Despite Arrest, Business as Usual for SKKMigas
A visitor uses his mobile phone as he walks at the lobby of the SKKMigas office in Jakarta, August 14, 2013. (Reuters Photo/Beawiharta)
Oil and gas industry activities will continue as usual despite the arrest of SKKMigas head Rudi Rubiandini.
"Oil and gas activities must not be disrupted," SKKMigas secretary Gde Pradnyana told reporters in Jakarta.
Pradnyana said SKKMigas, Indonesia's upstream oil and gas regulator, is working with the Ministry of Energy and Mineral Resources to keep operations running smoothly.
Johanes Widjonarko, the deputy chief of SKKMigas, is currently on his way home from Tokyo, Japan, to assume control.
"In the meantime, the officials who are here are conducting activities and making strategic decisions until they receive further directions," he said.
SKKMigas, meanwhile, proceeded as scheduled with a post-Idul Fitri Halal Bihalal event.
The Corruption Eradication Commission (KPK) arrested Rudi on Tuesday night at his private residence, along with four other people whose names the KPK have yet to release. The commission alleges that Rudi took $400,000 in bribes from a private oil company.
Some oil company officials were shocked by the news.
"This industry is already tough to deal with and it shouldn't be weighed down by this sort of scandal," an official at a foreign oil firm with operations in Indonesia told Reuters.
The oil and gas sector is politically crucial, accounting for about a fifth of Indonesia's government revenue.
Indonesia was once self-sufficient in oil and gas but has been struggling for years to attract investment to halt declining output from a peak of around 1.6 million barrels per day in 1995. Indonesia produced an average 831,000 bpd in the first half this year.
Rudi, an oil and gas expert from the state-run Bandung Institute of Technology, was appointed in January to head SKKMigas after the independent industry regulator BPMigas was declared unconstitutional. Some experts say the motivation was to gain greater control over the sector after SKKMigas was placed within the energy ministry.
Kernel Oil
The KPK alleges that Rudi took bribes from Singapore-based petrochemical trading firm Kernel Oil.
The firm had won a crude oil tender trade from a pool of over 40 countries, said Widhyawan Prawiraatmadja, commercial director of SKKMigas.
"Kernel Oil is one of companies registered in our oil trade. We sell state oil through a tender process," he told reporters on Wednesday.
Indonesia produces 830 barrels of crude oil per day, up to 60 percent of which goes to state oil company Pertamina, Widhyawan said. SKKMigas sells whatever Pertamina does not use to the highest bidder through the tender process.
"Kernel had won tenders in the past, but not yet this year," Widhyawan said.
As of Wednesday afternoon, the Jakarta Globe was unable to access Kernel Oil's website, and no representatives from the company were immediately available for comment.
Latest high-profile graft scandal
The arrests come as concern mounts about Indonesia's energy sector following the introduction of a string of nationalistic policies. Companies, such as US oil giant Chevron, have run into legal problems.
Last month three employees of a local Chevron subsidiary were jailed over a series of corruption allegations. The case spooked foreign investors who have battled fast-changing industry regulations and legal uncertainty in recent years.
While foreign investment continues to pour into the resource-rich country, there are growing concerns that rampant corruption and an incompetent bureaucracy could throttle growth and see that investment turned away.
Indonesia is one of the world's most corrupt countries. Transparency International last year ranked the country 118th out of 176 countries on its annual index, which rates the least to the most corrupt states.
JG/Reuters/AFP
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