T

he country'€™s upstream oil and gas regulatory special task force SKKMigas '€” established late last year to replace the now-defunct BPMigas '€” plans to become a state-owned firm in a bid to follow a Constitutional Court ruling.

SKKMigas commercial contracts director Didi Setiarto said on Monday the interim regulator would change its name the National Upstream Oil and Gas Development Company (PPMN). It also wants the authority to form subsidiaries that would oversee participating interests in oil and gas blocks in the nation to ensure the government received substantial revenue from petroleum activities.

Currently, the government holds shares in the production of the basins while the participating interests are usually shared between the oil and gas contractors.

'€œWe are hoping the plan will be discussed by lawmakers along with the revision of the 2001 Oil and Gas Law,'€ Didi said on Monday.

Filled with officials from BPMigas, SKKMigas '€” previously named SKSPMigas and later SKMigas '€” was formed less than 24 hours after the Constitutional Court disbanded the erstwhile regulator.

Groups such as Muhammadiyah, Indonesia'€™s second largest Muslim organization, pushed for more '€œnationalism'€ in the industry and filed a complaint to the court about the 2001 Oil and Gas Law.

In response to the lawsuit, the court ruled that BPMigas was against Article 33 of the Constitution because the state should extract the maximum benefit from natural resources; citing that the job should be given to a '€œstate-owned entity'€.

Didi said the regulator learned the successful story of Norway, which has a state oil company, Statoil, to strengthen the Norwegian involvement in their petroleum industry, as well as state-owned Petoro, which acts as an investment manager for the state'€™s direct financial interest.

'€œIn Indonesia'€™s case we already have Pertamina, which is a growing oil and gas corporation and equivalent to Statoil. What we need is our version of Norway'€™s Petoro,'€ he said.

According to Didi, SKKMigas will retain its regulatory function through PPMN while forming a business arm through collaboration with Pertamina, which already has Pertamina Hulu Energi (PHE).

PHE is Pertamina'€™s upstream oil and gas business subsidiary that manages domestic and overseas oil and gas fields under production sharing contracts (PSCs), Joint Operating Body'€“Production Sharing Contracts (JOB-PSC) and holding participating interest in several blocks.

'€œTo fund the new subsidiary, we will push for the implementation of the Petroleum Fund, which will be used to finance core infrastructure as well as research and development, particularly in the gathering of oil and gas reserves data to lure investors,'€ he said.

The government planned to implement the Petroleum Fund, which would allocate 5 percent of non-tax annual state revenues from the oil and gas sector to sustain the industry. However, the scheme would be under the review from the Finance Ministry.

Separately, the Energy and Mineral Resources Ministry'€™s oil and gas director general Edy Hermantoro said his office had yet to receive SKKMigas'€™ proposal.

Executive director of the Jakarta-based energy sector think tank ReforMiner Institute Pri Agung Rakhmanto welcomed the idea, citing that it would create more certainty in the country'€™s upstream oil and gas industry.

'€œSKKMigas needs to be transformed into a state-owned company that owns shares at the oil and gas blocks that Pertamina is incapable of managing. However, Pertamina must also receive the privilege to obtain the participating interests as well as developing the blocks that have relatively low risk,'€ he said.