KPK Reveals Graft-Prone Sectors in Oil and Gas Upstream Industry

TEMPO.CO, Jakarta - Taufiequrrahman Ruki, Acting Chief of the Corruption Eradication Commission (KPK) called on government officials and business owners in the upstream oil and gas industry to maintain their integrity as the industry is prone to corruption.

"Honestly, many business owners came to me complaining that they could not participate in the upstream oil and gas industry because they didn't commit bribery," Ruki said in a discussion held by the Indonesia Petroleum Association on Thursday, May 21, 2015.

According to Ruki, the most graft-prone spots during the exploration stage are in determining oil and gas potential, cooperation contract signing, licensing process, plan of development approval, work plan and budget approvals, authorization for expedition, and procurement plan approval. Ruki added that the exploration supervision stage is also prone to corruption.

In the exploitation stage, corruption often occurred during the process of asset and production cost controls, particularly during the cost recovery in investment credit and interest recovery. The final stages that are prone to corruption include production and development, production lifting calculation and first part of oil sales.

Ruki revealed that the vulnerability was due to weak integrity and complicated licensing process. In addition, the oil and gas industry is a profitable sector and is prone to interventions from both the government and the House of Representatives.

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