IOCs today have significant upstream methods for all types of things. Statistical methods to improve strikes and limit “dry-holes”; 3D seismic techniques to determine if oil is present in commercial quantities; drilling methods that can reach 90 degree horizontal and extend several kilometers out; all types of computerized processes and IT for support and operations; best practice methods for deepwater, shallow water and onshore drilling; content procurement processes that data mine for best world prices, scheduling, and availability; injection methods that can extend reservoir life, etc.

“Petroskills” is a service the IOCs use for oil education worldwide, and delivers education for oil workers in Indonesia. Yet, beyond premier schools, such as the Bandung Institute of Technology, there are no formal educational activities for upstream oil operations or maintenance in Indonesia.

To get the information disseminated more quickly, spatial sectoring is needed: This means developing poly-technical and engineering schools outside Jakarta and Bandung that will develop and create a future pool of workers for this vast industry.

If this initiative can be started, then Article 33, based on today’s reality of skills development that is aligned with the economic realities of a country, will be met in both letter and substance.

Indonesia’s foreign investment is still largely about oil, gas and mining. Its educational system needs to reflect it.

The oil business is conservative by nature. “Renegotiation” is a word the IOCs do not want to hear. It is understood that the IOCs and their contractors seek certainty in regards to their investments, and getting them to look down the road to new and changing paradigms will not be easy.

It is agreed in principle then that current contracts should be honored, to alleviate their concerns and not to jeopardize investment in Indonesia, but issues in regards to add-ons (expansions) of current PSCs that may not be readily apparent are of some concern.

Expansions should be considered as new projects, not under current PSCs regimes, but defining boundaries as to what constitutes an existing project and what is an expansion can also be debated forever.

Clear criteria needs to be set. Of course, demonstrating timelines with skills transfer, gain-sharing, and empowered employment (that is seconding and hiring locals for managerial decision making roles for Indonesia in Houston, London and Paris) would be a good-faith start.

If these things are being demonstrated, then why not extend the PSCs? It would produce theoretically a win/win/win: People/Companies/State.

Note that under this situation people are not assumed to be the state. They are a distinct, and equal in rank to the state, according to Article 33, in the Explanatory Memorandum. This issue is central to the legal case against BPMigas: That the state was not working for the people’s “maximum welfare”, but rather for investors.

To this end, real long-term benefit to the people is in the investment of developing a world standard oil and gas workforce. That will be a big enough payoff to investing entities. One only needs to consider Alaska with Prudhoe Bay or the UK and Norway with the North Sea. Both places over time developed world class operations and the workers to fill those jobs.

Foundational skills learned in these places are gladly accepted all over the world, from Angola to Libya to Malaysia to Canada. The point being, the resources in situ (in the location) were used to develop workforce and content. Over time the workers and content became renowned, and it is now used in other IOC operations around the globe.

Let’s put it another way: An oil worker from Norway or the UK is gladly welcomed to an offshore oil project in Angola not because of the color of their passport, but because the educational system and training in those places provided them the skills to do the job. Indonesia can do the same.

Perhaps much better, as countries that have a history of oil and gas development, have had an easier time to make the transition to a skills based economy not staying a crude oil export one.

Malaysia has already started to do this and China is now partnering with IOCs in third countries, such as Canada.

The bottom line is that if we can get past the short term thinking of financial returns for investments, and look to the longer horizon of people investments, Indonesia can benefit not only investors but also master its own skill and value added base for its fossil fuel industry. This will be sorely needed in a world of depleting resources and climate change threats.

The information and knowledge age needs to be clearly reflected and mandated in any new state organization that controls these resources for the people.

The writer, two-time Fulbright professor of energy and human resources, is chair of global management at Solbridge Int. School of Business in Daejon, South Korea.

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