Bank Indonesia (BI) revealed that US-based Chevron Pacific Indonesia, the country’s major oil producer, is subject to a Rp 100 million (US$10,304) fine should it continue to dodge the obligation to channel their dollar-based export revenues through local banks.
BI executive director for economic and monetary statistics, Hendy Sulistiowati, told The Jakarta Post on Tuesday that the central bank had sent a warning letter to Chevron’s officials.
“We have already sent a letter to them obliging them to comply with the central bank’s rule no later than March 1 or else they must pay up to Rp 100 million in fines,” she said in Jakarta referring to the Indonesian regulation on foreign oil and gas contractors.
In 2011, BI issued Central Bank Regulation (PBI) No. 13 ordering exporters to place their “dollars parked overseas” in Indonesian-based banks. The regulation was followed by an additional regulation in October last year, stating that oil and gas contractors were also included in the scheme, although many foreign firms rejected the idea.
The regulation set June 30, 2013, as the deadline for all oil and gas contractors to place their dollar-based export earnings in domestic banks.
The Rp 100 million in fines is imposed for one shipment only, which is around once a month or bi-monthly for Chevron, according to SKKMigas.
Should oil and gas contractors continue to evade the central bank’s rule after June 30, BI will ban their export permits, according to SKKMigas.
Chevron contributes around 300,000 barrels per day (bpd), or 30 percent of Indonesia’s oil output. Other giant firms such as France-based Total E&P Indonesie — the largest gas producer in Indonesia — and US-based ExxonMobil Indonesia — whose operations at the Cepu oil block in East Java are expected to return the nation’s average daily crude oil and gas output to a level of 1 million bpd in 2015 — also have yet to comply with the
These firms have repeatedly said that since the BI regulations overlap with the 2001 Oil and Gas Law, which regulates production-sharing contracts (PSCs) in the country, it should not affect them.
Hendy said BI had yet to send similar warning letters to other firms as they still had to meet the inflow deadline for their dollar-based export proceeds.
Chevron Indonesia’s vice president for government policy and public affairs, Yanto Sianipar, confirmed that the firm had recently received the warning letter from BI. He said the firm would “continue to engage with BI and the government”.
“Chevron respects the law and the regulations in Indonesia including this PBI 13 […] we believe that
we can come to a mutual solution,” he said. In an interview with the Post last week, officials with Chevron Indonesia did not reject the possibility that the firm could go to an international arbitration body should BI continue to push the June deadline.
Indonesia’s upstream oil and gas special regulatory special force SKKMigas’ deputy of finance control, Akhmad Syakhroza, said separately that while the Rp 100 million in fines would be small for Chevron, BI’s punishment would hurt their reputation.
“They will have their reputation hurt in the eyes of their buyers as well as in the capital market in the US,” he said, urging other oil and gas firms to comply with the law as BI had the authority to cancel their export permits should they continue to flout the ruling.
Chevron Indonesia’s mother company, California-based Chevron Corp., listed on the New York Stock Exchange as CVX, has operations in more than 180 countries.
This year, Chevron Indonesia is the largest investor in Indonesia’s upstream hydrocarbon industry contributing almost $4 billion in investment to the sector, up 37 percent from last year.
Oil and gas contractors that have complied with the ruling include Chinese oil and gas company PetroChina, which deposited dollars at the Jakarta branch of JP Morgan, Australian Santos (Australia and New Zealand Banking Group or ANZ), China-based CNOOC (Bank of China) and US-based ConocoPhillips (Bank of America).
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