Abstract

Oil (and gas) governance in the Cepu Block has brought a number of issues that can be related to equity failures. The most disadvantaged parties of the failures include some of local communities in Blora Regency of Central Java and Bojonegoro of East Java. Accommodating the interests of the local people, thus, becomes important, especially for accelerating poverty alleviation. This should be done in the framework of equity-based development. The big research question is: Considering that the equity failures in the oil and gas governance of Cepu Block are closely related to the lack of participation of local communities, how should the governance be more participatory to be able to distribute the benefits more equitably for the local people? This article presents progress of two years of research in answering this question (i.e., from the perception of the local people). It has used a mixed approach with a proportional random sampling to the worse-off households in the districts of Jiken, Sambong, and Cepu in Blora, and Ngasem, Kalitidu, and Dander in Bojonegoro. A focus group discussion (FGD) involving the local people from those districts obtained the needed information. It is confirmed that four aspects of benefits distribution experience severe equity failure (i.e., the aspects of job opportunity, taxation, social security, and basic infrastructure). A model to reformulate the related policies to be more equitable has then been discussed in the FGD. The results have confirmed that equitable opportunities in relevant skills education and capacity development should be prioritized. Indeed, the applicability of the proposed model should still be verified to other stakeholders (i.e., the related governments and authorized institutions in the Cepu Block oil governance). This will be done in the second year’s research.