Keep Us Strong WikiLeaks logo

Currently released so far... 97115 / 251,287

Articles

Browse latest releases

Browse by creation date

Browse by origin

A B C D F G H I J K L M N O P Q R S T U V W Y Z

Browse by tag

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
ETRD EAGR ETTC EAID ECON EFIN ECIN EINV ELAB EAIR ENRG EPET EWWT ECPS EIND EMIN ELTN EC ETMIN EUC EZ ET ELECTIONS ENVR EU EUN EG EINT ER ECONOMICS ES EMS ENIV EEB EN ECE ECOSOC EK ENVIRONMENT EFIS EI EWT ENGRD ECPSN EXIM EIAD ERIN ECPC EDEV ENGY ECTRD EPA ESTH ECCT EINVECON ENGR ERTD EUR EAP EWWC ELTD EL EXIMOPIC EXTERNAL ETRDEC ESCAP ECO EGAD ELNT ECONOMIC ENV ETRN EIAR EUMEM ENRGPARMOTRASENVKGHGPGOVECONTSPLEAID EREL ECOM ECONETRDEAGRJA ETCC ETRG ECONOMY EMED ETR ENERG EITC EFINOECD EURM EENG ERA EXPORT ENRD ECONEINVETRDEFINELABETRDKTDBPGOVOPIC EGEN EBRD EVIN ETRAD ECOWAS EFTA ECONETRDBESPAR EGOVSY EPIN EID ECONENRG EDRC ESENV ETT EB ENER ELTNSNAR ECHEVARRIA ETRC EPIT EDUC ESA EFI ENRGY ESCI EE EAIDXMXAXBXFFR EETC ECIP EIAID EIVN EBEXP ESTN EING EGOV ETRA EPETEIND ELAN ETRDGK EAIDRW ETRDEINVECINPGOVCS EPEC ENVI ELN EAG EPCS EPRT EPTED ETRB EUM EAIDS EFIC EFINECONEAIDUNGAGM EAIDAR ESF EIDN ELAM EDU EV EAIDAF ECN EDA EXBS EINTECPS ENRGTRGYETRDBEXPBTIOSZ EPREL EAC EINVEFIN ETA EAGER EINDIR ECA ECLAC ELAP EITI EUCOM ECONEFINETRDPGOVEAGRPTERKTFNKCRMEAID EARG ELDIN EINVKSCA ENNP EFINECONCS EFINTS ECCP ETC EAIRASECCASCID EINN ETRP EAIDNI EFQ ECOQKPKO EGPHUM EBUD ECONEINVEFINPGOVIZ ENERGY ELB EINDETRD EMI ECONEFIN EIB EURN ETRDEINVTINTCS EIN EFIM ETIO ELAINE EMN EATO EWTR EIPR EINVETC ETTD ETDR EIQ ECONCS EPPD ENRGIZ EISL ESPINOSA ELEC EAIG ESLCO EUREM ENTG ERD EINVECONSENVCSJA EEPET EUNCH ECINECONCS ETRO ETRDECONWTOCS ECUN EFND EPECO EAIRECONRP ERGR ETRDPGOV ECPN ENRGMO EPWR EET EAIS EAGRE EDUARDO EAGRRP EAIDPHUMPRELUG EICN ECONQH EVN EGHG ELBR EINF EAIDHO EENV ETEX ERNG ED
KMDR KPAO KPKO KJUS KCRM KGHG KFRD KWMN KDEM KTFN KHIV KGIC KIDE KSCA KNNP KHUM KIPR KSUM KISL KIRF KCOR KRCM KPAL KWBG KN KS KOMC KSEP KFLU KPWR KTIA KSEO KMPI KHLS KICC KSTH KMCA KVPR KPRM KE KU KZ KFLO KSAF KTIP KTEX KBCT KOCI KOLY KOR KAWC KACT KUNR KTDB KSTC KLIG KSKN KNN KCFE KCIP KGHA KHDP KPOW KUNC KDRL KV KPREL KCRS KPOL KRVC KRIM KGIT KWIR KT KIRC KOMO KRFD KUWAIT KG KFIN KSCI KTFIN KFTN KGOV KPRV KSAC KGIV KCRIM KPIR KSOC KBIO KW KGLB KMWN KPO KFSC KSEAO KSTCPL KSI KPRP KREC KFPC KUNH KCSA KMRS KNDP KR KICCPUR KPPAO KCSY KTBT KCIS KNEP KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG KNNB KGCC KINR KPOP KMFO KENV KNAR KVIR KDRG KDMR KFCE KNAO KDEN KGCN KICA KIMMITT KMCC KLFU KMSG