The upstream oil and gas industry provides many investment opportunities for national and local vendors. This opportunity should be supported by the increased competence and professionalism of the vendors.

Head of Goods and Services Procurement Management Division of the Special Task Force for the Upstream Oil and Gas Business Activities (SKK Migas) Erwin Suryadi, mentioned that through the fourth revision of Administrative Guidelines 007 on Supply Chain Management, SKK Migas provides an open space for competition for local vendors. However, he reminded that, despite the fact that SKK Migas pays great attention to local content, the Indonesian business players should not take it for granted. Goods and services vendors in the country are required to continually improve themselves, so as to produce quality products with competitive prices compared to imported products, and provide optimal service for the Contractors of Production Sharing Contracts (PSC Contractors).

“The creation of a climate of equality will make Indonesian upstream oil and gas industry better and provide multiplier effects for national and local entrepreneurs,” Erwin said.

Previously, SKK Migas with PSC Contractors operating in the Kalimantan and Sulawesi area held a workshop in Balikpapan on 20 to 21 November 2017. The event was attended by goods and services vendors operating in Kalimantan and Sulawesi.

The theme used in the workshop was Administrative Guidelines 007 Revision 04 in an effort to encourage the involvement of local small and medium enterprises (SMEs) to support upstream oil and gas operations. The presentation covers the efforts having been made by PSC Contractors in the Kalimantan and Sulawesi operating area such as PT Pertamina EP, PT Pertamina Hulu Mahakam, Vico Indonesia, and Eni Muara Bakau to encourage SME involvement to support their operations.

In addition, the supervision of the management transition process of the Mahakam block through contract mirroring, and the policy on occupational health and environmental protection in the tender process, were also discussed.

Vice President of Supply Chain Management (SCM) of PT Pertamina EP, Bethy Handayaningrum explained that this activity is important as it provides an understanding of the people in charge in the procurement of goods and services in PSC Contractors, and goods and services vendors as partners. “PT Pertamina EP continues to encourage local SME involvement to support operations in its working area,” she revealed.

Concerning contract mirroring, SKK Migas has initiated the policy to directly transfer contracts between goods and services vendors with Total E&P Indonesie to PT Pertamina Hulu Mahakam. The contract mirroring policy covering more than 500 contracts will provide certainty of continuity of operation in the framework of the operational transfer of Mahakam Block from Total E&P Indonesie to PT Pertamina Hulu Mahakam. This policy was taken to maintain the production of the Mahakam Block which contributes 22 percent to national gas production.

This contract mirroring policy will be effective from 1 January 2018 and is valid for one year. “SKK Migas plays an active role in overseeing the Government’s policy on the Mahakam Block management transition process. With this Contract Mirroring mechanism, vendors can continue their work as usual as they have obtained contract certainty,” Erwin added.

Some vital contracts to ensure the continuity of field operations are among others, human resources contracts involving nearly 2,000 employees working daily in the Mahakam Block. There are also ship, rigs and other operational supporting facilities contracts being part of the vital contracts. “Overall, the contract value covered in this transition period is more than US $ 1.5 billion,” Erwin revealed. He also mentioned that this shows that the upstream oil and gas industry is still active and contributing to boosting the economy in Indonesia. (acu)