Government arms up with oil, gas mafia eradication strategy

Government arms up with oil, gas mafia eradication strategy

Presidential Chief of Staff Moeldoko speaks at the Bina Graha Building, Jakarta on Tuesday. (14/1/2020). (Antara/Bayu Prasetyo/AK)

When gas has a major chunk in the production cost structure, then the price will significantly affect the competitiveness of our products in the global market. We lose the competition owing to the high gas price
Jakarta (ANTARA) - The government is honing its arsenal through a strategy to eliminate mafia practices in the oil and gas sector that are causal to steep prices.

"The president emphasizes that oil and gas affairs must really be able to run well," Presidential Chief of Staff Moeldoko stated at the Bina Graha Building, Jakarta, on Tuesday.

Moeldoko has invited PT Pertamina's Chief Commissioner Basuki Tjahaja Purnama to discuss varied issues in the oil and gas sector.

He echoed President Joko Widodo’s directive in the context of improving the oil and gas sector through approaches including lowering the industrial gas prices.

Moeldoko stressed he will oversee Jokowi's policy to decrease oil and gas prices.

Discussions between Moeldoko and Purnama centered on the president's directive to curtail the price of industrial gas and manage the strategy at PT Pertamina.

"The point is that all the president's policies, in the context of oil and gas, must be able to run as well as possible," Moeldoko stated.

There is a pressing need to adjust the gas prices for industries to boost Indonesia's competitiveness, ranging from products that are manufactured to attracting investors into the country.

President Joko Widodo (Jokowi) had earlier reiterated that the high industrial gas price in Indonesia had impacted the competitiveness of its products.

"When gas has a major chunk in the production cost structure, then the price will significantly affect the competitiveness of our products in the global market. We lose the competition owing to the high gas price," the president remarked at the cabinet session on gas adequacy for the industry here on Monday.

Jokowi opined that gas should not merely be viewed as a commodity but also as a capital for development that will additionally strengthen the national industry.

The president pointed out that power generator, chemical, food, ceramic, steel, and fertilizer industries relied on domestic gas production.

Related news: Indonesia's oil and gas production averages 1.6 million bpd

The president has instructed ministries and state enterprises to compute the gas price for the industry to drive the competitiveness of domestic products.

"Let us examine thoroughly the cause of the steep gas price, from its upstream sector in the gas field to channeling cost, transmission cost, and to its downstream sector at the distributor level," Jokowi noted.

The president has also sought reports to implement Presidential Regulation No. 40 of 2016 on the price of natural gas to study the potential hindrance to the industry.

In October 2019, the government had shelved a proposal of PT Perusahaan Gas Negara Tbk to raise the gas prices for the industrial sector. Earlier, the state-owned producer and distributor had planned to implement the new prices on Nov 1, 2019.

Currently, the selling price of gas for the industry is at some US$7–$10 per MMBTU. Related news: High oil, gas imports inhibited economic transformation: president

Related news: President orders reduction of oil, gas imports to cut CAD


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