A bribery scandal erupted last August at the Special Task Force for Upstream Oil and Gas Special Business Activities (SKK Migas), which issues the tenders and approvals for offshore energy projects in Indonesia. This week saw its former chief Rudi Rubiandini handed down a seven-year jail sentence for accepting bribes.
“Certainly the rig count dropped slightly, because the issues that were publicised later last year with SKK Migas have run on and the projects that are have not been approved, and we have some huge multi-billion projects in the pipeline,” Marc Thomson, a director of Wintermar Offshore Marine, told the Mare Forum Indonesia conference on Wednesday.
For example Chevron has $7bn worth of projects lined up in Indonesia, however, much of it is pending approvals.
Nova Yudhanto Mugijanto, head of offshore carriers for the Indonesian National Shipowners’ Association agreed with Thomson’s assessment of the situation. “The challenge is since last year there is a huge scandal in SKK Migas so there’s some kind of lack of leadership in the industry. With a lack of leadership who is going to a risk approve these huge projects,” he said.
“It is becoming very challenging because the shipowners have started investing, waiting while hoping the new project is coming in, but it has been quite a delay.”
Both speakers saw the upcoming Indonesian presidential election on 9 July and the resulting new government as key to moving forward.
“What we’re all waiting for is to see what happens after the election, to see if there is strong leadership in place, which will push through these projects which will increase the number of rigs coming into Indonesia which of course means higher demand for the offshore supply vessel market,” Thomson explained.
Mugijanto said that as result there would be little change in 2014 with the new President inaugurated on 20 October. “For 2014 and we have to just wait for the new government to be in place. In 2015 hopefully we have good leadership, and the country needs energy and the only way to do this pass those multi-billion projects,” he said.
The Mayor of Jakarta, Joko “Jokowi” Widodo, is the current frontrunner to be the next Indonesian President according to most political commentators.
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