BPMigas to probe Cepu, Natuna amid graft allegations

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Upstream oil and gas regulator BPMigas says it will scrutinize the operators of the oil-rich Cepu block in Java and the gas-rich East Natuna in Riau Islands amid graft allegations.

BPMigas spokesman Hadi Prasetyo said on Monday that the regulator would look into the chronology of the contracts designed to develop the two giant projects at Cepu and East Natuna. Hadi’s comments come after the Corruption Eradication Commission (KPK) announced that it had found potential “fraudulent practices” in the development of the blocks.

“We have yet to receive any formal notice from the KPK, but we will be ready should the agency need any information from us,” Hadi said.

The Cepu block, often touted as Indonesia’s largest untapped oil and gas field, spans the border of East and Central Java. The government has estimated that the block has at least 22 million barrels of oil in reserve and will be able to produce 165,000 barrels of oil per day by 2014.

Meanwhile, the East Natuna block, formerly known as the Natuna D-Alpha block, is located in the South China Sea. It is estimated to contain 46 trillion cubic feet of gas with a 71 percent carbon dioxide content, making it the biggest gas reserve in Asia.

KPK deputy chairman Busyro Muqoddas said on Sunday that the commission was currently looking into graft allegations surrounding the blocks.

“The case is incredibly complicated, but we are investigating it,” Busyro said.

The deputy chairman said that the KPK had suspected that there were fraudulent practices in the development of the Cepu block since 1990, when state-owned oil and gas company PT Pertamina, then owner of the oil field, sold its shares in the block to Humpuss Patragas, a company owned by then-president Soeharto’s youngest son, Hutomo “Tommy” Mandala Putra.

The block is currently operated by the local unit of US energy giant ExxonMobil, assisted by Pertamina. Several regional governments also have a stake in the block.

On the East Natuna block, Busyro said that the commission said foreign oil and gas contractors
were to have secured all of its production output, while the government was to have received only tax revenue under the terms of their contract.

In response to the allegations, Hadi said that BPMigas would provide all information needed by the KPK for its investigation.

The East Natuna block is operated by Pertamina, which leads a consortium that also comprises ExxonMobil, France’s Total SA and Malaysia’s Petronas.

Petronas resigned from the consortium in May and Thai’s PTT Exploration and Production
(PTT EP) was appointed by Perta-mina as the consortium’s coordinator in August to replace the Malaysian firm.

Energy and Mineral Resources Deputy Minister Rudi Rubiandini said that the ministry would support the KPK’s investigation of corruption in the oil and gas sector. “Anyone proven to cause state losses must be punished,” Rudi said.