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direction, BPH Migas has made it clear that it has
no intention of bowing to public pressure from
the energy ministry.

Counter-arguments
BPH Migas head Fanshurullah Asa said on April
23 that his agency did not answer to the energy
ministry and that he would not be replying to
Tasrif’s letter.
Asa said he was preparing to explain the
BNBR award to Prime Minister Joko Widodo, Indonesia’s upstream
but that Presidential Regulation Number 79 What next regulator SKK Migas
of 2020 stipulated that Cisem’s funding should Commission VII, the parliamentary commis- argues that the problem
come from the private sector. sion responsible for energy issues, has called for does not lie in filling
BPH Migas committee member Jugi Prajo- the heads of both the energy ministry and BPH the gas pipeline, but in
gio, meanwhile, told Kontan on April 23 that Migas to explain themselves. finding enough demand
BNBR had submitted a performance bond for The commission’s deputy chairman, Eddy for the final throughput.
the project on April 17. The performance bond Soeparno, said the two bodies’ back-and-forth
has been set at 1% of Cisem’s value, which is an arguing made a legal review of the whole issue a
estimated $196.41mn. necessity to ensure that all sides were following
But the energy ministry is not willing to be the law.
dismissed so easily, arguing that the regulator is “We at Commission VII will ask for an expla-
using legal loopholes to justify the BNBR award. nation from the Ministry of Energy and Min-
The head of the ministry’s legal department, eral Resources and BPH Migas regarding the
Idris Sihite, said the regulator’s retroactive use of results of the internal discussions on both sides,”
BPH Migas Regulation Number 20 of 2019 to Soeparno told Kontan on April 25.
pick a runner up from the 2006 auction made Indonesia’s upstream watchdog SKK
no sense. Migas, meanwhile, is the latest to wade into
“If the auction was held in 2006, according to the debate. The regulator has pledged to guar-
the provisions of the legality principle, he may antee supplies for the Cisem pipeline, but has
not refer to the provisions of the future princi- said that ensuring there was enough demand
ple. There is a prohibition to apply retroactivity,” for that gas is a bigger issue.
Sihite said in a virtual press conference on April SKK Migas finance deputy Arief Setiawan
23. Handoko said on April 26 that the pipeline could
The official argued that given current cir- receive gas supplies from a number of projects.
cumstances, BPH Migas should be using BPH These include the Jambaran-Tiung Biru (JTB)
Migas Regulation Number 5 of 2005 instead. gas field, which is part of the Cepu Block, the
Sihite said this earlier legislation makes no Muriah and Lengo blocks, as well as a number of
provision for runners-up if the winner backs other unnamed projects.
out of the project. SKK Migas said on April 15 that JTB, along
Sihite added that a meeting in on January with the Sidayu and Bukit Tua Phase 2B pro-
between the energy ministry, BPH Migas and jects, would come online later this year. JTB is
the Ministry of Law had concluded that BNBR estimated to come on stream in the fourth quar-
could not be picked as a direct replacement. ter of 2021, with an initial production of 192mn
The official said that from a practical stand- cubic feet (5.44mn cubic metres) per day of gas.
point projects tended to be developed more “For Cisem, we will ensure there is gas supply
quickly when funded by the state, adding that in 2022-2025. So what is important is the real
the government’s desire to supply affordable gas level of demand,” Handoko said during a virtual
to industrial and commercial users meant it was press conference. The official stressed the impor-
motivated to guarantee feedstock volumes. tance of determining the level of demand before
The Indonesian government passed a new work started on the pipeline.
regulation in April 2020 that capped prices for It is easy to understand why Commission VII
gas supplies to power plants at $6 per mmBtu is alarmed by the divide over Cisem, given that
($165.96 per 1,000 cubic metres). Jakarta has the project is seen as key to helping to alleviate
also set a similar price cap for the fertiliser, Central Java’s gas supply shortfall. However, the
petrochemical, steel, ceramics, glass and rub- squabbling further highlights the challenges fac-
ber gloves industries. ing the country’s energy sector.
The public squabble between the two energy There is a distinct lack of cohesion amongst the
agencies has alarmed senior politicians, while country’s energy planners, not just over who has
another wing of the government has warned that the final say over a pipeline project that has been
the issue of gas supply is not as big as feared, with in limbo for 15 years but also about what any future
demand being a bigger problem. development’s biggest challenges are.™

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