A new standard for “low”

There is of course amongst our demographic a significant presence of oil field trash and we are proud to have you, not least because your Editor was oil field trash himself until not very long ago.

At least we were proud until we read this in the Jakarta Post the other day:

JAKARTA: The Corruption Eradication Commission (KPK) confirmed that since 2003 it had managed to recover up to Rp 152 trillion (US$17 billion) in state funds from foreign companies in the oil and gas sector.

“Yes, the KPK has returned assets and money worth Rp 152 trillion from the oil and gas sector to state coffers,” KPK deputy chairman Haryono Umar said on Friday, as quoted by tribunnews.com.

He said that the country was vulnerable to huge losses in the oil and gas sector due to a lack of clarity in the government’s methods for recording data related to assets in the sector.

“This is very dangerous. There has been no accounting of state assets in the oil and gas sector,” he said.

Haryono added that the commission had reported the return of funds to the House of Representatives and also asked legislators to urge the government to begin recording the country’s assets and finance options in each particular sector.

The KPK explained that many of the state’s unrecorded assets, such as helicopters, cars, land and houses, were often used by foreign companies.

The message is as clear as it unbelievable, you guys, not content with stuffing your pockets with an average $2 billion a year, add to the insult by living in palatial houses and swanning around in helicopters and large SUVs all paid for by the state. God bless the KPK for riding to the rescue and recovering $17 billion. Guys, hang your heads in shame!!

OK, enough of that crap, what is the truth of all this?

A little known and terribly interesting fact is that the first implementation as we know it today of the Production Sharing Contract or PSC , was here in Indonesia in the late 1960s. One of the wrinkles of a PSC, in a sop to national sensitivities, is that any asset purchased by an oil company toiling under the provisions of a PSC immediately becomes the property of the State, with the oil company being granted the “free and exclusive” right to use the asset so long as it continues to operate.

So, in brief:

oil companies have purchased $17 billion dollars in assets for use in their businesses since 2003, mostly oil wells and processing plants but including the infamous “helicopters, cars, land and houses <they> often use”;

all these purchases, and much else, have been reported by the oil companies to the relevent Indonesian Authorities;

the relevent authorities have neglected to put them in a big spreadsheet and add them up and declare them as national assets;

KPK’s claim to have “returned assets and money worth Rp 152 trillion from the oil and gas sector to state coffers” is as self serving and populist as it is misleading and outright wrong. Having said some very nice things about the KPK in the past, this comes as something of a disappointment;

the Jakarta Post’s reporting sets a new standard for “low”.

So, relax boys, it wasn’t you wot done it, go have cold one.

This entry was posted in Business, Corruption, December 2011, Oil & Gas. Bookmark the permalink.

4 Responses to A new standard for “low”

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  3. Mike Taylor says:

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