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Interview

with Kuswo Wahyono, Chairman, Indonesian Association of Petroleum Engineers (IATMI)

30.09.2007 / Energyboardroom

How have these first months in the position of IATMI Chairman been?

I was elected director of IATMI (Society of Indonesian Petroleum Engineers) on November 2006. I was lucky at the time because my colleagues trusted my vision to turn IATMI into a truly professional organization, away from all the politics. I want to help to the profesionalization of all ITAMI’s members. I decided to slim down the organization in order to focus on its professionalism. After just one month, we handed over a ‘white paper’ to our government regarding the oil and gas regulations in Indonesia. Now we are working on another document on ‘idle fields’ and cost recovery flexibility.

How was IATMI created?

It was created in 1978 by petroleum engineering students at the Bandung Institute of Technology. It began as an association of engineers but has grown to include professionals from different fields involved in the oil and gas industry.

Are you involved with the Commission VII?

Not directly. In my condition as part of the executive agency BPMIGAS, at times I do visit the parliament to discuss important issues for the sector. As IATMI we have joint activities with SPE and other associations like IAGI and HAGI, we have a symposium every year, and this year this was in Yogyakarta. Middle of November we have our convention in Bali too.

What is IATMI’s positioning among all these non-governmental organizations involved in Indonesia’s oil and gas industry?

We are experts in all the areas essential to the oil and gas industry. This means that we have expertise not only from a technical perspective, but also on financial and legal issues. We can merge and discuss our problems or challenges and have different perspective. We have about 2400 members, including our offices abroad in Houston, Kuala Lumpur, and in Middle East covering 9 areas there. The Middle East office was established only in March 2007, and already we have about 300 members of IATMI compare to 1000 Indonesians are working in oil & gas industry there. We have an annual meeting here in Indonesia in July. So it is an organization with an Indonesian spirit with presence around the world.

IATMI’s international presence and scope is very unique. How do you operate in other countries?

That is one of our strengths; we are a non-profit organization, we are dedicated to sharing our knowledge and experience. We try to get everyone in Indonesia and abroad involved in our network in order to grow mutually.

How do you interact with local educational institutions?

We work with universities and have student members in our organization, especially from the petroleum engineering faculties. We collaborate by offering scholarships, and also help students get in contact with PSCs for internships and employment opportunities. Another way in which we support is working together with the university on developing the study program, as well as bringing the latest technologies from over the rest of the world.

How is your relationship with SPE?

It is very good. We celebrate joint conventions 2 or 3 times a year. Many IATMI members are also a part of SPE, and we also worker with IPA.

What influence do you have in government regulatory bodies?

We generate documents and studies (white papers) and give our suggestions to the government and parliament on these issues, but by principle we do not get involved in politics. We give our inputs based on our independent and professional perspective.

What are the main reasons that explain Indonesia’s fall in competitiveness in the industry? Does it have more to do with internal developments or to an inability to keep up with the pace of international changes?

I think that it has to do with both. We have a population of over 200 million in Indonesia and it is a big challenge to adequately educate so many people. There is an educational gap and also there are not enough jobs for many unskilled workers. We need to invest more on the human resources. This is a very big concern, because many of our engineers are leaving Indonesia to go work in other places where salaries are much higher, such as Middle East. I think the government must change the regulations on salaries, in order to offer more benefits and attractive pay conditions to those with expertise. The problem is that the level of salaries in Indonesia in general is quite low, which makes it difficult to further raise them for the oil and gas sector without generating strong reactions from other sectors. Then if we see our production and our demand, you see that the demand doubles our production practically. There is also the issue of the enormous government subsidies for fuel, which are not sustainable.

What is holding back the development of new exploration and production which are so essential for Indonesia’s future?

Contracts have to be more attractive. The 2001 oil and gas law was good, but the regulations have not followed with the right incentives to attract investment.

How important is it for foreign companies to have Indonesian people working for them, and at what levels?

There are many Indonesian professionals in the middle positions in foreign companies, it is very important to have an understanding of the local culture. In top management positions they are not as numerous, it depends on the company.

What would you say to a class full of students hesitating between engineering and financial/management university programs?

For the oil and gas industry, an engineering career is essential. Both the technical and business aspects are important, but it is better to have an engineering background first and afterwards you can complete your profile with management or financial studies. For example in my personal case, I have a postgraduate degree in economics.

How would you rate the efficiency and productivity of the Indonesian O&G companies, particularly Pertamina?

Pertamina faces big challenges on this front. They have very old assets and need considerable investments just to maintain production levels and to cover maintenance costs. In the other side, Pertamina has enough resources to be developed, that need more new investments and technologies.

Furthermore the labour union for Oil & Gas Industry is very strong, and has accomplished many things for the workers, so far. But we are not involved with them actively.

Do you know roughly what percentage of the IATMI members work for PSCs?

It is about 80%, and the remaining 20% percent is made up mostly of people working for the service providers.

What about the gas sector in particular? The situation looks brighter than for oil…

Yes, it is better. Total E&P Indonesie is the main PSC for gas in Indonesia. The main issue with gas is that the government has announced priority for the domestic demand, so that it can gradually replace a share of the oil consumption in Indonesia, so as to reduce the reliance of our oil imports.

How are the engineers getting ready to develop new technologies in the gas sector, such as Coal Bed Methane and new recovery techniques?

We are working on CBM and will have a seminar on the subject in March 2007. We have CBM experts in our organization. The problem with CBM is that it needs very high investments and takes time to develop.

How would you like for the rest of the world to see IATMI in five years?

We want to contribute to making Indonesia an attractive place for new investments and technologies, we need to make attractive contracts and give financial incentives.

Do you see any other country as a model for Indonesia, in regards to the way they develop the oil and gas industry?

Every country is different, and we have our own model in Indonesia. We were the first to develop the PSCs and have exported this method to the rest of the world.

Do you have any final comments on Indonesia’s Oil & Gas industry and IATMI?

For Indonesia, the key is having consistency in regulations and developing our human resources. In IATMI our motto is “InsyaAllah Amanah Tambah Menjadi Ibadah” which means “God’s willing, the integrity and accountability trusted upon us will increase the values of our services to people and God”.

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