KSEC KUM KCUL KMNP KSMT KCOM KOMCSG KSPR KPMI KRAD KIND KCRP KAUST KWAWC KTER KCHG KRDP KPAS KITA KTSC KPAOPREL KWGB KIRP KJUST KMIG KLAB KTFR KSEI KSTT KAPO KSTS KLSO KWNN KPOA KHSA KNPP KPAONZ KBTS KWWW KY KJRE KPAOKMDRKE KCRCM KSCS KWMNCI KESO KWUN KPLS KIIP KEDEM KPAOY KRIF KGICKS KREF KTRD KFRDSOCIRO KTAO KJU KWMNPHUMPRELKPAOZW KEN KO KNEI KEMR KKIV KEAI KWAC KRCIM KWCI KFIU KWIC KCORR KOMS KNNO KPAI KBWG KTTB KTBD KTIALG KILS KFEM KTDM KESS KNUC KPA KOMCCO KCEM KRCS KWBGSY KNPPIS KNNPMNUC KWN KERG KLTN KALM KCCP KSUMPHUM KREL KGH KLIP KTLA KAWK KWMM KVRP KVRC KAID KSLG KDEMK KX KIF KNPR KCFC KFTFN KTFM KPDD KCERS KMOC KDEMAF KMEPI KEMS KDRM KEPREL KBTR KEDU KNP KIRL KNNR KMPT KISLPINR KTPN KA KJUSTH KPIN KDEV KTDD KAKA KFRP KWNM KTSD KINL KJUSKUNR KWWMN KECF KWBC KPRO KVBL KOM KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG KEDM KFLD KLPM KRGY KNNF KICR KIFR KM KWMNCS KAWS KLAP KPAK KDDG KCGC KID KNSD KMPF KPFO KDP KCMR KRMS KNPT KNNNP KTIAPARM KDTB KNUP KPGOV KNAP KNNC KUK KSRE KREISLER KIVP KQ KTIAEUN KPALAOIS KRM KISLAO KWM KFLOA
PHUM PINR PTER PGOV PREL PREF PL PM PHSA PE PARM PINS PK PUNE PO PALESTINIAN PU PBTS PROP PTBS POL POLI PA PGOVZI POLMIL POLITICAL PARTIES POLM PD POLITICS POLICY PAS PMIL PINT PNAT PV PKO PPOL PERSONS PING PBIO PH PETR PARMS PRES PCON PETERS PRELBR PT PLAB PP PAK PDEM PKPA PSOCI PF PLO PTERM PJUS PSOE PELOSI PROPERTY PGOVPREL PARP PRL PNIR PHUMKPAL PG PREZ PGIC PBOV PAO PKK PROV PHSAK PHUMPREL PROTECTION PGOVBL PSI PRELPK PGOVENRG PUM PRELKPKO PATTY PSOC PRIVATIZATION PRELSP PGOVEAIDUKNOSWGMHUCANLLHFRSPITNZ PMIG PREC PAIGH PROG PSHA PARK PETER POG PHUS PPREL PS PTERPREL PRELPGOV POV PKPO PGOVECON POUS PGOVPRELPHUMPREFSMIGELABEAIDKCRMKWMN PWBG PMAR PREM PAR PNR PRELPGOVEAIDECONEINVBEXPSCULOIIPBTIO PARMIR PGOVGM PHUH PARTM PN PRE PTE PY POLUN PPEL PDOV PGOVSOCI PIRF PGOVPM PBST PRELEVU PGOR PBTSRU PRM PRELKPAOIZ PGVO PERL PGOC PAGR PMIN PHUMR PVIP PPD PGV PRAM PINL PKPAL PTERE PGOF PINO PHAS PODC PRHUM PHUMA PREO PPA PEPFAR PGO PRGOV PAC PRESL PORG PKFK PEPR PRELP PREFA PNG PGOVPHUMKPAO PRELECON PINOCHET PFOR PGOVLO PHUMBA PRELC PREK PHUME PHJM POLINT PGOVPZ PGOVKCRM PGOVE PHALANAGE PARTY PECON PEACE PROCESS PLN PRELSW PAHO PEDRO PRELA PASS PPAO PGPV PNUM PCUL PGGV PSA PGOVSMIGKCRMKWMNPHUMCVISKFRDCA PGIV PRFE POGOV PEL PBT PAMQ PINF PSEPC POSTS PHUMPGOV PVOV PHSAPREL PROLIFERATION PENA PRELTBIOBA PIN PRELL PGOVPTER PHAM PHYTRP PTEL PTERPGOV PHARM PROTESTS PRELAF PKBL PRELKPAO PKNP PARMP PHUML PFOV PERM PUOS PRELGOV PHUMPTER PARAGRAPH PERURENA PBTSEWWT PCI PETROL PINSO PINSCE PQL PEREZ PBS

