event Published at: 2015-10-23

That was likely an eye-opening trip to the rich resource district that supports around 20 percent to country’s oil production. The group comprised 25 participants from eight countries – including Indonesia, Myanmar, Philippines, Timor Leste, Dominica Republic, Tunisia, Germany, and United Kingdom. They were policy makers, actors of civil society organizations, journalist and other innovative agents of change whom eager to eyewitness how the sub-national level practices managing oil industries as well as overcoming the social and environmental impact.

The oil story at Bojonegoro began when oil exploration was started in 2001 after Mobil Cepu Limited (MCL) in collaboration with Pertamina discovered Banyu Urip field that reserves around 445 million barrels oil. Since the field was drilled out at 2005, the golden age of the old time has been likely reemerging in Bojonegoro. The district incrementally relishes revenue from oil industry thereby effectively accelerates their infrastructure and public facilities development. Together with Blora District, Bojonegoro is acknowledged as the pilot project at the sub national level on combating resource curse. This project was in collaboration with the Revenue Watch Institute and Open Society Institute’s Local Government and Public Service Reform Initiative (LGI) since 2008.

The enhancement of Bojonegoro was obviously perceived. The participant works for Bantay Kita, Philippines, Tess Tabada was very surprised when arrived at Bojonegoro after her last coming three years ago. She found that Bojonegoro city has been modernized with greatly number of motor cycles and massive buildings of stores, restaurants, and hotels.   

“I have been here with IKAT-US Program in 2012, what I just remember at that time was the-long deserted road. Only few motor cycles pass this road. Hope this is not only about the increasing number of vehicles but also improving the welfare of the people,” she told when our bus passed the main road at the outskirt of city of Bojonegoro.


Speaking to government and private company made participants varied viewpoints about complexity of oil resources governance. Over the two days fieldtrip, participants met diverse stakeholders in managing oil industry in Bojonegoro, including head of the district, heads of local government units and  the representative body that are handling on oil industry, Mobil Cepu Limited (MCL) as the operator, and the regulatory body of Jawa Bali and Nusa Tenggara (SKK Migas Jabanusa).  

Bupati Bojonegoro Suyoto and his officers warmly received the group at his residence, on Tuesday (20/10). He stated that Bojonegoro is one of the best practices of extractive industries since the district convincingly reduced poverty rate around three percent in the last three years. Nowadays, 196,000 people lives in the poverty or 15.95 percent of the total population (2013).  

                Suyoto explained that local government implemented several commitments for boosting local economy and increasing capital sustainability, including investing IDR 100 billion per year on Bojonegoro’s people credit bank and becoming the third biggest holding share in East Java Provincial Bank. Furthermore, local government nowadays is committed to generate some parts of revenue from oil and gas into petroleum fund. Around 40 percent of revenue sharing from central to local government and the participating interest from companies will be preserved into petroleum fund. The amount of oil revenue sharing in 2014 is IDR 500 billion, and it is estimated increasing three times up to IDR 1.5 trillion in 2016. However, this local innovation seems far to be executed since there is insufficient national legal law as umbrella policy law to protect the implementation.

“We use sharing revenues from extractive industries to significantly strengthen capacity of the host community in order to sustainably improve their welfare and happiness. We do not decide whether to extract or not, what we made is to ensure that the benefit goes to our people. ” he said.

Responding to Bupati’s vision, the participant from Tunisia who works for National Resources Governance Institute (NRGI) Wissem Heni believed that Bojonegoro has a big chance to achieve welfare as well as sustainable development. “Bupati is very affirmative and ambitious. I think he is committed for democracy and he has a big chance to institutionalize his vision with the supports from the local government units,” he said.

In hand with the local government on improving human development, private sector keen to introduce a new approach of community development. Field Public & Government Affairs Manager ExxonMobil – Mobil Cepu Limited (MCL) Rexy Mawardijaya explained “Strategic Community Investment” to the group, on Wednesday morning (21/10). He clarified that this strategy reflects part of how the company operates high risk and high investment business handling the social conflicts with local communities.

As part of the strategy, MCL delivers program to improve livelihood capacity of neighboring community, including life skill training, small business enterprise assistance, and health care services. “This program is applied by MCL in partnership with local government under the approval of regulatory Body (SKK Migas). Local government will take over this community program after three years.” Rexy told to the forum.


As the field trip concluded, the group perceived the resilience of the neighboring communities through seeing Sukowati and Banyu Urip oil field that are operated nearby the settlement. Petrochina as Joint Operation Body of Pertamina and ExxonMobil – Mobil Cepu Limited (MCL), respectively operates the oil fields. Visiting the grass root shows that in fact some local regulations are not implemented well. The group found some remaining problems related to the social-environmental issues due to the impact of the oil industry.

                Head of Campurejo Village Edi Sampoerno, and his team as well as the community received the group at village hall on Wednesday afternoon, (21/10). On the one said, he proudly describe human development in the village as the positive externalities of the oil industry, including school improvement and health aid. On the other side, he noticed that the industry brought environmental degradation, notably in water supply, air quality, and soil fertility.

“It is compulsory to give us the replacement and the compensation due to impact of oil industry. State already took from us, as well as the companies. I believed there is fund has been collected from the activities. The state kept the cost recovery that not easy for us to access the fund,” Edi said.

The participant from Indonesia who works for National Development of Planning Agency (Bappenas) Fridolin Berek reflected that the lesson learnt he had from Bojonegoro. He statetd that the district has opportunity to be a model for other sub-national level in managing oil sharing revenue for social benefit.(isw)