Publications

The Cepu Block is one of the largest national oil and gas producers. State revenue from the oil and gas sector in the Cepu Block can also be used to increase revenue from oil and gas producing regions in East Java. This is based on PP. 35/2004 that regulates oil and gas contractors' obligations to offer 10% of Participating Interest (PI) to Regional-Owned Enterprises (BUMD). However, in reality, not all regions are ready to participate in PI financing due to regional financial limitations. PI of Cepu Block has been realized since 2009 where PT Petrogas Jawa Timur Utama Cendana (PJUC) became one of the four BUMD that assigned to manage the PI of 2.243% with share rights. Initially, PT Petrogas Jawa Timur Utama Cendana used the Public-Private Partnership (PPP) scheme with PT Raharja Energy Cepu (REC) as the initial capital for joining in Participating Interest (PI) of the Cepu Block. Thus, this paper will discuss PI management's success in the Cepu Block, starting from the preparation, procedures for bidding and transferring PIs to the formation of the BKS PI 10% Cepu Block. PJUC utilize part of the funds obtained from PI 10% to manage various business fields. With good management, PJUC has successfully gained USD 3.5 billion profit in 2020 and has successfully paid off its debts, and has become one of the BUMD with a large contribution of local revenue East Java Province. Having PJUC debt paid off, revenue in 2021 will reach around USD 13 billion. BUMD's exists to managing the Cepu Block oil and gas working area through the 10% of Participating Interest that provides an increase in regional revenue for East Java. It increases BUMD's knowledge in managing oil and gas blocks as a non-operator contractor. Then, Participating Interest can be creating transparency in lifting, reserves, and cost recovery. Besides, the regional-owned enterprise can also help facilitate or accelerate issuing permits needed in the regions and help implement cooperation contract activities in the areas.