owned banks.

The utilization of national banking is also applied by the obligation of contractors (KKKS) to place the fund of abandonment and site restoration (ASR). The addition of ASR fund deposited in state-owned banks during 2013 reached US$ 134 million; it experienced an increase compared to the year of 2012 of US$ 112 million. In total, the fund placed in national banks as per 30 November 2013 was US$ 478 million.

Elan added that SKK Migas and contractors (KKKS) have managed creating cost-saving through a joint procurement and by optimizing the utilization of assets. As per November 2013, the cost-saving from joint procurement achieved US$ 109.7 million. “Meanwhile, the optimizing utilization of assets reached US$ 40 million,” Elan said.

Joint procurement is a collective procurement performed by contractors (KKKS) operated in an adjacent area. For example, cost-saving has made from rig charter contract through a consortium in Natuna and Makassar Straits. In the other hand, the optimizing utilization of assets is a utilization of a contractor’s asset by other contractors. For instance, a condensate storage facility of Petrochina Jabung is jointly utilized by JOB Pertamina-Talisman Jambi Merang in South Sumatera.

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