New Indonesia oil authority succeeds Pertamina

Indonesian President Megawati Soekarnoputri has signed a regulation establishing a new Indonesian national oil and gas authority.

Aug. 6, 2002

2 min read

By OGJ editors

HOUSTON, Aug. 6 -- Indonesian President Megawati Soekarnoputri has signed a regulation establishing a new Indonesian national oil and gas authority. The agency, to be known by the Indonesian language acronym BALAK, will assume all regulatory functions formerly performed by state-owned oil and gas entity Pertamina, which is being privatized as a commercial oil and gas entity.

Lawmakers have sought since 1999 to end Pertamina's monopoly, tie local fuel prices to international benchmarks, and remove costly government oil and gas subsidies. One official said the move could save the government as much as $4.8 billion/fiscal year (OGJ Online, Nov. 10, 2000). The current regulation establishing BALAK passed Nov. 23, 2001.

BALAK will regulate the oil and gas industry in Indonesia, award oil and gas concessions, sign contracts, and provide oversight to companies operating in the country. It will be an independent agency accountable to the president, who, in consultations with the House of Representatives, will appoint the top officials, including the chairman and deputies.

The authority will have about 500 employees—the same as Pertamina's former directorate of production-sharing contract management—which will manage oil and gas exploration and production companies in the country.

Pertamina, officially relieved of oil and gas governing responsibilities, is now free to concentrate on upstream exploration and development and downstream activities ahead of full privatization, currently scheduled to occur in 2004.