Stricter Sanctions Needed to Ensure Commitment on Oil and Gas Concessions: SKK Migas
Jakarta. Roughly half of the ongoing oil and gas cooperation contracts in Indonesia have not materialized due to a lack of investment, with contractors often selling off the concessions instead, a government official said on Sunday.
Elan Biantoro, a spokesman for the country's upstream oil and gas regulator SKK Migas, says that only 50 percent of the 240 ongoing oil and gas cooperation contracts in Indonesia have started development.
"In the end, some of the oil and gas block concessions are left untouched [by the company that won the tender], before being offered to someone else," Elan said in Jakarta on Sunday.
Such oil and gas block concessions can be worth up to $15 million, he added.
The government has said it would crack down on oil and gas contractors who fail to keep the commitments made when they won rights to develop oil and gas blocks, by gradually reducing the concession, according to Elan. However, that mechanism has insufficiently deterred contractors from selling off their concessions, he added.
"Generally, the concession is already being traded in less than three years," he said, noting that the government should start taking stricter measures against such contractors, such as revoking contracts for those who fail to keep their business commitments.
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