A Review of the Nigerian Energy Industry

Indonesia oil regulator says business as usual after graft scandal

South Sumatra, Indonesia20 August 2013, Jakarta – Indonesia’s energy regulator pledged on Tuesday that operations involving oil and gas sales in the crucial energy sector would remain normal, seeking to calm concerns about the impact of a major graft scandal that has engulfed the agency.

The interim head of the regulator, SKKMigas, said it was conducting multi-million dollar tenders as usual, reversing earlier comments from another agency official.

“There is no stoppage of tenders. Tenders will continue to run in accordance with regulations,” interim chairman Johanes Widjonarko told reporters.

An agency official on Monday said the regulator had suspended tenders as it reviewed internal procedures.

The agency said it had now limited the number of officials who could provide public information.

The regulator was thrown into disarray last week after its now suspended chairman, Rudi Rubiandini, was arrested by the anti-graft agency on suspicion of accepting a bribe from an executive of Singapore-based firm Kernel Oil. Three other agency officials have since also been suspended and barred from travel in connection to the case.

Rubiandini could not be reached for comment, but local media have quoted him as saying he was not involved in any corruption and the incident was related to a gift.

The arrest is a new blow to Indonesia’s attempts to attract more investment from international energy companies, several of which have threatened to scale back operations due to uncertainty about the investment environment.

The Corruption Eradication Commission, KPK, has not provided more details about the allegations.

Kernel Oil, which has denied involvement in the graft case, was barred from participating in a tender on Monday, said Widhyawan Prawiraatmadja, SKKMigas’ deputy chairman for planning and development. The oil trader was one of 40 companies previously authorized by the regulator to buy its oil and gas.

The winner of SKKMigas’ tender offering 400,000 barrels of Senipah condensate was expected to be announced on Wednesday, Prawiraatmadja said.

A government supervisory board, which includes the energy and finance ministers, has ordered a cleanup of the regulator.

Widjornarko said the agency would review its internal business procedures with input from the KPK and other government agencies.

Indonesia was once self-sufficient in oil and gas but has been struggling for years to attract investment to halt declining output from a peak of around 1.6 million barrels per day in 1995. Indonesia produced an average 831,000 bpd in the first half this year.

The former OPEC member has faced criticism for unclear regulations and complaints about a nationalist stance on resources.

– Reuters

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