T

he ongoing investigation over alleged fraudulent practices within energy giant Chevron’s environmental remediation project in Riau province may harm the investment climate in the Indonesia’s oil and gas sector, a top official has said.

Upstream oil and gas regulator BPMigas chief R. Priyono said on Wednesday that the supervisory body had been concerned that the case development would make oil and gas investors “think twice” before signing production sharing contracts (PSCs) in the sector.

 “We are worried because basically all disputes coming up from projects under PSCs should be settled under the civil code instead of the criminal law. Investors will see [the Chevron case] as a bad precedent,” he told The Jakarta Post in Jakarta.

 The executive was commenting on an investigation at the Attorney General’s Office (AGO) over alleged graft practices in Chevron’s bioremediation project at its oil fields in Riau. Bioremediation is a method to normalize soil that has been contaminated by waste from oil production activities.

 In March, the AGO initially suspected the program to be “fictitious”, causing Rp 200 billion (US$23.4 billion) in state losses due to the reimbursement from BPMigas to Chevron to repay the latter’s costs for the program under the costs recovery scheme.

After further investigation, the AGO concluded that the bioremediation program was not successfully implemented as planned because the soil at Chevron’s oil fields in Riau was still polluted.

Earlier, law enforcement extended the detention period of four Chevron employees named as suspects in the case. Four of them, identified only by their initials include ER, W, K and BAF. They were arrested on Sept. 27.

Separately, Chevron Pacific Indonesia (CPI) vice president for government policy and public affairs Yanto Sianipar said the firm “respectfully requested” for its employees to have their detention suspended. “CPI and its employees have cooperated and will continue to cooperate during the AGO investigation, and our people pose no threat to the ongoing investigation,” he told the Post. In addition, Yanto said the firm would continue to respect the laws of Indonesia and cooperate during the AGO investigation and any further court hearings.