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Ada Pertanyaan? Hubungi Kami Marcell Sihombing, Kartini L. Makmur
Minister Said (left), believes that the national oil and gas industry can be revived. Photo by: RES
The severe drop in global oil and gas prices is placing a serious burden upon the Indonesian economy, especially in relation to its oil and gas workers. However, Indonesian oil and gas companies have committed to not engaging in any program of mass layoffs.
Oil and gas companies operating in Indonesia such as Conoco Phillips, Chevron and Pertamina have stated that they won’t be following in the footsteps of companies located in other countries and engaging in massive layoffs. Instead, they have decided to pursue a strategy of reducing their investment funds and capital expenditure (capex). This issue dominated discussions at the Indonesian Oil and Gas Infrastructure Business Forum, which was held in Jakarta on Wednesday, 30 September 2015.
“World oil prices have experienced a severe drop from an average of USD 107 per barrel in February of 2014 to USD 38 per barrel in June of the same year. From that point on, layoffs became the trend among oil and gas companies. However, here in Indonesia, Conoco, Chevron, and Pertamina have instead committed to a process of restructuring,” asserted Mr. Kudus.
The recent severe drop in the price of oil and gas has spurred two major oil companies to lay off some 12,500 of their workers. CNN recently reported that Royal Dutch Shell has made 6,500 of its workers redundant in a bid to lower operational costs, while Centrica has laid off 6,000 workers as production is scaled back.
This trend of worker layoffs, prompted by the drop in global oil prices, has been going on for months, even though oil prices have now finally begun to increase again, albeit at an extremely modest rate. Ahmad Kudus, Pertamina’s Commercial and Business Development Director, emphasized at the recent forum that layoffs were not the best solution, as such an approach was likely to result in a rapid rise in the unemployment rate, which would lead to widespread social problems.
Mr. Kudus also expressed his concerns over the huge drop in the price of oil, especially in light of the fact that the global crude-oil price has been in decline since May. The decrease in demand for oil is being spurred by the global economic slowdown, while plans to revoke the current sanctions on Iran may result in overproduction.
Meanwhile, the revolution in energy and oil production initiated by the Organization of Petroleum Exporting Countries (OPEC) has led to an abundant supply of oil flooding the market, which is why Pertamina has had to reduce its capex by around 20 to 30 percent from a high of USD 3.2 billion.
Indonesia’s Minister of Energy and Mineral Resources (Minister), Sudirman Said, has stated his firm belief that the national oil-and-gas industry can be revived. According to Said though, such an outcome can only be achieved if companies, government and workers all work together in order to handle this pressing problem. The Minister’s main goal at the moment is to prevent massive layoffs in the upstream oil-and-gas sector.
“We tend to resort to the easy way out of sacrificing workers when faced with any pressure,” asserted Minister Said.
Said has admitted his concerns regarding the upstream oil-and-gas industry tendency to “play it safe” during times of weakening oil prices. However the minister insists that now is the best time to increase the employment of human resources, since the state is actively seeking to improve management of the country’s oil and gas industries.
Despite the government’s insistence that it will seek to avoid mass layoffs, the Vice-Chair of the Oil and Gas Specialized Working Unit (SKK Migas), Zikrullah, recently asserted that layoffs were probably inevitable. Mr. Zikrullah also claimed though that such measures would only be temporary and that the most important thing was to ensure that any layoffs were not too large in scale.
“We do hope to that we can avoid scaling back on workers in the face of the oil price slump. Increasing efficiency may indeed be an option and reducing the total number of workers must only be used as a last resort. Such layoffs, though, would only be a temporary response to the drop in the global oil price,” concluded Mr. Zikrullah.
(sp)
Marcell Sihombing, Kartini L. Makmur
Minister Said (left), believes that the national oil and gas industry can be revived. Photo by: RES
The severe drop in global oil and gas prices is placing a serious burden upon the Indonesian economy, especially in relation to its oil and gas workers. However, Indonesian oil and gas companies have committed to not engaging in any program of mass layoffs.
Oil and gas companies operating in Indonesia such as Conoco Phillips, Chevron and Pertamina have stated that they won’t be following in the footsteps of companies located in other countries and engaging in massive layoffs. Instead, they have decided to pursue a strategy of reducing their investment funds and capital expenditure (capex). This issue dominated discussions at the Indonesian Oil and Gas Infrastructure Business Forum, which was held in Jakarta on Wednesday, 30 September 2015.
“World oil prices have experienced a severe drop from an average of USD 107 per barrel in February of 2014 to USD 38 per barrel in June of the same year. From that point on, layoffs became the trend among oil and gas companies. However, here in Indonesia, Conoco, Chevron, and Pertamina have instead committed to a process of restructuring,” asserted Mr. Kudus.
The recent severe drop in the price of oil and gas has spurred two major oil companies to lay off some 12,500 of their workers. CNN recently reported that Royal Dutch Shell has made 6,500 of its workers redundant in a bid to lower operational costs, while Centrica has laid off 6,000 workers as production is scaled back.
This trend of worker layoffs, prompted by the drop in global oil prices, has been going on for months, even though oil prices have now finally begun to increase again, albeit at an extremely modest rate. Ahmad Kudus, Pertamina’s Commercial and Business Development Director, emphasized at the recent forum that layoffs were not the best solution, as such an approach was likely to result in a rapid rise in the unemployment rate, which would lead to widespread social problems.
Mr. Kudus also expressed his concerns over the huge drop in the price of oil, especially in light of the fact that the global crude-oil price has been in decline since May. The decrease in demand for oil is being spurred by the global economic slowdown, while plans to revoke the current sanctions on Iran may result in overproduction.
Meanwhile, the revolution in energy and oil production initiated by the Organization of Petroleum Exporting Countries (OPEC) has led to an abundant supply of oil flooding the market, which is why Pertamina has had to reduce its capex by around 20 to 30 percent from a high of USD 3.2 billion.
Indonesia’s Minister of Energy and Mineral Resources (Minister), Sudirman Said, has stated his firm belief that the national oil-and-gas industry can be revived. According to Said though, such an outcome can only be achieved if companies, government and workers all work together in order to handle this pressing problem. The Minister’s main goal at the moment is to prevent massive layoffs in the upstream oil-and-gas sector.
“We tend to resort to the easy way out of sacrificing workers when faced with any pressure,” asserted Minister Said.
Said has admitted his concerns regarding the upstream oil-and-gas industry tendency to “play it safe” during times of weakening oil prices. However the minister insists that now is the best time to increase the employment of human resources, since the state is actively seeking to improve management of the country’s oil and gas industries.
Despite the government’s insistence that it will seek to avoid mass layoffs, the Vice-Chair of the Oil and Gas Specialized Working Unit (SKK Migas), Zikrullah, recently asserted that layoffs were probably inevitable. Mr. Zikrullah also claimed though that such measures would only be temporary and that the most important thing was to ensure that any layoffs were not too large in scale.
“We do hope to that we can avoid scaling back on workers in the face of the oil price slump. Increasing efficiency may indeed be an option and reducing the total number of workers must only be used as a last resort. Such layoffs, though, would only be a temporary response to the drop in the global oil price,” concluded Mr. Zikrullah.
(sp)