Rabu, 19 Desember 2018

Corruption or Business Risk?

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  • Pertamina CEO Karen G Agustiawan at the KPK building, Jakarta. ANTARA/Wahyu Putro A

    Pertamina CEO Karen G Agustiawan at the KPK building, Jakarta. ANTARA/Wahyu Putro A

    TEMPO.CO, Jakarta - Pertamina`s investment losses in the Basker Manta Gummy (BMG) Block in Australia, totaling Rp568 billion, is not sufficient to condemn former Pertamina CEO, Karen Agustiawan, a corruption suspect—let alone put her in detention after she underwent an initial examination. Only after enough evidence proves there has been untoward practices in the procedure for acquisition of 10 percent of the shares of Roc Oil Company Ltd by Pertamina, will it be acceptable to slap her with the status of suspect. 



    Thus far, Karen insists that Pertamina’s decision of nine years ago went through the proper procedure. She claims to have obtained documents proving due diligence and at the approval of Pertamina’s Board of Commissioners. On the other hand, the Attorney General’s Office (AGO) is maintaining their accusation that the processes undergone in the shares purchase amounting to US$31.49 million was flawed. Both sides are now ready to take the case to court. The public obviously hopes for a fair and transparent court procedure, unburdened by vested interests from any party.

    Aside from the element of whether or not corruption occurred in the case, it is important to take close note of AGO’s step to criminalize a corporate decision involving a Pertamina upstream enterprise. As important is the need to understand that exploration and exploitation in the oil and gas sector are always riddled with risk. This is precisely why multinational corporations competing in the sector play with super-substantial capital and are adept at playing with very high stakes.

    This is what occurred in the acquisition of the BMG Block. When Pertamina purchased it, the BMG oil well was claimed to yield a minimum of 812 barrels of crude oil per day for Pertamina. After several months, it was stuck at 252 barrels. Three years later, Pertamina—through their subsidiary, Pertamina Hulu Energi—let go their ownership of the shares. 



    Did this mean Pertamina’s investment of half a trillion rupiah was all for nothing? This may very well be. But do such losses indicate a criminal act of corruption? This needs further investigation. Incompetency and miscalculation are often the triggers for losses sustained by corporations. But they do not necessarily mean corruption had occurred. If Karen or any other party enjoyed personal gain from the transaction, only then does corruption come into the picture.

    We can learn from Petronas’s case. In 2013, the Malaysian government’s oil and gas company acquired the Kepodang Field oil well from Britain’s BP. The block’s location is 180 kilometers from the Semarang shoreline in Central Java. After operating for two years, it turned out gas production from the eight oil wells were below prediction. Meanwhile, Petronas had already signed a contract for use of a pipeline with PGN, Indonesia’s state gas company, and had signed another sales contract with PLN, Indonesia’s state electricity company for 116 million standard cubic feet per day (MMSCFD) for 12 years. The fact was, the realization was only at around 75-90 MMSCFD.

    Petronas was at a disadvantage. The result was PLN had to seek for a new source of gas in a hurry for the Gas and Steam Power Supply Grid in Tambak Lorok, which supplied power to the entire Central Java. PGN also drew a loss, because the pipeline to be used by Petronas fell below expectation. The two sued Petronas through arbitration and demanded compensation. The question that arises: could the Petronas management in such a case be slapped with willful corruption? So long as no conspiracy nor twisting of procedure occurred, obviously we have to say no.

    President Joko Widodo and the Minister of Energy and Mineral Resources Ignasius Jonan have to sit together with law enforcers: the chairman of the Corruption Eradication Commission, the chief of the National Police, and the Attorney General. The three institutions had better get their perceptions in alignment in the matter of upstream oil and gas businesses. Aligned perceptions at the highest level will ensure legal certainty for professionals working in state-owned enterprises in the oil and gas sector.

    Pertamina could also reconsider the option to leave upstream oil and gas enterprises. The state-owned company could choose to focus on serving the public interest in downstream oil and gas, which hold minimum risks. A decision in this issue is important, because up to last year, Pertamina still owned 12 asset investments for upstream oil and gas projects abroad—from Myanmar to Algeria. If such a decision cannot be made, the state could well be haunted by huge losses caused by uncertainty in the oil and gas upstream sector. Moreover, the Pertamina leadership in future will forever have no courage to take any risks at all, for fear of ending up in prison.