‘Open access’ has failed to strengthen RI oil and gas sector, experts say

| January 24, 2014 | 0 Comments

Jakarta, Indonesia. January, 20, 2014. The Jakarta Post, By Slamet Susanto.

Experts say Indonesia’s oil and gas management, known as “open access”, which tends to forward export markets, contradicts the Constitution, which obligates the government to manage the country’s oil and gas for the sake of national interests, not to erode its energy sovereignty.

Fahmi Radhi, a researcher from Gadjah Mada University’s (UGM) Center for People’s Studies, said the main problem in the country’s oil and gas management was the government’s policy to use oil and gas as export commodities, although Indonesia had been an oil importing country since 2004.

According to Fahmi, the current trade liberalization of oil and gas services seemed to have triggered the emergence of a style of oil and gas management that could endanger Indonesia’s energy sovereignty.

He added that Law No. 22/20Oil and Gas Indonesia01 on oil and gas, as an implementing regulation of the 1945 Constitution, had opened opportunities for the trade liberalization of oil and gas to take place, allowing foreign investors to dominate the domestic oil and gas sector.

“It is stipulated in the 2001 Oil and Gas Law that oil and gas are market commodities, while according to the Constitution, they should be treated as strategic commodities,” Fahmi said during a focus group discussion on Monday.

“Open access” is a model of oil and gas management mandated by the Oil and Gas Law in which anyone is allowed to transport oil and gas, as long as they pay the associated usage fees and as long as the capacity of pipelines is still sufficient.

Imported oil is currently priced at US$110 per barrel, higher by about $7 per barrel than gas.

Darmawan Prasodjo, an energy economist from the Indonesian Democratic Party of Struggle’s (PDI-P) executive board, said Indonesia’s heavy dependence on imported oil showed “Pertamina’s failure in oil and gas management”. (ebf)

 

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