AsianOil: Indonesia sets upstream content targets

Indonesia’s upstream watchdog SKK Migas has set a local content target for upstream investment in 2021, after the coronavirus (COVID-19) pandemic derailed last year’s target.
The head of SKK Migas’ goods and services procurement management division, Erwin Suryadi, said on March 10 that upstream procurement spending had amounted to $3bn in 2020, with local content providers winning about 56% of that total.
“[Investment] is not on target because it was the beginning of COVID-19, so it was difficult to make adjustments at the beginning of the pandemic,” local news outlet Kontan quoted Suryadi as saying at a virtual event last week.
Suryadi said contractors had compiled a procurement list for goods and services valued at more than $6.05bn in the Centralised Integrated Vendor Database (CIVD) system. SKK Migas developed CIVD in collaboration with upstream contractors in 2016, with the goal of promoting local suppliers while maintaining quality control through supplier registration.
The Energy Ministry requires upstream contractors to maximise the use of domestic goods and services in their projects. Not only must production-sharing contracts (PSCs) include local content requirements, but SKK Migas is also required to approve procurement tenders over a certain value.
The watchdog, however, raised the threshold on tender values in 2015 from IDR50bn or $5mn to IDR200bn or $20mn in the hopes of streamlining the process.
Suryadi said CIVD was designed to help the upstream sector procure high-quality goods and services from domestic providers at a competitive price.
Kontan reported that the database contains 1,482 tender packages for goods and services this year, with almost 87% of the total value set to be awarded by July. The outlet added that January was set to be the year’s biggest month in procurement terms, accounting for nearly 23% of the total package.