JAKARTA (rambuenergy.com) – The Energy and Mineral Resources Ministry’s (ESDM) drive to increase the utilization of domestic resources or local content in any upstream oil and gas projects appeared to have brought positive results. In 2014, the utilization of local content in the upstream oil and gas projects has reached 54.15 percent, which is higher than the minimum requirement of 35 percent.
The Special Task Force for Upstream Oil and Gas (SKK Migas) Head Amien Sunaryadi said that the utilization of local content is a form of the government’s intervention and control in the upstream oil and gas industry.
The SKK Migas has issued guideline (PTK) that has been used as reference for oil and gas contractors in carrying out project tenders.
A study that has been undertaken by University of Indonesia showed that the upstream oil and gas industry activities have created significant multiplier effects on the economy in term of creating employees and increasing the national gross domestic product (GDP). Every Rp1 billion is spent, 10 new jobs are created, the study shows. And every Rp700 million is spent, household income increase by Rp200 million.
The SKK Migas data shows that the upstream oil and gas industry spent Rp209 trillion in 2014, meaning that 899,400 new jobs were created in the year and increased the GDP by Rp86 trillion and household income by Rp23.8 trillion.
In 2014, the upstream oil and gas industry is estimated to have procure goods and services worth US$17.35 billion, with local content of 54.15 percent on cost basis.
For the period of 2010-2014, the state owned companies have involved in the procurement of oil and gas industry, valued at US$4.51 billion with local content level of 77.25 percent.
Since 2009, when SKK Migas (previously BPMigas) was headed by R Prioyono, the upstream oil and gas industry has carried transactions through state owned banks amounting to US$44.91 billion. In 2014 alone, the total transactions through national banks reached US$12.43 billion, surged from US$8.195 billion in 2013.
In addition, the amount of funds placed by oil and gas contractors in the state owned banks for abandonment and site restoration funds reached US$635 million at end 2014. Deputy Head for Business Control of SKK Migas M.I. Zikrullah said during the Supply Chain Management Summit in Jakarta that to maintain the achievement, there should be synergy between the supply and demand, including information about the needs of the oil and gas contractors. (*)