Indonesia pegs oil, gas spending at $5 billion

Indonesia’s domestic firms will increasingly benefit from expenditures of oil and gas contractors this year due to “aggressive efforts” by the government, according to a senior official.

Aug 26th, 2009

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Aug. 26 -- Indonesia’s domestic firms will increasingly benefit from expenditures of oil and gas contractors this year due to “aggressive efforts” by the government, according to a senior official.

R. Priyono, chairman of the country’s upstream oil and gas regulating agency BPMigas, said domestic firms might be able to absorb as much as 50 trillion rupiah ($5 billion) from the annual spending of oil and gas contractors now estimated at 110-150 trillion rupiah/year.

“We don’t set high targets as we have just begun intensifying the use of local content in the industry,” said Priyono. “We will be very happy with the 50 trillion rupiah if it can be realized.”

Priyono acknowledged 50 trillion rupiah is not an optimal figure but said it is significantly higher than in previous years when most contractors spent only 20% of their annual outlay through local firms.

In an effort to raise the figure to 55% by the end of 2010 and to 91% by 2025, Priyono and Industry Minister Fahmi Idris signed an agreement Aug. 21 aimed at increasing the use of locally made heavy equipment, machines, ships, and offshore rigs for the country’s oil and gas industry.

“We expect to follow up the agreement with more concrete actions,” Priyono said, without providing details.

Contact Eric Watkins at hippalus@yahoo.com.

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