BAL and Gas Management Aceh

By: Pri Agung Rakhmanto
Enactment of Law Number 11 Year 2006 concerning Aceh Government has a lot to change in the organization of community life in all areas of Aceh. One of them is a significant natural resource management, specifically including management of oil and gas (oil).

As stated in Article 160 Paragraph 1 BAL, the Government of Aceh now has the authority to manage oil and gas resources along with the Central Government. In Paragraph 2 of Article the same then mentioned that in order to take over management of the oil and gas, the Central Government and Aceh may designate or establish an agency for implementing the set together.

In the context of the national oil and gas management, especially regarding the authority and local involvement, the provisions of this BAL is one of the true fruit of the struggle of the Acehnese who take dozens of years and claimed thousands of casualties. Achieving this valuable should best be used wisely by the Government and Parliament of Aceh so that the existing oil and gas resources in Aceh really give you the benefit and prosperity of the real and big as possible for the people of Aceh.

Exam
One 'test' the first who is now facing the Government and Parliament of Aceh was found in the case management of oil and gas at Block A. Block A is located in Kuala Langsa until wanderer Cut, is a region rich in oil and gas, which in its development is currently performed by the Contractor Cooperation Contract (KKKS) PT. Medco E & P Indonesia, along with consortium partners. Medco contract on Block A will expire on August 31, 2011. 'Exam' is meant here related decisions Medco contract extension on Block A is: Is the Government and Parliament should approve the contract extension Aceh Medco in Block A as soon as possible before the contract expires or is better to suspend approval of a contract extension until the publication of the Implementing Regulation (PP) from BAL-possible that there will be a basic implementation of the formation of oil and gas implementing agency for Aceh region.

The first option, approve a contract extension as soon as possible, it can be said is an option that provides certainty and clarity to all existing stakeholders. For the Government and Parliament of Aceh, and also the people of Aceh as a whole, more obvious certainty that there is local revenue streams from oil and gas production revenue sharing funds will be obtained from the more immediate contract extension. From here the Government and Parliament of Aceh will be able to make the planning of development programs on the basis of standards that are relatively more controlled and more measured. The same is true for the central government, where state revenues derived from oil and gas concessions in part also depend on Block A of this. For Medco, this certainty will also be very useful for planning and realization of investments. The faster certainty Block A contract extension was obtained, the sooner Medco can realize the investment, which in turn will be the sooner the economic benefits from the development of Block A, this can be felt all the existing stakeholders. It is worth to note here, has more than 30 years since the potential for oil and gas in Block A is found (approximately year 1972), its development faces many obstacles, especially for a relatively marginal economic value (the gas reserves are just over 343 BSCF) and the high level of investment risk existing. One aspect which by some is seen as 'weak point' of this first option is extended only if the contract has not been formed when oil and gas implementing agency for Aceh region, the authorities feared that oil and gas management will remain in the hands of central government and not in the hands of Aceh own.

The second option, suspend the approval of a contract extension until waiting for the PP from the BAL, especially oil and gas waiting for the establishment of the implementing agency for Aceh region, the consequences on the uncertainty in various aspects. PP of PA Act certainly can not just issue merely because the urge to take immediate decisions about extending the contract of Block A. The issuance of PP requires careful study and consideration and comprehensive. Formation of oil and gas implementing agency for Aceh region, if the reference to Article 160 Paragraph 2 above, can also be said is not true is a necessity, but rather an option that might be applied or not in the context of joint management of oil and natural gas between the Central Government and Aceh . In the oil and gas industry practice in many countries, oil management was not always done through an executive body. At the national level, he is also already started rolling ditiadakannya discourse to the possibility of oil and gas implementing agency, because in many aspects deemed not conducive enough for the overall management of oil and gas sector. In other words, although the second option seems to promise something more, especially in terms of 'managing authority', the element of uncertainty regarding when to establish it is also high. Need to be a common concern that oil and gas contractor, whoever it was, a foreign national or a clear-needed certainty to be willing to invest. In the meantime, your investment today, especially when associated with oil and gas exploration and production activities, also would not directly produce results right now, so time becomes an important aspect in this regard.

Observing the development of Block A case until today, at least as preached Porch (May 18, 2010), that of meeting the Governor of Aceh Irwandi Yusuf and Speaker of the House of Aceh Hasbi Abdullah on May 17, 2010 and then, it was agreed that the Medco contract in Block A is extended with terms -no adverse Aceh and Medco will follow later when the PP Gas-approved, what can be said to be decided is actually quite appropriate.

In this case, the positive side of the first option, namely the certainty that anticipated problems of all stakeholders, have been met, and the positive side of the second option, namely concern to management authority by the Aceh problem, also have been accommodated relative. With the approval of Block A contract extension soon, but this conditional, it can be said that the Government and people of Aceh will still be reaping the benefits from the development of Block A is a more certain, without having to worry that the management authority will not be in the hands of Aceh. Without the oil and gas implementing agency for Aceh region also, with the provisions of Article 160 BAL, was so clear that the Government of Aceh-Aceh-with the approval of the Parliament has the authority to manage oil and gas resources.

* The writer is the observer of Energy, Executive Director ReforMiner Institute.
(serambinews.com)