AsianOil: Indonesian upstream expands domestic content level

Indonesia’s upstream watchdog SKK Migas has revealed that the domestic content level in the country’s oil and gas projects during the first four months of the year exceeded the government’s target.
The regulator said that domestic content levels reached 58% of project costs by the end of April, compared with the government’s full-year target of 57%.
SKK Migas said that in order to help boost the level of domestic goods and services used by the upstream it would focus on bringing together developers and local providers.
“We held a virtual event that aims to provide opportunities for domestic companies to inform [contractors] of their capabilities. For [contractors], this activity will increase their knowledge of domestic companies’ ability to support their operations,” local financial daily Neraca quoted SKK Migas’ head of supply chain management, Erwin Suryadi, as saying on May 17.
The official added that by improving local companies’ ability to provide goods and services to oil and gas contractors, the upstream sector could help drive domestic economic growth.
“If the value of the procurement of upstream goods and services as of April reached $1.14bn, then a [domestic content level] of 58% means investment in the national support industry amounted to $658.9mn,” Suryadi added.
The official noted that SKK Migas was spearheading work programmes to expand the domestic content level of upstream projects. SKK Migas has invited the head of the Indonesian Petroleum Association’s (IPA) supply chain management (SCM) committee as well as four domestic companies to be part of the process.
Fajar Benua Indopack has been invited to supply gaskets, expansion joints and flexible hose products, Asia Mega Pasifik will provide high-density polyethylene (HDPE) geomembrane products, Harmand Intimarin Indonesia will offer drilling services and onshore rigs, while Bumi Cahaya Unggul will cover pumping units.
Pertamina Hulu Energi (PHE), an upstream unit of state-owned Pertamina, wants domestic manufacturers to improve both their technical competencies as well as quality and production capacity, according to PHE acting vice-president of SCM Irfan Zaenuri. Neraca cited the official as saying PHE has used 111 domestic manufacturers in its projects last year.