Browse by classification

Community resources

courage is contagious

Viewing cable 08JAKARTA1579, INDONESIA TARGETS COST RECOVERY IN OIL AND GAS PRODUCTION

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

Understanding cables
Every cable message consists of three parts:
  • The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
  • The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
  • The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
To understand the justification used for the classification of each cable, please use this WikiSource article as reference.

Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #08JAKARTA1579.
Reference ID Created Released Classification Origin
08JAKARTA1579 2008-08-20 04:45 2011-08-24 01:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Jakarta
VZCZCXRO4439
RR RUEHJS
DE RUEHJA #1579/01 2330445
ZNR UUUUU ZZH
R 200445Z AUG 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 9843
INFO RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHJS/AMCONSUL SURABAYA 2245
UNCLAS SECTION 01 OF 02 JAKARTA 001579 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/MTS and EEB/ESC/IEC/ENR 
DOE FOR CUTLER AND GILLESPIE 
DOC FOR ITA/MAC NADJMI 
DEPT PASS TO USTR KEHLERS 
 
E.O. 12958: N/A 
TAGS: ENRG EPET EINV ID
SUBJECT: INDONESIA TARGETS COST RECOVERY IN OIL AND GAS PRODUCTION 
CONTRACTS 
 
1. (SBU) Summary.  The Indonesian government instituted a negative 
list for cost recovery items under oil and gas production sharing 
contracts, in a decree signed June 30 and released publicly in early 
August.  Oil and gas companies noted that the regulations disallowed 
expenses that had been allowed for decades, although they 
acknowledge the political pressures surrounding oil and gas 
production costs.  There are different signals within the Ministry 
of Energy and Mineral Resources on the next steps for cost recovery 
- the MIGAS Director General declared that future oil and gas 
production contracts may not include cost recovery provisions, while 
the Chairman of BP Migas stated that cost recovery would have to 
remain in the contracts.  End Summary. 
 
------------------------------- 
The Cost Recovery Negative List 
------------------------------- 
 
2. (U) In early August the Minister of Energy and Mineral Resources 
(MEMR) notified companies of Decree Number 22, a negative list of 
cost recovery categories signed by Minister Purnomo Yusgiantoro on 
June 30.  The new regulations disallow cost recovery for seventeen 
expense categories, including foreign worker costs, tax and legal 
consultants, certain kinds of public relations, environmental and 
community development, fees for site abandonment and restoration, 
cost overruns, and costs due to operating errors. 
 
3. (U) The decree follows a period in which BP Migas has become more 
stringent on the types of costs that it would allow for cost 
recovery.  Many foreign companies have complained that expenses that 
have been transparently declared and allowed for decades, and on 
which they based their cost estimates, are being denied. 
 
4. (SBU) The Indonesian Petroleum Association, representing foreign 
and domestic oil and gas producers, has been engaging the Indonesian 
government on the cost recovery issue.  Because of the political 
sensitivities surrounding cost recovery, changes to the regulations 
have been rumored for some time.  However, IPA President Roberto 
Lorado expressed surprise that the regulations were finalized before 
the government completed consultations with the industry. 
 
-------------------------- 
Calls for Cost Containment 
-------------------------- 
 
5. (U) Cost recovery has become a hot political issue in Indonesia, 
spurred by the rising cost of fuel subsidies and declining domestic 
production of oil and gas.  Adding to the concern is the fact that 
production costs are rising as producers use new equipment and 
procedures to maximize output at aging fields.  The press has run 
stories on alleged improper cost recovery charges for several years, 
citing items such as DVDs, parties, dance lesson, and charities, 
indicating that bill-padding is a major problem in production 
sharing contracts (PSC). 
 
6. (U) With the public perception that rising costs are due to 
inefficiency and corruption, demands to reduce cost recovery charges 
have become more heated.  Several members of the legislature 
recently called for cost recovery payments to be reduced to a 15% 
average of oil and gas revenues, down from the current 23% average. 
BP Migas, the oil and gas upstream regulator, has pointed out that 
the 15% goal is unrealistic, noting that cost recovery constitutes 
40% to 60% of gross revenues in some oil and gas producing 
countries.  As production moves further offshore and into deeper 
waters in Indonesia, BP Migas sees costs rising, not falling. 
 
----------------------------- 
Will Cost Recovery Disappear? 
----------------------------- 
 
7. (SBU) Amid the debate on cost recovery, the Director General for 
Oil and Gas (Dirjen MIGAS) Evita Legowo stated at a press conference 
on July 28 that the Indonesian government may do away with cost 
recovery entirely in future contracts for oil and gas development. 
Although this statement was made prior to the announcement of the 
cost recovery negative list, MIGAS officials, who are responsible 
for overall policy for oil and gas exploration and production, 
indicated that eliminating cost recovery remains an option. 
 
8. (SBU) The Chairman of BP Migas, R Priyono, stated his opposition 
to eliminating cost recovery in a conversation with Econoff.  While 
stressing that the Indonesian government will only enter into 
contracts that maximize the benefits to the country, he acknowledged 
that PSCs are the best option, and cost recovery is a necessary 
component of a PSC.  Of the two primary types of contracts that do 
 
JAKARTA 00001579  002 OF 002 
 
 
not require cost recovery - technical services contracts (TSC) or 
royalty/tax systems - Priyono sees neither as appropriate for 
Indonesia.  In a TSC, Pertamina would manage all production and hire 
companies to do drilling and production services only, and Priyono 
does not believe that Pertamina has the capacity or capital to 
manage these contracts nationwide.  He is also not in favor of tax 
and royalty systems, despite their popularity with production 
companies, because he does not believe they provide the government 
with enough control over these necessary commodities. 
 
HUME