BPMigas saves $96.5 million in upstream procurement
The Jakarta Post, Jakarta – 10/02/2011
Upstream oil and gas regulator BPMigas managed to save as much as US$96.5 million (Rp 870 billion) in 2010 in the procurement of goods and services for upstream oil and gas operations, thanks to the use of a joint procurement system.
BPMigas head R. Priyono said the joint procurements slashed costs by $66.7 million, while material transfers between oil and gas production sharing contractors (PSCs) cut expenditures by $29.8 million.
“That achievement exceeded the previous target of $75 million,” he said at an opening ceremony of a meeting in Batam, Riau islands.
According to the agency’s data, in 2009, the agency saved only $61.93 million, of which $35.42 million came from joint procurements and $26.51 million from material transfers.
With 2010’s achievement, BPMigas was upbeat that the target to save approximately $105 million this year — about $75 million from joint procurements and $30 million from material transfers — could be achieved.
“We’re optimistic we can surpass our target again,” Priyono said.
He added that, in addition to the joint procurement and material transfer activities conducted among PSCs, were the joint uses of warehouses and other facilities, air and sea transportation vehicles, rigs for drilling or work-over, and joint three-dimension seismic study operations.
Currently, six goods and services procurement forums exist in East Kalimantan, East Java, the Central Sumatra area, South Sumatra, Natuna (Riau province) and the Offshore North West Java (ONWJ) area. Another forum will be established in Papua and Maluku in the near future.
The agency’s deputy for general affairs, Rizal Asir, said the forum was useful for improving time and cost efficiencies, and also helped stimulate local businessmen to take part in the upstream oil and gas industry.
“Cooperation among, PSCs, goods and services providers, and national banks increases through these forums,” he said.
The agency also noted that the value of goods and services procurements increased to $10.79 billion in 2010, up 20 percent from $8.98 billion in 2009.
The level of local components in the procurement processes rose to 63.4 percent last year from 49 percent a year earlier.
Rizal said the transactions to pay for goods and services procurements via national banks jumped 18 percent to $4.6 billion in 2010 from $3.9 billion in 2009.
“I believe our upstream oil and gas businesses can stand out not only at local levels, but also compete internationally,” he concluded.
BPMigas has been committed to support all efforts to boost the country’s oil and gas production. In 2010, Indonesia failed to reach its oil production target of 960,000 barrels per day by producing only 954,000 barrels per day. This year, the country has set a target to crank up oil production to 970,000 barrels per day.
In line with that target, the Energy and Mineral Resources Ministry said earlier that investments in the oil and gas sector may exceed $16 billion this year, increasing 18.5 percent from $13.5 billion last year.