House calls on government, Pertamina to crack down oil theft

OIL AND GAS - JAKARTA. House of Representatives lawmakers have called on state-owned energy holding company Pertamina to take firm action against theft in its oil and gas operation as revealed in reports they have received.

At the latest meeting with the oil and gas giant, lawmakers of House Commission VII overseeing energy said that, according to the reports, there was rampant illegal drilling and pipe tapping, as well as unlicensed refineries across the archipelago.

“There are still cases of illegal tapping in which oil and gas pipelines are deliberately hacked into, and then the oil is refined into fuel [secretly] and sold illegally,” said the commission deputy chairman Ridwan Hisjam during the meeting.

Data from the Energy and Mineral Resources Ministry detailed reports of illegal drilling and tapping in at least 10 oil and gas working areas, which are mainly under the management of Pertamina.

Pertamina EP (PEP), one of Pertamina’s upstream subsidiaries, is the biggest victim as its five working areas from Sumatra to East Java were impacted by the criminal activities.

Pertamina president director Nicke Widyawati said her company had located eight spots of illegal drilling in PEP’s Pangkalan Susu Field in Langkat, North Sumatra, with at least 56 active illicit wells.

“It isn’t enough to crack down on the illegal drilling activities while failing to eradicate them up to the level of illicit refining and marketing, because that [merely eliminating illegal drilling] won’t deter the violators,” she said.

While it did not have the exact data of potential losses caused by the criminal acts, PEP revealed that its 260-kilometer Tempino-Plaju pipeline in Jambi and South Sumatra had suffered Rp 280 billion (US$20 million) in losses as a result of illegal tapping.

“At that time, our oil losses reached 2,000 barrels per day. But now, I think there is no more big oil theft, with losses of fewer than 15 barrels per day,” said PEP president director Nanang Abdul Manaf, adding that his company was concerned at the impact oil spills from the illegal activities could have on the surrounding environment.

The ministry’s director general of oil and gas Djoko Siswanto said weak supervision was one of the reasons for the recurring criminal activities. He pointed to the fact that there was insufficient funding for the existing inter-organizational task force under the Office of the Coordinating Political, Legal and Security Minister to crack down on the theft.

“It [the task force] has been working since February 2017 and we believe it is the best solution so far. But, its daily operational budget is insufficient,” he said during the meeting.

Lawmakers insisted that intensive coordination and better mitigation should be conducted by all stakeholders involved in the task force, including the Environment and Forestry Ministry, Attorney General’s Office and the National Police.

Meanwhile, Nicke of Pertamina said teaming up with regional administrations to manage old and relatively small oil wells had proven effective in cutting down the illegal activity.

“The legal method of managing oil wells is through regional administrations with their designated business units like village cooperatives [KUD],” she said.

Pertamina has teamed up with 12 regional business units, including regional-owned enterprises, with a total oil output of 1,444 barrels of oil per day.

Djoko of the ministry concurred that cooperation between regional administrations and Pertamina was the safest way to manage the operation of older and smaller wells as the company had the experience as an operator and oil off-taker.

“Even though Pertamina buys oil at a minimum price 70 percent lower than the Indonesian Crude Price [ICP], it can assure the security of drilling activities.” he said.