The talking points stressed that upstream oil and gas business in Indonesia already have some set of robust management and reporting mechanism, including within PSC alone. Yet, what EITI should focus, is on related party transaction among the HQ and subsidiaries - and let it be available to public

1. Benefits for Government, Companies and Civil Societies
Sampe L. Purba
skkmigas
Presented in EITI Transparency International – Jakarta, 2 Dec. 2013
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2. ISUES
INSTRUMENTAL INPUT
• National Paradigm
• Laws and Regulations
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National Economy
significantly
supported by Oil
and Gas Industry
Oil and
Gas
upstream
governan
ce
Civil Society
awareness and
demands towards
transparency
Administrative
and Contractual
binding
Governance
Asymetric information
on related-party
transaction HQ –
Subsidiaries
Conception
Policy
Strategy
Effort
Expected
Upstream
Governance
Optimum
benefit on
Energy
Management
• Strategic Environment
• Opportunity Challenge
ENVIRONMENTAL
INPUT
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3. Points to note :
 Oil and Gas Business is a significant driver to National
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economy {national budget, energy security, national
capacity enhancement, technology and human
resources development}
 Regulatory framework governed under :
 Administrative Law
 Public Law
 Private – Contractual Law
• The rise of openness and democracy to broaden the so-
called consent parties beyond the relevant stakeholders
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4. Governance Structure of PSC
STRUCTURE GOVERNANCE LAW of PSC
National Constitution 1945
Ch.5 (1),(2),4(5)
Ps 33 (2),(3)
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Law No. 22 of 2001
PD 9/ 2013
GR 35 of 2004
PRODUCTION
SHARING CONTRACT
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5. Control Mechanism in Upstream Oil and Gas Sector
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UKP4
POD
WP&B
AFE
Parliamen
t
Pre-Audit
Supreme
State
Auditor
Current
Audit
Corruption
Eradication
Commission
Post Audit
Relevant
Institution
SKK Migas
BPK, BPKP,
Tax Authority
Public Auditor
Home Office Auditor
Production Sharing Contracts
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6. INTERNAL GOVERNANCE WITHIN PSC
Head Quarters
Home Gov’t
World wide Portfolio Benchmarking
Personal and Group Performance Evaluation
Shareholders Audit
IRS : Taxation
Security Exchange Commission
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Commercial Stake
holders
Partners
Covenants with Financial Institution
Industrial Good Engineering Practices
Association and Interest Group
Non Operator Audit
Project Based Approval
Annual Work Program and Budget Approval
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7. Concluding Remarks
 Oil and Gas management reflects the Government
sovereignty and authority to the benefit of the people
 Accountability flows through the national system
 Transparency has to be equally balanced imposed to
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the multinational companies operating in Indonesia
 Related party event within HQ and subsidiaries on
the underlying transaction charged to Indonesia need
to be cautiously scrutinized by EITI
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8. Sampe L. Purba
sampepurba@gmail.com; slpurba@skkmigas.go.id
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