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Natural Gas Business in Indonesia

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3Natural Gas Business in Indonesia

Introduction

Gas is an energy future of Indonesia. It is a fact that cannot be denied anymore. Based on existing data, throughout 2010 there were new discoveries of gas reserves are significant enough to achieve 2.09 trillion cubic feet, while the discovery of oil only amounted to 140 million barrels only. On January 1, 2011, proved reserves position and potential of gas in Indonesia reached 153.72 trillion cubic feet of proven and potential reserves and crude oil for 7.41 billion Barrels. (BPMIGAS Bulletin Issue, 2011)

If the reserves are produced with current production levels then the Indonesia's oil reserves will run out for 12 years, while Indonesia's natural gas reserves are still able to …show more content…

Natural Gas Business Scheme

In 2001 to 2008, sales of natural gas from KKKS have never been done in an open tender, natural gas can be sold directly to natural gas distribution companies without any tender, in other words, KKKS never announced to the media (newspapers, websites etc.) regarding the potential for natural gas that will be commercialized. Hence, Natural Gas Distribution companies who have network to KKKS will benefit from this kind of process. The process of selling gas without open tender as mentioned above can lead to unethical business behavior, because KKKS is the only one who gained full authorization from BPMIGAS to control the commercialization process but KKKS did not doing a transparent business process.

What KKKS doing is not in accordance with the principles of good corporate governance that includes Transparency, accountability, responsibility, independency, and fairness to attain a company's sustainability by also considering the interests of stakeholders. (Binhaldi, 2006)

To avoid unethical business behavior, commercialization of natural gas process by KKKS must be done transparently. KKKS must Provide timely, Appropriate, clear, accurate and comparable information accessible to stakeholders that their rights commensurate with (Binhaldi , 2006).

Indonesian Natural Gas Business in 2009 – 2011

In 2009, BPMIGAS issued

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